Chiu Suet Ying v. The Incorporated Owners of Kiu Yu and Kiu Fat Mansions

DCCJ 5071/2014

[2018] HKDC 699

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5071 OF 2014

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Before: His Honour Judge MK Liu in Court

Dates of Hearing: 16-18 May and 8 June 2018

Date of Judgment: 15 June 2018

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JUDGMENT

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A. INTRODUCTION

1.This action and the other 2 actions, namely DCCJ 4753/2014 and DCCJ 2116/2015, concern the adverse possession claims made by various squatters occupying the common areas of Kiu Yu Mansion^[1] and Kiu Fat Mansion^[2] (“the Buildings”).  The defendant in each of these actions is the incorporated owners of the Buildings (“the IO”).  The location of the area claimed to be occupied by the plaintiff in each of these 3 actions is shown in the agreed plan (“the Agreed Plan”) annexed hereto as “Annex 1”.  The 3 actions are tried sequentially from 11 May 2018 to 8 June 2018.

2.The background facts in this action are as follows.  Unless otherwise specified, the facts set out below are agreed or not in dispute.

3.The Buildings are governed by the Crown Lease of Kowloon Inland Lot No 1358 dated 7 March 1932 as varied by a Deed of Variation of the Crown Lease of Kowloon Inland Lot No 1358 dated 27 October 1962.

4.The IO was incorporated on 23 May 1985 under the Buildings Management Ordinance (“BMO”).  It was subject to a winding-up order between 27 August 2003 to 19 February 2009.  The IO was able to settle all the outstanding debts, and as a result the winding-up proceedings were permanently stayed on 19 February 2009.

5.The plaintiff in this action (“Chiu”) was and is at all material times neither a registered owner, nor a paper owner, nor a tenant of any part of the Buildings, nor a party to the Deed of Covenant (Memorial Number UB 470880) governing the Buildings and dated 22nd December 1964 (“the DMC”).

6.Chiu occupied and is still occupying certain area or portion of the common parts of the Buildings^[3].

7.On 13 April 2012, the Building Authority (“BA”) commenced DCMP 937/2012 and DCMP 938/2012 against the IO under s 27(1)(a)(ii) of the Buildings Ordinance (“the DCMP Proceedings”).

8.On 14 September 2012, Chiu applied to be joined as one of respondents in the DCMP Proceedings.  On 5 October 2012, Chiu was ordered to be joined as the 10^th Respondent in DCMP 938/2012.

9.On 13 November 2012, Order Nos COTE0017/12 and COTE0018/12 were made under the DCMP Proceedings (“the Closure Orders”).  On or around 8 April 2013, notice of the Closure Orders was posted up around the Blue Area as shown in the Agreed Plan informing Chiu (and other occupiers) that the Closures Order would be enforced on 5 June 2013.

10.On 21 December 2012, Chiu (together with two other persons, one being Lau Sang, the plaintiff in DCCJ 4753/2014) commenced HCMP 2873/2012 against the IO, in which they claimed that they had acquired possessory titles to some common areas of the Buildings. However, on 29 December 2014, they discontinued the proceedings.

11.In this action, Chiu is claiming that she has acquired a possessory title to the area shaded in blue on the Agreed Plan (“the Blue Area”).  The annual rent or the rateable value of the Blue Area, determined in accordance with the Rating Ordinance, or the annual value of the Occupied Area, whichever is the least, does not exceed HK$240,000. The parties have further agreed that the reliefs sought by Chiu and the reliefs sought by the IO herein do fall within the jurisdiction of the District Court.

B.   CHIU’S CASE

12.Chiu commenced this action on 31 December 2014.  Her pleaded case is that in or about 1965, her predecessor in title, Fung Pui Kuen (“Fung”) and her husband, who were at all material times neither the owner nor tenant of the Buildings, without consent or approval from the IO’s predecessors, enclosed the Blue Area for use as a small shop known as “Kan Fung” (勤豐百貨).  In 1996, Fung sold the shop to Chiu at HK$30,000, and Chiu took over the exclusive possession of the shop from Fung.  The Blue Area has been in the adverse possession of Fung and then Chiu continuously since about 1965.  Alternatively, the Blue Area has been in the adverse possession of Chiu since 1996.  Chiu claims that by reason of these, she has acquired a possessory title to the Blue Area.

13.Chiu has called 7 factual witnesses to give evidence in support of her case:-

(1)   Chiu herself;

(2)   Chan Siu Kam (“Chan”, Chiu’s friend);

(3)   Tam Kwai Fong (“Tam”, who had dealings with Chiu);

(4)   Wong Yuk Chu (“YC Wong”, Chiu’s friend);

(5)   Chau Man Wah (“Chau”, Chiu’s daughter);

(6)   Ho Man Yuen (“Ho”, Chiu’s neighbour); and

(7)   Chiu Lai Ching (“LC Chiu”, Chiu’s elder sister).

14.Chiu has also filed a witness statement made by a Ho Yun Tak (“YT Ho”).  YT Ho did not give evidence in this trial.  As told by Mr Ernest CY Ng, counsel for Chiu, YT Ho was not available during the trial period.  Mr Ng does not place any reliance on YT Ho’s witness statement.  Mr PK Chan, counsel for the IO, submits that no weight should be given to that witness statement.  However, Mr Chan does not ask the court to draw any adverse inference against Chiu because of the absence of YT Ho in the trial.  In these circumstances, I would just place that witness statement aside.

15.Chiu has also produced the expert’s evidence from Mr Joseph Wong (“P’s Expert”).

C.   THE IO’S CASE

16.The IO denies the adverse possession claimed by Chiu and requires Chiu to prove her case^[4].  In particular, the IO mentions that according to the business registration records of Kan Fung, Kan Fung was registered under the name of Fung from 1 September 1967 until its cessation of business on 14 January 2010.  The address of Kan Fung as shown on those records was G/F, 84 Lok Shan Road Side-Door To Kwa Wan.  The IO also mentions that after the removal of the unauthorized structures on the Blue Area in or about October 2013 as a result of the actions taken by BA, Chiu built iron fence to fence off the area.  The area fenced off by Chiu is larger than the original area occupied by Chiu before the BA’s actions.

17.The IO also claims that Chiu is bound by the DMC and/or s 34I of the BMO, and is in breach of clause 13(b) of the DMC^[5] and s 34I of the BMO by occupying the Blue Area.

18.The IO counterclaims for:-

(1)   A declaration that Chiu is in breach of the DMC and/or s 34I of the BMO;

(2)   An injunction requiring Chiu, at his own expenses, forthwith demolish and remove all structures and/or objects in the Blue Area and reinstate the Blue Area;

(3)   An order that in the event of Chiu failing to demolish and remove the structures and object in the Blue Area and/or to reinstate the Blue Area, the IO is entitled and at liberty to demolish and remove the same at the expenses or costs of Chiu, and to recover such sums from Chiu in full indemnity, to be assessed by the court if the amount of such expenses and costs cannot be agreed;

(4)   An injunction restraining Chiu, whether by herself, her servants, agents, tenants, licensees, occupiers or otherwise howsoever from repetition or continuance of the acts complained of above or of similar acts; and

(5)   damages for trespass to be assessed.

19.The IO has called 2 factual witnesses to give evidence in support of their case:-

(1)   Wong Wai Chi (“WC Wong”), chairlady of the management committee of the IO since about 2009; and

(2)   Wong Tze Yan Kevin (“Kevin Wong”), secretary to the management committee of the Io since about 2009

20.The IO has also produced the expert’s report made by Mr John Howard Chinchen (“D’s Expert”).

D.   THE AGREED ISSUES

21.Mr Ng and Mr Chan have signed a joint list of issues, in which the following agreed issues are set out:-

(1)   Whether the IO’s right to recover possession of the Blue Area has been extinguished and/or otherwise lost under the Limitation Ordinance (“LO”) before the commencement of this action in favour of Chiu and whether Chiu is entitled to claim possessory title (or a declaration thereof) against the IO:-

(a)   Whether Chiu has, at the material time, the requisite intention to possess/dispossess the Blue Area or any parts thereof (from its registered paper owners and/or the IO) by way of adverse possession; and

(b)   Whether Chiu has, at the material time, factually possessed/dispossessed the Blue Area or any parts thereof (from its registered paper owners and/or the IO);

by way of adverse possession for over 12 and/or 20 years since 1996 and/or about 1965 and/or such year as the court may find.

(2)   In the consideration or resolution of the above, including:-

(a)  Whether the existence of DCMP Proceedings and the conduct thereof including but not limited to any court orders made and/or enforcement action taken (or a lack of a refusal by Chiu thereof) has any effect(s) and the effect(s) thereof;

(b)  Whether Chiu has expanded or otherwise changed her occupied area, and the effect(s) thereof;

(c)  Whether Chiu in carrying out the business of Mei King Flower Shop (美景花店) has succeeded the adverse possession of Kan Fung and/or Mei King Water and Electrics (美景水電工程) (if any) on or within the Blue Area and the effect(s) thereof; and

(d)  Whether the Blue Area is part of the fire escape route for the residents of the Buildings.

(3)   Whether Chiu was and is bound by the DMC and/or s 34I of BMO and the consequences thereof, including whether they have been breached.

(4)   Whether the IO is entitled to any relief claimed.

E.   THE PRINCIPLES

22.As a matter of law, it is permissible to claim a possessory title to a common area owned by all the co-owners of a building.  Before the establishment of an incorporated owners of the building, the claimant has to show adverse possession against each and every co-owner.  However, after the establishment of the incorporated owners, the claimant may succeed by showing adverse possession against the incorporated owners^[6].

23.The principles concerning adverse possession are well known and have been recently summarized by the Court of Appeal in Tsang Foo Keung v Chu Jim Mi Jimmy^[7]:-

(1)  In order to succeed in claiming possessory title by adverse possession, the claimant must show that he has both the factual possession during the relevant period and the requisite intention to possess.

(2)  The requisite factual possession is a sufficient degree of exclusive physical control, and what is sufficient depends on the circumstances of the case and, in particular, the nature of the land and the manner in which land of that nature is commonly enjoyed. What must be shown is that the alleged possessor has been dealing with the land as an occupying owner might expect to deal with it.

(3)  The requisite intention is to exclude the world at large, including the owner, from the land so far as is reasonably practicable and so far as the law allows.

(4)  The person claiming adverse possession has the burden of proving both exclusive physical control and the requisite intention by compelling evidence.  It cannot be lightly assumed that the paper title holder has foregone his interest in land.

(5)  Evidence of subjective intent should be approached with caution. Intention is normally better assessed by inference drawn from the acts of the possessor in the light of nature of the land and its use.

(6)  If a person takes possession by virtue of a licence granted by another, it is the licensor who is treated as being in possession.

24.A squatter may take benefit from the occupation by his predecessor.  He can acquire a possessory title provided that there has been continuous adverse possession by his predecessor and him for the entire limitation period.  This point has been made clear by the Privy Council in Sze To Chun Keung v Kung Kwok Wai David & Another^[8]:-

“…… At the time when proceedings were commenced, the defendant had been in possession on his own account for only two years. But this does not matter: the Limitation Ordinance is not concerned with whether the defendant has acquired a title but with whether the plaintiff’s right of action has been barred. For this purpose, all that matters is that there should have been continuous adverse possession for the period of limitation. The rights inter se of the successive persons who may have been in possession adversely to the plaintiff since he was dispossessed are for this purpose irrelevant. ……”

25.Statements made by the person claiming possessory title by adverse possession have to be approached with care.  As reminded by the Court of Final Appeal in Wong Tak Yue v Kung Kwok Wai & Another (No 2)^[9]:-

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

26.There is no presumption in favour of the squatter.  Whether there has been adverse possession for the entire limitation period prescribed in the LO has to be proved by evidence and the burden of proof is on the squatter.  See On Yip Property Development Co Ltd v Kwok Tai Kuen Alan^[10], per Cheung CJHC at [8]:-

“8. …… Whether, at any material time, there was adverse possession, and whether any such adverse possession once begun continued unbroken for 20 years, are questions of fact to be established by evidence, the burden being on the squatter. He has to discharge the burden of proof by cogent and sufficient evidence. Whilst such evidence can take many forms, including direct oral evidence, documentary evidence and inferential evidence, and the parties’ cases must be considered in light of inherent probabilities and commonsense, there is no place for any presumption, whether legal or evidential, in favour of the squatter. Everything must naturally depend on the facts of each case. ……”

27.In respect of evaluating the evidence given by witnesses, the principles are well known.  See Hui Cheung Fai and another v Daiwa Development Limited^[11] and Lee Fu Wing v Yau Po Ting Paul^[12].

28.In respect of expert evidence, the court is not bound by the opinion expressed in the reports made by the experts, and can and should make its own judgment by considering all the materials available, including the aerial photos in the reports.  See Grand Wayfair Investment Company Limited v Chan Yung Kan^[13].

29.I bear the aforesaid principles in mind in my consideration of the evidence and the issues in this case.

F.   THE EVIDENCE

F1.  Chiu’s factual witnesses

Chiu

30.In her evidence-in-chief, Chiu said the following:-

(1)   Previously, the Blue Area was occupied by Kan Fung owned by Fung (also known as “Mrs Hui”).  Chiu’s brother-in-law Tse Shing (“Tse”, husband of LC Chiu) operated a shop called Mei King Water and Electrics beside Kan Fung, and the 2 shops were separated by a wall.  The locations of these 2 shops are shown in the plan annexed to her witness statement, a copy of which is annexed hereto as “Annex-2”.

(2)   In about 1965, Fung started to operate Kan Fung on the land inside the red rectangle^[14] as shown in Annex 2.

(3)   In late 70s, Tse started to operate Mei King Water and Electrics on the land inside the blue rectangle beside Kan Fung as shown in Annex 2.

(4)   In about 1983, Chiu and her elder sister LC Chiu together started Mei King Flower Shop, and Mei King Flower Shop was operated inside Mei King Water and Electrics.

(5)   In 1996, Fung decided to retire and emigrate.  Chiu purchased Kan Fung from Fung at HK$30,000.  Since she had a close relationship with Fung and they treated each other just like family members, no document was signed to record or evidence the transfer.

(6)   Thereafter, Chiu operated Mei King Flower Shop inside the area previously occupied by Kan Fung.

(7)   Mei King Flower Shop was her own business and she was the sole proprietor.

31.Chiu’s family is living in a public housing unit in Lam Tin Estate, Kowloon.  She and her husband^[15] applied for public housing in about 1988 and was assigned the present public housing unit in about 1995.  Under cross-examination, Chiu agreed that the Housing Authority would regularly request the tenants to declare their assets and income to see if they may have become rich tenants (富戶) and hence need to pay double rentals for the public housing units.  Chiu admitted that she had never declared to the Housing Authority that she owned or purchased the Blue Area, which was a shop facing Lok Shan Road.  She said it was only a small matter.  All the forms for reporting family’s assets and incomes submitted to the Housing Authority were filled in by her daughter, Chau.  Chiu said that her daughter might not know that Chiu had purchased the shop on the Blue Area, as she had not mentioned that to her daughter.

32.In my view, Chiu is clearly evasive in answering all these questions.  While the forms to the Housing Authority might be filled in by her daughter, Chiu has to put her own signatures on those forms and she must have knowledge of the contents of those forms.  Clearly, having purchased and being the owner of a shop facing Lok Shan Road would not be a small matter, for the shop is definitely a very valuable property.

33.Chiu said that at the very beginning, Mei King Flower Shop was started by she and her elder sister LC Chiu in about 1983.  However, since about 2000, her sister had no participation in Mei King Flower Shop for she had to take care of her grandsons.  From about 2000 onwards, LC Chiu did not have any interest in Mei King Flower Shop and Mei King Flower Shop was solely owned by Chiu.

34.However, according to the business registration of Mei King Flower Shop, it is a sole proprietorship owned by Tse.  Under cross-examination, Chiu was asked to explain this.  Chiu said it was only for the sake of convenience as she was not familiar with the procedures for the application for business registration.  Chiu was shown the business registration records of Mei King Flower Shop and agreed that the date of commencement of the same was 16 August 1983, and at all times Tse was the sole proprietor of Mei King Flower Shop.  When being asked why she did not call Tse to give evidence in this trial, Chiu said why she should call Tse and said the present proceedings did not concern Tse.

35.Chiu was shown the tax return of Tse for the fiscal year 2013/14.  When being asked whether it was correct for Tse to state in the tax return that he was the “owner” of Mei King Flower Shop, Chiu said it was correct as he was the registered owner in the business registration records.  When being asked for whom the MPF in respect of Mei King Flower Shop in the sum of HK$2,700 was paid, Chiu said she did not know.  Chiu agreed that a self-employed person needed to make contributions to MPF.  She admitted that she herself did not have any MPF account though she alleged that she was the actual owner of Mei King Flower Shop and agreed that she was thereby a self-employed person.  Chiu further admitted that she claimed herself to be a housewife and never reported her earnings to the Housing Authority.

36.Clearly, Chiu’s evidence saying that she was the sole proprietor of Mei King Flower Shop is untrue.  As shown in the business registration documents and the tax return mentioned above, the sole owner of Mei King Flower Shop is Tse.

37.Chiu claimed that in about 1996, she paid HK$30,000 in cash to Fung for buying Kan Fung, including the land occupied by the shop.  Chiu said that at that time, Fung intended to retire and emigrate to Canada to live with her son there.  Chiu said that she had a close relationship with Fung and so they did not prepare any written document to evidence the sale and purchase.  Chiu said that soon after the sale and purchase, Fung cleared all her stocks in Kan Fung, and Kan Fung ceased its operation and Fung no longer worked there.  Chiu said that Mei King Flower Shop then moved into the shop premises of Kan Fung.

38.Under cross-examination, Chiu was asked why the annual business registration fees of Kan Fung was paid up to 31 August 2010.  Chiu said that she paid all such business registration fees upon the request of Fung who wanted to retain the business registration of Kan Fung.  The total annual business registration fees allegedly paid by Chiu amounted to about HK$23,150.  Chiu said she did not receive any tax returns in respect of Kan Fung since 1996 and said those tax returns might be sent directly to Fung’s residence.

39.Chiu was shown the business registration records of Kan Fung, which revealed that Kan Fung only ceased to have operation on 14 January 2010.  Chiu then said Fung emigrated to Canada in about 2012, and Fung had not given any address or telephone number to her for future contact before Fung’s emigration.  Chiu said before Fung emigrated, BA had already posted notice of their application for closure orders against the unauthorized structures around Kiu Yu Mansion.  When being asked why she did not ask Fung to leave her telephone number as she might need Fung to be her witness in support of her claim of adverse possession in the proceedings concerning BA’s application for closure orders, Chiu said that Fung had indicated that she did not want to be bothered by this matter.

40.Chiu’s attention was also drawn to a photo^[16] showing that the name of Kan Fung was still displayed outside the shop in August 2012.  Chiu was asked why it would be necessary to display Kan Fung’s name outside the shop in 2012.  Chiu said that was upon the request of Fung, as Fung was afraid that her friends might still send letters to the shop to try to find her.  If the name of Kan Fung was not displayed outside the shop, those letters might not reach the shop.  When being asked how she could pass those letters to Fung who did not leave any correspondence address or telephone number after her emigration, Chiu said she did not receive any such letters addressing to Fung after the emigration of Fung.

41.In my view, Chiu’s evidence concerning the alleged dealings between herself and Fung is inherently improbable and cannot be believed.

(1)   As shown by the documents, Kan Fung did not cease its business in about 1996 or shortly after 1996.  Kan Fung only ceased its business in 2010.

(2)   There is no explicable reason as to why the business registration fees of Kan Fung were paid up to 2010 if Kan Fung had already ceased business in about 1996.

(3)   The alleged sale and purchase of Kan Fung in about 1996 is an important transaction.  It is unlikely that the parties would not sign any paper to record or evidence the transaction.

(4)   If Chiu and Fung treats each other just like family members, it is inconceivable that Fung would not leave any correspondence address or telephone number to Chiu when Fung emigrated.  Close friends would always want to keep in touch with each other.

(5)   Since Chiu does not have the way to find Fung, if Chiu receives any letter addressing to Fung at the shop, Chiu would have no way to pass the letter to Fung.  That being the case, there would be no point to display the name of Kan Fung outside the shop up to at least 2012.

42.I have to mention another aspect of Chiu’s evidence, ie different versions concerning electricity supply to the Blue Area before 1995.  In her affirmation filed in HCMP 2873/2012 (“the HC Affirmation”), Chiu said that before 1995, the electricity supply to Mei King Water and Electrics and to Kan Fung was from Kiu Yu Mansion.  However, in her witness statement filed in these proceedings, she said this was wrong.  She said that the correct version should be before 1995, the electricity supply to Mei King Water and Electrics and to Kan Fung was from Mei King Building^[17], not from Kiu Yu Mansion.  When being asked why she mentioned an incorrect version in the HC Affirmation, she said that the service of the solicitors representing her in that High Court case was not good.  I do not regard this as a satisfactory explanation.  The HC Affirmation was written in Chinese, and Chiu was able to understand the contents of that affirmation before putting her signature on the same.  Merely blaming the solicitors previously representing her is certainly not a convincing explanation.  This is not an insignificant matter.  If electricity supply to Kan Fung before 1995 was from Kiu Yu Mansion, the occupation of that area prior to 1995 might well be with consent from the owners of Kiu Yu Mansion and was not adverse possession.

43.In my judgment, Chiu is an evasive witness and her evidence is contradicted by contemporaneous documents and is inherently improbable on various important aspects.  She is also unable to offer any convincing explanation regarding the inconsistent evidence on the electricity supply issue mentioned above.  I refuse to accept her evidence.

Chan

44.Chan is a friend of Chiu and LC Chiu.  She said that LC Chiu once told her that “勤豐個舖頂咗俾佢哋做”.  Chan said that LC Chiu uttered those words to her in 1996 or 1997.

45.An undeniable objective fact is that the business registration fees of Kan Fung were paid up to 2010.  That being the case, I doubt whether LC Chiu uttered those words to Chan in 1996 or 1997.  Further, even assuming that LC Chiu did mention this to Chan in the past, the meaning of the message related by LC Chiu to Chan is ambiguous.  The plain meaning of that message is this: the business of Kan Fung has been sold to them.  The meaning of that message does not necessarily mean that the subject matter of the sale and purchase would include the transfer of the land occupied by Kan Fung to them.  Further, who are “them” in that message is unknown.  Since Tse and LC Chiu are husband and wife, “them” in that message can well be Tse and LC Chiu.

46.For these reasons, I decline to attach weight to Chan’s evidence.

Tam

47.Tam works in the flower industry and has known Chiu and LC Chiu for more than 20 years.  From time to time, she would go to Mei King Flower Shop to work there.  Tam said that LC Chiu was still working in Mei King Flower Shop.  This contradicts Chiu’s evidence, for Chiu said that LC Chiu no longer worked in Mei King Flower Shop after 2010.

48.Tam said that at first Tse and LC Chiu opened the flower shop in Mei King Water and Electrics, and Chiu joined the flower shop at a later time.  She said that the flower shop was moved to the present location^[18] in 1995 or 1996.

49.Save and except one point, I accept Tam’s evidence.  The point which I am unable to accept is that the flower shop was moved to the Blue Area in 1995 or 1996.  The annual business registration fees of Kan Fung were continuously paid up to 2010.  If the area was occupied by the flower shop from 1995 or 1996 onwards and Kan Fung was no longer there, there would be no point in paying the business registration fees of Kan Fung until 2010.  In my view, Tam made a mistake on the time when the flower shop moved to the Blue Area.

YC Wong

50.YC Wong is a friend of Chiu.  She said that she would go to Mei King Flower Shop to visit Chiu from time to time.  She said that the flower shop was moved to the present location in about 1996.  However, in the light of the objective fact that the business registration fees of Kan Fung were paid up to 2010, I am of the view that YC Wong also made a mistake on the time.  I decline to give weight to YC Wong’s evidence.

Chau

51.Chau is Chiu’s daughter.  She was born in 1981.  She said that she was told by Chiu that Fung had sold Kan Fung to them.

52.There is one glaring feature in Chau’s evidence.  When Chau was in the witness box, she said that part of paragraph 6 of her witness statement was not from her.  The meaning of that part is this: the electricity supply to the Blue Area was from a unit in Mei King Building under Fung’s arrangement, and it was only until 1995 an independent electricity meter was installed for the Blue Area.  Chau could not explain why these contents appeared in her witness statement.

53.I doubt whether all the evidence given by Chau is indeed from what she has seen or what she has heard.  I decline to give weight to her evidence.

Ho

54.In his evidence, Ho said he started to occupy the back lane of Kiu Yu Mansion in 1962 or 1963.  In about 1963 or 1964, he gave the Blue Area to a Mr Hui and Mr Hui operated a business there.  Mr Hui was unmarried at that time.  Later, Mr Hui and Fung married. The shop operated by the couple was Kan Fung.

55.Ho mentioned that Mrs Hui (ie Fung) continued to work in Kan Fung until about 3 or 4 years ago.  He agreed that Kan Fung had closed down for several months before the flower shop moved into the shop premises of Kan Fung.  He said he had seen Mrs Hui after the Government had posted notices of its intention to apply for closure orders against the unauthorized structures around Kiu Yu Mansion.

56.Under re-examination, Ho insisted that the flower shop moved into the shop premises of Kan Fung about 3 years ago.

57.Ho’s evidence in this case appears to be credible.  I accept his evidence.  Ho said that Fung was still working in Kan Fung a few years ago.  This is supported by the fact that the business registration fees of Kan Fung were paid up to 2010 and the name of “勤豐百貨” still appeared in the signboard outside the shop as late as August 2012.

LC Chiu

58.LC Chiu tried to give evidence in support of Chiu.  Under cross-examination, she was asked questions concerning the business registration records and the tax returns of Mei King Flower Shop mentioned above.  All these documents show that the owner of Mei King Flower Shop is Tse, not Chiu.  Facing these documents, LC Chiu could not offer any satisfactory explanation.

59.LC Chiu also said that in 2010, both Tse and herself retired and they have not worked to earn any money since then.  However, the tax returns mentioned above show that in fact Tse still had incomes from work after 2010.

60.LC Chiu’s evidence is contradicted by documents.  I refuse to accept what she has said and reject her evidence.

F2.  IO’s factual witnesses

WC Wong

61.Since about 2009, WC Wong has been the chairlady of the management committee of the IO.  She said that in about October 2013, as a result of the Closure Orders, Chiu demolished the original structures on the Blue Area, but immediately rebuilt another structure surrounded by iron mesh wire on the land.  WC Wong had an impression that the area newly enclosed by Chiu was larger than the original area occupied by the flower shop.

62.WC Wong also said that her daughter was born in 1996.  When her daughter was a primary student, WC Wong would buy things for her daughter from Kan Fung, and it was Fung selling things to her in Kan Fung.  That would mean that Fung was still operating Kan Fung after 2002.  WC Wong also said that Chiu only started to operate a flower shop on that area in about 2009.  WC Wong’s evidence is supported by the fact that the business registration fees of Kan Fung were paid up to 2010.

63.In my view, WC Wong’s evidence is clear and straightforward.  I accept her evidence.

Kevin Wong

64.Kevin Wong has been the secretary of the management committee of the IO since about 2009.  He mentioned that Chiu only started to run a flower shop at the premises of Kan Fung in around 2009. This is supported by the fact that the business registration fees of Kan Fung were paid up to 2010.

65.I am of the view that Kevin Wong is an honest and credible witness.  I accept his evidence.

F3.  The expert evidence

66.The expert evidence produced by the parties is of limited assistance.

67.The leave given to the parties is to adduce expert evidence by way of a land surveyor report in respect of the measurement plan on the demarcation of the land claimed under adverse possession by Chiu^[19], but the evidence from P’s Expert clearly goes beyond this.  Apart from providing measurement of the of the subject area claimed to be acquired by Lau by adverse possession, P’s Expert also express the following opinion in paragraph 6.5 of his report:-

“ ... according to the Survey Sheet, I could confirm that ‘the Flower Shop’ has been in the current location for at least 17 years from year 1997 to 2014. Furthermore, according to the Aerial Photo, I could confirm that ‘the Flower Shop’ has been occupied for at least 41 years from year 1973 to 2014. Yet the actual occupation inside ‘the Flower Shop’ could not be identified simply from the Aerial Photos and Survey Sheets.”

68.P’s Expert conducted a site inspection on 7 January 2016, by then the original structures on the area have been demolished and the area was surrounded by iron mesh wire erected by Chiu[20]. That being the case, it is not known on what basis P’s Expert can give an opinion as to the size of the original “Flower Shop” on that area^[21].

69.As to the additional opinion provided by P’s Expert as set out in paragraph 6.5 of his report, since the IO has not raised objection to this before the commencement of the trial, I would consider this.  Having examined the survey sheets and the aerial photos produced by P’s Expert, I decline to give weight to this opinion.

(1)   The survey sheets from 1997 to 2014 merely only show “TS” at the lane.  While “TS” means temporary structure, this does not necessarily mean the structures on the Blue Area and can mean any temporary structures in that lane.

(2)   I do not agree that the aerial photos can show the existence of the “Flower Shop” in the lane. 

70.D’s Expert, based upon the survey conducted by him in late January 2016, is of the opinion that the dimensions of the “Flower Shop” are about 3999 mm x 2554 mm.  However, for the reason stated in paragraph 68 above, this may not be the exact size of the original “Flower Shop” on the area.

71.D’s Expert is also of the opinion that the change of land use within the area now being fenced off by Chiu could not be shown by looking at the aerial photos.  This is stating the obvious.

72.At the end, the outcome of this case depends upon the factual evidence.

G.   MY FACTUAL FINDINGS

73.Based upon the evidence accepted by this court, I find that:-

(1)   Mei King Flower Shop only moved to the Blue Area in about 2009.

(2)   The owner of Mei King Flower Shop is Tse and not Chiu.

(3)   There is no reliable evidence showing whether there has been any agreement between Fung and Chiu by which Kan Fung was transferred to Mei King Flower Shop, and if yes, what exactly has been transferred (in particular, whether the land occupied by Kan Fung is a subject matter in that transfer) under the agreement. 

74.As a result of these findings, the adverse possession claim made by Chiu must fail.

(1)   Since Mei King Flower Shop only moved to the Blue Area in about 2009, Chiu has to prove[22], inter alia, that Fung’s occupation of the area before 2009 was adverse to the owners of the Building.

(2)   According to Ho, that area was given by him to Mr Hui at the very beginning.  However, there is no evidence showing that the initial possession of the back lane of Kiu Yu Mansion by Ho was without consent or permission from the owners of the Buildings.

(3)   Further, it is not known while Fung was in possession of the area, whether Fung’s possession was with the consent or permission from the owners of the Building.  It is also not known whether Fung had ever paid, or had ever been prepared to pay, any rent or licence fee to the owners of the Building.

(4)   Bearing in mind that there is no presumption in favour of the squatter, the above are matters to be proved by Chiu.  There is no clear evidence, let alone compelling evidence, on all these matters.

(5)   It is also not known whether Fung has ever transferred the land to Mei King Flower Shop.  There is no reliable evidence on this issue.

(6)   Further, after Kan Fung’s occupation, until the erection of the iron mesh wire by Chiu in about October 2013, the area was occupied by Mei King Flower Shop.  Mei King Flower Shop’s occupation was Tse’s occupation, not Chiu’s occupation.

75.By reason of all these, Chiu’s adverse possession claim cannot succeed and must be dismissed.

H.   ANSWERS TO THE AGREED ISSUES

Issue (1)

76.As a result of my findings above, the answer to Issue (1) is clearly “No”.  Chiu’s adverse possession claim fails and the IO may recover possession of the Blue Area.

Issue (2)

77.Given my findings above, it would not be necessary for me to answer each of the questions listed out under issue (2).  Suffice for me to say that I have considered the materials in the DCMP Proceedings produced by the parties in this case, and the findings made above are made after considering these materials.  I would only mention that 2 matters. First, on the question of the fire escape route, this is an unpleaded issue and there is no sufficient evidence before me showing that the fire escape route has been adversely affected by Chiu’s occupation of the Blue Area and the extent of the impact.  Second, although I accept the evidence given by WC Wong, the evidence cannot show precisely to what extent Chiu has enlarged her site by enclosing more area in the iron mesh fence built by her after the demolition of the structures on the original site in about October 2013.  However, since I have ruled that Chiu’s adverse possession claim must fail, all these would not affect the outcome of this case. 

Issue (3)

78.In my view, if Chiu succeeds in her adverse possession claim, s 13(b) of the DMC and s 34I of the BMO would not be relevant.  Since Chiu has never been a co-owner of the Buildings, she is not bound by the DMC or s 34I of the BMO.  Further, any right to enforce a negative covenant against Chiu would have been extinguished by the operation of LO s 17.  This has been authoritatively stated by the Court of Appeal in Wong King Lim v Incorporated Owners of Peony House^[23].

79.If Chiu cannot succeed on her adverse possession claim, the IO can recover possession of the Blue Area from Chiu and claim damages.  Since Chiu is merely a squatter and trespasser, the DMC and the BMO would not be relevant.

80.On any view, the DMC and the BMO would not assist the IO.

Issue (4)

81.Mr Ng submits that if I am against Chiu, I may simply dismiss Chiu’s claim and order Chiu to deliver vacant possession of the Blue Area to the IO.  Mr Ng submits that the injunctive reliefs claimed by the IO^[24] are based upon breaches of the DMC and the BMO by Chiu, and such claims are misconceived.  I agree.

82.I am prepared to give the order sought by the IO in paragraph (3) of the prayer of that counterclaim, ie, an order that if Chiu fails to demolish and remove the structures now on the Blue Area and reinstate the area at her own costs, the IO may take action to remove the same and claim indemnity from Chiu. I am of the view that this is a legitimate claim and the IO is entitled to have this order.

83.Both Mr Ng and Mr Chan agree that Chiu is to be given 2 months to deliver vacant possession of the Blue Area to the IO.  I am prepared to order Chiu do deliver vacant possession of the Blue Area to the IO within 63 days.

84.Mr Ng and Mr Chan also agree that only nominal damages should be awarded to the IO, for the IO has not adduced evidence to prove their actual loss as a result of the trespass committed by Chiu^[25]. I would award nominal damages of HK$10 to the IO.  As this is a nominal award, I would not order any pre-judgment interest.

I.   COSTS

85.I have heard submissions on costs.  In my view, costs should follow the event.  For the purpose of facilitating taxation, I am prepared to make one single costs order for the whole set of proceedings^[26].  Although the IO cannot get the injunctive reliefs claimed in the counterclaim, the time spent on the arguments concerning the DMC and the BMO is minimal.  In these circumstances, it would not be just and fair to deprive the IO of any costs^[27].

86.In my judgment, costs of the whole set of these proceedings should be to the IO.

J.   CONCLUSION

87.I make the following order:-

(1)   Chiu’s claim be dismissed;

(2)   Chiu do deliver vacant possession of the Blue Area (including at her own costs demolishing and removing the iron mesh wire and all other structures on the area and reinstating the area) to the IO within 63 days;

(3)   In the event that Chiu fails to at her own costs demolish and remove the iron mesh wire and all other structures on the Blue Area and reinstating the area within 63 days, the IO is at liberty to do all the aforesaid and recover the costs of those works from Chiu in full indemnity, the amount of such costs is to be assessed by the court if not agreed;

(4)   Liberty to apply;

(5)   Chiu do pay nominal damages of HK$10 to the IO;

(6)   Costs of these proceedings (including all costs reserved, if any) be to the IO, with a certificate for counsel, to be taxed if not agreed.

88.Lastly, it remains for me to thank Mr Ng and Mr Chan for the assistance provided to the court.

Mr Ernest C Y Ng, instructed by Wong & Co, for the plaintiff.

Mr Chan Pak Kong, instructed by T H Wong & Co, for the defendant