Chan Mei Lin and Others v. Lee Hong

HCA 2861/2001
and HCA 1803/2010
(Heard Together)

[2018] HKCFI 2441

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2861 OF 2001

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BETWEEN

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(By Original Action)

AND BETWEEN

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(By Counterclaim)

ACTION NO 1803 OF 2010

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BETWEEN

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J U D G M E N T

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INTRODUCTION

1.This is the trial of two actions ordered to be heard by the same judge at the same time or one after the other.  The parties to the two actions are the siblings, their cousins and the siblings’ mother (the “Mother”).  The underlying dispute in the two actions is their ownership and rights over various lots of agricultural land in Demarcation District No 107 (“DD 107”) in Yuen Long in the New Territories.

2.The siblings’ father (the “Father”) had nine children (the “siblings”).  In addition, the Father also brought up two of his brother’s children as part of his family.  These two children and the Father’s own nine children are referred to collectively or in any combination as “the children”.  The Father, his mother (the “Grandmother”), his wife (ie the Mother), and the eleven children regarded themselves as constituting one family (the “Family”).  

HCA 2681/2001

INTRODUCTION

Introduction

3.In HCA 2861/2001 (the “1^st Action”), the Mother, ie the 1^st plaintiff (“P1” or the “Mother”), two of her children, ie the 2^nd and 5^th plaintiffs (“P2” and “P5” respectively) and their two cousins, ie the 3^rd and 4^th plaintiffs (“P3” and “P4” respectively) alleged that the Mother or the Family had acquired squatter’s title over Lots 560RP and 561RP in DD 107 (the “1^st Land”); and that on a day in 1997 P5 instructed the defendant (“D”) to represent the Family or the Mother to claim squatter’s title over the 1^st Land from its paper owner with a view that it be assigned subsequently at the Mother’s discretion to P2, P3, P4, P5 and D (the “instruction of 1997”); and D agreed (the “Agency Agreement”).  Pursuant to the instruction of 1997, D entered into a settlement agreement with the paper owner, Allex Development Limited (“Allex”), to assign the 1^st Land to D (the “settlement agreement”).  The plaintiffs further alleged that in breach of his duty as agent or trustee for the Mother, D refused to give an account of his acts done pursuant to the instruction of 1997.  They sought a declaration that D held the 1^st Land on trust for them and an order for its transfer to the Mother; and other ancillary injunctive orders to restrain D from interfering with their use of their buildings on or adjacent to the 1^st Land.  D denied having accepted the instruction of 1997.  He asserted that he reached the settlement agreement with Allex assigning the 1^st Land to him by deed on his own and for himself.  He further alleged P4 and P5 of trespassing the 1^st Land.  He counterclaimed for an injunction to restrain them from further trespass of the 1^st Land and damages.

The background

4.The Father came to Hong Kong from China in 1954 and took possession of seven lots of land in DD 107, namely Lots 808, 809, 811 to 815, ie collectively, the 2^nd Land, pursuant to a lease granted by the Shams (the “1954 Lease”) and started to operate thereon a farm known as “Fung Yuen”.  In 1955, the Mother and Grandmother came to join the Father and lived in Fung Yuen.  As time went by, Fung Yuen had different boundaries at different times.

5.What is in dispute between the parties is whether the 1954 Lease included the 1^st Land which is immediately adjoining and is situated to the north of the 2^nd Land.  According to the plaintiffs’ pleaded case, the lease did not include the 1^st Land but the 1^st Land was fenced off in such a way that it appeared to form part of the 2^nd Land and the Father and Mother encroached it and treated it as part of Fung Yuen.  D’s case is that the leased land included the 1^st Land, but the Father only intermittently used two of the structures on the 1^st Land.  Lot 560RP is a small plot of land adjacent to Lot 561RP which is of no significance to the parties’ dispute evidentially.  It will not be specifically referred to in this judgment, but the parties’ rights to this lot are tied to their rights to Lot 561RP.  The essence of the parties’ dispute is whether the Father had adverse possession over the 1^st Land since 1954 which was then continued by the Mother and the Family.

6.In February 1962, the Father purchased the 2^nd Land from the Shams.  In February 1964, he transferred them to the Grandmother to hold on trust for himself to avoid it from falling into the hands of his creditors when he was at risk of bankruptcy proceedings.

7.The plaintiffs further pleaded that in about 1970, the Father leased Lots 556, 557A, 557B and the rest of Lot 561 (which was later identified as Lot 561A and which covers Lot 561 excepting Lot 561RP) from the Shams (the “1970 Lease”) to build a pond for fish farming.  The 1970 Lease was terminated in 1976 when the Shams sold the lots to the Lius and Laus on 28 April 1976.  D’s case is that the lease commenced in 1968 and covered the entirety of Lot 561.

8.Pausing here, effectively, the plaintiffs asserted that the Father and Mother had adverse possession of the 1^st Land from 1954 through to 1976; while D’s case is that the Father alone, not jointly with the Mother, had possession of the 1^st Land as a tenant under the 1954 Lease but the Father only occasionally used the 1^st Land between 1954 and 1968; and that between 1968 and 1976 the Father was in possession of the 1^st Land pursuant to the 1968 Lease from the Shams. 

9.A significant divergence between the parties’ case is about setting up the boundary fence dividing Lot 561A and Lot 561RP. The plaintiffs’ pleaded case is that in 1977 one of the Lius approached the Father and expressed their wish to fill up the pond.  They discussed and agreed to the boundary dividing what they thought was Lius’ Lot 561 and the Father’s 2^nd Land without engaging a land surveyor.  Then the Lius erected a system of fencing supported by concrete poles.  In so doing, the Lius carved out parts of Lot 560 and Lot 561, ie the 1^st Land, which were later identified as Lots 560RP and 561RP respectively under the settlement agreement between D and Allex.

10.D’s pleaded case is that one of the Lius approached him after filling up the pond in 1977 and discussed with him about the dividing boundary.  As he was using the 1^st Land for his used motor car parts business, the Lius agreed to fence off the 1^st Land from Lot 560 and Lot 561.  Then the Lius erected the fence.

11.The Father and Mother emigrated to United States in 1982. Before their emigration, the Father caused the Grandmother to assign the seven lots of land to the six children on 26 February 1982 in the following manner.  Lot 808 and Lot 812 were assigned to P5, Lot 813 was assigned to P4, Lot 814 was assigned to P2, Lot 815 was assigned to Lee Kin (one of the nine siblings), and Lot 811 was assigned to D.  Lot 809 was assigned to P2’s wife to hold on trust for P3, which was later vested in P3 on 29 March 1988.

12.Prior to the transfer of the seven lots to P2, P3, P4, P5, D and Lee Kin, the six children executed two documents, namely the 1^st 1982 Agreement and the 2^nd 1982 Agreement on 14 and 24 February 1982 respectively.  It is the plaintiffs’ case that the effect of these agreements and the assignments of the seven lots was to create a tenancy-in-common in equity over the seven lots among the six children and each of them is entitled to an undivided equal share in all the seven lots. 

13.When the Father and Mother emigrated to the United States, they initially lived in Mersey Avenue in San Leandro provided by D.   They returned to Hong Kong occasionally and resided in Fung Yuen.  The Father returned to Hong Kong in 1992 and died in December.  The Grandmother remained in Hong Kong and passed away in November a year later.

14.While the Father was away, the farming business of Fung Yuen ceased.  All the children, except P4 and D, had moved out of Fung Yuen at various times either to work in the urban area in Hong Kong or for emigration.

15.P2 worked in a plastic factory between 1967 and 1976 and lived with his girlfriend.   He became a motor mechanic in 1980 and moved out of Fung Yuen to the urban area upon his marriage.  He emigrated to Australia in 1988.  

16.P3 was a teenager studying middle school between 1973 and 1979.  She helped in Fung Yuen after school.  She worked in a bank in Central and moved out of Fung Yuen between 1982 and 1983.  She emigrated to Australia in 1998.

17.Lee Kin moved out of Fung Yuen to live in To Kwa Wan in 1974 when he started working in the urban area.  He started his photo finishing business in 1991 and moved to Fairview Park in Yuen Long. He emigrated to the United States in 1991. 

18.P4 moved out of Fung Yuen in 1975 working as a cameraman for a television company.  When the television company closed down, he moved back to Fung Yuen in 1978 and worked for two years in D’s Asia Food Company (“Asia Food”).  He joined D’s company, Asia Aquatic Co (“Asia Aquatic”) in 1987 and worked until 1994.  

19.P5 was studying in a boarding school in 1976.  He worked in the entertainment business after graduation.  He moved out of Fung Yuen in 1978 and lived in rented or self-owned properties in the urban area with his family.  He returned Fung Yuen to live in a house in Lot 561RP, identified as “H2”, during holidays or weekends initially and on full time basis since about 2000.

20.Only D remained throughout on the 1^st Land and 2^nd Land full time to operate Asia Food until 1984 and later Asia Aquatic.  He had the consent of the children to use their lots for his fish farming business.

21.In about 1985, a structure identified as “H3” in Lot 51RP was re-built into a warehouse straddling on Lots 561RP, 812 and 815.  In 1986, H2 was rebuilt into a one-storey holiday house adjoining the warehouse forming an L-shaped structure.  In 2000, the P5 added another storey to H2.

22.In about July 1997, the Lius and Laus sold Lots 560 and 561 to Allex.  Allex discovered that part of Lots 560 and 561, ie the 1^st Land, had been encroached.  It demanded D to deliver up possession of the 1^st Land.  D informed the plaintiffs of the demand and negotiated with Allex. 

23.The plaintiffs’ pleaded case is that after discussion among the children, D accepted the instruction of 1997 given to him by P5 to represent the Mother and the Family to claim possessory title over the 1^st Land and in that connection received a sum of $50,000 from P5 as contribution to the legal costs incurred.  D denied having agreed and accepted the instruction of 1997.   His case is that he had acquired legal title to the 1^st Land by reason of his adverse possession and settlement agreement with Allex under which Allex carved out Lots 560RP and 561RP from Lots 560 and 561 respectively and assigned them to him on 27 January 2000 at the nominal consideration of $1 (the “2000 Assignment”).

24.In a family meeting on 10 February 2000 (the “Family Meeting”), the issue of the transfer of P3’s Lot 809 to D and the progress of Allex’s claim over the 1^st Land was discussed.  The meeting ended in hot temper and disagreement.  Thereafter, the relations between D and the plaintiffs, particularly P2 and P5, turned sour.   

25.In November and December 2000, Messrs Foo & Li (“F&L”) wrote to D claiming ownership of the 1^st Land for P2 to P5.

26.In May 2001, with the help of Lo, P2 to P5 and D entered into negotiation for a land swap to resolve their long term dispute over the various land lots.  P2 and P4 reached an understanding with D to suspend the building works on their lots pending the negotiation.  But on 19 June 2001, D had a dispute with P2 and P4 because they resumed works in breach of that understanding.  As result, D threatened to chop down the trees in the 1^st Land as manifestation of his rights over the land (the “2001 Incident”).  Police intervention was called.  No prosecution was brought against D.

27.On 23 June 2001, the plaintiffs commenced the 1^st Action against D and obtained an ex parte injunction restraining D from (1) severing, diverting, obstructing tampering or otherwise interfering the water supply to the plaintiffs’ land lots; (2) demolishing, removal or otherwise damaging any buildings, structures or trees on the 1^st Land; (3) parting with possession of any part of the 1^st Land; and (4) causing any nuisance, disturbance or alarm to the plaintiffs and other occupants on the plaintiffs’ land lots and the 1^st Land.

28.On 27 July 2001, paragraphs (1) to (3) of the ex parte injunction order were discharged and paragraph 4 was varied such that D was only restrained from using, displaying or causing any violence of force as would cause alarm to the plaintiffs or other occupants on their land lots and the 1^st Land as to their personal safety or the safety of their properties.

The issues to be proved by the plaintiffs in HCA 2861/2001

29.The plaintiffs’ case in the 1^st Action is founded on the instruction of 1997 and D’s breach of the Agency Agreement.  Hence, it is incumbent on the plaintiffs to prove the instruction and the breach.  However, Mr Li SC submitted that it was also necessary for the plaintiffs to prove their plea in paragraph 32 of the Statement of Claim that P1 “had acquired a squatter’s title to [Lots 560RP and 561RP]”.  Mr Chong disagreed.  He argued that the above phrase was only the instruction given to D as the alleged basis of the claim to be asserted by D for the Family or for the Mother in making a claim of adverse possessory against Allex, the truth of which need not be proved.  He reiterated that what the plaintiffs have to prove are just the Agency Agreement and the breach.  Similarly, he submitted that whether the Father or Family had abandoned possession of the 1^st Land leaving D in sole exclusive possession is irrelevant.

30.I respectfully disagree.  If the plaintiffs did not have adverse title to the 1^st Land, they could not prove any damages. In Kwok Lau Chu v Kwok Chi Yau, Chief Maker Limited [1], the plaintiff and defendant, who were father and son, operated a business over the disputed land, which was said to be a partnership asset.  The father’s case was that in breach of an agreement to claim the land for the father, the son acquired it from the paper owner.  Deputy High Court Judge William Wong SC held that such a case “simply cannot get off the ground” as it had been adjudicated in previous actions that neither the father nor the son had any adverse title over the land.  On the same rationale, the plaintiffs’ claim cannot succeed without proving at least a right back in 1997 to assert an adverse title against Allex.  Besides, as conceded by Mr Chong, whether the plaintiffs were able to assert such a right is relevant in assessing the inherent probability of the parties’ case.

31.Mr Chong argued that as it is D’s case in the counterclaim that he was in adverse possession of the 1^st Land and in the position to give or refuse consent to P5 to rebuild and use H2 in 1986 and to object to the addition of an extra floor towards the end of 2000, D had to prove his adverse title.  I disagree.  D has avoided that issue by relying on his paper title and by suing in trespass since January 2000.  Mr Chong argued that if D was unable to prove adverse title, he had obtained property by deception.  D’s title was by way of assignment by the paper owner by deed.  In the absence of an application to set aside the assignment, that title is conclusive.  It is good against any trespasser.  If there was any issue of deception, it would be a matter for Allex.  It is irrelevant in these proceedings.

32.Thus, based on the pleadings, the major issues which the plaintiffs have to prove to support their claim in the 1^st Action are:

(1) whether the Family or the Mother had acquired a right to adverse title over the 1^st Land in 1997;

(2) whether P5 occupied the 1^st Land under the 2^nd 1982 Agreement and/or the permission of P1, or under the licence of D and was in breach of the terms of that licence;

(3) whether there was a meeting in 1997 between the P5 and D in which D accepted the duty of asserting a claim for squatter title in respect of the 1^st Land for the Mother or the Family as per the instruction of 1997 and is holding the 1^st Land as agent or trustee for the Mother or the Family;

(4) whether between February and June 2000, D had caused electricity supply to H2 to be disconnected with a view to prevent P5 from using H2;

(5) whether on 19 June 2001, D prevented P2 from continuing building work on Lot 814 and did any act causing alarm to the plaintiffs or other occupants of the lot;

(6) whether the alleged acts in (4) and (5) above constituted breach of the 2^nd 1982 Agreement;

(7) whether P5’s use of H2 since mid-2001 constituted continuous trespass; and

(8) what is the appropriate relief to be granted to the plaintiffs and D.

The issues to be proved by D in his counterclaim in HCA 2681/2001

33.D counterclaimed for injunction and damages.  Mr Chong referred to D’s defence in which D asserted that he granted P5 a licence in 1986 for using H2 and that P5 was in breach of the licence in mid-2001 by building an extra storey on H2.  He argued that by repeating these pleas in the counterclaim without asserting any right under his legal title, D’s counterclaim for trespass was solely founded on the strength of his possessory title and not legal title.

34.Then relying on Taylor v Twinberrow [2], Mr Chong argued that the title of Allex had been extinguished under section 17 of the Limitation Ordinance and could not have been revived by the time when D commenced his counterclaim.  He then quoted the following dicta of Jessel MR in Sanders v Sanders [3] :

“ As I said in In re Alison (1879) 11 Ch D 284, when a title has been extinguished by the statute, no mere acknowledgment by the person who has acquired under the statute as good a title as if a conveyance had been made to him can restore the old title.”

With respect, it is difficult to understand Mr Chong’s logic about extinguishing and revival of Allex’s title by the time when D lodged his counterclaim.  It seems to be his argument that Allex could not have assigned a good title to D by the 2000 Assignment and therefore to succeed on the counterclaim D has to rely on his adverse possessory title over the 1^st Land.  Hence, Mr Chong argued that the issue is whether it was D alone or the plaintiffs and D jointly who had adverse possession over the 1^st Land. This is another departure from the plaintiffs’ pleaded case that it was the Father and Mother who were in joint adverse possession of the 1^st Land. Apart from the fact that this new assertion has never been pleaded, it is not even the plaintiffs’ pleaded case that the 2000 Assignment should be set aside.

35.Mr Li SC had no quarrel with the legal principles stated in the two authorities quoted by Mr Chong.  In Taylor v Twinberrow, the plaintiff’s father who was a yearly tenant of a cottage allowed the defendant’s husband to occupy it rent free as a tenant at will in 1900.  In 1919, the plaintiff’s father purchased the freehold of the cottage which he devised by his will to the plaintiff.  In 1925, the defendant’s husband died but the defendant continued to occupy the cottage on the same terms.  In 1928, the plaintiff brought an action to recover the cottage.  The defendant’s plea of limitation was rejected.  On appeal, the court held that the yearly tenancy had merged in the freehold and the rights which the defendant’s husband acquired against the plaintiff’s father were gone and time had to start to run afresh against the plaintiff freeholder.  Scrutton LJ explained that “the operation of the statute in giving a title is merely negative; it extinguishes the right and title of the dispossessed owner, and leaves the occupant with a title gained by the fact of possession, and resting on the infirmity of the right of others to eject him.”  That case may be treated as authority for the proposition that there could not be a conveyance of the title of the paper owner to the adverse possessor even if there was sufficient period of adverse possession.  The case of Sanders v Sanders is just on the point that a payment of rent by an adverse possessor after the title of the paper owner had been extinguished could not have revived the title of the paper owner.  On the facts of the present case, these principles are not engaged.  The assignment was by deed.  By agreeing to have the 1^st Land assigned to him by Allex on the basis that Allex was the absolute owner of the land, D is estopped from denying Allex’s title: see Jourdan [4]and Halsbury’s Laws of Hong Kong [5].

36.Returning to the pleading, D pleaded the 1986 licence which he, as the party in adverse possession of Lot 561RP was entitled to give to P5, and then P5’s breach in 2000 by building an additional storey on H2 as part of the background to explain how P5 came into occupation of H2.  In paragraphs 11(b)(iii) and (c) of the Amended Defence and Counterclaim, D pleaded the 2000 Assignment under which Allex assigned the legal and beneficial title of the 1^st Land to him.  In paragraph 23, which repeated the Defence, he pleaded the act of P5’s trespass as having been committed since mid-2001. That was well after he acquired legal title under the 2000 Assignment.  It is inconceivable how Mr Chong could contend that D was claiming solely on the basis of his possessory title.  Nowhere in the pleading did D plead that he was claiming in trespass because he was the adverse possessor of the 1^st Land.  In his evidence, D expressed his worry that by 1997 his adverse possession might not have met the prescribed limitation period. In my view, it is manifestly clear that when D filed the Amended Defence and Counterclaim, he made the counterclaim on the basis that he is the absolute legal owner of the 1^st Land.  Mr Chong simply ignored these pleadings and the fact that D’s claim of adverse possession had not been adjudicated.  By his submission, Mr Chong was attempting to force on D an un-pleaded case of adverse possession which he created for D and then to kill it with well-established legal principles set out in those two authorities.  That is absurd.

37.In my view, to prove his counterclaim, D has to prove his legal title in the 1^st Land and the act of trespass.  These issues are not in dispute.  The only defence is that D held the legal title as agent or trustee of the Mother and that P5 occupied H2 pursuant to the permission of the Mother.  These are issues (2) and (3) set out in paragraph 32 which the plaintiffs have to prove.  The plaintiffs bear the burden of proof.  If they fail to prove issues (2) and (3), that would be the end of their claim and D would be entitled to rely on his paper title and to judgment on his counterclaim.  The parties’, particularly the Mother’s, right to adverse possession of the 1^st Land from 1945 leading up to 1997 is a very important part of the plaintiffs’ case and forms the backbone of the plaintiffs’ case which they must prove.

CREDIBILITY OF WITNESSES

Introduction

38.The witnesses were required to give evidence relating to the events as early as 1954.  Except for the Mother, some of them were just a few years old and others were yet to be born.  For the purpose of weighing the witnesses’ evidence, I set out in the following table the dates of birth of the six children involved in these actions in chronological order and their ages as at 1954 when the Father took possession of the 1^st and 2^nd Land and as at 1968 when the Father leased other lots including Lot 561:

Party	Name	Date of birth	Age as at
			1954	1962	1968
2nd plaintiff	Lee Hok	19 April 1950	4	12	18
Non party	Lee Kin	17 September 1954	0	8	14
4th plaintiff	Lee Hok Chuen	3 February 1955	-	7	13
Defendant	Lee Hong	2 December 1956	-	6	12
5th plaintiff	Lee Tsun	6 March 1960	-	2	8
3rd plaintiff	Lee Sze Hung	14 January 1962	-	0	6

39.The material issues in this case concerned events which occurred more than sixty years ago.  When assessing the witnesses’ evidence, I place myself in the setting in which the events related by the witnesses occurred.  I bear in mind that the most reliable test of a witness’ credibility is inherent probability of his evidence and its consistency with contemporaneous documents when viewed against the surrounding circumstances.  Hereunder is my assessment of the witnesses’ credibility.

The Mother

40.The Mother is now in her eighties.  She is one of the two most important witnesses in the plaintiffs’ case as it is the plaintiffs’ case that the Father and Mother or the Family/the Mother had adverse possession of the 1^st Land.  She is the only surviving witness who can testify on the events from 1954 through to 1976.  In the video recording of the 2001 Incident, her speech was cogent and she appeared to be alert.  At trial, she was not as alert as she was 17 years ago, but her speech was still cogent.  She appeared to be able to understand the questions put to her and she answered them in a responsible manner.  Under cross-examination, she spontaneously replied on a number of occasions that parts of her witness statement dated 29 July 2013 did not accord with what she said when giving her statement.

41.My overall impression of her testimony is that she renounced most parts of her witness statement which she had just confirmed was true and adopted as her evidence in chief.  Despite the vivid description of her role in relation to possession of the 1^st Land and her negotiation with the Lius on the boundary, she denied her knowledge in those matters.  She was adamant that the Father was the head of the family who called the shots and decided what to do with the land; that she was just a housewife looking after the home and the children.  She firmly repeated her feeling that as a wife she had no say in a chauvinistic family under the dominance of the Father.  Her witness statement contained many allegations which were prejudicial to D’s case.  In paragraph 63, she asserted that she had told D to claim the 1^st Land on behalf of the Family.  In paragraph 65, she alleged that P5 paid D $50,000 as contribution to D’s legal costs in claiming the 1^st Land.  In paragraph 67, she said that D claimed in September 1998 to have acquired the 1^st Land.  The Mother denied to have made or had knowledge of such assertions.  Obviously, she had no personal knowledge of those matters some of which occurred while she was residing in the United States.  But her denial of the various parts of her witness statement was not without reasons.  For example, when she denied saying in paragraph 66 that P5 resided in H2 on a daily basis since 1985, she gave a very valid reason spontaneously.  She said she was living in the United States at that time, which was absolutely true.  In paragraph 77, she said that during the incident on 19 June 2001 D threatened to chop anybody who carried on works in Lot 561RP and on P2’s lot.  She categorically denied having heard such.  Her denial was absolutely correct and was supported by the tape recording.

42.The Mother appeared to be confused about the ownership of the property in which she resided when she emigrated to the United States.  She said she was residing in one of her daughter’s home but it was in fact D’s property.  She could not be blamed for the confusion as there was some transaction between that daughter and D which she might not be aware of.

43.Mr Chong submitted that the Mother had become senile and asked me to give no weight to her evidence.  Before he called an aged witness, he should have verified her condition and ability to testify.  It is not sufficient to make a bald submission that the witness had become senile when her evidence turned out to be unfavourable.  He did not even re-examine her on the denials, not to say cross-examine her and turn her hostile.  I am conscious of the problem with aged witnesses.  They may have poor recollection and even illusions.  They may give detailed accounts of events which they thought had occurred but which had not. They may even appear to be sincere, persuasive and telling the truth when their evidence is just illusions which they honestly believe were true. Having seen her performance in the witness box, I am satisfied that she was not such witness.  The Mother impressed me as an honest witness.  She acknowledged that her memory was fading in these recent years.  She had cognition of her mental condition and was trying her best to give unbiased evidence.   I consider her evidence reliable and accept her evidence.

44.Her witness statement contained accounts of certain events which were similar to those in the witness statements of P2 and P5.  It was probably drafted by solicitors and had been read back to her.  She might not have treated the matter seriously then and signed it without paying attention when it was read to her.  In a similar manner when she was asked in the witness box to adopt her witness statement, she confirmed initially that it was true.  Now that when she was taken through the witness statement slowly by counsel in cross-examination, she came to realize the incorrectness.  I treat her evidence with caution.  I give no weight to the assertions in her witness statement which she denied.  She gave some inaccurate evidence when viewing some of the photographs, which I believe arose out of her poor eye sight and failure in recollection which has no impact on her honesty.  Having tested her evidence against undisputed and incontrovertible evidence, I am satisfied that she was a reliable witness.    

The 2^nd plaintiff

45.P2’s evidence was mainly about the use of the 1^st and 2^nd Land; the discussions among the children leading to the instruction of 1997; and the 2001 Incident.  He gave a late supplemental witness statement shortly before trial covering the use of the 1^st Land in 1954.  While admitting that the Mother was in the best position to testify on those matters, the purpose of his statement was probably to cover the inadequacy of the Mother’s witness statement.  He was only four years old in 1954.  He knew nothing about the 1954 Lease and his recollection of the events in 1960s was probably vague and has to be treated with caution.

46.He volunteered negative comments about D’s life, his taking advantage of Lee Kin’s power of attorney given to him to transfer Lee Kin’s Lot 815 to himself in 1992 (the “Lee Kin’s Saga”), and his exploiting P2 in their joint venture in seafood business.  The “negative comments” were just disagreements between the Mother and D. 

47.As the evidence unfolded and as related through Lee Kin’s own mouth via video link, the Lee Kin’s Saga was a good turn by D to help his brother in distress.  As for the allegation of exploiting P2 in the joint venture, P2’s accusation was that D put an end to the joint venture without accounting for the profits or the cost of lobsters shipped to D. Under cross-examination, it transpired that D had given P2’s wife a lump sum for exporting lobsters to Hong Kong.  P2 only half-heartedly said that he did not know if the account had been squared as it was handled by his wife.

48.It also transpired from P2’s evidence that D lent him AUD 100,000 shortly after he emigrated to Australia.  The loan was repaid promptly.  It was a substantial loan and an act of good brotherhood.

49.He also accused D of threatening to chop him and his workers during the 2001 Incident.  On my finding on that incident, P2concealed the fact that there was a prior interim agreement or understanding between the plaintiffs and D not to execute any works on the land lots until the parties have finalized a land swap agreement and it was his breach of that interim agreement or understanding which led to the 2001 Incident.  More importantly, he exaggerated in his evidence saying that he was intimated but in fact he was not frightened and he followed D around taking video recording of the incident.  He also made false accusation that D had threatened to chop anybody when D only threatened to chop the trees should the plaintiffs continued to execute works.  He was very prejudiced against D.  He was an exaggerating and unreliable witness.

The 3^rd plaintiff

50.P3 was the youngest among the plaintiffs.  She was born in the year when the Father purchased the 2^nd Land.  She has no personal knowledge about the use of the 1^st and 2^nd Land.  She did not have much evidence to offer on those matters.  She had a good relationship with P5 and maintained frequent telephone contacts with him after her emigration to Australia.  Much of her evidence was a repetition of what she was told by P5 in respect of which she has no personal knowledge.  She mentioned nothing about the instruction of 1997.  Though she was present during the Family Meeting, she chose to omit giving evidence about what happened during that meeting.  I think she had something to hide and was not willing to tell the truth for fear she would offend either party.  Probably as a result of what P5 told her about D (some of which was untrue) and D’s repeatedly pestering and nagging her to transfer her Lot 809 to him at no consideration, she formed an unfavourable view of D.  She said D was greedy in asking her to hand over the Grandmother’s savings for her funeral expenses.  I am unable to draw any adverse inference against D from that incident.  There is nothing more appropriate than to apply the funds in the estate towards the deceased’s funeral expenses.  There is no evidence that any of the children, including P3 herself, offered to pay those expenses out of their own pockets.  There is of course no reason why P3 should keep the Grandmother’s savings.  Her evidence about the dealing of Lot 809 is consistent with D’s.  Her evidence about the mediation by Lo and the understanding to suspend building works on the lots pending a land swap agreement is consistent with D’s.  As my analysis on the Lee Kin’s Saga shows, she was prejudiced against D.  She also made serious accusations against D of threatening to chop P2, P4 and their workers during the 2001 Incident when she was not present at the scene.  She was ready to assume and was easily misled by people whom she trusted.  On the whole, her evidence was unreliable.

The 5^th plaintiff

51.P5 is the party who is most interested in the outcome of this litigation by reason of the fact that he had his residence on Lot 561RP.   He is the most important witness in this litigation.  One would expect his witness statements to be detailed and comprehensive on the material issues.  However, as compared with D’s, they are lacking in details in respect of some material issues in dispute.

52.He is the most educated among the children.  He had a successful career in the entertainment business.  Given his background, spontaneous and direct answers were expected of him in cross-examination.  However, there were many occasions when he took time to consider the questions before answering, which suggested that he was anticipating the questions to come before answering.  He gave evidence in a manner as if he was conducting a business negotiation.  That might well be what he was accustomed to, but he impressed me as a sophisticated, evasive and insincere witness.  I did not come to that conclusion on the basis of his demeanour alone, but also on the basis of the incontrovertible evidence and inherent probability.

53.On some crucial issues, his witness statement is lacking in details and in conviction.  As I shall explain when analyzing the evidence, his allegation that he refurbished H2 as his regular residence without having to seek D’s consent is incredible and has no realism.  His denial of an interim agreement or understanding to suspend building works on the land lots pending finalization of a land swap agreement is inconsistent with the unchallenged evidence of an independent witness, Lo, whose evidence I have no reason to doubt.  As will be analyzed below, he gave different versions as to how he interacted with D on the most crucial issue of the instruction of 1997.  His production of a letter purportedly signed by Lee Kin in 2004 also casts serious doubts on his credibility, if not honesty as well.  As P3’s witness statement showed, he had often misinformed her about the conduct of D.  I find P5 an exaggerating and incredible witness.  I do not accept his evidence.

Lo Ching Wai

54.Lo is a friend of D who had known the siblings and their cousins for over 20 years. He was invited by P4 and P5 to mediate in their dispute with D.  His evidence was not challenged in cross-examination.  I accept his evidence.

Lee Kin

55.Lee Kin is the siblings who was assigned Lot 814.  He is now receiving psychiatric treatment in a mental health institution in California.  He has to attend periodic psychiatric consultations but is not required to take any medication.  He could not obtain leave to come to Hong Kong to testify and gave evidence via video link.

56.He was able to listen attentively and focus on the questions. His answers were cogent and to the point.  He was temperamental and easily provoked.  He was agitated and shouted when provoked by the repeated and incessant questions asked by Mr Chong in attempting to probe his mental condition.  He even refused to answer some of those questions put by Mr Chong.  Other than that, he appeared to be a perfectly normal witness.  I consider he was mentally fit to testify. 

57.He testified on three main issues: his execution of a power of attorney in respect of Lot 814; his agreement to transfer the lot to D (the “Lee Kin’s Saga”); and the authenticity of a letter dated 13 September 2004 purportedly signed by him (the “2004 Letter”).  For reasons as will be explained in my analysis of these three issues, I find him a credible witness and accept his evidence.  That finding casts serious doubts on the credibility, if not also the honesty, of P5 who produced the 2004 Letter.

The defendant

58.D was not an achiever in school, but a hard-working and successful entrepreneur.  He single-handedly built up a successful fish farming business with the support of the Family, by using of part of P3’s Lot 809 and part of P5’s Lot 808.  When P2 and P3 were about to emigrate to Australia, he kept nagging them to transfer their lots to him at no cost.   In 1992, he was transferred Lee Kin’s Lot 815 under un-reproachable circumstances.  However, the rumour was spread among the children that he abused Lee Kin’s power of attorney to transfer the land to himself at under value.  He was viewed by the children as a greedy person who was trying to take away their lots as well as the 1^st Land which they thought was held by the Mother under adverse possession.  That was the overall sentiment of the children as revealed in the course of their evidence.  He had been given power of attorney by P2, P3 and P4 to deal with their lots, but he never abused the trust imposed on him.

59.As compared with the plaintiffs’ witness statements, D’s statements are very comprehensive as if they were a detailed account given by someone with first hand personal knowledge.  They carry conviction.

60.As my analysis of the evidence showed, many of the accusations of wrongful conduct against him were repetitions of what one sibling alleged which may or may not be supported by credible evidence. Some accusations were shown to be groundless when tested against other incontrovertible evidence, for example, the Lee Kin’s Saga and the threat to chop anybody during the 2001 Incident.

61.D had the advantage of not having to discharge the burden of proof on the major issues, ie the instruction of 1997 and P1’s adverse possession of the 1^st Land.  On the other issues, his evidence is supported by documentary evidence or corroborated by the evidence of Lo and to some extent that of P3.  Except for some minor blemishes, his evidence remains, by and large, intact.  I accept his evidence.

Henry Chan

62.Henry Chan is the plaintiffs’ land surveying expert.  He has given evidence in court as expert witness for more than ten occasions.  His expert status was not challenged.  However, Mr Li SC criticised his lack of impartiality.  He suggested that Henry Chan’s report was replete with wrong facts or based on disputed facts which he learned from reading the pleadings and witness statements, a fact which he did not disclose in his report.  He submitted that Henry Chan had committed the error of giving his opinion based on wrong facts or disputed facts without at least stating that the facts were in dispute.  He also criticised Henry Chan for exceeding his mandate by covering the question of land use of the 2^nd Land.  He submitted,  quoting Tristram Hodgkinson & Mark James [6]that Henry Chan contravened the fundamental common law requirements of an expert in that the report was not seen to be the independent product of the expert; did not provide independent assistance to the court by way of objective unbiased opinion in relation to matters within his expertise; failure to state the facts or assumptions on which his opinion is based and failure to make it clear when a particular question or issue fell outside his expertise.

63.I do not intend to deal with the criticisms in any detail.  Henry Chan did contravene some of these requirements.  I accept his explanation that he did so with the intention of giving the court a full picture of the background.  Though not so stated in the report, he frankly admitted under cross-examination that he had read the pleadings and witness statements. In quoting the facts, he stated that they were assertions of the plaintiffs. There was no attempt to address them as his expert conclusion.  This court has not been misled.  His traversing into the issue of the use of the 2^nd Land was unnecessary, but that use was not in dispute.  Having compared his report with that of D’s expert’s, I find that there were substantial agreements between the two experts.  Henry Chan was less ready to draw inferences based on common sense as did D’s expert which were supportive of D’s case and appeared to be adopting the stance of the plaintiffs.  Despite that, the differences between his and D’s expert’s opinion were nevertheless within the scope of reasonable disagreement.  His report may have fallen foul of some of the common law requirements, but there was nothing to suggest it was biased.  Mr Li’s criticisms were, in my view, unduly harsh. 

Conrad Tang

64.Dr Conrad Tang is D’s land surveying expert. He has given evidence as expert in court before.  Mr Chong has no dispute on Dr Tang’s expert status.   As distinct from Henry Chan’s conventional analysis, Dr Tang was able to produce 3D images from aerial photographs using StereoPhoto Maker software which greatly assisted his analysis and boosted the reliability of his opinion.  His report was well presented.  On the whole, I prefer his opinion to Henry Chan’s.

Ellen Lo and Jack Chan

65.Ellen Lo and Jack Chan were the parties’ valuation experts. The parties have no dispute on their status as experts.  They produced separate reports and a joint report.  There was a large measure of agreement in their opinion.  I accept their evidence.

The Lee Kin’s Saga and the 2004 Letter

66.A common theme among P2, P3 and P5’s evidence is that D always tried to take away their land.  D had been nagging P2 and P3 to transfer their lots to him at no consideration before their emigration. They all quoted the Lee Kin’s Saga to denigrate D’s character and integrity by abusing the power of attorney given to him by Lee Kin to transfer Lee Kin’s Lot 815 to himself.  Their case was founded on the 2004 Letter purportedly signed by Lee Kin.  The letter was produced by P5.  This saga was raised by the plaintiffs to smear D’s character and to damage his credibility.  It has no relevance to the issues in dispute, but it damaged P5’s credibility.

67.The 2004 Letter contained, inter alia, the following assertions.  Lee Kin’s business went into financial difficulties as a result of the collapse of the Bank of Commercial Credit in 1991 and he left for the United States to join his parents and another sister.  He instructed D to arrange a power of attorney in respect of Lot 815 to enable D to manage the land on his behalf.  These facts are not in dispute. 

68.In the letter, Lee Kin alleged that on the day he left for the United States, he signed a power of attorney in a café in Central and gave it to D.  It was not executed in a solicitors’ office.  He had no time to read the power of attorney and it had not been explained to him. Then without prior notice to him, D used the power of attorney to transfer Lot 815 to himself. He further alleged that even if the transfer was to offset D’s loan of $200,000 to him, it was improper and under-priced.  In his video link evidence, Lee Kin disputed the truthfulness of the above allegations and the authenticity of that letter.  He said it was not written or signed by him.

69.D’s case as contained in Lee Kin’s witness statement which Lee Kin repeated under cross-examination during the video conference was as follows.  Lee Kin had financial difficulties as a result of the collapse of the Bank of Commercial Credit.  He borrowed several sums of money from D totalling $200,000 and a lump sum of $100,000 from P5, but still failed to salvage his business.  Since then, he indulged in gambling in Macau.  He became a regular customer in the casinos and had facilities from the triads active in the casinos.  On 6 January 1992, he made delivery of goods to a client in Zhuhai and collected payment of $200,000.  Then he went to gamble in Macau where he lost the money and incurred a loan of $500,000.  He was escorted back to Hong Kong by some triad escorts on the following morning to collect payment.  On the ferry, he secretly contacted D and asked him to arrange his flight to the United States and to transfer Lot 815 to D to offset D’s loan of $200,000 and so as to protect the lot from being seized by the money lenders.  When he reached Hong Kong, he used some excuses to send away the triad escorts.  He met D in a café near the ferry terminal and told him what had happened.  Then they parted.  He went back to his company and then his home in Fairview Park to pack up.  Next, he went to Fung Yuen to meet with D.  He met P4 and told him the arrangement.  After that D took him to a solicitors’ office in Central where he executed the power of attorney as there was no time to prepare a proper conveyance.  Then D drove him to the airport.

70.In the summer of 2004, P5 visited the Mother, Lee Kin and his sister in the United States.  P5 informed Lee Kin about the 1^st Action saying that D wanted to seize the 1^st Land from the Family and asked Lee Kin to give a handwritten account of how Lot 815 came to be transferred to D.  Lee Kin agreed.  He later wrote a statement in point form and gave it to his sister Lee Sze Tsun to hand over to P5 in Hong Kong.  He did not keep a copy.

71.In September 2004, D visited Lee Kin in the United States and queried why he wrote a statement which was inconsistent with the facts, including specifically that D transferred Lot 815 to himself without his knowledge.  Lee Kin denied having done so.  After having been shown the 2004 Letter, he confirmed that the letter was not written or signed by him.  He specifically denied having signed the power of attorney in a café in Central, borrowing US$6,000 from P2 and asserting that D transferred Lot 815 to himself without his knowledge.  On 2 November 2013, he executed a deed of confirmation to verify the power of attorney.

72.One very telling document in support of Lee Kin’s evidence is the power of attorney. It was executed on 7 January 1992 in the office of Messrs Norman Yung & Co (“NY”), a firm of solicitors in Central, not a café in Central.  The document contained an interpretation clause and attestation clause showing that it had been duly interpreted to the signatory and its execution was witnessed by a solicitor’s clerk.  Lee Kin could not have made the assertions in the 2004 Letter by mistake because according to his evidence, he was confronted by D within a couple of months after he had written the letter and passed it to Lee Sze Tsun to forward to P5 and he identified the incorrectness immediately.  Given what D had indisputably done to help him when he was in financial difficulties and in distress, there could be no conceivable reason why Lee Kin would tell lies in the 2004 Letter to smear D.  I accept Lee Kin’s account of the circumstances under which he executed the power of attorney and his agreement to transfer Lot 815 to D.  The inescapable conclusion is that the 2004 Letter was a forgery.

73.The plaintiffs’ use of the forged 2004 Letter is not without consequence.  P2, P3 and P5 obviously acted on it.  They confirmed under cross-examination that despite what Lee Kin asserted in his witness statement to which a copy of the power of attorney was attached, they did not seek verification from Lee Kin, and still confirmed that they believed in the assertions contained in the 2004 Letter.  This not only showed that they were subjective, but were also obstinately prejudiced against D.  Even assuming that they were honestly mistaken or misled, the reliability of their evidence must be discounted and viewed with caution.  Further, how the letter came to be produced by the plaintiffs is obscure.  On Lee Kin’s evidence, he gave his letter to Lee Sze Tsun to hand over to P5.  On P5’s evidence, he received the 2004 Letter from Lee Sze Tsun.  Thus, only P5 and Lee Sze Tsun could explain how that letter turned out to be the 2004 Letter.  There was no explanation from P5 and Lee Sze Tsun was not called.  P5 was the one most closely connected to the 2004 Letter, which for reasons as explained above was an obvious forgery.  P5’s credibility was severely dented, if not also his honesty.

P1’S RIGHT TO ADVERSE TITLE TO THE 1^ST LAND

Legal principles applicable to adverse possession

74.The legal principles applicable to adverse possession are well settled and can be found in any property law textbook.  Paragraphs 8 to 13 of my earlier decision in Berkenhead Properties and Investment Limited v Lam Kai-man & Anor [7]contains a convenient summary as follows:

“ 8.   The legal principles applicable to adverse possession were usefully summarised by Slade J (as he then was) in Powell v McFarlane (1979) 38 P&CR 452 which was approved by the English Court of Appeal in Buckinghamshire County Council v Moran [1990] 1 Ch 623.  Those principles were applied by the Court of Final Appeal in Wong Tak Yue v Kung Kwok Wai David (No 2) (1997–98) 1 HKCFAR 55.  The following principles may be distilled from these authorities.

9.   Exclusive possession is the bedrock of English land law.  The starting point of land law is that in the absence of evidence to the contrary, the owner of land with the paper title is deemed to be in possession of the land.  He is the person with the prima facie right to possession.  A person seeking to establish title to land by adverse possession has to prove he has, in respect of that land and for a period of 12 years or more: (i) factual possession; (ii) intention to possess or animus possidendi; and (iii) adverse possession.

10.   Factual possession signifies an appropriate degree of physical control.  It must be a single and conclusive possession.  What acts constitute a sufficient degree of exclusive physical control depend on the circumstances, in particular the nature of the land in question and the manner in which land of that nature is commonly used or enjoyed.  Everything depends on the particular circumstances.  Broadly speaking, what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no one else has done so: Powell v McFarlane.

11.   Intention to possess or animus possidendi is the intention to possess the land in one’s own name and on one’s own behalf, to the exclusion of the world at large, including the owner with the paper title so far as is reasonably practicable and so far as the process of the law will allow.  In the case of a paper owner, the slightest act done in manifestation of his title is sufficient evidence of that intention which may negative intention to discontinue or abandon possession.  By contrast, for a squatter, he has to make it perfectly plain to the world at large by his actions or words that he is enjoying the land openly as of right as if he is the rightful owner.  If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the court will treat him as not having had the requisite intention and consequently as not having dispossessed the owner: Powell v McFarlane. An intention to pay rent for the use of the land is plainly and completely inconsistent with the intention to possess.  As was pointed out by Nourse LJ in Buckinghamshire County Council v Moran, adverse possession can be described as ‘possession as of wrong’.  For the purpose of the Limitation Ordinance, it is the intention of the squatter that is essential.  Further, it is not necessary for the squatter to establish an intention to own or even an intention to acquire ownership of the land: Buckinghamshire County Council v Moran.

12.   Adverse possession means that the possession by the squatter must be adverse against the title of the paper owner. Possession is never adverse if it is enjoyed under a lawful title or with the permission of the paper owner: Buckinghamshire County Council v Moran.

13.   The burden of proof of these three requirements is on the squatter.  The standard of proof is the civil standard.  However, the burden is a heavy one.  The squatter has to adduce objective and compelling evidence: Powell v McFarlane at 476.  Self-‌serving evidence is hardly likely to be of assistance.  The court will scrutinize such evidence with great care.  The squatter’s evidence of his subjective intention will invariably be given no weight as being self-serving evidence, but his statements against his interest will usually be accorded considerable weight. Objective evidence will be given such weight as they deserve.”

In summary, to prove adverse possession, a squatter has to bear the burden of proving physical possession, intention to possess and that the possession is adverse to the paper owner.

75.The plaintiffs’ case was launched on the basis of the Mother’s joint adverse possession with the Father. While ownership may be joint and several, possession cannot.  Possession must be single.  It can be held jointly but not severally because of the concept of unity of possession. Unity of possession has been defined in Megarry & Wade: The Law of Real Property [8] as follows:

“ (a) Unity of possession.

Unity of possession is common to all forms of co-ownership. At common law, each co-owner is as much entitled to possession of any part of the land as the others.  He cannot point to any part of the land as his own to the exclusion of the others; if he could, there would be separate ownership and not co-ownership.”

76.In JA Pye (Oxford) Ltd v Graham & another [9], Lord Hope referred to this unity as “exclusivity” and said:

“ 70. The general rule, which English law has derived from the Roman law, is that only one person can be in possession at any one time. Exclusivity is of the essence of possession. The same rule applies in cases where two or more persons are entitled to the enjoyment of property simultaneously. As between themselves they have separate rights, but as against everyone else they are in the position of a single owner.”

77.Thus, two or more persons are in joint adverse possession of land belonging to another if they are in physical occupation of the land with the common intention that their possession shall be to the exclusion of everyone else including the paper owner, but not as between themselves. They have effective control over the land as against the whole world.  As between themselves, they are entitled to the use and possession of any part of the land but cannot point to any part as his own to the exclusion of the other.  Joint possession is distinguishable from the case where one enjoys possession under the licence of the other who has exclusive right to possession.  The common example is the case of children enjoying possession of land under the licence of the father who is the person entitled to exclusive possession.

The parties’ case of adverse possession

78.In essence, the plaintiffs’ pleaded case is that the Father, Mother and the Grandmother jointly leased and jointly took possession of the 2^nd Land from the Shams under the 1954 Lease.  At the time, unknown to them, the 1^st Land was fenced off in such a way that it appeared to form part of the 2^nd Land.  The Father and the Mother encroached upon the 1^st Land and converted it and the 2^nd Land into Fung Yuen.  In 1962, the Father purchased the 2^nd Land from the Shams and continued to encroach upon the 1^st Land as if it formed part of the 2^nd Land.  Between 1970 and 1976, under the 1970 Lease, the Father and Mother jointly leased some other lots including the rest of Lot 561 and the rest of Lot 560, ie what were subsequently identified as Lots 561A and 560A, from the Shams and converted them into a fish pond.  The 1970 Lease did not include the 1^st Land and hence they continued adverse possession over the 1^st Land.  The tenancy was terminated in about early 1976 when the Shams sold their land lots to the Lius.  In 1976, the Lius agreed the boundary between Lot 561 and the 2^nd Land without engaging a land surveyor.  By that agreement, the Lius severed the 1^st Land from Lots 560 and 561 and treated it as if it were part of the 2^nd Land.  The Father and Mother continued encroaching on the 1^st Land.  The plaintiffs’ case is that by the end of 1974 (20 years after the Father took possession of the 1^st Land along with the lease of the 2^nd Land under the 1954 Lease) or alternatively, by February 1982 (ie 20 years after the Father purchased the 2^nd Land), the Father and Mother had jointly acquired possessory title over the 1^st Land.

79.D’s case is that the 1954 Lease included the 1^st Land such that there was no adverse possession.  As for the 1970 Lease which according to the plaintiffs started in 1970, D alleged that it actually commenced in 1968.  This lease was originally raised by D in paragraph 4(ea) of the Defence in which he alleged that the lease covered various lots including “the rest of Lot 561”.  If that phrase, “the rest of Lot 561, is construed to mean that the lease did not cover Lot 561RP, it would be consistent with the plaintiffs’ pleaded case.  In the course of his cross-examination, D departed from his pleaded case and asserted that the lease covered the entirety of Lot 561, ie including Lot 561RP.  That was a significant departure from his pleaded case which deserved adverse comment. However, the words “the rest of” as they stand in paragraph 4(ea) of the Defence are quite devoid of meaning.  As D’s evidence was consistent with his witness statement and the theme of his defence, I think the pleading arose out of a misunderstanding between him and his legal team.  I draw no adverse inference of credibility against D.  It is common ground that the 1970 Lease was terminated in 1976 or 1977 when the Shams sold the lots to the Lius and Laus.  After the pond was partially filled up by the Lius and Laus in 1977, D fenced off the 1^st Land from Lius’ and Laus’ land.  Since then, except for the occupation of a house on Lot 811 by the Father and Mother until their emigration in 1982 and by P3 until she moved out in 1982 or 1983, D solely used and occupied the 1^st and 2^nd Land.  The important fall back in his case is that in any event, by 1982 when the Father and Mother emigrated to the United States, they abandoned exclusive possession of the 1^st Land, if ever they had any exclusive possession.

80.The plaintiffs bear the burden of proving possession, animus possidendi and that the possession was adverse.  It would be convenient to consider the use and occupation of the 1^st Land in five stages, namely from 1954 to 1962, from 1962 to 1970, from 1970 to 1976, from 1976 to 1978 and from 1978 and thereafter.

Occupation from 1954 to 1962

81.This period covered the period when the Father leased the 2^nd Land from the Shams until he purchased it.  The evidence available from both parties as to the circumstances in 1954 was extremely scanty and hazy.  This is because the Father who was the one who negotiated and agreed to the 1954 Lease had passed away and the Mother who joined him a year later has no personal knowledge of the lease.  P2 was only four years old at the time and D was yet to be born.  Some reliance may be available from the experts’ evidence, the aerial photographs and survey plans.

82.The Mother’s evidence is that sometime after the Father had come to Hong Kong, he informed her by letter in 1954 that he had entered into the lease of some land in Fung Kat Heung to operate a farm.  After the Father had settled down, she moved from China to Hong Kong with her children and the Grandmother in about 1955 and lived in Fung Yuen.  In her earlier statement to the police, she said she came to Hong Kong in 1956. 

83.The Mother said she saw no clear demarcation of the leased land.  The Father and Mother just relied on a fence made up of bamboo and wire mesh as identified to them by the Shams as the boundary.  That piece of land was made up of both the 1^st and 2^nd Land.  That was the basis upon which the plaintiffs said that at the time, unknown to them, the 1^st Land was fenced off in such a way that it appeared to form part of the 2^nd Land.

84.Pausing here, it should be noted that there is absolutely no documentary evidence of the lots which formed the subject matter and the term of the 1954 Lease.  The oral assertion of the Mother and P2 that the 1954 Lease included only the 2^nd Land, apart from being a bald assertion, was hearsay.  Similarly, D’s assertion that to the best of his knowledge and belief that the 1954 Lease included the 1^st Land suffered the same defect.  But he does not have to bear the burden of proof.  While there is no presumption against adverse possession, the law leans in favour of the paper owner and would not lightly assume that he has been dispossessed.  It is incumbent on the squatter to prove each and every fact required to support his claim of adverse possession.  Cogent evidence is required.  In Wu Yee Pak v Un Fong Leung & Others [10], Chan PJ held that the squatter has to prove his possession was adverse in that he was neither a tenant nor a licensee of the paper owner.  The plaintiffs therefore have to prove that the 1954 Lease did not include the 1^st Land and hence the Father’s and Mother’s possession was adverse to the paper owner.  They have to prove the subject matter of the 1954 Lease, specifically the land lots which were leased and the duration of the lease.  

85.On the plaintiffs’ case, the Father was led into possession of the 1^st Land by reason of the 1954 Lease.  The boundaries of Lots 812 to 815 adjoining the 1^st Land roughly formed a letter “W”.  According to the Mother’s evidence, there was no clearly defined boundary between the leased land and Lot 561.  She said in her witness statement that she and the Father just relied on the boundary as identified to them by the Shams which consisted of a fence of bamboo and iron wire.  On her case, that boundary must be more or less the same boundary as the one agreed between the Father and the Mother with the Lius later in 1976 and which turned out to be the present northern boundary of Lot 561RP.  As the Lot Index Plan shows, that boundary is in the form of a straight line.

86.The Mother’s evidence is problematic.  First, she denied in her oral testimony that she had any role in fixing the boundary, it was a matter for the Father.  Second, she came to Hong Kong a year after the 1954 Lease was entered into and the boundary identified by the Shams. Her evidence could not be true.  It was at best hearsay.  Third, the straight line boundary asserted by the plaintiffs’ case is in sharp contrast with the “W” boundary between Lot 561 and the leased land, ie the 2^nd Land.   The area between the straight line boundary and the “W” boundary was substantial.  It enclosed the three structures on the 1^st Land, ie H1, H2 and H3.  The Shams owned many lots of land in DD 107.  There was no reason to assume or suggest that the Shams did not have knowledge of the lot boundaries.  The straight line boundary asserted by the plaintiffs and all the surrounding circumstances suggest that the straight line boundary was probably a conscious decision of the Shams and the Father when negotiating the 1954 Lease.  This lends support to D’s case that he believed that the 1954 Lease included the 1^st Land.  There is no requirement that a landlord may only lease his land lot in its entirety.  There is nothing to prevent him from leasing only part of his lot.  Indeed, it would be convenient for the Shams to use a straight line to delineate part of their Lot 561 to be leased to the Father together with the 2^nd Land.  I must emphasise that there was no evidence to support such a scenario and I am not making such a finding.  But it is incumbent on the plaintiffs to show that the 1^st Land was not part of the subject matter of the 1954 Lease, if they wish to launch a claim of adverse possession.  But, the circumstances are such that with the lack of documentary evidence or such convincing evidence that the subject matter of the 1954 Lease did not include the 1^st Land, it is difficult to see how the plaintiffs’ case that the Father and Mother had adverse possession over the 1^st Land since 1954 could even get off the ground.

87.It is the agreed opinion of the parties’ land surveying experts that both the 1^st and 2^nd Land were used to be open land.  The 1^st Land was first fenced off from Lot 561 in 1978, and first fenced off from the 2^nd Land in 1985.  On the Mother’s evidence, there were at most some wire mesh at some part of the 1^st Land which was identified by the Shams.    Even if it is treated as supporting the Mother’s evidence about a boundary made of bamboo and wire mesh identified by the Shams, such fencing was set up as a boundary by the paper owner identifying part of his land leased under the 1954 Lease.  It was not set up by a squatter as an enclosure to exclude the paper owner and others from trespassing into the 1^st Land and as evidence of his animus possidendi.

88.There were three structures on the 1^st Land when the Father took over in 1954, ie H1, H2 and H3.  The parties’ experts described the condition of H2 in 1960 as normal, while H1 and H3 were described as in a dilapidated condition.  Despite their condition, it is common ground that they were used by the Father at least during the early 1960s.  The plaintiffs’ case is that since 1954, the Father and Mother converted the three structures into a chicken shed and used the unoccupied part of the 1^st Land for cultivation.  The Mother’s evidence was vague.  In his supplemental witness statement given shortly before trial, P2 gave a more detailed account of the use of the 1^st Land.  He said that H1 was divided into three parts, one of which was used as quarters for the Father’s workers, one for raising chicken and one for storage.  He said that H2 was used for raising pigs and H3 was used for raising chicken.  Though Mr Li SC queried why P2 gave such a witness statement at this late stage when it was his evidence that the Mother was in the best position to testify on land use matters, P2 was 12 years old in 1962, he is capable of having such recollection.  His evidence is also partly supported by D.

89.D’s evidence is that the plaintiffs only had limited and intermittent use of the 1^st Land.  He said that between 1961 and 1962, H3 was used as a flour factory, while between 1962 and 1963, the Father reared chicken on the open area of the 1^st Land and used H1 as storage.   Though he was only six years old in 1962, his evidence on land use in the early 1960s supported P2’s.  As it is the common opinion of the experts that the 1^st Land was used at least during the early 1960s, I accept P2’s evidence that there had been use and occupation of the 1^st Land by the Father, subject to one rider that there was no cultivation activity on the 1^st Land. However, this finding cannot cure the defect in the plaintiffs’ case caused by the total lack of credible evidence as to the subject matter of the 1954 Lease.

Occupation from 1962 to 1970

90.This period covered the period between the time when the Father purchased the 2^nd Land to the time just before he leased more lots, from the Shams for constructing a pond for his fish farming business.  As the pond was constructed in 1970, the plaintiffs’ case that the lease commenced in 1970 is more inherently probable.  There was no reason why the Father would have leased the lots and left them idled for two years before constructing the pond.  The plaintiffs’ case as to when this lease commenced makes better sense.  Besides, as D was only twelve years old back in 1968, his evidence as to time has to be treated with great caution.  I therefore accept the plaintiffs’ evidence that the lease commenced in 1970.

91.P2’s evidence is that after the purchase of the 2^nd Land, the Father continued using the 1^st Land including H1, H2 and H3 as part of Fung Yuen as before.  As a result of Typhoon Wanda in 1962, part of H1 which was used for raising chicken was destroyed.  However, it continued to be used as quarters for P2 and the workers, including one named Leung Kwai, and for storage.  H2 and H3 continued to be used for raising pigs and chicken.

92.P2’s evidence is flatly contradicted by Dr Conrad Tang’s opinion.  According to Dr Conrad Tang, the three structures were already in poor maintenance as shown in the aerial photo stereo-model.  It is also common ground that the three structures were badly damaged during the typhoon in 1962.  Both Dr Conrad Tang and Henry Chan agreed on the basis of the 1962 survey sheet and the aerial photo stereo-model that the western part of H1 was in ruin as marked on the survey sheets of 1962, 1967, 1968 and 1970.  They also agreed that H2 and H3 were omitted from the survey sheet altogether possibly because of their dilapidated condition.  The roof of H3 was gone.  It was not restored until 1972.  Almost for the entirety of this eight years’ period the structures were in an unusable condition.   This evidence contradicts the plaintiffs’ case.  At best, the open area might have been used for raising chicken.  That use as such could not amount to exclusive or adverse possession.  On the basis of the agreed evidence of the experts, I have to reject P2’s evidence that the 1^st Land including these ruinous structures were used by the Father for the majority of this eight-year period.  The likelihood is, as D alleged, that with the termination of the 1954 Lease (which probably included the 1^st Land) and as a result of the destruction caused by the typhoon, the Father ceased use and occupation of the 1^st Land.  At the highest, the Father might have used the 1^st Land intermittently during this period.  The plaintiffs have clearly failed to prove occupation during this period.

Occupation from 1970 to 1976

93.This period covered the period from the time when the Father leased more land from the Shams to build a pond for his fish farming business to April 1976 when the lease was terminated.  This lease as I have found in the preceding subsection commenced in 1970.  The lease was therefore the 1970 Lease.  The plaintiffs’ pleaded case is that the 1970 Lease covered Lots 557A, 557B and 561A, but not Lot 561RP.  They further alleged that despite that the 1970 Lease did not include Lot 561RP, the Father’s use and occupation of the Lot 561RP continued into 1977 when the new boundary was agreed with the Lius.  As result, the Father formally dispossessed the Lius of the 1^st Land.  D’s case is that the lease also covered the entirety of Lot 561 including Lot 561RP so that the Father’s occupation of Lot 561RP was pursuant to the 1970 Lease and was not adverse.  The pleadings related to this lease arose rather confusingly.  It was first raised by D in his Defence as a lease entered into in 1968 (the “1968 Lease”).  In their Reply, the plaintiffs admitted the lease but averred that it was entered in 1970.  There was then no disagreement about the area covered whether by the 1970 Lease or the 1968 Lease.  As the pleadings then stood, the lease included Lots 556, 557A, 557B and Lot 561A, but does not include Lot 561RP.  However, during his cross-examination, D clarified that the lease included Lots 556, 557A, 557B and the entirety of Lot 561, including Lot 561RP (collectively, the “3^rd Land”).  This is a significant change of case, which attracts adverse inference.  

94.The Father’s use of the 1^st Land and 3^rd Land during this period is supported by the experts’ opinion and is not controversial.  Up to 1970, the three structures in Lot 561RP were in a dilapidated condition.  But the aerial photograph taken in 1972 showed that H3 had a new roof.  I do not think that for an annual rental of $500, the Shams would have refurbished the roof of H3 for use by the Father.  It was more likely than not that the roof was refurbished by the Father after leasing the 3^rd Land for the purpose of his fish farming operation.  Mr Chong argued that the Father must have had adverse possession of Lot 561RP otherwise he would not have incurred such a capital expenditure.  In my view, refurbishment of the roof was open to many equally possible inferences.  Refurbishing the roof at a relatively small cost as compared with the cost of converting the lots into a fish pond would greatly enhance the Father’s use of the fish pond.  It was all a matter of business sense which may not reflect on the issue of whether the Father had adverse possession over the 1^st Land.  On the other hand, the fact that the Father did nothing for all the years from 1962 since the typhoon, if not from 1954, suggests that all along he did not regard himself as having any interest in the 1^st Land. 

95.The real question is whether the Father was in possession of Lot 561RP pursuant to the 1970 Lease or that the lot was not covered by the lease.  On this issue, the plaintiffs’ case that the Father used the 1^st Land without renting it since 1954 until 1970, and then rented Lot 561A without at the same renting Lot 561RP but continued using it until 1977 is highly artificial.  This is particularly so as the plaintiffs have failed to prove that after the Father purchased the 2^nd Land, he continued to use and occupy Lot 561RP, which was probably leased to the Father under the 1954 Lease together with the 2^nd Land under the straight line boundary.

96.Mr Chong sought to rely on the rental receipt for 1973 as evidence that the lease did not include the 1^st Land.  The document acknowledged receipt of $500 from the Father for the annual rental of the fish pond in DD 207.  With respect, the receipt is neutral.  The fish pond was very extensive.  It is common ground that it covered Lots 556, 557A, 557B and 561.  At the time Lot 561 had not divided into Lots 561A and 561RP.  It would be unrealistic to construe the description “fish pond” mentioned in the receipt as meaning solely the area covered by the water of the pond and did not include other surrounding land area providing service and access to the fish pond as well. As the lots were rented for conversion into a fish pond, a fair construction must be that the receipt was referring to all the four lots, including the entirety of Lot 561.  Lots 561A and 561RP were unknown to the Father, Mother and the Shams at the time.

97.As I have said, the law leans in favour of the paper owner and would not too readily find adverse possession against him.  The 1970 Lease was undocumented.  In the absence of credible oral testimony that only part of Lot 561 (or to be more specific, what is now known as Lot 561A) was covered by the lease, it must be assumed that the entirety of Lot 561 was covered by the lease.  Even if Lot 561RP had been adversely possessed by the Father previously, this lease was an acknowledgement by the Father of the paper owner’s title and that the previous adverse possession was abandoned or ceased.

98.It is incumbent on the squatter to prove that his use and occupation of land was adverse to the paper owner.  As in the case of the Father’s use and occupation of the 1^st Land from 1954 to 1962, the plaintiffs have to prove that the use and occupation of the 1^st Land from 1970 to 1976 was otherwise than pursuant to a tenancy agreement with the paper owner.  On the evidence of this case the plaintiffs have quite failed to discharge this burden.  Furthermore, as I said, their case of possession during this period is very artificial.

Occupation between 1976 and 1978

99.This is a very critical period in the parties’ case.  It is common ground that the 1970 Lease came to an end in 1976 when the Shams sold their land to the Lius on 28 April 1976.  The plaintiffs’ evidence was scanty and extremely confusing.  The Mother’s evidence as contained in her 2013 witness statement was that the Lius purchased the adjacent land including Lot 561 in about 1972 and the Father ceased the fish farming business in 1975 as the land had become unsuitable for fish farming.  Then in 1976 a representative of the Lius approached her and the Father and told them about the Lius’ intention to fill up the fish pond and proposed to agree the boundary between their land lots.  She and the Father participated in agreeing the boundary but not any of the children.  After the Lius had filled up the pond, they fenced off their land.  The Father and Mother also planted some palm trees to further demarcate the boundary. 

100.The Mother’s evidence that the Lius purchased Lot 561 in 1972 and not 1976 is obviously incorrect. I assume that to be a typo which has no impact on her credibility and reliability.  But, more importantly, under cross-examination she turned her witness statement upside down saying that she did not participate in the negotiation; that the Father decided everything and that she had no say in anything.  She even said that her witness statement did not reflect what she told her solicitors.  She repeatedly and unequivocally denied that she had participated in the Father’s discussion about the boundary with the Lius.  P2 to P5 gave no evidence about the agreement with the Lius on the boundary.  The plaintiffs’ case about the settlement of the boundary with the Lius was a total void. 

101.D’s case is that it was he who agreed the boundary with the Lius in 1978 and it was he who dispossessed the Lius.  By way of background, D ceased formal education after completing Form 3 and a year’s vocational training.  He worked as a motor driver for half a year and then as a motor car salesman in Yuen Long for two years.  In 1977, he carried on a side line business scraping motor vehicles and selling used motor vehicle parts.  With the help of his parents, in about 1978 he started a food business under the name of Asia Food Company manufacturing biscuits and egg rolls and in wholesale of food.  Between 1976 and 1978, apart from the Father, Mother and Grandmother, D and P3 were the only children living in Fung Yuen.  P3 was still studying in middle school.  All the other children had moved out at various times either to work in the urban area or for emigration: see paragraphs 15-20.  During 1976 and 1978, D was only child who was actively using the 1^st and 2^nd Land.

102.D’s evidence is that since 1970 the Father had moved his farming operation from Lot 561 to Lots 799, 800, 562A and 563A belonging to an adjacent land owner.  The farming activity was limited to growing vegetables.  This move tied in well with the commencement of the Father’s fish farming business.  This evidence is also supported by paragraph 3 of P2’s supplemental witness statement.  

103.Since the Lius purchased Lot 561 in April 1976, the Father ceased his fish farming business altogether and stopped paying Crown rent in respect of that lot.  D had a good memory of the event because the Father was very happy about Lius’ purchase as the Shams had to terminate the lease and pay the Father compensation.  Then D used H3 for storage of his farming equipment and used motor vehicle parts and used the open space in Lot 561RP for storing scrapped vehicles.  Then the Lius filled up the fish pond and used the land for their sauce factory in 1977.  At around the same time, D fenced off the 1^st Land using wire mesh. Since then, he had been using the 1^st Land to the exclusion of all others.

104.About a year later in 1978, the Lius approached D to discuss about their boundary and the area occupied by D.  They agreed to keep the existing wire mesh fence set up by D as their common boundary.  None of the children participated in the negotiation.  Then the Lius installed a fence using concrete bases and wire mesh.  This aspect of his evidence is supported by both experts’ opinion.  Since then, he formally dispossessed the Lius from the 1^st Land.  In 1987, D replaced his wire mesh fence with iron sheet for better security.

105.D’s evidence was detailed.  He set out the background at the material time between 1976 and 1978 when the boundary was agreed and fence erected.  He was able to give details about the use of the various land lots, the work and business he was engaged in and the whereabouts of the children and what they were doing at the time.  The Mother said under cross-examination that D was not even 18 years old in 1976 and could not have erected the fence on the boundary.  Though young in age, D was not young in experience.  As a student, he was not an achiever.  But he had wide exposure in work and business.  He had been a car salesman, had run his own food business and used motor vehicle parts business.  His evidence is also supported by the experts’ evidence.  The 1977 aerial photograph clearly showed a vehicle parked on Lot 561RP and a tyre lying on the ground.  According to the experts, the fence which was about the height of the vehicle only appeared in the aerial photograph for the first time in 1978.  That must be the fence set up by D as the fence erected by the Lius was much stronger and taller.

106.Given their absence or lack of participation in the affairs of Fung Yuen, the plaintiffs were not in any position to challenge D’s evidence.  In an attempt to test D’s evidence, Mr Chong referred to the business registration certificate of Fung Yuen in 1974 and 1978 which showed that P2 was its proprietor and argued that P2 was actively engaged in the management of Fung Yuen.  D disagreed.  He explained that the business registration certificate was obtained for the purpose of registering a second hand motor vehicle given to the Father by the Father’s friend.  As P2 was the only sibling who had a driving licence at the time, the vehicle and the business of Fung Yuen were registered under his name.  It was not disputed that P2 was a plastic factory worker and motor mechanic residing with his girlfriend outside Fung Yuen between 1970 and 1980.  D’s explanation is highly credible.

107.P2 also disputed D’s evidence that he was the only sibling working in Fung Yuen after the Father emigrated to the United States.  He said that P4, who was unable to give evidence also farmed in Fung Yuen.  In addition, Lee Kin also said that P4 continued to grow vegetables in Fung Yuen after 1986.  However, P4 described himself as a cameraman in the 1982 conveyancing document transferring Lot 813 to him.  As P4 had regular full time employment at the time, at the highest, his farming activities were just on a casual or part time basis assisting the Father.  I accept that the situation in Fung Yuen at the time was as described by D. 

108.The Shams had sold their lots.  They were not concerned about D’s use of Lot 561RP.  The Lius as new owners probably had no clear idea of the boundaries with the 2^nd Land.  They bought a huge plot of land.  At the time, agricultural land was cheap.  They did not engage surveyors to demarcate their lots and enforce their rights.  Instead, they chose to agree the boundary, on the plaintiffs’ evidence with the Father and Mother, or on D’s evidence with D.  Against that background, it was obvious that the Lius were not keen to argue about a relatively small piece of abandoned land of the size of the 1^st Land.  They did not actively pursue their rights.  I accept D’s evidence that at the time the 1970 Lease was terminated the Father had moved his farming operation elsewhere and D commenced using the 1^st Land for his used motor car parts business.  I am well satisfied that the Father had abandoned whatever possession he had over the 1^st Land in 1976 when the 1970 Lease was terminated.  D was left in exclusive use and occupation of the 1^st Land since 1977 at about the same time as the Lius were filling the fish pond.  It was D who agreed the boundary of Lots 560RP and 561RP with the Lius in 1978.  On my finding, D formally dispossessed the Lius and Laus of the 1^st Land in 1978.  The plaintiffs have failed to prove that the Father was in adverse possession of the 1^st Land during 1976 and 1978. 

Occupation from 1978 to 1997 and thereafter

109.D’s occupation of the 1^st Land continued into the 1980s.  In early 1980s, all the children, except P3 who was still studying in school, had moved out of Fung Yuen.  P2 and P5 were living outside Fung Yuen.   Only the Father, Mother, Grandmother, P3, P4 and D stayed in Fung Yuen.  The farming activities of Fung Yuen had been moved to other lots and gradually ceased altogether.  There was no one interested the 1^st Land or had any need to use it other than D. 

110.D’s occupation of the 1^st Land was more exclusive since 1982 after the Father caused the Grandmother transfer the 2^nd Land to the children and emigrated with the Mother to the United States.  Except P4, all the children had moved out of Fung Yuen to work in the urban area.  P4 had an intermittent presence in Fung Yuen.  D and Grandmother were practically the only members of the Family remaining in the 1^st and 2^nd Land.

111.In 1985, D re-built H3 as a warehouse for his intended fish farming business.  He also obtained consent from P2 to P5 to use their lots for building a fishery and office on P3’s Lot 809 and other facilities on P2’s Lot 814.  The works were completed in 1987 and Asia Aquatic commenced business.  P4 was employed by D in Asia Aquatic.  In the meantime, H2 was refurbished as a holiday house.  I shall deal with that issue separately.  D’s use and occupation of the 1^st Land became even more exclusive in 1988 after P2 and P3 also emigrated to Australia.  That status quo continued into 1997.

112.The plaintiffs vaguely suggested that D’s occupation and use of the 1^st Land was as agent or under the authority of the Father.  There was no such evidence of agency or authorization, particularly on my finding it was D who actually dispossessed the Lius when agreeing the boundaries with them.  Even assuming that it was the Father who had dispossessed the Lius (which I must emphasise was not the case), the situation in 1982 was that the Father had only had adverse possession of the 1^st Land for six years and he was emigrating for the United States.  He had no proprietary interest in the 1^st Land to leave to anyone.  If a squatter leaves the land which he adversely possessed, he simply abandons his adverse possession.  It was argued that just before the Father passed away, he told the Mother to look after the land, suggesting that he had interest in Lot 561RP.  Such argument is only to be dismissed for there is no evidence which land the Father was referring to.  On the evidence, the Father had no interest, legal or beneficial, in any land to give away at the time of his demise.  Accordingly, I find that D had use and occupation of the 1^st Land from 1977 to 1997 and thereafter.

Refurbishment of H2 in 1986

113.There was a turn in 1986 when H2 was refurbished as a one-storey holiday house for use by P5.  P5’s pleaded case is that he had obtained the Mother’s permission to refurbish H2 in 1984.  He paid the cost of the refurbishment of $50,000.  He denied ever asking for D’s consent to refurbish H2. 

114.D’s case is that he had exclusive possession of the 1^st Land since 1977 and that P5 sought his permission to convert H2 into a holiday house for use during the holidays.  After some discussion, he agreed on condition that P5 paid the building cost.  He then engaged a contractor to carry out the works which cost $50,000.  However, P5 only paid him $33,000 and he paid the balance.  After the house was refurbished, P5 only came to use it during the weekends for about 20 times in a year.  D used the holiday house during P5’s absence and caused his servant to clean up the house for P5 when he came.  He paid all the costs of maintenance and utility charges.  That arrangement continued until 2001 when the parties were in dispute and the present litigation commenced.

115.When the parties’ evidence is viewed against the contemporaneous background circumstances and the parties’ evidence, I consider P5’s evidence incredible and D’s evidence closer to the truth.  In 1978, D had dispossessed the paper owner.  He was the sole user and occupier of the 1^st Land.  He had rebuilt H3 as a warehouse for his fish farming business and was using the open space of the 1^st Land for storage of scrapped vehicles.  He had the Father’s and the children’ approval for the use of the 2^nd Land for his fish farming business in 1985.  The parents had emigrated.  All the other children had moved out of Fung Yuen, including P5.  He and the Grandmother were the only members of the Family staying in Fung Yuen.  Against that backdrop in 1986, it just begs belief that all P5 did before refurbishing H2 was to ask for consent from his Mother who was in the United States.  That does not appear inherently probable. In his testimony, he changed his case and said he just casually informed Mother about refurbishing H2.  That was far from seeking approval.  Then, D further top up his evidence by saying that he had consent from the Father and Grandmother as well.  Not only was this allegation un-pleaded and not contained in his witness statement, it is inconsistent with his earlier evidence.  His evidence was ever changing.  He was making up his evidence in the witness box.  His evidence is incredible and improbable.

116.P5 disputed that he had to obtain D’s permission to refurbish H2.  He said rather contemptuously that there was no reason to ask for D’s permission as there were six seniors before him.  He fortified his case by painting a picture in his witness statement and in his evidence in the witness box that he resided at H2 since 1986 on a daily basis as against D’s evidence that he used it as a holiday house for about twenty times in a year.  When confronted with the fact that he had a family, documents evidencing his different addresses at different times, and his police statement evidencing his residential address at the material time so that he could not have used H2 as his residence, he tried to wriggle his way out by arguing that even though only used during holidays, H2 was nevertheless his residence according to his peculiar notion of residence.  In the end, out of desperation, he said he lived in H2 so that he could enjoy the quietness of being separated from his wife and daughter.  The holiday house was in a remote and concealed part of Yuen Long in the New Territories.  The court had made a site visit to the land lots.  It was quite a long drive from Queensway even these days with the convenience of the Western Cross Harbour Tunnel.  The inconvenience of and the time required for daily commuting to work from the holiday house to the urban area thirty years ago could well be imagined.  P5 was not telling the truth, but making up a case for the purpose of his defence and to boost the Mother’s or the plaintiffs’ case of continued possession and control over the 1^st Land.

117.A small but interesting point to note is P5’s assertion in the course of cross-examination that D had a meeting with him in his office in Tsimshatsui in 1997 to discuss about making a claim of adverse possession against Allex and then they had a further discussion when he went to Fung Yuen during the weekend.  That was a clear indication that he only used H2 as a holiday house during weekends even in 1997.  If he were indeed residing on an everyday basis in H2, it would have made no sense for D to go to Tsimshatsui to discuss with him.  What could have been more convenient than for D to walk over to his home to have a word with him after dinner?  And why would P5 said he had further discussion when he went to Fung Yuen during the weekend?  He could have simply said he had further discussion during the weekend or back in Fung Yuen instead.  His assertion was denied by D.  His assertion was most probably an impromptu concoction in the witness box made while forgetting he had said earlier that he was residing regularly in H2.  That assertion discredited him on both counts.

118.On the contrary, D’s evidence is more credible and consistent with realism.  Back in 1986, the parties’ relationship was cordial.  The children, including P5, consented to his using the various lots for his fish farming business. It was under that atmosphere that P5 asked for a holiday house to use during holidays and agreed to pay the building costs.  The agreement was full of realism.  P5 was to pay for the building costs and to use it only during holidays, while D was to enjoy the holiday house for the rest of the week.  The arrangement was consistent with D paying for maintenance and utility charges and to clean up the house for P5 whenever he came for holiday.  There was no reason why D would have paid these maintenance and utility charges until 2001 when the dispute arose, if H2 was to be refurbished and used as P5’s own and daily residence.  These payments were consistent with D’s case that he granted a licence to P5 for the use of H2 as a holiday house.  It was also likely that it was D who engaged a contractor to refurbish H2 as he was in Fung Yuen all the time and was engaging contractors for his own construction works.  For the above reasons, I reject P5’s evidence and accept D’s.  I find that P5 did obtain D’s consent for refurbishing H2 as a holiday house for his use during holidays.  That was an acknowledgement by P5 of D’s possessory right over the 1^st Land and evidence that D had exclusive possession of the 1^st Land in 1986.

Lack of enclosure of the 1^st Land

119.Mr Chong emphasised the significance that there was no fencing or other physical feature separating the 1^st Land from the 2^nd Land.  Under cross-examination, D admitted that all Family members were free to stroll on the 1^st Land.  Hence, Mr Chong argued that such evidence is inconsistent with D having exclusive possession of the 1^st Land.

120.Enclosure, whether by artificial fencing or natural physical feature is a strong indicia of exclusive possession.  But lack of such enclosure is not necessarily fatal to a case of exclusive possession.  Exclusive possession is a question of fact which has to be resolved according to the evidence of the case.  It is not D’s case that he dispossessed the plaintiffs of any part of their lots in the 2^nd Land.  Hence, the absence of a fencing to evidence his intention of excluding the plaintiffs from the 1^st Land has less significance than in the case of a squatter encroaching on land of the paper owner and fencing it off to exclude it from the paper owner.  In the present case, it is important that D had dispossessed the paper owner and erected a fence separating the 1^st Land from the paper owner’s.  Despite the absence of a fence separating the 1^st Land from the 2^nd Land, the lot boundaries were there.  The children knew or are taken to have knowledge of the lot boundaries.  These lot boundaries together with the fencing erected by D demarcated or identified the 1^st Land which D had dispossessed the paper owner of.  D said that all other Family members, including the plaintiffs, had his permission to and were free to stroll on the 1^st Land.  There was no need to set up any fencing between the 1^st Land and the 2^nd Land as it is not D’s case that he encroached on the plaintiffs’ land. 

121.Following on that answer, Mr Chong argued that D did not have exclusive possession of the 1^st Land.  Possession is a question of fact.  As explained by Lord Browne-Wilkinson in JA Pye (Oxford) Ltd v Graham [11]:

“ [Actual possession] involves two elements:

1. The factual element — the physical, effective, single and exclusive control of the property in question by the possessor.

2. The mental element, referred to in the older cases as the animus possidendi.  This is the manifested intention on the part of the possessor to exercise single and exclusive control of the property in their own right.  There is both a subjective and an objective aspect to this.  The person must subjectively intend to exercise single and exclusive control of the property in their own right.  Further, his conduct must objectively manifest that intention.”

122.The Father had abandoned the use and occupation of the 1^st Land upon termination of the 1970 Lease in 1976.  Since then no other children had the use and occupation of the 1^st Land.  On an objective view, having dispossessed the paper owner of the 1^st Land, D became the person in sole occupation.  He, therefore, has the physical, effective, single and exclusive control of the 1^st Land.  That control entitled him to exclude any subsequent trespasser or to grant licence to enter the 1^st Land.  It is D’s case that the Family members of the plaintiffs, including P5 and his immediate family members, had his express licence to use H2 and his implied licence to stroll on the 1^st Land.  The objective aspect of animus possidendi is well satisfied.

123.As for the subjective mental element, it is D’s manifested intention to exercise single and exclusive control of the 1^st Land in their own right, subject to the implied general licence granted to the Family members and the specific licence granted to P5.  He has also steadfastly maintained at trial that other than the implied licence he had not allowed other Family members to use the 1^st Land.  As for the objective mental element, D had manifested his intention to exercise single and exclusive control through granting the special licence to P5 and objected to his building an additional storey on H2 and counterclaiming P2 and P5 for trespassing the 1^st Land.

Other miscellaneous arguments of the plaintiffs

124.Mr Chong referred to D’s answer in cross-examination that his use of Lot 561RP was confined to using H3 for storage and that the aerial photographs taken in the mid-1980s showed that after the renovation of H3, H2 remained in ruin and the rest of Lot 561RP was covered by grass.  He submitted that the evidence showed that D only had control of H3 at best.  I think Mr Chong has conveniently forgotten D’s evidence that he used Lot 561RP for parking used vehicles in 1977 which was supported by the aerial photograph taken in 1978. In any event, having dispossessed the paper owner, it was irrelevant that D left the land, which is in his possession, idled so long as he exercises his right to exclude others and his animus possidendi over the land.

125.Mr Chong referred to D’s pleading in the 2^nd Action that he used the 1^st and 2^nd Land for the business of Asia Food and that he started the business on the 2^nd Land with the consent of the Father and the Mother in or about 1977 as evidence of D’s lack of exclusive possession over the 1^st Land.  Such argument is badly misconceived as the consent obviously was related to the use of the 2^nd Land, then beneficially owned by the Grandmother on behalf of the Father.  Seeking such consent in respect of his use of the 2^nd Land has no impact on D’s possession of the 1^st Land.

126.Mr Chong referred to D’s pleading in the 2^nd Action that he rebuilt H3 in 1977 pursuant to the consent of P3 to P5 and submitted that the plea evidenced D’s lack of exclusive possession over the 1^st Land.  With respect, Mr Chong misconstrued the pleading.  The plea was about estoppel and detriment suffered as a result of D’s reliance on P3’s consent. Obviously, that consent referred to the building of a fish farm in 1985 on Lot 809 legally owned by P3 and installation of water pipes and wells on the adjacent lots legally held by the other plaintiffs.  By 1985, the various lots in the 2^nd Land had been assigned to the children.  Consents were obviously required from the plaintiffs for the use of their respective lots.

127.Insofar as that argument relates to consent for the use of H3 in 1977 or 1985 is concerned, that argument is also without merit.  H3 straddled on Lot 561RP and Lots 812 and 815 then beneficially owned by the Grandmother on behalf of the Father prior to 1982.  Thus, insofar as the rebuilding in 1977 was concerned, the Father’s or the Grandmother’s consent was of course required.  Insofar as the rebuilding in 1985 was concerned, consent from P5 as owner of Lot 812 was of course required.  D’s seeking these consents in no way undermined his case of adverse possession over the 1^st Land.

Animus possidendi and joint possession by the Father and Mother

128.The plaintiffs’ case was launched on the basis that the Father and Mother jointly entered into the 1954 Lease and jointly possessed the 2^nd Land and then the Father and Mother jointly encroached on the 1^st Land.  Presumably the joint lease and joint possession was pleaded in order to plead a cause of action for the children.  However, the Mother’s evidence was that she and the Grandmother only arrived at Hong Kong about a year or more after the Father had entered into the 1954 Lease and had taken possession of the 2^nd Land.  The Mother could not have been a party to the 1954 Lease and could not have had taken joint possession of the 2^nd Land. Prima facie, the adjacent land annexed subsequent to a lease was annexed by the tenant.  If the Father had adverse possession over the 1^st Land, such possession was prima facie on his own account and not jointly with the Mother.  On the fact, there is a total lack of evidence of joint intention from the Mother and the Father to jointly possess the 1^st Land.  This severely undermined the plaintiffs’ case of joint possession of the 1^st Land between 1954 and 1970.

129.The plaintiffs also pleaded that the Father and Mother jointly leased Lot 561A together with other lots but not Lot 561RP under the 1970 Lease and jointly adversely possessed Lot 561RP since 1970.  Presumably, the joint lease was pleaded to support a case of joint adverse possession of Lot 561RP. Again, the pleaded case is inconsistent with the Mother’s evidence that it was the Father who entered into the 1970 Lease.  The Mother’s evidence contained in paragraph 31 of her witness statement dated 29 July 2013 was that her husband, not she and her husband, rented Lots 557A, 557B and 561A from the Shams for conversion into a fish pond.  The Mother or her solicitors who drafted this witness statement must know the distinction between Lots 561, 561A and 561RP and the significance of the distinction.  Thus, it was not Mother’s evidence that she and the Father jointly rented Lot 561A which did not include Lot 561RP which they were in adverse possession. 

130.Similarly, in paragraph 3 of P2’s latest supplemental witness dated 20 September 2017, he mentioned about the Father leasing Lot 561 for conversion into a fish pond.  P2 and his solicitors drafting the supplemental witness statement for him must have realised the significance of the distinction between Lot 561A and 561RP, particularly in September 2017 when all the issues in dispute were crystallised.  This statement is inconsistent with the plaintiff’s case on two counts.  First, the 1970 Lease was entered into by the Father solely and not the Father and Mother jointly.  Second, the lease included Lot 561 and not just part of it, ie Lot 561A.  The lease included Lot 561RP.  Thus, the Father was in possession of the 1^st Land under the 1970 Lease and could not have been in occupation as a squatter whether alone or jointly with the Mother.

131.The rental receipt produced by D also evidenced that the Father was the sole lessee, not the Father and the Mother jointly: see paragraph 96.  As such it would be difficult to support a case of joint intention on the part of the Father and Mother to have adverse possession over the 1^st Land. 

132.As for the intervening period between 1962 and 1970, the Father purchased the 2^nd Land in 1962 and registered it under his sole name.  If the Father had adversely possessed the adjacent land, ie Lot 561RP, in the absence of an express intention he must have done so in his own right and for himself and not jointly with the Mother.

133.For adverse possession, what matters is the intention of the squatter.  There is a total lack of evidence of the intention of the Father to adversely possess Lot 561RP or to dispossess the paper owner, let alone a joint intention to do so with the Mother.  This is fatal to the plaintiffs’ case of adverse possession.

134.I have dealt with the issue of D’s animus possidendi in paragraphs 119 to 123 when dealing with Mr Chong’s arguments about D’s lack of exclusive possession over the 1^st Land and requirement of consent from the plaintiffs in respect of his use of the 1^st Land.  For reasons as set out therein, I am satisfied that D has proved animus possidendi.  The Father has abandoned his use and occupation of the 1^st Land upon the termination of the 1970 Lease.  Then D took over the 1^st Land for the use of his used motor car business and subsequently agreed boundary with the Lius and dispossessed them in 1978.  He had control of the 1^st Land and gave consent to his siblings, namely P5, to use H2 on the 1^st Land.  All these acts are clear evidence of possession and animus possidendi.

Summary

135.To succeed on their claim for substantial damages for D’s breach of the Agency Agreement, the plaintiffs have to prove that by 1997 the Family or the Mother had acquired possessory title over the 1^st Land by adverse possession.  The plaintiffs bear the burden of proof. 

136.I accept that the Father had use and occupation of the 1^st Land between 1954 and 1962.  The Father was led into possession of the 1^st Land and 2^nd Land pursuant to the 1954 Lease.  However, the plaintiffs have failed to prove that such use and occupation was adverse to the paper owner as they were unable to prove that the 1^st Land did not form part of the subject matter of the 1954 Lease.  In the circumstances, it is more likely than not that the Father’s use and occupation of the 1^st Land was pursuant to the 1954 Lease and could not amount to adverse possession.  Furthermore, they have also failed to prove the intention of the Father in his use and occupation of the 1^st Land, let alone that the joint intention of the Father and Mother was to adversely possess the 1^st Land to the prejudice of the paper owner.  This failure existed throughout the period from 1954 to 1997.

137.The Father’s use and occupation of the 1^st Land continued after the Father acquired the 2^nd Land in 1962.  With his acquisition of the 2^nd Land, the 1954 Lease must have come to an end; and with that the lawful use and occupation of the 1^st Land.  The use and occupation of the 1^st Land thereafter might be without consent of the paper owner and therefore wrongful and adverse.  However, as the expert evidence showed, such use was very much reduced between 1962 and 1970.  The three structures on the 1^st Land were dilapidated following Typhoon Wanda in 1962.  Contrary to the plaintiffs’ evidence, the open area of Lot 561RP was not used for cultivation as they alleged.  I have to accept D’s evidence that Lot 561RP was only intermittently used by the Father during this period and that H3 was used as a storage for farming equipment.  Such use and occupation fell far short of actual possession.  Even if there had been adverse possession between 1954 and 1962, which is not the case, such adverse possession was abandoned sometime between 1962 and 1970.

138.In 1970, on the Mother’s and P2’s own evidence the Father leased Lots 556, 557A, 557B and the entirety of Lot 561.  With this lease, the adverse possession over the 1^st Land, if there had been any, was abandoned by the Father acknowledging the paper owner’s title by taking up the 1970 Lease.  The Father turned the newly leased lots into a fish pond and refurbished the roof of H3.  There was more evidence of use and occupation of the 1^st Land.  But such use and occupation was pursuant to the 1970 Lease and could not have been adverse. Such lawful use came to an end in April 1976 when the lease was terminated when the Shams sold Lot 561, including Lot 561RP, and some other lots to the Lius.  The Father ceased his fish farming activities entirely and moved his other farming activities to some other lots belonging to a neighbour.  He ceased use and occupation of the 1^st Land.  The plaintiffs have failed to prove that the Father had adverse possession of the 1^st Land between 1954 and 1970, but whatever adverse possession he might have was clearly abandoned in April 1976.  In any event in 1982 when the Father and Mother emigrated to the United States. 

139.Then D commenced use and occupation of the 1^st Land for his used motor car parts business in 1977.  He fenced the 1^st Land off from the Lius’ lots.  In 1978, the Lius settled the boundary between their land and the land occupied by D, severing Lots 560RP and 561RP from Lots 560 and 561.  The Lius were formally dispossessed of the 1^st Land.  This status quo continued until Allex purchased Lot 561 along with other lots from the Lius in 1997.  D’s adverse possession began some time in 1977.  There was no concrete evidence when his adverse possession actually began.  It had certainly begun in 1978 as evidenced by the aerial photographs.  But back in 1997 when Allex demanded vacant possession of the 1^st Land from D, D was not entirely sure if he had completed the 20 years’ statutory limitation period applicable under the Limitation Ordinance in 1997.

THE INSTRUCTION OF 1997

The background

140.Soon after the Lius and Laus had entered into an agreement for the sale and purchase of various lots of land including Lots 560 and 561 with Allex on 20 June 1997, a representative from Allex approached D seeking to repossess Lot 561RP.  D informed the plaintiffs of Allex’s claim.

141.On D’s instruction, Messrs Leung Kin & Co (“LK”) issued a letter to the Lius on 15 July 1997 claiming adverse possession of Lot 561RP for D on the bases of D’s family occupation for more than 40 years.  The claim was not made on behalf of the Mother or the plaintiffs.

142.On 29 July 1997, the Lius assigned the various lots of land to Allex.  

143.On 15 October 1997, D instructed Messrs Edmund Cheung & Co (“EC”) in place of LK.

144.On 25 November 1997 EC issued a letter to Messrs Kao Lee & Yip (“KLY”), solicitors acting for Allex, claiming adverse possession over Lot 561RP on behalf of D.  After some correspondence, Allex offered to convey Lots 561RP and 560RP to D on D paying Allex’s legal costs.  Following D’s agreement, Allex assigned these lots to D at a nominal consideration of $1 on 27 January 2000.

145.At the Family Meeting in February 2000, the Mother and the children discussed about D’s request to have P3’s Lot 809 transferred to him and about Allex’s claim over the 1^st Land.  D informed the plaintiffs that he had acquired the 1^st Land from Allex.

146.On 15 February 2000, F&L, acting for P2 to P5 wrote to D and Allex claiming adverse possession of not only Lots 560RP and 561RP, but also Lots 560A and 561A.

147.The parties’ relations worsened.  P5 accused D of interrupting his electricity supply.  P4 accused D of criminal intimidation in the 2001 Incident.  These led to a series of injunction proceedings and then the issue of the 1^st Action.

The parties’ pleaded case

148.The plaintiffs’ cause of action as pleaded in paragraph 32 of the Statement of Claim was as follows:

“ On a day in 1997, during a meeting between the 5^th Plaintiff and the Defendant, the latter was instructed by the 5^th Plaintiff to represent the Family/[Mother], being the person who had acquired a squatter’s title to [the 1^st Land] for the purpose of claiming her squatter’s title from their owner with a view that the same might be assigned at the direction of the [Mother] to the 2^nd – 5^th Plaintiffs and the Defendant subsequently and that the Defendant agreed to do so (hereinafter called ‘the instruction of 1997’).”

149.In essence, the plaintiffs’ pleaded case is that at a meeting between P5 and D in 1997, P5 instructed D to represent the Family or the Mother for the purpose of claiming the Mother’s squatter title and D agreed.  In that connection, P5 gave D $50,000 in August 1998 as contribution to legal costs for the claim.  This payment was not disputed by D.  The plaintiffs relied heavily on this payment as evidence of D’s acceptance of the instruction of 1997.  They also alleged that at the Family Meeting D acknowledged having received that payment for that purpose.  This allegation is in dispute.

150.D denied there was the instruction of 1997.  His case is that he was annoyed and confused upon learning about Allex’s claim over the 1^st Land.  He informed the plaintiffs of Allex’s claim, but did not seek their advice.  The Mother and P2 who were then in good terms with showed some concern.  P3 and P5 did not respond or did not seriously respond.  Then he instructed LK to issue a letter to the Lius asserting adverse possession over the 1^st Land.  He informed the plaintiffs before LK’s letter was issued and the plaintiffs knew he was making a claim against Allex in his own right.  But LK misunderstood his instruction and asserted adverse possession on behalf of the Family.  As LK refused or delayed in amending the letter, he instructed EC in place of LK.  He admitted receiving $50,000 from P5 but alleged that it was P5’s contribution towards his share in the utility charges for his use of H2 as a holiday house over the years, and denied it was contribution towards his legal costs in claiming title to the 1^st Land.  While admitting there was a Family Meeting held on 10 February 2000, he denied acknowledging at the meeting that the payment of $50,000 was P5’s contribution to his legal costs. 

151.The disputes are all factual.  The plaintiffs bear the burden of proving the instruction of 1997 and D’s acceptance of the instruction.

The testimony

152.On the plaintiffs’ pleaded case, there was a meeting between P5 and D in which P5 instructed D to make the claim for the Family or the Mother.  On such a pleaded case, one would expect P5 to give unequivocal evidence how the meeting came about, when and where was the meeting held and how the instruction was given.  Contrary to that expectation, P5 gave a very vague and an entirely different account of D informing the Mother, P4 and himself that the new owner of the adjacent land wanted to recover Lot 561RP and that D suggested making a claim of adverse possession.  Then upon the Mother’s approval, D assumed the responsibility of handling the claim on behalf of the Family.  That is very far from saying that there was a meeting between P5 and D during which P5 instructed D to make a claim for the Family and that D agreed.  Under cross-examination, P5 tried to toe-in with his pleaded case by asserting that D visited him in his office in Tsimshatsui and told him for the first time about Allex’s claim.  Though this new account appears to tie in with the plaintiffs’ pleaded case, I do not think it may fairly be treated as supplementing his evidence in his witness statement.  It is an entirely new assertion which came out in the course of cross-examination.  It is a blatant attempt to give a new version in order to bridge a critical evidential gap between his evidence and the pleaded case.  P5’s evidence is not credible.

153.In paragraph 23 of his witness statement dated 6 August 2013 and his earlier affirmation dated 22 June 2001, P2 gave another version of the 1997 incident. He said that D told him on the telephone about the claim of the new owner and asked him how to deal with it.  Then he discussed with the Mother and P3 to P5.  The Mother agreed that they should make a claim in respect of the 1^st Land on the basis of adverse possession by joint effort with P5 providing financial support.  Then he concluded, without saying how it was, that D acted as their agents in making a claim in respect of the 1^st Land.  There was a total absence of evidence of the meeting between P5 and D or evidence as to how the decision or agreement that D was to act as the Mother’s or P5’s or the children’s agent in the claim was reached.  It may that this was an event which happened preceding and independently of the meeting between P5 and D as pleaded. 

154.In paragraphs 8 and 12 of his 2001 affirmation, P2 alleged:

“ 8. In about June 1997, [P2 to P5] and [D] orally agreed that [D] should instruct lawyers to take actions to acquire the registered title [of the 1^st Land]. …

12. In the family meeting, it was resolved that [D] should procure [the 1^st Land] to be registered in the names of [D] jointly with [the plaintiffs].

This affirmation was made much closer in time to the 1997 incident.  But there was no mention of the instruction of 1997 given to D by the Mother or P5.  Furthermore, if indeed such instruction had been given and accepted by D, there would be no need for the children and the Mother to resolve in the Family Meeting three years later that the title in the 1^st Land be registered in the joint names of the plaintiffs and D.

155.In her witness statement dated 6 August 2013, the Mother gave a similar and more detailed account as that given by P5 in his witness statement.  She said that D told her that he would contact the Shams to seek their confirmation that the plaintiffs had adverse possession of Lot 561RP for over 40 years; that she agreed and instructed D to make a claim on behalf of the Family; that D agreed; that she instructed D to engage a solicitor to make the claim; and that she instructed the children to collect evidence and photographs for D.  That is another departure from the plaintiffs’ pleaded case.  However, under cross-examination, the Mother totally denied knowledge about the content of that part of her witness statement. Specifically, she denied instructing D to make the claim.  Mr Chong submitted that it might well be that the Mother had become senile while testifying in court and her evidence should not be accepted.  For reasons as I have explained in paragraph 44, I reject that submission. I accept her repudiation of what she had said in her witness statement.

156.In paragraphs 9 and 10 of her affirmation dated 19 July 2001 filed 12 years before this witness statement or four years after the alleged instruction of 1997, the Mother said:

“ 9. …in about 1997, [D] informed [me] and other members of the family that the Liu family had sold Lots 560 and 561 and there would be need of legal action to get the legal title of the [1^st Land]. We of course agreed. …

10. I verily say that it was the decision of the family that [D] was to obtain the legal title of the [1^st Land] for the family and should hold the title of the [1^st Land] in the joint names of [P2 to P5].”

157.Thus, 17 years ago, it was only the Mother’s evidence that she believed it was the decision of the Family that D was to obtain the legal title of the 1^st Land for the Family.  Even then, it was vague how the decision that D was to obtain the title of the 1^st Land was reached.  Though the focus of that affirmation was to obtain an injunction to restrain D from assaulting the children, the affirmation touched on the legal title of the 1^st Land and there was no mention about instruction coming from the Mother or from the Mother through P5 as pleaded.  Anyway, it is consistent with the Mother’s denial of her 2013 witness statement.  This affirmation suggests that the statement of the Mother in 2013 as well as the pleading are very much recent concoctions.  There is every truth in the Mother’s denial of what she said in her 2013 witness statement on this issue.  Her denial was not the result of her senile condition.

158.P3’s evidence on this issue is similar to P5’s. She mentioned some discussions among the Mother, P4, P5 and D about Allex’s claim over Lot 561RP.  She admitted under cross-examination that that was what she was told by P5.  Obviously, she was not a party to those discussions.  She said absolutely nothing about the instruction of 1997.  I can draw no support from her testimony for the plaintiffs’ case on the instruction of 1997.  P4 did not testify because of his mental condition.

P5’s payment of $50,000

159.The plaintiffs relied heavily on the undisputed payment of $50,000 by P5 to D as evidence of D’s acceptance of the instruction of 1997.  But in the light of the unsatisfactory state of the plaintiffs’ evidence about the instruction of 1997, P5’s assertion that his payment of $50,000 was contribution to D’s legal costs is evidence which has no case to hang onto. 

160.That payment was admitted by D, but he denied that it was contribution to his legal costs.  D said that he expressly requested for the money as payment of utility charges for P5’ use of H2 as holiday house over the years, ie from 1986 to 1998.  He had not charged P5 in the past, but had to demand compensation from him in 1998 as he was in financial difficulties, having to pay his employees’ salaries, miscellaneous land charges and legal costs in connection with the claim for the 1^st Land.  He refuted P5’s accusation saying that it was only during the Family Meeting two years later that P5 alleged for the first time that the money was his contribution to the legal cost.

161.Mr Chong doubted the inherent probability of D’s evidence because there had been a change in D’s pleaded case and that there was no separate water or electricity meters to justify the amount charged. Previously D pleaded that the payment was a gift and payment of utility charges.  The change was partial.  It only amounted to a withdrawal of one of the alleged basis of the payment and does not amount to a total change of D’s case.  It suggests an element of uncertainty in his pleaded case and deserves criticism.  I agree that D’s evidence is unsatisfactory, but he does not bear the burden of proof.  His evidence only serves to test the veracity of the plaintiffs’ evidence, particularly P5’s.  The plaintiffs bear the burden of proof.

162.Apart from asserting the payment which was not in dispute, P5’s evidence was wholly devoid of particulars.  It is P5’s case that the sum was demanded by D as his contribution to legal costs.  There was no evidence how it was agreed that he should contribute to the legal costs, though there was a slight mention by P2 that the Mother said that P5 was to contribute financially while the other children were to provide other support.  There was no evidence how much in financial terms P5, D and the other children were to contribute.  There was no evidence as the basis on which the amount of $50,000 was fixed and agreed. 

163.On the objective fact, D started making the claim by instructing LK in July 1997 or when he made payment on account to EC on 15 October 1997.  D only requested for the sum of $50,000 a year later from P5 and there is no dispute that D had not demanded contribution from any other children.  On 1 May 1998, KLY offered to assign the 1^st Land to D on his paying Allex’s costs, and D accepted the offer on 11 May 1998.  D made a successful claim in May 1998.  Up till then, there was no demand for contribution by D.  There was a three and half months’ gap between the making of the settlement agreement with Allex and D’s request for the said sum from P5. Furthermore, EC issued a demand note for $106,670 on 27 October 1999 which D settled on 13 January 2000.  During the intervening period, D did not request for further contribution from P5 or any of the other children. Furthermore, if D had accepted the instruction of 1997 and intended to appropriate the 1^st Land as his own, it would be most improbable that he would request for contribution to his legal costs, but this issue had never been explored at trial.

164.The total legal cost was $242,700.  On the plaintiffs’ evidence, the only mention about sharing the legal cost was the Mother’s direction that P5 shall provide finance and the other children shall provide other forms of support, such as looking for photographs.  The direction on cost sharing was very vague.  There was no mention of what each of the children had to bear or that they did not have to bear any and to share in the fruits of the claim.  There was no mention particularly of the share which D and P5 who were interested in the 1^st Land had to bear.  If all that the other children had to share was the $50,000 which P5 had paid, the amount of costs which D had to bear would be out of proportion with the one-third interest in the 1^st Land which he would be entitled under the alleged instruction of 1997.  Mr Chong argued that $50,000 was a reasonable estimation of the legal cost against the background that D only paid $20,000 costs on account in October 1997. It may be argued that it was open to D to demand further contribution upon receiving the final account from EC.  But the fact is D never made such a demand. More importantly, there was no evidence of any agreement on contribution to the legal cost save the very vague mention by P2 of the Mother’s instruction that P5 was to finance the legal action while the other children were to provide other support.  Mr Chong’s argument has no realism.  P5’s evidence about agreement on payment of contribution to legal costs is devoid of contents.  Despite the criticism on D’s partial change of his case and after considering the evidence about the Family Meeting which I shall deal with in the next subsection, I am not satisfied that the sum of $50,000 was paid as contribution to the legal costs or was in any way related to the instruction of 1997. 

The Family Meeting on 10 February 2000

165.The purpose of bringing up the Family Meeting is to prove D’s acknowledgment that $50,000 paid by P5 was as contribution to legal costs in claiming the 1^st Land from Allex.  It is common ground that most of the Family members returned to Hong Kong to celebrate the Chinese New Year in 2000 and the Family Meeting attended by the Mother, P2 to P5, D and his wife, and another sibling Lee Sze Mei (who is not one of the plaintiffs) was held on 10 February 2000.  During the meeting the transfer of P3’s Lot 809 to D and the claim in respect of the 1^st Land were discussed. The meeting ended in disagreement.  One major issue in dispute is whether D acknowledged receiving $50,000 from P5 as contribution to the legal costs for claiming the 1^st Land for the Family.

166.The overall theme of the plaintiffs’ evidence is that the meeting was called to require D to discharge his duty as trustee or agent of the Mother regarding transfer of the 1^st Land to the Mother or to the P2 to P5 and D.  After repeated pressing, D admitted having acquired title of the 1^st Land from Allex at the nominal consideration of $1.  The plaintiffs also alleged that D acknowledged receiving the sum of $50,000 from P5 as contribution to D’s legal costs in claiming the 1^st Land.

167.According to D, he requested the meeting to discuss about the transfer of Lot 809 as he had his fish farm built on that lot.  During the discussion, the plaintiffs objected to the transfer.  Then, P5 raised the issue of the 1^st Land and alleged for the first time that he had contributed $50,000 as legal costs and was entitled to be registered as one of the owners of the 1^st Land.  D replied that the claim in respect of the 1^st Land had nothing to do with the children but was a claim on his own.  Though not disputing the receipt of $50,000 from P5, he refuted the payment was contribution towards his legal costs, as those costs far exceeded $50,000.  Then, he rushed back home and brought back some correspondence from EC relating to his claim over the 1^st Land showing that the costs he incurred up till then was already $190,000.  The meeting ended in disagreement.

168.I repeat my earlier observation about the lack of details in the plaintiffs’ witness statements.  The Mother, P2 and P3 mentioned nothing about D’s acknowledgement of having received $50,000 from P5 as contribution to legal costs.  That payment was only mentioned in P5’s witness statement.  Though that payment was not disputed by D, the lack of details attracts criticism.  By way of contrast, D gave a full account of why he demanded payment.  Then, for the purpose of rebutting P5’s accusation he rushed home to bring back the documents to show the plaintiffs that he had spent much more to obtain the title of the 1^st Land for his own behalf. That was a reasonable spontaneous reaction in response to a wrongful accusation.

169.P5’s accusation that D acknowledged receiving $50,000 from him as contribution to his legal costs begs belief.  If D had acknowledged the payment as contribution to his legal costs, there was no need for him to rush back home to bring back the documents to demonstrate that the costs were much higher than that allegedly contributed by P5.  The evidence of both P2 and P5 on this issue has been demonstrated to be inaccurate at least in one respect. They both admitted that they were wrong to assert in their witness statements that it was after the meeting and upon their repeated pressure that D produced the documents.  D’s spontaneous reaction was very striking.  It is unlikely that P2 and P5 could have both formed an erroneous recollection that it was some time after the meeting and upon P5’s repeated behest that D produced the documents.  In my view, it was done to downplay D’s spontaneous reaction and to distort D’s case.  P2 and P5 have repeatedly demonstrated that they were unreliable and exaggerating witnesses.  P5 has demonstrated himself to be a dishonest witness in relation to the Lee Kin’s Saga.  I do not accept their evidence on this issue and prefer D’s.  While acknowledging the payment and receipt of $50,000, D gave a spontaneous denial that it was contribution for legal costs.  Despite the criticism about D’s partial change of his case, I accept his evidence that the payment was not contribution to his legal costs.  P5 conveniently and opportunistically took advantage of the payment to boost the plaintiffs’ case. 

The contemporaneous correspondence from the solicitors

170.Mr Chong left no stone unturned.  He referred to LK’s letter dated 15 July 1997 in which LK asserted that the 1^st Land had been occupied by the Family for more than 40 years and to EC’s letter dated 20 December 1997 in which EC asserted that the Father had occupied the 1^st Land and H3.  He then referred to D’s answer in cross-examination that he was worried that his claim for adverse possession since 1977 might not be sufficient to defeat Allex’s title.  He argued that these assertions and D’s answers in cross-examination contradicted D’s case that he had sole and exclusive possession of the 1^st Land.  He therefore submitted that it would be necessary for D to rely on support from the plaintiffs to provide evidence of the Family’s occupation of the 1^st Land and he could not have made the claim for himself.  Such argument is tenuous to say the least.  It was even suggested at one stage that D might have obtained the 1^st Land by deception.  In the absence of any application to set aside the 2000 assignment to D, it is irrelevant how D presented his case to Allex in order to obtain title to the 1^st Land.  The plaintiffs’ argument is convoluted and it is difficult to see how it could support D’s case of the existence of the Instruction of 1997.

The Mother’s letter of 22 September 1998

171.The plaintiffs also relied on Mother’s letter of 22 September 1998 as evidence of the instruction of 1997.  In the letter, the Mother was giving directions to the children about the management of “this piece of land”.  She made the following points:

(1) It belongs to the 11 children;

(2) As D was using it for his business, it would be most appropriate for him to manage it for the purpose of operating and developing his business, but that was not the same as owning it;

(3) The chldren’s difference lies in their failure to distinguish between management and ownership;

(4) The children should enter into a new covenant in respect of the land stating that “this piece of land” belongs to the 11 chiuldren jointly;

(5) If it becomes necessary to change its ownership or to sell “this piece of land”, unanimous consent from all the 11 children would be required; at this stage it shall be managed and operated by D; and

(6) If D had any problem in commercial documentation, the children shall cope with D to solve the problem.

172.Mr Chong argued that the subject matter of the letter, ie “this piece of land” was the 1^st Land.  He relied on the pleading in the 2^nd Action in which D pleaded that as result of the dispute over the 1^st Land P3 reneged on her agreement to transfer Lot 809 to him but gave him a special power of attorney on 6 November 1998 instead.  He submitted that as the dispute in late 1998 was about the 1^st Land and not Lot 809, the Mother’s letter was written against this background and hence “this piece of land” mentioned therein should be construed as referring to the 1^st Land.

173.With respect, apart from being very tenuous, this argument was premised on a very unbalanced, if not distorted view, of the incontrovertible background circumstances.  Even according to the plaintiffs’ evidence, the plaintiffs knew nothing about the progress of D’s claim in respect of the 1^st Land in late 1998 and P5 paid $50,000 as contribution to D’s legal costs only in August 1998.  On the incontrovertible evidence, no dispute had yet arisen amongst the children over the 1^st Land in September 1998.  Furthermore, as confirmed by P3, at the time, D was operating mainly on her Lot 809 and not the 1^st Land. According to P3, D had been repeatedly asking her to transfer her Lot 809 to him unconditionally when she was about to emigrate to Australia in 1998.  P4 and P5 objected strongly.  She told the Mother about the disagreement over Lot 809.  She believed that the letter was written by the Mother in response to what she had told the Mother.  She was of the opinion that the focus in that letter was on Lot 809 and she understood that the Mother was referring to Lot 809 by “this piece of land”.  In compliance with those direction, P3 gave D a special power of attorney on 6 November 1998 authorizing him to manage Lot 809.  I have no reason to disagree with P3 because that was the only reasonable inference to draw against the incontrovertible background. 

174.Mr Chong argued that if the Mother’s letter was referring to Lot 809, the Mother would be asking P3 to abandon her interest in that lot contrary to the Father’s wish of assigning that lot to her.  Such argument is baffling.  If by that argument he meant the Mother was requiring P3 to abandon her right to exclusive possession of Lot 809, it is obviously a bad argument because it is Mr Chong’s submission that the effect of the 2^nd 1982 Agreement was to convert the sole ownership of the individual child in respect of his respective lot into joint ownership with all the six children in respect of all the seven lots.  None of the children has exclusive possession of any particular lot, not even the one assigned to him and registered in his sole name.

175.Mr Chong also relied on D’s use of H3 in support of his argument that the children’s dispute was about the 1^st Land. In so arguing, he totally ignored P3’s evidence, the incontrovertible evidence that D’s operation was mainly carried on in Lot 809 and that H3 occupied a very small part of the 1^st Land.

176.I reject Mr Chong’s submission. The Mother’s letter does not support the existence of the instruction of 1997.

Conclusion

177.The plaintiffs’ evidence is a mess of confusion and contradiction.  It is a wholesale departure from the pleaded case.  As Mr Li SC rightly submits, one can hardly find a case worse than the present one when the plaintiffs gave different versions of the same event, none of which proved the pleaded case.  The plaintiffs bear the burden of proving the instruction of 1997. 

178.The parties’ evidence on the issue whether there was the instruction of 1997 has to be viewed against the contemporaneous circumstances.  In 1997, D was the only child residing and conducting business operation on the 1^st and 2^nd Land.  The Mother and some of the children were in the United States.  P2 was in Australia.  P3 had moved out of Fung Yuen and was residing in the urban area.  P4 was residing in Fung Yuen.  P5 was residing in the urban area but maintained a holiday house in the 1^st Land to which he returned during holidays and weekends. It was against this background that D informed the plaintiffs of Allex’s claim. 

179.The plaintiffs’ evidence mainly came from P2 and P5.  The evidence of P3 was unhelpful.  In essence, P5’s evidence is that the Mother authorised D to make a claim against Allex while P2’s evidence is that the Mother approved making a claim and D acted as agent to do so; but the Mother denied having instructed D to make a claim.  Their evidence vaguely supported a case that D had the Mother’s authority to make a claim, but it does not tally with the pleaded case of a meeting in which P5 instructed D to make a claim on behalf of the Mother or the Family.

180.On the other hand, D’s evidence is cogent and inherently credible when tested against the plaintiffs’ evidence and the surrounding circumstances.  For reasons as I have already explained, I reject the plaintiffs’ evidence that he paid D $50,000 as contribution to legal costs of the claim and that during the Family Meeting D acknowledged the payment as P5’s contribution of legal costs.  I accept D’s evidence that when informed of the claim by Allex, none of the plaintiffs responded or seriously responded.  That was most probably because none of them except P5 would be affected by Allex’s claim.  P5 had a one storey holiday house on the 1^st Land.  He adopted a wait and see attitude, leaving it to D to resist the claim and to benefit from it afterwards, if D succeeded.  No one contributed to the legal costs incurred by D.  Only the Mother and P2 who was then in good terms with D showed some concern.  The plaintiffs have simply failed to discharge the burden of proving the instruction of 1997 on which their case is founded. This is sufficient to dispose of their claim.

RELIEF SOUGHT BY THE PLAINTIFFS

The relief sought by the plaintiffs

181.In the 1^st Action, the plaintiffs sought the following reliefs:

(a) a declaration of beneficial ownership of the 1^st Land in favour of the Mother and an order for transfer of the 1^st Land at the Mother’s direction;

(b) a declaration and a restraint order that D shall not interfere with P5’s use and occupation of the holiday house at the 1^st Land;

(c) a declaration and a restraint order that D shall not use, display or cause any violence or force as would cause alarm to plaintiffs or other occupants of the 2^nd Land;

(d) a declaration to the effect that D shall not prevent, hinder or otherwise interfere with P2’s use and occupation of Lot 814;

(e) a restraint order that D shall not prevent, hinder or otherwise interfere with P2’s use and occupation of Lot 814; and

(f) damages.

Relief (a)

182.By virtue of Allex’s assignment of 27 January 2000, D acquired legal title in the 1^st Land.  The plaintiffs having failed to prove the instruction of 1997, D is entitled to rely on his legal title in the 1^st Land to defeat the plaintiffs’ claim.  Accordingly, the plaintiffs’ claim for declaration and order for transfer of the 1^st Land is dismissed.

Relief (b)

183.The declaration and a restraint order sought is related to P5’s use and occupation of the holiday house at the 1^st Land, ie H2.  The basis of P5’s claim is that the Mother had possessory title over the 1^st Land and his right to use and occupy the holiday house thereon was derived from the permission of the Mother given to him in 1986 when H2 was refurbished and again in 1999 or 2000 when an additional storey was being added on it.  The Mother confirmed having given such permission.  

184.The Father and Mother left Fung Yuen in 1982 to emigrate to the United States.  On my finding in paragraphs 102 to 108, the Father had abandoned possession of the 1^st Land since 1976 and D had dispossessed the paper owner and started adverse possession over the 1^st  Land since 1977.  D was the person in possession in 1986 and had authority to grant a licence to others to use the land. I find it was D who granted a licence to P5 to refurbish and use H2 as a holiday house during weekends and holidays.  Despite D’s objection, P5 added an extra storey on H2 in 2000.  The licence must be taken to have been revoked in 2000, or at the latest by the time of the filing of the defence and counterclaim.  As the Mother did not have any right or interest over the 1^st Land, her permission was of no effect.  P5 has no legal interest to seek this relief.  In addition, since 27 January 2000, D is entitled to rely on his legal title over Lot 561RP to defeat P5’s claim.  The plaintiffs’ claim for declaration and restrain order is dismissed.

Reliefs (c), (d) and (e)

185.It will be convenient to deal with these three reliefs together.  The plaintiffs’ claim for these reliefs is premised on D’s breach of the 2^nd 1982 Agreement. For reasons as discussed in paragraphs 248 to 253 below, I accept Mr Chong’s argument and find that the effect of the 2^nd 1982 Agreement was to create a tenancy-in-common in equity among the six children.  The effect is to convert that their exclusive right to possession over their respective lots into a joint possessory right over all the seven lots as if they were co-owners of one combined piece of land.  Each of them is entitled to use and enjoy all the seven lots, but has no right to exclusive possession over any particular lot, including the one registered under his name.  None of them is entitled to exclude any of the other five children from the use and enjoyment of any of the lots.

186.The plaintiffs relied on four alleged incidents in support of their claim for permanent injunction, declaration and restrain order in respect of the 2^nd Land and in particular, P2’s and P5’s use and occupation of Lot 814.  Before turning to these incidents, I have the following general observations on the plaintiffs’ claim for relief.

187.First, an application for injunctive relief must be phrased in clear and unequivocal terms.  As stated by Lord Upjohn in Redland Bricks Ltd  v Morris[12] :

“ The Court must be careful to see that the defendant knows exactly what he has to do, and this means not as a matter of law but as a matter of fact.”

For relief (c), it is virtually impossible to define clearly what constitutes “violence or force” which could cause alarm to plaintiffs or other occupants of the 2^nd Land.  There is no yardstick to determine what kind of act and the level force in doing it would cause alarm to anybody.  Some people may be feebler and weaker in the heart than others and easily get excited or scared.  It is impossible for the court to grant an injunction in those terms.

188.Second, for the restrain orders sought under reliefs (d) and (e), the word “prevent, hinder or otherwise interfere” are unduly wide and undefined to enable D know what he can or cannot do.

189.Third, P1, P2 and P3 are residing in the United States or Australia with no imminent date of returning to Hong Kong while P4 is residing in a mental health institution indefinitely.  They will not be benefitted by any injunctive relief in their favour.  Such relief in their favour would be neither just nor convenient.

190.Fourth, it is trite law that the mere proof of a legal wrong done in the past is insufficient to entitle a claimant to an injunction.  The court will not grant injunctive reliefs unless satisfied that the unlawful interference is continuing or absent an injunction there is an appreciable risk that the person sought to be restrained will interfere with the claimant’s right in the future: see Snell’s Equity [13].  There is not a scintilla of evidence of risk of violence or force that may cause alarm to the plaintiffs or other occupants of the plaintiffs’ lots.  Sixteen or more years have lapsed since the events complained of.  The fact that the plaintiffs have never applied for committal is very telling evidence that D has never breached the interlocutory injunction.  In the absence of any allegation of recurrence of the infringement, the effect of the past events may be properly regarded as having become stale or spent.  There is no basis to grant the injunctive relief sought. 

191.Fifth, the plaintiffs are guilty of delay in prosecuting the 1^st Action after having obtained the interim injunction.  This alone is sufficient to have the interim injunction discharged and to justify refusal of the application for injunction in permanent form.

192.The above observations are sufficient reasons for refusing the plaintiffs’ application for injunctive relief on general legal principles.  I now turn to the factual basis of the plaintiffs’ claim.

193.In the first alleged incident, P5 accused D of assaulting him during a social gathering organized by him in late 1999, threatening him with violence and to evict him from the 1^st and the 2^nd Land. However, no evidence has been adduced of such an assault.  The only incident of assault adduced was directed at P5’s wife in about 1999 or 2000, which was not the plaintiffs pleaded incident.  Though D admitted he had an argument and minor pushing with P5 on Lot 815, it was not in a social gathering.  The evidence is inconclusive as to what had exactly happened and if what had happened would justify the court’s exercise of this jurisdiction.  The reliefs sought based on this incident must fail.

194.The second alleged incident is that in or about April 1999, D caused electricity supply to H2 to be disconnected thereby preventing P5 from using H2 as a residence.  There is no evidence of the actual cause of interruption of electricity supply or water supply as alleged in P5’s witness statement.  In his witness statement D explained that the electricity supply to both H2 and H3 were provided via cables running from his houses on Lots 811 and 815.  He alleged that those cables were disconnected due to a heavy rainstorm.  He denied disconnecting the cables as that would interfere with electricity supply to his warehouse in H3 as well.  Then P5 caused a cable to be installed overhanging D’s house in Lot 815 to provide an independent electricity supply to H2 under a separate account or electricity meter.  D was uncomfortable with the overhead cable and requested China Light & Power Company Limited (“CLP”) to re-route.  A new cable was then laid running from Lot 816 to H2.  All these evidence was not challenged. 

195.Instead, Mr Chong relied on a letter dated 15 September 2000 from CLP in response to D’s request to re-route the overhead cable stating that consent from the owner of Lot 816 was required to re-route the cable through Lot 816.  He argued that “this had the effect of preventing electricity supply to H2 as the ownership of Lot 816 does not belong to any of the plaintiffs or D and, hence, it would not be possible for P5 to re-route electricity connection to H2 through Lot 816.”  Mr Chong must know that this is factually incorrect as the owner of Lot 816 had given consent and electricity supply was indeed restored.  Apart from being an un-pleaded issue, the re-routing has not prevented P5 from enjoying the use of H2. 

196.Mr Chong submitted that what D did amounted to a breach of clause 5 of the 2^nd 1982 Agreement which provided that all children and grandchildren of the Grandmother would have the right to reside in any of the seven lots.  With respect, such argument is disingenuous.  He totally ignored P5’s frank admission that he had not discussed with D about the installation of the overhead cable and simply considered D’s non-concession an affront to him.  P5 never explained why he would prefer an overhead cable providing separate supply running over D’s house instead of using the same path and common supply before the rainstorm.  Both P5 and D have as much the same right to enjoy all the seven lots of land.  As in the law of nuisance, P5’s right to enjoy the land is subject to his co-owner’s right not to be interfered with. P5 bears the burden of proof, but he has adduced no evidence there was an imbalance of their rights to his prejudice.

197.As for the un-pleaded case of interfering with water supply to H2, P5 relied on the incident on 19 June 2001 when D threaten to chop P5’s worker laying pipes to supply water to H2.  This will be considered together with the fourth incident.  Suffice it is to say at this stage, that complaint is unmeritorious.

198.P5’s reliance on this incident is wholly unmeritorious.  The granting of any injunction necessarily depends upon the existence of a legal right: Snell’s Equity [14].  More fatally, as a result of my finding that P5 has no legal interest in Lot 561RP and that his licence to use H2 has long been revoked, he has no longer any legal interest in the land to support his claim for injunction and declaration.  The very simple reason is that P5 should not be there.  There is no reason why relief should be granted against a legal owner of land in favour of a non-existing complainant.

199.The third alleged incident is that in or about August 2000, D prevented P5’s electrical contractor from going through Lot 815 for the purpose of installing or connecting electricity supply to H2.  As submitted by Mr Li SC, there is no an iota of evidence that D did prevent the electrical contractor going through Lot 815.  In any event, P5 can access H2 from his own Lot 812 or through Lots 813 and 814 belonging to P4 and P2 respectively, with whom he is in good terms.  P5’s reliance on this alleged incident is not understood.  Further and in any event, as stated in paragraph 184, P5 has no legal interest in Lot 561RP to maintain any action for injunctive or declarative relief.

200.The fourth alleged incident is that on 19 June 2001, D, his servant or agents entered into Lot 814 and threatened P2’s and his workers that he would chop and wound them unless the rebuilding or renovation works on the lot would stop.  P2 relied heavily on the video recording which he took during the incident.

201.It is common ground that with the help of a common friend, Lo, the children entered into negotiation in May 2001 for a land swap to settle their long term dispute.  Lo was D’s former colleague who was known to the children for more than 20 years.  He was invited by P4 and P5 to act as mediator.  

202.According to D, in his separate meeting with Lo, he agreed to swap his Lot 561RP for part of the lots of P2, P4 and P5.  He gave proposals for the re-defined lot boundaries and location for vehicular access.  Then Lo had a separate meeting with P2, P4 and P5 that evening.  After the meeting, Lo informed D that P2, P4 and P5 agreed to the swap in principle subject to finalisation of details and engagement of surveyors in delineating the boundaries.  Lo proposed on the telephone that before reaching agreement on the swap the parties should suspend all work on Lot 561RP.  D agreed.  On 16 June 2001, D, his wife, the Mother and one other sibling together with Lo went to discuss with P2 and P5 about the swap, specifically about the new boundaries to allow vehicular access to D’s fishery.  No agreement was reached and the parties agreed to further discuss later.

203.Lo did not give so much details about the negotiation and did not mention the separate meetings in his witness statement.  He gave an overall summary that the discussion came to a standstill as there were disputes as to the boundaries of some of the lots and the area to be made available for vehicular access.  Lo then said he proposed that to avoid further confrontation, the parties should avoid doing anything on their land before the proposed swap was finalized.  He said that was expressly agreed by D, but mentioned nothing about the plaintiffs’ reaction. 

204.P5 disputed that the parties had reached any concluded agreement or agreement in principle.  By way of contrast, D’s evidence was, as always, very comprehensive, while P5’s evidence was extremely brief and lacking in details. He simply denied he had agreed to suspend work on Lot 561RP pending a final agreement.  His evidence lacks conviction.  Mr Chong did not cross-examine Lo but took the point that Lo did not say whether P2 and P5 had also agreed to suspend work pending finalization of a land swap agreement.  He argued that there was no such interim agreement.  I do not endorse such an approach in dealing with a witness’ evidence.  D had mentioned about the interim agreement, albeit in the form of hearsay.  From the transcript of what D said during the incident as recorded in the video, it is manifestly obvious that he was acting on that understanding.  If the plaintiffs’ case is that there was no such interim agreement or understanding reached, it should be put to the relevant witness, namely Lo. 

205.On the other hand, P2 frankly admitted that there was an understanding among the parties that works would be put to a halt until a land swap agreement had been reached.  His evidence rendered P5’s evidence suspect.  It suffices for me to accept D’s and Lo’s unchallenged evidence and P2’s admission of an understanding reached by D during the course of the negotiation which set the stage for the incident on 19 June 2001.

206.On 19 June 2001, P2, P4 and P5 were carrying out construction works in building a new storey on P2’s house in Lot 814 and laying water pipes in Lot 561RP.  Upon learning that, D took out an axe and demanded the workers to stop the works or he would chop down the trees in Lot 561RP as manifestation of his ownership in that lot.  He was and is the legal owner of that lot.  That was what he was entitled to do, but for the understanding which was not honoured by the plaintiffs.  The Mother was present reasoning with D while P4 was recording and P2 was on-looking.  Security guards and police were called.  D was walking around threatening to chop trees if the plaintiffs should continue with the building works.  He was waving his axe, but not directing it at anybody or threatening to chop anybody.  That was confirmed by the video recording, the Mother’s oral testimony and P2’s affirmation filed on 23 June 2001.  However, contrary to his affirmation filed shortly after the incident, P2 asserted in his witness statement dated 29 July 2013 twelve years later that D threatened to chop everybody and had in fact caused his workers to fell down one tree in Lot 561RP.  On the evidence, no tree had ever been fell.  What P2 asserted in his witness statement is manifestly untrue and contrary to the incontrovertible evidence.

207.On an objective view, D was agitated because of the plaintiffs’ breach of their understanding, but nobody was intimidated.  P2 followed D around and continued with his video recording without any threat or interference from D.  The Mother continued reasoning with D about felling trees. No tree was fell.  The video recording only showed the perfunctory act of D’s workers pretending to cut the trees.  It put beyond any doubt that D had not threatened to chop anybody.  Just by viewing the recording and without relying on D’s evidence, I am well satisfied that there was no threat to chop or hurt anybody.  This finding is supported by the fact that D was not prosecuted. 

208.Mr Chong argued that D’s reliance on the breach of understanding was self-induced and could not justify the sort of conduct on that day.  Though not an agreement, an understanding is meant to be honoured and not to be breached at will.  Though I am unable to assess the impact of the breach to D, accepting D’s evidence as I do, I fail to see how it could be argued that the breach was self-induced and not provocative.  Mr Chong argued that it is absurd if the breach could constitute a defence for if no agreement was finally reached the plaintiffs would be retrained from what they were entitled to do on their land.  The factual premise of Mr Chong’s argument is incorrect because D is actually the legal owner of the land in issue.  The obvious and short answer to his argument is that the understanding was binding only for as long as the parties were engaged in negotiation.  If there was no prospect of reaching an agreement, either party had the liberty to put an end to the negotiation and the understanding automatically lapsed.  In my view, though the breach did not justify D’s conduct, the conduct in the circumstances does not justify the court’s exercise of the jurisdiction to grant the relief sought.  A party seeking this kind of relief must come to court with clean hands. If it was their conduct which induced D to act as he did, how could it be equitable for the court to exercise the jurisdiction.  Putting it in another way, if the plaintiffs were not in breach, the court will not be called upon to exercise the jurisdiction.  After all, D was only threatening to cut down his own trees on his land.  Furthermore, this incident arose because of the breach of understanding created in the negotiation for a land swap.  Now that there is no more negotiation, the risk of recurrence practically does not exist.  In fact, 17 years have lapsed without any incident.  The parties had their lesson.  I agree with Mr Li SC that the fourth alleged incident does not justify the court’s exercise of the jurisdiction.  

209.In conclusion, D was entitled to enter Lot 814 under the 2^nd 1982 Agreement.  He was waving his axe threatening to chop the trees in Lot 561RP of which he was and still is the legal owner.  That was what he was entitled to do.  As the video recording showed, he was not threatening to chop or wound anybody.  On an objective view, he has not done anything which would cause alarm to the plaintiffs or other occupants of the 2^nd Land or prevented P2 from use and occupation of Lot 814.  The plaintiffs have failed to prove any breach of the 2^nd 1982 Agreement on which their claim for injunctive and declarative relief under reliefs (c), (d) and (e) is based.  Their claim for these reliefs is dismissed.

Relief (f)

210.It is absolutely unclear what damages the plaintiffs are claiming. There is no plea as to the nature or the particulars of the alleged damages. They have also adduced no evidence as to damages.  Having dismissed the plaintiffs’ claim of legal interest in the 1^st Land, it must necessarily follow that any claim for damages arising from D’s use and occupation of the 1^st Land cannot be sustained.  Insofar as the claim for breach of the 2^nd 1982 Agreement is concerned, the plaintiffs have failed to prove any breach and their application for injunctive and declaratory reliefs have been dismissed.  It must also necessarily follow that any claim for damages based on any alleged breach of the 2^nd 1982 Agreement cannot be sustained. The plaintiffs’ claim for damages is therefore dismissed.

211.In conclusion, all of the plaintiffs’ claims in the 1^st Action are dismissed.

D’S RELIEF SOUGHT

D’s counterclaim

212.D counterclaims for an injunction restraining P4 and P5 and/or their agents from entering into Lot 561RP without his prior consent; damages for trespass against P4 and P5; and damages for P5’s breach of licence for his use of H2 since 2001.  Mr Li SC confirmed that in respect of the claim for damages, D is content with a claim against P5 only.

213.D’s counterclaim in trespass was founded on his legal title under the 2000 Assignment.  His counterclaim was for an injunction and damages since mid-2001.  P4’s and P5’s defence was founded on the Mother’s adverse possessory title which the plaintiffs have failed to prove, which cannot be a valid defence in the face of D’s legal title.  Accordingly, P4 and P5 are liable to D in trespass.

Injunction

214.All along P2, P4 and P5 assumed Lot 561RP had been adversely possessed by the Mother which they were authorized to use and occupy on the same terms as the 2^nd 1982 Agreement as if it were part of the Family land.  They knew at the latest by 10 February 2001 that D was the legal and beneficial owner under the 2000 Assignment.  They disputed D’s legal title.  In view of the background of this case, I respect their mistaken belief.

215.In that mistaken belief, P2 and P4 acted jointly with P5 in trespassing Lot 561RP.  P5 played an active role in the trespass as he built an additional storey on H2 and was residing in it.  P2’s role was unclear.  During the incident on 19 June 2001, he was video recording D’s activity.  He was involved on that day as he was attempting to rebuild his house on Lot 814.  No injunction was sought against him.

216.P4’s role was also unclear.  What he did on 19 June 2001 was to call for the police.  He is now under disability.  P5 was appointed as his next friend and guardian ad litem.  The risk of his repeating the act of trespass is low.  I do not think it necessary to issue an injunction against him.

217.The position of P5 is very much different.  For reasons as I have explained, I have formed an adverse view of his credibility.  His evidence was contradicted in many respects by incontrovertible evidence and by the Mother’s evidence.  I have rejected most of his evidence.  On my finding of fact, he dishonestly denied he was given a licence by D to use H2 as a holiday house.  He abused the privilege given to him and breached the licence by building an additional storey on it and using it as his daily residence.  Given the position he took, there is a strong likelihood that despite this judgment he will continue trespassing Lot 561RP by refusing to vacate H2.  An injunction order is necessary.  However, having regard to the background and nature of this case, a stay of the order to allow him to organize and arrange his vacation from H2 may be appropriate.  Accordingly, I grant the injunction order sought and a stay of that order for up to three months on condition that he pays mesne profit at the rate of $15,964 per month on or before the seventh day after the handing down of this judgment and thereafter on or before the first day of the succeeding month.

Damages

218.There was an order for valuation expert evidence in respect of the 1^st Land as from 2001 on two basis, one with superstructure and one on area not covered by superstructure.  The valuation on the second basis should be construed as meaning valuation of the entire Lot 561RP without the superstructure.    

219.The legal principle of assessment of damages for trespass is the sum which a willing landlord and willing lessee would have agreed by way of rent or licence fee: see Winfield & Jolowicz on Tort [15]and Clerk & Lindsell on Torts [16].  As the nature of the occupation by P5 of the lot is as a residence, the assessment of the market rent should reflect the use of the lot for such purpose, ie with the house and the open garden.  Damages should be assessed on the first basis.  I have not lost sight of the building cost which P5 paid, which on the basis of D’s evidence was $33,000.  It should be deducted in full from the valuation.

220.Ellen Lo for the plaintiffs and Jack Chan for D have produced separate valuation reports and a joint statement in which one can see there are agreements on all the issues.  The valuation was only made up to 1 January 2013 as the commencement date of a two-year tenancy, ie up to 31 December 2014.  Because of the delay in setting down the 1^st Action for trial, an update is necessary.  Under cross-examination, Ellen Lo agreed that the market rent for Lot 561RP as from 1 January 2013 up to the date of trial remained the same if not on the uptrend.  Mr Li SC confirmed D’s acceptance of the valuation on that basis.  The agreed rental value of Lot 561RP is as follows:

Period	Monthly Market Rent	Damages
1 July 2001 - 31 December 2002	$8,583	$154,494
1 January 2003 - 31 January 2004	$5,665	$67,980
1 January 2005 - 31 January 2006	$6,351	$76,212
1 January 2007 - 31 January 2008	$8,067	$96,804
1 January 2009 - 31 January 2010	$8,067	$96,804
1 January 2011 - 31 January 2012	$12,531	$150,372
1 January 2013 - 31 January 2014	$15,964	$191,568
1 January 2015 - 31 October 2018	$15,964	$734,344
Total:		$1,568,578

After deducting the building costs incurred by P5, the total amount of damages assessed is $1,535,578.  D shall also pay interest on each monthly sum due according to the above table at the rate of prime rate plus 1% from the first date of each respective month until the date of this judgment and thereafter at judgment rate on the total sum from the date of this judgment until full payment.

Costs

221.Mr Li SC submitted that D should be awarded costs on an indemnity basis.  The thrust of his argument is that the plaintiffs were dishonest and presenting a concocted case.  I would prefer to make such an order only after hearing the parties’ argument on the basis of my finding of fact.  I therefore make a costs order nisi that the plaintiffs shall pay D’s costs on a party and party basis.

CONCLUSION — HCA 2681/2001

222.The plaintiffs’ claims are all dismissed.  I enter judgment in favour of D on his counterclaim in the following terms:

(1) that, subject to sub-paragraph (2) below, P5 be restrained from trespassing D’s Lot 561RP save with the prior consent of D;

(2) that there shall be a stay of the order in sub-paragraph (1) for up to three months on condition that P5 pays mesne profit at the rate of $15,964 per month on or before the seventh day after the handing down of this judgment and thereafter on or before the first day of the succeeding month;

(3) that P5 shall pay D damages in the sum of $1,535,578 with interest in the terms as stated in the preceding paragraph: and

(4) a costs order nisi that the plaintiffs shall pay D’s costs on party and party basis.

HCA 1803/2010

INTRODUCTION

Introduction

223.In HCA 1803/2010 (the “2^nd Action”), the plaintiff and the defendant are respectively D and P3 in the 1^st Action.  To avoid confusion, I refer them also as D and P3 respectively.  In the 2^nd Action, D claimed against P3 a declaration that she holds Lot 809 in DD 107 on trust for him or is estopped from denying the same; and an order for its conveyance to D.  Lot 809 is one of the seven land lots in DD 107 which are collectively referred to as the “2^nd Land”.  It is registered under the name of P3.  It is being used by D for his fish farm business.  P3 counterclaimed for an order for delivery of vacant possession of Lot 809 and an account of profit or damages.  By a consent order dated 14 December 2017, D wholly discontinued the 2^nd Action against P3.  What is left of that action is P3’s counterclaim against D for possession of Lot 809 and an order of account and/or damages. 

Further background

224.The background and finding of fact set out in the 1^st Action also form the relevant background in the 2^nd Action. The further relevant background is as follows.

225.Prior to the Father’s and Mother’s emigration to the United States in 1982, the Father caused the Grandmother to execute a document described as “Particulars of Land/Property to be sold” dated 10 February 1982 addressed to the District Land Office (“DLO”) for the purpose of preparing the necessary assignments.  By that document, the Grandmother indicated her intention to assign as vendor the seven lots of land in the 2^nd Land to the P2, P3, P4, P5, D and Lee Kin (one of the nine siblings) as purchasers.  The Father signed as witness.  It was specified in that document that the purchasers were to hold the land as tenants-in-common in equal shares.

226.On 14 February 1982, P2 to P5, D and Lee Kin executed an agreement witnessed by the Father in which they agreed that in case of sale of any part of the 2^nd Land or its resumption by the government they would contribute 10% of the purchaser price to the Grandmother as her maintenance (the “1^st 1982 Agreement”).  Obviously, the purpose of the 1^st 1982 Agreement was to provide for maintenance of the Grandmother after the Father’s and Mother’s emigration. 

227.On 24 February 1982, P2 to P5, D and Lee Kin executed another agreement also witnessed by the Father containing, inter alia, the following terms (the “2^nd 1982 Agreement”):

(a) no party shall sell, let or mortgage the 2^nd Land and the buildings thereon on his own;

(b) the 2^nd Land and buildings thereon can only be resumed by government or sold with the unanimous consent of all parties;

(c) in case of sale or resumption by government, the proceeds of sale shall be divided equally among the six parties to the agreement irrespective of the size of the lot or the house thereon each party has so as to avoid unequal treatment; and

(d) all the children, grandchildren, daughters-in-law and granddaughters-in-law of the Grandmother shall have the right to reside on the 2^nd Land and the buildings thereon and there is no excuse to refuse.

228.Pursuant to the 1^st and 2^nd 1982 Agreements, the seven lots of land, except Lot 809, were assigned to P2, P4, P5, Lee Kin and D; while Lot 809 was assigned to the wife of P2 to hold on trust for P3 who was then a minor. 

229.In July 1984, D registered the business of Asia Food.  The business registration of Asia Food expired on 14 August 1987.  On 15 December 1987, he commenced business of Asia Aquatic.  P3 and P4 consented to D using their Lots 809 and 813 for his fish farming business.

230.On 29 March 1988, P2’s wife assigned Lot 809 to P3.  In the same year, P2 emigrated to Australia and authorised D to use his Lot 814 for D’s fish farming business.

231.On 2 September 1991, DLO granted P3 a short term waiver for Lot 809 in connection with its use as a fishery.

232.On 2 March 1993, P3 granted a general power of attorney in favour of D in respect of Lot 809.  In about August 1998, P3 emigrated to Australia.

233.On 6 November 1998 P3 granted a general power of attorney in favour of D with respect to Lot 809.

234.It should be recalled that Allex assigned the 1^st Land to D on 27 January 2000 and the Family Meeting was held on 10 February 2000 in which D asserted that he had acquired the 1^st Land from Allex for himself and refuted P5’s allegation that P5 had contributed $50,000 to him as legal costs in connection with the Mother’s or the Family’s claim of the 1^st Land from Allex.  The relationship between D and the other children turned sour.

235.A few days later, ie on 14 February 2000, P2 and P3 revoked the power of attorney in favour of D in respect of their Lots 814 and 809.  On the same day, they granted power of attorney to P4 and P5 in respect of those two lots.

236.It should be recalled that in November and December 2000, F&L wrote to D claiming ownership of the 1^st Land for P2 to P5.  In May 2001, P2 to P5 and D entered into negotiation for a land swap to resolve their dispute over the various land lots, but the negotiation broke down ending in the 2001 Incident.  Then the plaintiffs commenced the 1^st Action.

237.On 1 August 2008, F&L on behalf of all the plaintiffs, including P3 asked D if he would pay rent for his use of their lots, including Lot 809, but D failed or refused to pay.

238.On 7 August 2010, P3 formally requested D to deliver up Lot 809, but D refused.

239.On 10 December 2010, D commenced the 2^nd Action. 

P3’s pleaded case

240.P3 more or less repeated the plaintiffs’ case as advanced in the 1^st Action.  The material facts on which she relied in support of her pleaded cause of action on the counterclaim are:

(1) the 2^nd 1982 Agreement created a tenancy-in-common in equity among the children and/or a trust in favour of P2 to P5, Lee Kin and D (collectively, the “Beneficiaries”) and by reason of the 2^nd 1982 Agreement P3 held Lot 809 as a trustee for the benefit of the Beneficiaries.

(2) D’s use of Lot 809 for his fish farming business was pursuant to a revocable licence granted by P3;

(3) D’s refusal to pay rent for his use of Lot 809 demanded on 1 August 2008;

(4) P3’s revocation of the licence to occupy Lot 809 and formal demand for its delivery up in August 2010; and

(5) D’s occupation of Lot 809 to the exclusion of the other Beneficiaries and descendants of the Grandmother.

241.P3 admitted that since 26 February 1982, she has been and still is, holding Lot 809 as trustee for the benefit of the Beneficiaries.  She sought delivery up of the vacant possession of Lot 809; an account of profit since 1 August 2008; and damages to be assessed. 

242.In essence, P3’s claim is founded on tenancy-in-common in equity, trust and revocation of licence to occupy the lot.  In addition, Mr Chong sought to raise two un-pleaded issues, namely that on its true construction the application of the 2^nd 1982 Agreement is confined to residential use only; and that D’s occupation of Lot 809 amounted to ouster of the other co-tenants under the tenancy-in-common in equity or other beneficiaries of the trust.  As for P3’s claim founded on her revocation of the licence, it is superfluous.  It stands or falls on the question whether as a co-tenant under the tenancy-in-common in equity or as a Beneficiary under the trust D would require her licence to use and occupy Lot 809.  The core issues of her claim are tenancy-in-common in equity and trust.  As I shall demonstrate, the two issues are the same. 

D’s defence

243.D’s pleaded causes of action were common intention constructive trust and estoppel which are based on three understandings reached in 1985, 1993 and 1998.  His claim was not founded on the 2^nd 1982 Agreement and he denied the existence of a tenancy-in-common in equity in respect of the 2^nd Land.  In his defence to P3’s counterclaim, he repeated his plea of common intention constructive trust and estoppel.

244.In 1985, D intended to commence a fish farming business on the 2^nd Land which would necessitate the construction of a fishery in Lot 809 and the installation of water pipes and wells on the adjourning lots.  He informed P2 to P5 of his intended business plan and they verbally consented to his permanent use of parts of the lots registered in their names at no charge (the “1985 Understanding”).  As result, D employed P4 in his business.  In 1991, D applied to DLO and was granted a change of user of Lot 809 to that of a nursery and packaging of eels on payment of an upfront fee of $3,600, a deposit of $5,690 and an annual fee of $30,000.  Since 1985, he incurred a total investment of $3,060,000 in improving Lot 809 for the purpose of his fish farming business.

245.In early 1993, in recognition of the 1985 Understanding and D’s substantial contributions to the improvement of the lots, including Lot 809, and given her own lack of interest in the development of Lot 809, P3 verbally agreed to relinquish all her interest in Lot 809 and to convey it to D (the “1993 Understanding”).  Despite arrangements having been made by P3 for D to attend her solicitors’ office to execute the conveyancing documents, P3 only gave him a general power of attorney in English.  D could not read English and laboured under the mistaken belief that legal title had been conveyed to him by the general power of attorney.  Under that mistaken belief, he incurred further expenses in improving his fish farming business on the lots.

246.Upon discovery of his mistaken belief, D requested P3 to execute the necessary documents for the formal conveyance to him of the title of Lot 809.  P3 verbally agreed (the “1998 Understanding”).  For that purpose, she delivered the conveyance on sale memorial, the assignment memorial and deed of conveyance memorial pertaining to her registered title to Lot 809 to D’s solicitors (EC) on 3 September 1998.  However, as result of the plaintiffs’ dispute with D over the subject matter in the 1^st Action, P3 reneged her agreement and only gave D a special power of attorney on or about 6 November 1998, which was later revoked on 14 February 2000 following the parties’ dispute at the Family Meeting.

247.D pleaded three defences.  First, since about 1985 or alternatively 1993 or in the further alternative 1998, a common intention constructive trust over Lot 809 was created with P3 holding the lot on trust for D as beneficial owner.  Second, for the same reasons, P3 is estopped from denying that she holds any interest in Lot 809 on trust for him.  Third, while denying he is or was a mere beneficiary of the trust under the 2^nd 1982 Agreement or a tenant-in-common in equity of Lot 809, D argued that even in that capacity he is and was entitled to occupy the 2^nd Land, including Lot 809 and in the absence of a plea of ouster P3’s case based on the tenancy-in-common in equity cannot even get off the ground. Probably, for this reason, Mr Chong slipped in the two un-pleaded construction issue and ouster issue.

P3’S COUNTERCLAIM

P3’s claim of tenancy-in-common in equity

248.P3’s plea of tenancy-in-common is fraught with difficulties.  Having pitched her case on a tenancy-in-common in equity, it means she and D has the same one-sixth equal and undivided share in the 2^nd Land and are equally entitled to use and occupation of the 2^nd Land, including Lot 809 (not to mention that in fact the P3 had one-third interest in the land as he also holds Lee Kin’s share).  P3 does not have as against D a more superior right to exclusive possession of Lot 809 unless D’s possession amounted to ouster of other co-tenants.  But there is no plea of ouster. 

249.P3, indeed P2, P4 and P5 as well, are in the same position as D.  All of them signed the “Particulars of Land/Property to be sold” dated 10 February 1982 in which they stated that they intended to hold the lots as tenants in common in equal shares.  They confirmed that they did not take issue about it or disavowed it at all.  All of them signed the 1^st 1982 Agreement providing for maintenance for the Grandmother.  All of them signed the 2^nd 1982 Agreements in which they covenanted that no party shall sell, let or mortgage the 2^nd Land and the building thereon on his own; and that all the children, grandchildren, daughters-in-law and granddaughters-in-law of the Grandmother shall have the right to reside on the 2^nd Land and the buildings thereon and there is no excuse to refuse.  In the event of sale of any of the lots, the proceeds of sale shall be shared equally amongst the six children.  Plainly, the six children were intended to have unity of possession over all the seven lots of land in the 2^nd Land collectively as one whole undivided lot of land.  Then, pursuant to these three documents, the six children were assigned their respective land lots.

250.Mr Chong submitted that the effect of these documents and assignments is to convert that the individual children’s exclusive right to possession over their respective lots assigned to them by their Grandmother into a joint possessory right over all the seven lots as if they were co-owners of one combined piece of land.  Each of them is entitled to an equal and un-divided share in the 2^nd Land and to use and enjoy all the seven lots, but has no right to exclusive possession over any particular lot, including the one registered under his name.  None of them is entitled to exclude any of the other five children from the use and enjoyment of any of the lots.  This right is extended to all of the children, grandchildren, daughters-in-law and granddaughters-in-law of the Grandmother.  These burdens and benefits are like covenants which run with the land and bind their successors in title.  P2 to P5 and D are all assigned their respective lots subject to and with the benefit of these covenants.  None of them can exclude any others from using the lot held under his or her name. 

251.While denying the tenancy-in-common in equity existed, D pleaded in his Reply and Defence to Counterclaim, that even in that capacity as a tenant-in-common he is and was entitled to occupy all the seven lots, including Lot 809.  Mr Li SC has not advanced any argument why the tenancy-in-common in equity does not exist.  I agree with Mr Chong’s submission that the effect of the 2^nd 1982 Agreement and the assignments of the seven lots created among the six children a tenancy-in-common in equity over the seven lots of land collectively as one piece of Land.  Whether Mr Chong calls the arrangement a tenancy-in-common in equity or one in which the legal owners hold their respective lots on trust for themselves and the other beneficiaries, the arrangements are the same in substance and have the same legal effect.

252.It is trite law that there is unity of possession in a tenancy-in-common.  The co-tenants’ position vis-a-vis one another as stated by the learned authors of Gray & Gray [17]  is as follows:

“ 7.4.32 As is true of joint tenants, the unity of possession enjoyed by tenants in common entails that each tenant is as much entitled to possession of the co-owned land as is any other. No co-tenant may physically demarcate any part of the land as his to the exclusion of his brethren. Instead, each co-tenant has ‘a right to exercise acts of ownership over the whole property, subject to the qualification that in so doing he must not interfere with the like right of any other co-tenant. …

7.4.33 It has long been clear that at common law each co-owner (whether joint tenant or tenant in common) has ‘a perfect right to possession of the entire co-owned land and to the ‘use and enjoyment of it in a proper manner.’ …

7.4.34 Save in cases of physical ouster of another co-tenant or gross interference with mutual rights of enjoyment, the notion of trespass has no meaning between co-owners. In this context an important distinction is drawn between exclusive use and exclusory behavior. …

7.4.36 A remedy for trespass is available against a co-tenant only in cases of ‘ouster’, it being settled law that non co-tenant may go so far as to turn another co-tenant off the land.  Ouster comprises any unequivocal and express ‘denial of the title and right to possession’ of a co-tenant and is wide enough to cover not merely instances in which one co-owner evicts or excludes another from the land, but also circumstances where he otherwise interferes with the common enjoyment of that land.”

253.As a co-tenant of all the seven lots collectively, D is entitled to use and possession of Lot 809.  It is mind boggling that having pleaded the two 1982 Agreements and tenancy-in-common in equity, P3 turned around and argued that D is not entitled to use and occupy Lot 809, but she is so entitled and is also entitled to demand D to deliver up its vacant possession.  Such argument could only be launched if there had been ouster by D of P3.  But P3 has not pleaded ouster.

Ouster

254.However, Mr Chong advanced argument based on ouster.  Mr Li SC objected for the simple reason that ouster has not been pleaded and had it been properly pleaded and advanced by evidence, D would have been able to meet the allegation by proper answer such as whether P3 has been denied access and use of Lot 809.  I allowed the argument to proceed.  If good cause is shown, I shall allow an amendment to the pleading and, if necessary, grant an adjournment and leave to D to re-open his case and adduce further evidence.

255.Ouster is a question of fact.  Ouster could be physical or constructive.  A use of the co-owned land by one co-owner to such an extent as to exclude the other co-owner from using the land would among to physical ouster.  Where there has been such gross interference with a co-owner’s use and enjoyment of land by one co-owner as to prevent the other co-owner from use and enjoyment of co-owned land in a proper manner, it would among to constructive ouster.  Any denial of a co-owner’s title to co-owned land would also amount to ouster.

256.Mr Chong referred to photographs showing D’s use of Lot 809 which was covered by a workshop, a two-storey office building, a fish pond, some open space for loading and unloading and another fish pond.  He argued that by his use of Lot 809, D has effectively excluded and deprived the other Beneficiaries and descendants of the Grandmother from using the lot.  He quoted four authorities in support of his argument that D’s use and occupation of Lot 809 amounted to ouster: Kong Colin Chung Ping v Kong Wing On [18]; Incorporated Owners of Lorna Villa v Chan Yan Wah [19]; Fu Wan Sang v Fu Man Kwong [20], and Tang Tak Sum v Tang Kai Fong [21].

257.Having visited the site, it is clear that D has quite extensively occupied Lot 809 for his fish farming business and left little space available on that lot for the plaintiffs’ use.  But exclusivity is not the same as ouster.  No action lies in trespass against a co-tenant merely on the ground that he exclusively occupies and exploits the whole of the co-owned land to which he is entitled by virtue of unity of possession.  As was said by the learned authors of Gray & Gray, a co-owner is not thereby taking ‘more than comes to his just share or proportion’ [22]. P3 has to prove ouster.  It is not P3’s pleaded case that there has been physical ouster of her from Lot 809 or there has been gross interference with her use and enjoyment of Lot 809 by D as to amount to constructive ouster or any denial of her title to Lot 809.  There is no evidence of such either. At most, P3 has uttered at trial that she wanted to recover the lot as she might go back to live in Hong Kong after her retirement.  There is other space available within the 2^nd Land where she could use for that purpose.  D has not denied her title to Lot 809 or her right to use any other parts of the 2^nd Land.  Both P3 and D are entitled to use the lots held under their own names or any others’ and are not entitled to exclude any others from the use of the lots held in his or any other co-owner’s name.  Had there been a proper plea of ouster, D may well be able to adduce evidence on how he could have met P3’s complaint that she has been denied access and use of Lot 809.  It is therefore P3 who sought to deny D’s right to use Lot 809 by her demand letter of 7 August 2010.  It was she who was seeking to ouster D from the lot. It was in response to that demand that D took out the 2^nd Action.  It should not be construed as a denial of P3’s title of Lot 809.  On the undisputed evidence, P3 voluntarily gave up her right to use and occupy Lot 809.  Furthermore, the 2^nd Action was based on P3’s relinquishing her interest in Lot 809.  That claim was based on consent rather than a denial of title and in any event, D has discontinued the action.

258.Most importantly, Mr Chong’s argument was premised on D’s use and occupation of Lot 809 and overlooked the whole picture.  P3’s case of tenancy-in-common in equity is premised on unity of possession of the seven lots collectively as one piece of land.  Though D has extensively occupied Lot 809, looking at the seven lots of land as a whole, there is plenty of space available for P3’s use.  As pointed out above, a co-tenant has a perfect right to possession of the entire co-owned land and to the use and enjoyment of it in a proper manner.  D is as much entitled to the use and enjoyment of Lot 809 in a proper manner as P3.  No co-tenant may physically demarcate any part of the land as his to the exclusion of his co-tenants.  Though Lot 809 is held under her name, P3 cannot forget it is her case that the seven lots are held under a tenancy-in-common in equity and that she also held Lot 809 as trustee on trust for the Beneficiaries including D.  She cannot claim the lot to the exclusion of her Beneficiary and co-tenant.  The ouster in the authorities quoted by Mr Chong were about total exclusion of a co-owner by another of one co-owned property.  Those authorities have no bearing on this case.   The evidence does not support an ouster.  In the circumstances, no purpose would be served to allow P3 to amend her counterclaim by pleading ouster.

The construction issue

259.Mr Chong argued that on the true construction of the 2^nd 1982 Agreement the user specified in clause 4 of the agreement is for residential use.  Hence, D’s use of Lot 809 for his fish farming business is not covered or protected by the 1982 Agreement.  His contention is that the fact that Lot 809 was for agricultural use is relevant and in order to facilitate D’s use of Lot 809 for his fish farming business, it was necessary for him to apply to DLO for a short term waiver to modify the user under the government lease.  Hence, the use was out of the contemplation of the parties to the 2^nd 1982 Agreement.  Clause 4 of that agreement reads:

“ All the children, grandchildren, daughters-in-law and granddaughters-in-law of the Grandmother shall have the right to reside on the 2^nd Land and the buildings thereon and there is no excuse to refuse.”

260.With respect, Mr Chong’s argument is extremely tenuous and lacks paternal sense which was what underlie the Father’s distribution of the land lots. Construction of a document is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of making the document: Investors Compensation Scheme Ltd v West Bromwich Building Society [23].  The factual background was that a caring and paternalistic father was bequeathing his land or the beneficial interest in his land to his children, nephew and niece for their benefit.  The lots were agricultural lots.  He was disposing of his entire interest in the land.  He was reserving any interest to himself.  He would of course give to them the greatest benefit which those lots could be used to realise.  There is no reason to believe that the Father would limit the use to which the land could be put.  Such restrictions are matter for the government as landlord and not for him. Similarly, there is no reason to assume that the Father would limit the benefit to be given to his descendants under clause 4 so that they could use the land for no other purpose other than residential.  The word ‘reside’ should be given the widest possible meaning including any use which would enable the descendants to make a living.

261.Furthermore, the factual background at the time was that the 2^nd Land was mainly used for farming.  The use of part of the land as a residence was just an ancillary use.  In fact, under cross-examination, P2 agreed that D was entitled to use the 2^nd Land for his business according to the 2^nd 1982 Agreement.  There is no dispute that the plaintiffs had consented to D’s use of part of their lots for his fish farming business.  P3 and P5 also said in the witness statements that the parties to the 2^nd 1982 Agreement had the right to “reside” and “use” the 2^nd Land.  P3 also confirmed in her cross- examination that the Father had told the children that they could mutually use the 2^nd Land but he had not mentioned the manner of use.  That was how the parties to the 2^nd 1982 Agreement understood the agreement to mean.  The right to reside or live in the lots means the right to live on and use the lots for such use as the lot could be put to, including any use which the government lease permits whether strictly under the conditions of the lease or under any waiver.

P3’s claim based on trust and revocation of licence

262.P3’s claim based on trust suffers the same defect.  Even if there was a trust as pleaded, D has a beneficial interest in Lot 809 and would enjoy the same right as a co-tenant with P2 to P5 and Lee Kin.

263.As for her claim based on revocation of licence, it is premised on P3 being the legal owner of Lot 809 was entitled to its exclusive use and occupation, to grant a licence to D to use the lot and to evict D upon revocation of the licence.  This claim also suffers from the same defect.  She has forgotten her pleaded case of tenancy-in-common.  Thus whether the power of attorney she granted to D was treated as a licence and whether the licence has been revoked, D as a co-tenant is as much entitled as she is to the use and occupation of Lot 809.

P3’s counterclaim — conclusion

264.It is not open to construe the 2^nd 1982 Agreement as being limited to giving the descendants of the Grandmother a right to reside on the land and no more.  The effect of the 2^nd 1982 Agreement and assignments was to create a tenancy-in-common in equity among P2 to P5, Lee Kin and D over the 2^nd Land.  Each of them is entitled to use all the seven lots as a co-tenant so long as such user does not amount to ouster of any other co-tenant.  There is no plea of ouster.  Even if ouster has been pleaded, there is no evidence in support of an ouster of P3.

265.P3 claimed for account for profit made by D arising out of his use of Lot 809.  Effectively, she is claiming a share in the business profits of D’s Asia Aquatic.  It is trite law that there is no liability on a co-tenant who employs his capital and industry in making use of co-owned land and makes a profit to account for those profits to his other co-tenants: see Gray & Gray [24].

266.P3 also claimed for rent for the use of Lot 809.  That claim also fails as no rent or mesne profit is payable by one co-tenant to another for his use and occupation of co-owned land because of unity of possession.  The rationale is summarised by Gray & Gray [25] as follows:

“ It is often said that in the absence of agreement no obligation in respect of rent or mesne profits can normally arise at common law as between co-tenants by reason merely of the fact that one of their number happens to enjoy sole occupation of the entire co-owned property. Since co-tenants, whether joint tenants or tenants in common, enjoy unity of possession, each is equally entitled with his fellow co-owners to physical possession of the co-owned land. The traditional common law view used to be that no co-tenant should be charged a rent for the sole enjoyment of that which was his ‘perfect right’ and which the other co-tenant was regarded as a matter of voluntary choice and one co-owner’s unilateral decision to vacate the land should not ‘change his status into that of a landlord over the remaining co-tenant in possession.’”

267.Accordingly, P3’s pleaded case is defective and her counterclaim is dismissed. 

D’S DEFENCE

An overall view of the defence

268.As P3’s counterclaim cannot even get off the ground and is hereby dismissed, there is no need to consider D’s defence.  For completeness, I shall very briefly deal with the parties’ arguments on D’s defence below.  In view of the obvious outcome, I shall only deal with some critical evidence very briefly.

269.In his defence to P3’s counterclaim, D repeated his plea of common intention constructive trust and proprietary estoppel in the claim.  In his final submission, he abandoned his defence of common intention constructive trust. But as a fall back, he relied on tenancy-in-common in equity argument raised by P3.  That argument has been analysed at length.  For reasons as already stated, I accepted that a tenancy-in-common in equity over all the seven lots in the 2^nd Land was created among the six children and as a result P3’s counterclaim was defective and must be dismissed.  Accordingly, D’s fall back defence must succeed.  Thus, whether D succeeds in his defence of proprietary estoppel is of no consequence.  However, Mr Chong argued that as D has discontinued his claim and consented to his claim be dismissed against P3, he is estopped from raising this defence of estoppel which formed the basis of his claim.

Whether D is estopped from raising the defence of proprietary estoppel

270.The thrust of Mr Chong’s argument is that this defence was based on D’s pleaded cause of action of proprietary estoppel which was abandoned and discontinued before the commencement of this trial on the condition that subsequent actions against P3 for the same or substantially same cause of action would be barred.  He relied on issue estoppel, res judicata in the wide sense and abuse of legal process.

271.He submitted, quoting SCF Finance Co Ltd v Masri & Anor (No 3) [26]and Khan v Golechha International Ltd [27], that an order dismissing proceedings is capable of giving rise to issue estoppel even though the court making such order has not heard argument or evidence directed to the merits.  Hence, a person privy to the action would be bound and cannot advance argument on the same issue.  Based on these authorities, Mr Chong argued that D’s discontinuance of his action was a conscious decision made upon legal advice.  Not only that the discontinuance was without reservation but also that the Consent Order made it clear that the discontinuance would be with prejudice so that the issue in respect of D’s claim of proprietary estoppel cannot be revived again.  Upon the discontinuation, there would be no issue left in respect of D’s assertion of constructive trust and proprietary estoppel against P3’s interest in Lot 809.  Any part of D’s defence to P3’s counterclaim in reliance upon his abandoned claim of constructive trust and proprietary estoppel would amount to impugning the Consent Order and should be struck out for abuse of legal process. 

272.The terms of the Consent Order are as follows:

“ BY CONSENT, IT IS ORDERED that:-

1. leave be granted to [D] to wholly discontinue all his claims in the action against [P3] and that [D] shall be and is hereby precluded from bringing any subsequent action against [P3] for the same or substantially the same cause of action as is hereby discontinued;”

273.The proposition of the law on issue estoppel as quoted by Mr Chong is too much of a short hand summary.  The proper statement of law has been set out in Halsbury’s Laws of Hong Kong [28]is as follows:

“ A party is precluded from contending the contrary of any precise point which, having once been distinctly put in issue, has been solemnly and with certainty determined against him. Even if the objects of the first and second actions are different, the finding on a matter which came directly (not collaterally or incidentally) in issue in the first action, provided it is embodied in a judicial decision that is final, is conclusive in a second action between the same parties and their privies. This principle applies whether the point involved in the earlier decision, and as to which the parties are estopped, is one of fact or one of law, or one of mixed fact and law. The conditions for the application of the doctrine have been stated as being that:

(1) the same question was decided in both proceedings;

(2) the judicial decision said to create the estoppel was final; and

(3) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.”

274.The issue which the parties are estopped must be one which has been distinctly put in issue and determined against him.  On the facts and pleadings of this action, I accept that the issues in the claim and counterclaim have been distinctly put in issue and are the same.  I also accept for the purpose of determining issue estoppel that the claim and counterclaim may be treated respectively as the earlier and subsequent proceeding though they arise in the same action.  But, it is important to note that the action was not dismissed.  It was discontinued without a determination of any of the issues, though D was precluded from bringing any subsequent action against P3 for the same or substantially the same cause of action.  Had there been a dismissal, it could be argued that there was a determination of the issues on which the action was founded.  But the action was only discontinued and not dismissed.  The two authorities quoted by Mr Chong could be distinguished on this basis.  The condition for raising issue estoppel is not met. 

275.The law on res judicata in the wider sense is reasonably well settled.  It had its genesis in the Privy Council decision in Yat Tung Investment Company Limited v Dao Heng Bank Limited [29].  It is also known as the rule in Henderson v Henderson.  The principle has been succinctly summarised by Ma J (as he then was) in Ray Chen v Anita Wan Ching Lam [30] as follows:

“ Res judicata in its so-called wider sense is the principle that ‘the court requires the parties to that litigation to bring forward the whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matters which might have been brought forward as part of the subject in context, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case.’: see Henderson v Henderson [1843] 3 Hare 100, at 115 per Sir James Wigram VC. In Yat Tung Investment Company Limited v Dao Heng Bank Limited [1975] AC 581, Lord Kilbrandon said at 590A–B, ‘But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings.” (emphasis added)

Ma J observed that Yat Tung had laid down a rather stringent rule in the sense that, if a matter could have been raised in earlier proceedings, then, without more, it should have been raised in those earlier proceedings and hence it would be an abuse of process to raise it again in later proceedings.  However, as observed by Ma J (as he then was), the rule has been relaxed in subsequent cases.

276.In Ko Hon Yue v Chiu Pik Yuk [31], Ma CJ said that the present state of the law was reflected by the House of Lords decision in Johnson v Gore Wood & Co (a firm) [32] and the Hong Kong Court of Appeal decision in Chiang Lily v Secretary for Justice [33]. In short, in general a party is not permitted to raise in subsequent proceedings matters that party could and should have raised in earlier proceedings.  There has to be an abuse of the process in seeking to raise in subsequent proceedings claims and issues which could and should have been raised in earlier proceedings.  The abuse can take different forms:

(1) The principle is to serve public interest in that there should be finality in litigation and that a party should not be twice vexed in the same matter.

(2) This is reinforced by the current emphasis on efficiency and economy on the conduct of litigation, in the interests of the parties and the public as a whole.

(3) The onus is on the party alleging abuse.

(4) The bringing of a claim or the raising of the defence in later proceedings may, without more, amount to abuse if the court is satisfied that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all.

(5) It is, however, not necessary, before abuse may be found, to identify any additional elements such as a collateral attack on a previous decision or some dishonesty.  But where those elements are present the later proceedings will be much more abusive.

(6) There will be rarely a finding of abuse unless the later proceedings involves what the court regards as unjust harassment of a party.

277.Here, there is no earlier proceeding or later proceeding. These are the only proceedings in which the issues arose.  What happened was that D pleaded the same issues in his claim and in his defence to the counterclaim in the same proceedings.  He then abandoned their use in the claim without any determination of those issues but maintained the plea in the defence to the counterclaim.  There is no question of the issues not having raised in the same proceedings.  There is no room for any argument of a determination in an earlier proceedings and P3 being vexed a second time in the subsequent proceedings.  There is no collateral attack on any previous determination of the issues. 

278.With respect, P3’s arguments of issue estoppel and res judicata in the wider sense or abuse of legal process is based on a misunderstanding of the relevant legal principles.  D is not estopped from raising the proprietary estoppel defence.

Proprietary estoppel — the law

279.It is trite law that a party raising a proprietary estoppel has to prove three elements, namely, representation, reliance and detriment: see Snell’s Equity [34].  As Mr Li SC submitted, the modern approach is that “it requires a very much broader approach which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of preconceived formula: see Gillet v Holt [35].

The facts

280.Apart from denying the defence case as pleaded by D, P3 did not seriously challenge D’s evidence on these issues during cross-examination.  D’s allegations were not contradicted by P3’s evidence.  There is incontrovertible evidence in support of D’s evidence.  The most glaring one is the evidence of P3’s delivery of the title documents of Lot 809 to EC in September 1998 which supports D’s case and contradicts P3’s.  Another important piece of evidence is the short term waiver granted by DLO in September 1991.  Obviously the application for the waiver was made by P3 on behalf of D with full knowledge of his fish farming business and investment commitment.  It evidences her consent to D’s use of her Lot 809.  I accept D’s evidence and reject P3’s.

281.The matter began in 1985 when D told P2 to P5 at a family meeting that he intended to commence a fish breeding business which would require the use of their lots and P2 to P5 agreed.  While this was denied in the pleading, P3 admitted under cross-examination that there was such a meeting and nobody, including herself, objected.  She must be taken to have consented, not just acquiesced, when to her knowledge D commenced such massive construction works on the 2^nd Land, particularly on her Lot 809 and she obtained the short term waiver for D to use her lot as a fishery.  I accept D’s evidence that P3 had represented to him that he may have the use of Lot 809 for his business, ie the 1985 Understanding.

282.According to D, having seen what he had done to improve Lot 809 and his business, she indicated to D in 1993 her wish to relinquish all her interest in Lot 809 and arrangement was made to convey the legal title of the lot to him in the office of NY instructed by P3.  But unknown to D, what he obtained was a general power of attorney in English.  P3 denied, but her evidence was rather muddled.  In my view, giving D a general power of attorney under such circumstances may be treated as her continued consent and encouragement to D for his continued use of Lot 809, ie the 1993 Understanding.

283.Then, in 1998 upon realising that what he obtained was a general power of attorney, D requested P3 to transfer the legal title in Lot 809 to him again and P3 agreed.  There is incontrovertible evidence that on 3 September 1998, P3 delivered the title document to EC which must be for the purpose of transferring title of Lot 809 to D.   At the time, dispute over the lots in the 2^nd Land was brewing among the children which resulted in the Mother writing to the children on 22 September 1998 reminding them the distinction between management and ownership of the lots and directing them that D shall have management and use of the lots for his business and in that connection the children shall assist D: see paragraphs 171.  P3 never explained why the title documents had been delivered to EC.  She just avoided dealing with that aspect of D’s evidence.  Her silence corroborates D’s case.  At the time, P3 was contemplating emigration to Australia.  She had sold her flat.  Probably, she had no intention then of returning to Hong Kong permanently at any future time.  She was gifted the lot by the Father.  None of the Father’s own daughters had been given a share in the 2^nd Land.  Seeing the industry D had put into the land, she might feel giving her lot back to the Family an appropriate gesture of gratitude before leaving Hong Kong for good.  She reneged on her agreement upon the resistance of the other children and the Mother’s letter.  In the light of all the circumstances, I consider D’s evidence more inherently credible and accept his evidence on the 1998 Understanding.

284.There is no dispute that between 1987 and 2000 D incurred $3.06 million in the fish farming business.  Notably, as result of the 1985 understanding, D spent $575,000 in capital investment by way of construction costs in 1987 and $150,000 in fish pond works in 1991.  Subsequent to the 1993 understanding, D incurred $120,000 in building staff quarters in the 2^nd Land in 1993.  Furthermore, as result of the 1998 understanding, D incurred $400,000 in construction costs in upgrading the fishery in 1999.  Though at that time D was aware that P3 would not be transferring the title in Lot 809 to him, he was nevertheless given the power of attorney with the understanding that he may continue to use the lot for his fish farming business.  I have not taken into account D’s investments in plant and machineries as those expenditures would be written off in time and may be treated as necessary business expenditure.  The above capital investments amounted to $845,000 and were substantial.

Discussion

285.Mr Chong argued that the above evidence is not sufficient to raise a proprietary estoppel.  The thrust of his argument is that Lot 809 was a piece of agricultural land which D had commenced using for his fish farming business in 1977 and it was only until 1991 that he regularised his use by obtaining a temporary waiver which could be determined by government upon three months’ notice without any compensation.  Hence, he argued that the expenditure incurred between 1987 and 1989 were incurred with the understanding and knowledge that his user would not be permitted under the land grant; while his expenditure incurred since 1991 were incurred with the understanding that he would lose his entire investment without compensation upon three months’ notice given by P3 or the government.  That would be the price which D would have to pay for investing in a piece of land for which he has never paid any rent and equity would not arise to assist D.  Hence, Mr Chong submitted, it would not be unconscionable for P3 to recover Lot 809.

286.With respect, such argument has no realism at all.  Prior to 1991, there was a risk that government would take lease enforcement action against the unauthorised use as a fishery.  That must be a calculated risk which D was prepared to assume if P3 would consent to his use of the lot.  That risk had never been realised.  It can fairly be said that but for P3’s encouragement D would not have incurred that substantial capital investment in 1987.

287.As for Mr Chong’s argument that the short term waiver could be terminated by P3 upon giving three months’ notice, I consider the argument unconscionable.  The notice period of three months is a condition of the waiver.  It was an agreement between P3 and DLO.  While D took the waiver on the terms as it was granted, it is not a condition of the consent given by P3 to D for the use of her lot.  It is never P3’s case that she could terminate her consent by giving D three months’ notice.  In fact, she cannot because of the tenancy-in-common in equity which she acknowledged and which she expressly pleaded.  Under the circumstances, it could be implied that P3 would not exercise her right to terminate the waiver save with D’s consent.  That DLO could terminate the waiver by giving three months’ notice is a calculated risk assumed by D, but he has never assumed the risk that P3 would put an end to the waiver in derogation of her grant to him for using her Lot 809.  Looking back now in 2018, it could be said that at the material time between 1985 and 1998, there was no realistic prospect that DLO would terminate the waiver whether three months after it was granted or at any time thereafter up to today.

288.There were other frivolous arguments advanced by Mr Chong which I do not consider it necessary to deal with them save to say that I disagree with them.  They were directed at the question of whether D is entitled to have ownership of Lot 809.  That was a claim which D has discontinued.  The issue here is D’s defence to P3’s counterclaim for vacant possession of Lot 809 and not the legal interest in that lot.

289.In conclusion, I am satisfied that it is open to D to plead proprietary estoppel and it would be unconscionable to allow P3 to withdraw her consent and to demand delivery of vacant possession of Lot 809 from D.  Besides, it is not open to her to make that demand because D has as much right to use and occupy that lot as a co-tenant of a tenancy-in-common in equity.  P3 cannot even pass the hurdle of proving her case.

Costs

290.Mr Li SC submitted that this is an appropriate case for awarding costs on indemnity basis.  P3 pleaded a defective case which is bound to fail and advanced numerous unmeritorious arguments wasting D’s costs.  By pleading tenancy-in-common in equity without pleading ouster, P3’s counterclaim is doomed to fail.  This pleading point aside, there was no evidence of ouster. 

291.Both actions are problematic.  The Father with the best of intention bequeathed his beneficial interest in the 2^nd Land to the six children with the vision of creating an Eden Garden for all the eleven children, their spouse and their next generation to use and enjoy as one parcel in common.  As the photographs I reviewed during the trial show, the plaintiffs and D were loving siblings and loving cousins then.  But circumstances changed thirty years down in time with the Father’s demise.  They were no longer loving and playful cubs but are now deadly tigers fighting fiercely for their territories and for a piece of meat fallen from the neighbour’s door.  The Eden Garden has turned into a battlefield and an impasse.  The only way out is for the six children to mutually discharge their obligations under the 2^nd 1982 Agreement and swap their lots and, better still, redefining the boundaries and entering into a mutual covenant to provide for common area for vehicular access.  I pointed out, in particular, the disadvantageous position P3 was in and repeatedly gave judicial encouragement to the parties for a settlement.  She ought to have discontinued her counterclaim just as D had discontinued his.  But, my advice fell on death ears.  Being over confident of her chance of success, P3 obstinately pressed on with her counterclaim which was doomed to fail.  I would not hide my sympathy for her.  A costs order against her is inevitable.  For one consideration, I am not prepared to order indemnity costs without hearing full argument from both sides, that is, the action was commenced by D rather unconscionably.  D had the benefit of the use of her land and yet turned around to claim its beneficial interest.  I shall make a costs order nisi that P3 shall pay D’s costs on a party and party basis and leave it to D to consider if he would wish to engage in full argument on costs than to make an indemnity costs order nisi and to give P3 the burden of resisting the order.

CONCLUSION

292.Because of the unity of possession P3 is not entitled to demand D as a co-tenant to deliver vacant possession of Lot 809 to her or to demand rent or mesne profits.  Furthermore, having regard to the investment incurred by D as result of the three understandings, it would be unconscionable to allow P3 to withdraw her consent and to demand delivery of vacant possession of Lot 809 from D.  Accordingly, P3’s counterclaim is dismissed with a costs order nisi that she shall pay D’s costs of her counterclaim on party and party basis.

Mr K M Chong and Ms Emma Wong, instructed by Edward Ko & Company, for the plaintiffs (by original action) and the defendants (by counterclaim) (in HCA 2861/2001) and the defendant (in HCA 1803/2010)

Mr C Y Li SC, leading Mr Ross M Y Yuen and Mr Dan Leung, instructed by King & Co, for the defendant (by original action) and the plaintiff (by counterclaim) (in HCA 2861/2001) and the plaintiff (in HCA 1803/2010)