Fong Kam Mui v. Hsbc Private Trustee (Hong Kong) Ltd

HCA 2264/2014

[2019] HKCFI 630

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2264 OF 2014

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Before: Deputy High Court Judge Maurellet SC in Court

Dates of Hearing: 19, 20 and 22 February 2019

Date of Judgment: 26 February 2019

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JUDGMENT

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INTRODUCTION

1.In these proceedings, Madam Fong Kam Mui (“P”) seeks a declaration that:

(1) the rights of the defendant (“D”) to recover the Subject Area (as defined below) has become statute-barred under section 7(2) of the Limitation Ordinance, Cap 347 (“the Ordinance”);

(2) the title of D to the Subject Area has been extinguished by virtue of section 17 of the Ordinance; and

(3) P has acquired a possessory title to the Subject Area.

2.The Subject Area is about 967 square metres.

3.Since 21 December 1977, one Tang Chung Wah (“Tang”) had been the registered owner of the parcel of ground registered in the Land Registry as “the remaining portion of Lot no 12 in Demarcation District No 129” (“the Lot”).  The Lot occupies an area of about 29,976 square meters (ie roughly 30 times larger than the Subject Area).

4.D became the registered owner of the Lot by reason of an assignment dated 8 April 2015.

5.Prior to P’s occupation of the portion of land shown and coloured yellow and pink in the plan marked exhibit A to the Statement of Claim (“the Occupied Area”)[1] which is partly on the Lot (the pink area) (“the Subject Area”) and partly on government land (the yellow area), one Ms Ip Cheung (“Ip”) and one Mr Chan Dong (“Chan”) were the persons in possession of the Occupied Area (“Chan/Ip”).  Chan/Ip were themselves neither tenants nor owners of the Subject Area.

6.The legal status of their presence is examined in more detail below.

7.The Block Government Lease (“the Lease”) provided that the proper occupation of the Lot was for “agricultural or garden ground” and without further permission there shall be no “building or structure of any description”.  It was accepted that should P be successful in these proceedings, her interest in the Subject Area would be one of an agricultural land.

Other introductory matters

8.In his opening, Mr Frederick Chan confirmed that P would seek to rely for the purpose of this trial exclusively on the period from approximately March 1985, when P and her family (“P’s Family”) were in occupation up to the date of the writ in this Action, ie 10 November 2014.  

9.P therefore claims on the basis of adverse possession over a period in excess of 20 years pursuant to the Ordinance.

10.I should point out that while expert reports were prepared by land surveyors for each side, both parties agreed that they would not call the experts and were content to have the contents of the reports as admissible in evidence and that I would give these such weight as I saw fit.  This is sensible.  As is apparent from the comprehensive opening submissions filed by both sides, nothing turned on them.

11.I should also note that while D had sought damages for trespass in its Counterclaim, Mr C Y Li SC (leading Mr Jeremy Kwong) confirmed that if D were successful D would not seek substantive damages but were content to obtain nominal damages against P.

12.Finally I should mention that Mr Hung who was originally D’s witness was (with respect very sensibly) not called and therefore no evidence was led at trial by D.  Given how D came into the picture it is apparent D is not adducing positive evidence as such but relying on P’s own evidence and other incontrovertible evidence to defeat her claim.

P’S PLEADED CLAIM

13.P’s case is succinctly set out in her Statement of Claim (“SOC”).

14.As set out Chan/Ip had been persons “in possession of the Occupied Area” without the consent of the owner of the Lot.

15.In early 1985 Chan/Ip agreed to “transfer possession of the Occupied Area to the Plaintiff together with the structures built thereon in consideration of HK$80,000”.

16.The agreement (“the Agreement”) which had been written in Chinese by a ‘letter writer’ on P’s instructions provides (in translation) as follows:

“ [Chan] now agree to assign the farm situated at no 99 Sha Kiu Sheung Wan to [P]. This farm included the government land, private land and two houses for residence and with permit numbers 11966 and 10294 and pig and chicken houses etc. and all structures erected thereon. [P] agree that in consideration of the sum of HK$80,000, P should from 1^st March 1985 takes possession of the farm. From thereafter [P] shall have all interests in the farm, [Chan] has no right to receive compensation for resumption for redevelopment from this land by the governmentin the future. All such compensation will be received by [P]. This agreement is now confirmed in writing. s.d 9^th March 1985”.

17.It is important to note that the two permits referred to in the Agreement related to:

(1) Permit 10294 (“1^st MOT”) was a Modification of Tenancy (“MOT”) granted on 22 February 1968 by the District Commissioner of the New Territories under the then owner’s name one “Yue Kai Shui and others”, in consideration of a payment of a fee of HK$12 “the Crown hereby permits the modification of the Crown Lease or purchase of Lot 12 R.P in DD 129 to the extent only that the registered owner Yue Kai Shui may for the period between 1/1/1967 and 31/12/1968 maintain [certain structures described] as indicated in red on a map [kept with] the district office subject to the following general and special conditions …”.  These included that the MOT could be cancelled by the authorities at any time, that it was not transferrable.  Moreover, if in the opinion of the District Office there was a breach of any conditions he may cancel the MOT forthwith.  Ip Cheung signed under “signature of the permittee” and critically “ON BEHALF OF THE REGISTERED LAND OWNER”.  Yue Kai Shui was one of the former registered owners of the lot.

(2) Permit 11966 (“2^nd MOT”) was a MOT dated 15 May 1969 whereby the owner was stated to be Tang.  In consideration of the payment of a fee of $37, the Crown similarly permitted modification of the Crown Lease of the Lot to the extent only that “the registered owner Tang Wai Yin” may for a one year period maintain certain structures.  The document was apparently signed by one “To Tai” and one “Sze Lap Fu” under “signature of the permittee” and again “ON BEHALF OF THE REGISTERED OWNER”.

(3) Connected to the 1^st MOT numbered 10294 (as the 1^st MOT’s number is quoted in the letter), there is also a letter from the District Officer dated 15 May 1969 (“the May 1969 Letter”) whereby it is stated that approval was given to the erection and maintenance of certain structures for a period of one year.  It was further pointed out that “the structures covered by this approval may be used only for agricultural purposes and may not be used for domestic or industrial purposes, not human habitation”.  This letter was sent to Yue Kai Shui, others bearing his last name as well as Tang.  Two of the structures were for pigs and chicken rearing.

18.Since about 9 March 1985, P says she had continuously been in open and uninterrupted possession of the Occupied Area to the exclusion of the owners of the Lot and with the intention of continuing to possess the Occupied Area as her own land to the exclusion of the owners of the Lot and the world at large.

19.P then pleads and prays on a number of particulars of adverse possession.  It is unnecessary to list them all here but include the fact that prior to P’s Family’s occupation of the Occupied Area, several structures had already been built and the Occupied Area was completely enclosed by wire fences and a structure built in the north eastern part.  One could only enter via two gates and a door.  Immediately after moving in, P’s Family changed the padlocks to the gates and door and P’s Family lived in and reared pigs in the Occupied Area.  Since then they rebuilt or added to some of the structures.  In about 2000, P demolished a structure hitherto used for rearing pigs and built a new structure for residential purposes.

20.In the period of 1988 to 1990, P’s two daughters and youngest son left such that only P and her husband, together with their oldest son continued to reside there.  In August 1996, P’s husband passed away and shortly thereafter, the farm ceased operating.  Since about 2003, P pleaded that she “granted various licences to use part of the Occupied Area for storage purposes in consideration of the licence fee payable to [D].”  In answer to particulars P then pleaded that the said licences were granted through her oldest son acting on her behalf.

PRE-1985: RELEVANT EVENTS

21.P was born in Wuhan, Hubei in mainland China in 1946.  She married in 1965.  Her 1^st son Chung Lam, 1^st daughter Chung Lai, 2^nd daughter Chung Yin and 2^nd son Chung Hoi were born in the Mainland respectively in 1966, 1967, 1969 and 1971.

22.P received primary level education and while she is able to speak, read and write Chinese (albeit perhaps not very well) she cannot understand English.

23.P’s Family came to settle in Hong Kong in 1973.  They rented a wooden house in Tuen Mun.  In 1974 they were able to buy the said house. In 1983, P and her husband rented a pig’s farm and stone house in Yuen Long. This remained the position until 1985.

1985 – 2014: RELEVANT EVENTS

24.As explained below, given how and when D came to become the registered owner of the Lot, D was not able to adduce a positive case on many of the factual allegations made by P and to some extent supported by other witnesses she called.  Rather D relied on documents which are undisputed or historical records which are incontrovertible.

25.In early 1985, Ms Man Chuen Fong told P that one of her friends planned to sell a plot of land together with the structures thereon in Sha Kiu Sheung Wan Tsuen, Lau Fau Shan (“the Village”).

26.In about March 1985, Ms Man accompanied P to the Occupied Area where she met Chan/Ip.

27.The Occupied Area was surrounded by metal wire fences and there were a number of structures which would allow poultry and pig farming. The Couple said they had built the structures but were not the owners and had been living there for many years but had no idea as to the identity of the owner or how to contact him/her.

28.The Couple then negotiated with P, as to the amount of money they wanted so as to move out from the Occupied Area and let P use the land. Eventually P says that there was an agreement that in consideration of P paying the Couple $80,000, they would move out of the Occupied Area and allow P to use the Occupied Land thereafter.

29.As the Couple required something in writing, P went to find in Yuen Long a letter writer who on Ps instructions reduced the agreement into writing.

30.After signing, P and her family members moved in and changed all the locks of the entrances of the Occupied Area and they have since then lived and used it.  Without permission from P’s family no one was allowed to get onto the said land.  P even raised some mongrels to guard the entrances of the Occupied Area.

31.P’s Family lived in the eastern side of the Occupied Area.  There were other structures such as a garage and a fodder room.  The rest of the structures was said to be places used for farming.

32.P’s Family and her husband together ran the pig farm there (known as Lam Yuen) with the help of their children when they were free.  A licence for livestock keeping was later obtained from the Environmental Protection Department.  I note that in the EPD’s Pre-operational survey under the Livestock Waste Control Scheme which was filled in by P and her husband there was a reference to the 1^st and 2^nd MOT under “licence No/ ‌permit No/‌STT No/‌STW No.”.

33.I will revisit the significance of this below.  What is quite clear is that P by propounding and referring to the two MOTs to the world at large and in this instance the government (viz the EPD) P was relying on them when running her farm in 1993.

34.In the middle of 1985, P’s husband applied for electricity supply from CLP.  A receipt from CLP dated 18 May 1985 was produced.  The address there was described as “36 Sha Kiu Sheung Wan Tsuen”.  I should point out that there is some controversy over the way third parties have described the Occupied Area in particular utilities and other service providers.  As this is a discrete point I will deal with this here rather than with my other findings of fact below.  Sometimes it was described as “36 Sha Kiu Sheung Wan Tsuen”, sometimes as “No99(36)” (as in the bills from the Water Supplies Department) or even “99 Sam Wan (ie Deep Bay) Sha Kiu” (as used in some letters in 1990 or the statement from BOC–Prudential).  There is no suggestion, let alone evidence that there is another property by that name/‌description anywhere or one which was under the control/‌occupation of P at the relevant time.

35.On a balance of probabilities, I find that those receipts and other documents evidencing use of water/‌electricity/‌other documents relate to those by P and her family members on the Occupied Area.  It is further inherently improbable that given P’s Family background and financial circumstances they would have been living in another place of that description at the same time and yet sought to use those documents to falsely claim they were living in the Occupied Area.

36.It may be that, as P says her daughter told her, “no 36” was the previous building number.  The exact source of confusion or historical reason for the mistake is unimportant.  Given the passage of time and perhaps as P explained flooding, some of the earlier receipts/invoices/other documents for utilities have been lost.  I am not prepared to draw any adverse inference because of non production of documents which go back a long time.

37.For reasons of convenience, Chung Lai moved out of the Occupied Area in 1986 and Chung Yin shortly thereafter.  In short, only Chung Lam and P and her husband continued to reside there, although from the late 1980’s up to 2002, Chung Lam worked in Guangzhou and would usually only come back to the Occupied Area on weekends.

38.The pig farm appears to have been successful and P’s and her husband’s hard work paid off.  By November 1992 the farm had over 600 pigs.  In the early 1990’s, Chung Hoi went to Australia for his studies and by 1993 Chung Yin went to England to pursue tertiary education.

39.This was the state of affairs until about 1996, when sadly in August of that year, P’s husband passed away due to illness.  Soon after, P decided to wind down the pig farm and returned the livestock licence whereby some monies were paid to her as relief payment.

40.From about 2002, Chung Lam returned to live in Hong Kong at the Occupied Area.  He worked as a lorry driver and used the vacant structures to store goods for friends/customers.  He then gave P part of those fees as household expenses.

41.In or about 2003, P received a notice from the Lands Department concerning illegal structures on the Occupied Area which sought their removal.

42.In the letter from the District Lands Office dated 27 June 2003 (addressed to Ip but c/o P) and also addressed to Mr Sze and To (presumably Sze Lap Fu and To Tai), the heading referred to the 1^st MOT (ie 10294), noted illegal extensions of structures permitted under the 1^st MOT and that the 1^st MOT may be revoked.

43.In August 2003, an application (“the Application”) was made on P’s behalf to the Town Planning Board (“the Board”) for permission to continue to use the structures on the Lot for the purposes of temporary residence and storage for a period of three years.

44.The Application was rejected on 10 October 2003 and Landbase Surveyors (“Landbase”) were engaged to review that decision but that also failed.  There was a suggestion by P that a law firm had been engaged which in turn engaged Landbase but given the confusing way in which she explained this and the fact P generally did not seem to have a clear recollection over matters which involved dealing with the authorities, I am not convinced a law firm was in fact engaged.

45.How it came to be made and who precisely handled the Application is the subject of some dispute, but for reasons set out below, I do not think this ultimately matters.

46.One reason why it may be that D was defensive on this issue is that there are a number of features in the Application which D has highlighted as indicating a lack of good faith on P’s part by reason of the allegations contained in the Application.

47.The fact is that instructions must have been provided by P or through P, to whoever was assisting with the Application or indeed Landbase. It was done with her instructions or at the very least with her acquiescence.

48.It was stated under the “name of owner” rubric that it was “unknown (the applicant is unable to provide it)”.  This does not seem to me to be surprising.  It is of course true as D suggested that P could have found the answer if she had wanted to.  The truth is probably she was apathetic and uninterested in finding out whom it was.  On whether the site comprised government land it was stated only about 100 square feet.  This is of course much less than what is really was.  It is also true that if the Board had wanted to find the answer to either question it could easily have done so.

49.The high point of D’s criticisms on bad faith comes when the Application deals with “justifications” and it was stated that P had no relatives in Hong Kong (which is accepted to be untrue) and given her financial resources will not be able to have another place to stay if the structure were demolished.

50.Of more relevance is that the Application was stated to be for a “warehouse and residence” and this had been sought on a temporary basis, namely three years.

51.On 11 May 2015, the District Lands Office revoked the 1^st MOT.  The letter was sent to “Yue Kai Shui and other owners”.  It was also copied to Tang and Ip as well as P herself.  On the same date the 2^nd MOT was also revoked.  That letter was sent to Tang with it being copied to P as well as Sze Lap Fu and To Tai.

52.In 2013, Chung Lam married and brought his wife over to live on the Occupied Area.

53.Various photos have been produced by P in support of her description of her use of the Occupied Area at various stages.  These tend to support her evidence and she was not really challenged about these in cross examination.

54.On 10 September 2013, the Lands Department wrote to D noting that after an inspection on site, a number of original structures which had been registered under the squatter survey had been altered, hence they had deleted the squatter survey numbers.  This would appear to be relevant to the extent these were on government land since the letter goes on to say that “as the said structures are on private land and are covered by a revoked [MOT] this Office will also notify the District Lands Office”.

55.On 11 June 2014, the Lands Department wrote to D to inform it that SK/243–245 had been cancelled.  On 15 August 2014, a similar letter was sent to D informing it that SK/652–657 and SK/X/291–293 and 295–296 had also been cancelled as the squatter huts had ceased to exist.  Finally on 17 December 2014, a similar letter was sent to D informing it SK/641–644 had been canceled as the structures ceased to exist.

56.P stated in her witness statement that since 1985 no one claimed to be the owner of the Lot or its representative and that no one had indicated she needed their permission to use the Lot or to pay rent.

57.P admitted that she has continued to pay the yearly MOT licence fees for both the 1^st and 2^nd MOT.  For example, she has produced the receipts for these for 2002 and 2003.  Obviously had the fees not been paid these would have been revoked long ago.  It is of relevance that the Demand Notes from the Government were addressed to Ip albeit c/o P for the 1^st MOT and addressed to To Tai and Sze albeit c/o P for the 2^nd MOT.

AGREED LIST OF ISSUES

58.Pursuant to the Order of Mr Justice Wilson Chan dated 21 November 2018, a List of Agreed Issues was filed by the parties and were stated to be the following:

(1) Whether the plaintiff has possessed the Subject Area continuously since about 9 March 1985 to the exclusion of the defendant and its immediate predecessor(s) in title for the relevant statutory period of 20 years?

(2) If the answer is yes, whether the plaintiff has the requisite animus possidendi for the purpose of establishing adverse possession of the Subject Area?

(3) Whether the defendant’s right in relation to the Subject Area was extinguished and therefore statute-barred under sections 7(2) and 17 of the Limitation Ordinance (Cap 347)?

(4) If the answers to Questions 1, 2 and 3 are yes, whether the Court could and should nevertheless refuse to make any declaration in favour of the plaintiff on grounds of illegality and/or public policy?

(5) If the plaintiff has unlawfully trespassed the Subject Area, what remedies (if any) is the defendant entitled to recover?

59.It seems to me that if the answers to Issues 1 and 2 to be in the affirmative, Issue 3 would normally also be in the affirmative.  Issue 4 is complicated by the fact the state of the law seems not to be entirely clear or settled although both parties’ counsel have confirmed that at least at this level of Court, they were content for me to adopt the guidance of DHCJ S Leung in Choy Kuen Chi (see below) and applying the same broad principles given that the exercise involved is by definition a broad brush one.

60.Regarding Issue 5, it seems to me that these are matters of consequential relief only, since D has now made clear it would not be seeking substantive damages.  I have indicated at the closing that issues of consequential relief would be dealt with at the same time as costs when I give judgment on 26 February 2019.

APPLICABLE LEGAL PRINCIPLES

General principles

61.A convenient summary of the basic applicable principles has been stated in the Court of Appeal’s judgment in Tsang Foo Keung v Jimmy Chu [2017] 3 HKC 527 at paragraph 22:

“ …it will be helpful to summarise the basic principles of adverse possession:

(1) If the law is to attribute possession of land to a person who can establish no paper title to it, he must be shown to have had both factual possession during the relevant period (in the present case 20 years as the alleged possession occurred prior to 1991) and the requisite intention to possess.

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

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

(4) The person claiming adverse possession has the burden of proving both exclusive physical control and the requisite intention. Although the standard of proof is still the normal civil standard, ie on the balance of probabilities, commensurate with the serious consequences of finding that the holder of the paper title has been disposed the evidence of exclusive possession and intention must be compelling. It cannot be lightly assumed that the paper title holder has foregone his interest in land.

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

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

62.In Incorporated Owners of San Po Kong Mansion v Shine Empire Ltd (2007) 10 HKCFAR 588, the Court of Final Appeal cited with approval Yuen JA’s dicta in the Court of Appeal:

“ Yuen JA added that the need for acts to be unequivocal was set out in Powell v McFarlane (p.472) as quoted and referred to in JA Pye (Oxford) Ltd v Graham(paras.76–77):

76. … It is in cases where the acts in relation to the land of a person claiming title by adverse possession are equivocal and are open to more than one interpretation that those acts will be insufficient to establish the intention to possess. …

77. The conclusion to be drawn from such acts by an occupier is recognized by Slade J in Powell v McFarlane, at p.472:

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 courts will treat him as not having had the requisite animus possidendi and consequently as not having dispossessed the owner.”

(my emphasis)

63.The Court of Final Appeal also cited with approval (at para 7) the judgment of Slade J in Powell v McFarlane (1979) 38 P&CR 452, approved by the House of Lords in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419.  Of particular relevance is the passage below on animus possidendi:

“ (4) … the animus possidendi involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large,including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow.

…

An owner or other person with the right to possession of land will be readily assumed to have the requisite intention to possess, unless the contrary is clearly proved.  This is why the slightest acts done by or on behalf of an owner in possession will be found to negative discontinuance of possession.  The position, however, is quite different from a case where the question is whether a trespasser has acquired possession.  In such a situation the courts will require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world.  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 courts will treat him as not having had the requisite animus possidendi and consequently as not having dispossessed the owner.  (pp.470–472.)”

Relevance of licence/MOT

64.In Pang Yiu Chor v Wong Wai Leung[2], Au-Yeung J observed as follows:

“ 22. The following principles are relevant:

(1) To constitute possession, control must be exercised by the defendant in his own right: Jourdan and Radley-Gardner,Adverse Possession, 2^nd ed, at para 7-103.

(2) If a person (the licensee) takes possession by virtue of a license granted by another, it is the licensor who is treated as being in possession: Radley-Gardner, Adverse Possession, 2^nd ed, at para 7-127.

23. The 2^nd principle is made clear by the Privy Council decision in Sze To Chun Keung v Kung Kwok Wai David & anor [1997] 1 WLR 1232.  It applies even where the license was given by some person (in that case, the government) other than the true owner or on his behalf, since the possession is that of the licensor.”

65.In Yu Kit Chiu v Chan Sek Woo[3], the Court of Appeal considered the impact of a MOT in the context of the squatter, one Mr Chan, having signed one “on behalf of registered land owner”.  The Court of Appeal considered he was unable to establish animus possidendi.  Cheung JA held at paragraph 44 that:

“ 44. While bearing in mind the backdrop of the case which happened in rural New Territories in 1970 and Mr. Chan was a man of humble background, the law is that a man is taken to understand what he had signed. Because of his infirmity, Mr. Chan was unable to give evidence on his understanding of the MOT he signed in 1970. On that basis it has to be taken that he understood the contents of the MOT and that he signed it on behalf of the deceased. In Powell, Slade J held that where the trespasser’s use of land was equivocal, the onus is on him to ‘adduce compelling evidence’ that he had the requisite intention to possess (see p. 476). The document spelt out that in consideration of the deceased paying the requisite fee, the head lessor modified the Crown Lease by allowing him to maintain the structures on the land. After due consideration, I agree with the Judge’s analysis of the position. I am of the view that the signature of Mr.Chan on behalf of the deceased did not merely acknowledge the deceased’s ownership of the land but was also an acknowledgment of the deceased’s possession of the land. The erection of four structures on the land together with their use clearly were matters concerning possession of the land and not simply ownership. The head lessor’s permission to allow the four structures to be maintained continuously was also related to the issue of possession because they related to how the land was to be used and not merely ownership of the land. By acknowledging that he agreed to the terms of the modification on behalf of the deceased, Mr.Chan was acknowledging that he was possessing the land on behalf of the deceased and not to his exclusion. In my view Mr. Chan was not able to establish that he had the intention to possess the land in 1970 or thereafter when he had since 1970 paid the permit fees continuously. He did so even up to 2005 which was even after the plaintiffs had commenced proceedings against him.” (my emphasis)

Further at paragraph 47, his Lordship further held that:

“ 47. The correspondence between the District Lands Office and the plaintiffs was copied to Mr. Chan, he must have been aware that the plaintiffs were actively engaged in the discussion of the fees required by the STW. Although in his letter dated 2 January 1986 to the District Lands Officer, Mr. Chan requested the permit to be issued to him on the ground that the owner did not have any contact with him, eventually the permit was not issued to Mr. Chan but to the plaintiffs. Despite this, Mr. Chan continued to pay the fees. The STW was again in respect of a matter concerning the possession of the land, namely, the use of a built up area of the land. The payment of fees by Mr.Chan must be a continuing recognition of the possession of the land by the plaintiffs which is inconsistent with Mr.Chan having the intention to possess.” (my emphasis)

66.More recently Lok J[4] had occasion to revisit the impact of MOTs in the context of a claim for adverse possession:

“ 20. It is also trite law that occupation under a licence or otherwise with the permission of the legal or paper owner does not amount to possession for the purpose of adverse possession asthe occupation is enjoyed under lawful title. In Tsang Foo Keung v Chu Jim Mi Jimmy, it was held that occupation of a hawking stall on a private land under a hawking licence granted by the Government pursuant to the Hawker (Urban Council) By-laws was not possession for limitation purpose. The finding was made following Pang Yiu Chor v Wong Wai Leung and Sze To Chun Keung v Kung Kwok Wai David. These cases have established the principle that there is no adverse possession where the occupation was one by licensee as this will not be possession in his own right. It matters not whether the licence was granted by the paper owner or by someone else. Even if the licence was granted by someone else, the possession will be by the licensor and not by the occupier.

21. There is, nonetheless, an issue as to whether the test of determining animus possidendi is purely objective. Relying on authorities such as the Privy Council’s judgment in Ocean Estates Ltd v Pinder, the English decision in JA Pye (Oxford) Ltd v Graham and the local decision in Ho Hang Wan v Ma Ying Cheung, the Plaintiff says that the test is purely objective.

22. I disagree. First, the learned authors in Jourdan & Radley-Gardner: Adverse Possession have stated that there are two aspects to animus possidendi: (i) there must be an actual, subjective intention to possess; and (ii) the intention must be manifested by unequivocal actions.

23. Second, the requirement of a subjective element is consistent with the Court of Final Appeal’s decision in Wong Tak Yue v Kung Kwok Wai (No 2), which held that the subjective willingness to pay rent if asked negated the requisite animus possidendi. In reaching the decision, the Court of Final Appeal followed the decision of the English Court of Appeal in R v Secretary of State for the Environment, ex parte David. Further,Lam J (as he then was) in Hong Kong Kam Lan Koon Ltd v Realway Investment Ltd, after reviewing the authorities, came to the conclusion that he was bound by Wong Tak Yue and the contrary view expressed in Pye did not represent the law in Hong Kong. Hence, Wong Tak Yue remains the governing authority on the point.

24. Although I find that the test for determining animus possidendi is both subjective and objective, I do not think that such issue would affect the final outcome of the case. As I will demonstrate in the latter part of this Judgment, even by just looking at the conducts of the Plaintiff and the Father objectively,there was simply no intention to possess the Land on their part.” (my emphasis)

67.Specifically regarding the impact of MOTs, Lok J opined as follows:

“ 56. In each of these two cases [one of which being Yu Kit Chiu], the party claiming adverse possession signed the MOT in question acknowledging it to have been done on behalf of the registered land owner. Though the present MOT did not have the same acknowledgement, it does not really matter. The terms of the MOT made it clear that it was a permission given to the registered owner, i.e. the Tong. By making the MOT application,the Father therefore clearly acknowledged the Tong’s right over Lot 322, and so there was simply no animus possidendi.

57. Further, the involvement of the Tong by giving its consent to the MOT is well supported by evidence. First, the wording in the MOT clearly suggests that the Tong had given its consent to the MOT application. In fact, the issue of MOT is a matter affecting the terms of a Crown lease of which the privies are the Crown as the landlord on the one hand and the registered owner as the lessee on the other. Under such circumstances, it would be quite unthinkable that the Tong, as the registered owner of Lot 322, could be left out when the District Commissioner for New Territories was considering whether to issue the MOT in 1957, the effect of which was to modify the terms of the Crown lease. The involvement of the Tong as the registered owner in consideration regarding the MOT application is also supported by the fact that, in 1984, the Government requested the Plaintiff to obtain the consent of the Tong when he applied for the transfer of the MOT. Further, the unchallenged evidence of Wong Wan Leung relating to the setting up of a working desk in the District Lands Office also supports that consent had in fact been given by the Tong for the MOT application.

58. It is clear that, during his life time, the Father recognised his position as licensee by renewing the MOT every year and paying the annual fees as required. He also sought the retrospective approval for rebuilding the kitchen in 1961, an act which was inconsistent with himself being in occupation as an adverse possessor.As shown by the Tong’s consent letter in 1985, the Father had all along been regarded as a ‘tenant (租戶)’by the Tong.” (my emphasis)

68.It should be noted that the squatter had applied for the MOT to be transferred to his name after the death of the father (see paragraph 62 of the judgment).  This was thus evidence of the plaintiff wishing to step into the father’s shoes.

69.In Lai Suk Yi v Hau Tso Hee[5], DHCJ Kwok SC was faced with a situation not dissimilar to the one before this Court.  A MOT was countersigned by the squatter’s father (Mr Lai Chi Chuen).  His Lordship considered that payment by the squatter after her father’s passing for the MOT to be ‘fatal’ to a case of adverse possession.  He held that:

“ 65. The Receipted Demand Notes covered the years 2006 – 2014 as annual fees for Modification of Tenancy granted on the application of Hau Tsan Pui (侯燦培) for the benefit of Lai Chi Chuen (黎智全) as permittee. The payment of fees evidenced by the 9 Receipted Demand Notes is a continuing recognition of the occupation/possession of the land with the consent of the paper owner. This is incompatible with Lai Suk Yi (黎淑儀) having the intention to possess for the purpose of the Limitation Ordinance.” (my emphasis)

70.It would appear that his Lordship was following Yu Kit Chiu.

71.Unsurprisingly, Mr Li placed heavy reliance on the latter two cases.  In any event, he submitted that in substance whether a squatter himself signed the MOT or not is not the most important matter as any act by him/her which equivocally evinces his intention would be fatal to a claim of adverse possession.  For his part, Mr Chan reminded me that the Court of Appeal’s dicta in Yu Kit Chiu was confined to the situation where a squatter by signing a MOT ‘on behalf of an owner’ would become for practical purposes estopped from claiming he was also in possession.  Mr Li relies on the latter two cases and submits that payment for the MOT should be fatal to a claim of adverse possession.

72.I agree with Mr Chan that the Court of Appeal’s dicta only go so far as to hold that, unsurprisingly, where a squatter has recognized (in writing and in a MOT in the case before it) the owner being the paper title owner he could not be heard to have shown any animus possidendi.

73.The focus of the Court was on whether the act of the squatter (signing the MOT ‘on behalf of the registered owner’) amounted to an “acknowledgment of [the paper title owner’s] possession of the land”.  In other words whether by his conduct the squatter “was acknowledging that he was possessing the land on behalf of the [paper owner] and not to his exclusion”.

74.Lok J in Lee Siu Fong held that renewing the MOT every year and paying the annual fees amounted to a “recognition” of one’s “position as a licensee”.  The act of payment for the MOT amounted to a “continuing recognition of the occupation/possession of the land with the consent of the paper owner”.

75.This was also the same approach DHCJ Kwok SC adopted in Lai Suk Yi where the payment of fees for the MOT was treated as a “continuing recognition of the occupation/possession of the land with the consent of the paper owner”.

76.Both decisions support the proposition that the Court would analyse the evidence of intention and infer from such evidence whether an intention to possess has been shown or otherwise.

77.I agree with Mr Chan that these authorities do not support the proposition that in every case where Y signs a MOT ‘for and on behalf of X the paper owner’, if Z renews and pays for the said MOT, then he would always be found to have lacked animus possidendi for that reason alone.  Yu Kit Chiu is authority for the proposition that Y cannot show animus, not that Z can never do so.

78.Ultimately the Court in conducting this exercise has to consider all the evidence probative of intention, direct and indirect, and then consider if a squatter has discharged his burden of showing that his acts are not open to more than one interpretation and that he has made it perfectly plain to the world at large that he had intended to exclude the owner as best he can.

79.The analysis of Cheung JA in Tsang Foo Keung is instructive:

“ 2.8. In my view, first, this is a case where is evidence pointing to a contrary conclusion. This is not a case where the Chus entered the land without consultation and without obtaining permission from any one. The Judge relied on the fact that the Chus were occupying the land by way of a licence from the Government. I am satisfied that the Judge was correct to find that their occupation was as Government licensees pursuant to the fixed pitch hawker licence granted by the Government and not by way of ‘possession’ for limitation purpose. The Judge was correct to regard the following in coming to this finding:

‘ 59. In my view, these By-laws and licence terms and conditions, subject to which Chu Senior and/or Madam Yu carried on business at D1’s Old Hawker Stall and occupied the land on which that hawker stall stood, amply demonstrate that during the period from 1963/64 to 1985:-

(1) The licences granted to them were ‘fixed pitch’ hawker licences which spelt out the specific location and the precise dimensions of their allocated pitch.It is not merely a licence permitting them to carry out certain activities.

(2) Chu Senior and Madam Yu were at all material times subject to the power of the licensing authority to allocate a specific pitch to them as well as the power to require them to vacate from their allocated pitch.

(3) The purpose and the duration of Chu Senior and Madam Yu’s occupation of their allocated pitch, as well as the activities which they were permitted to carry out at their allocated pitch, were subject to close control and regulation by the licensing authority.

(4) Chu Senior and Madam Yu were also subject to stringent restrictions as to how their allocated pitch could be occupied and used.’

2.9. Further, in the light of these factors, the nature of the occupation by the Chus was at best equivocal and open to more than one interpretation. This being the case the statements of Slade J and Lord Hutton come into play and the Court will treat the Chus as not having had the requisite intention and consequently as not having dispossessed the plaintiffs.” (my emphasis)

Credibility of witnesses and relevance of testimony

80.The general approach to determining credibility and fact finding is not in dispute[6].

81.Apart from P herself (whose position I deal more particularly below), P called Chung Yin (the younger daughter) and Chung Lam (the older brother).  The children’s evidence buttressed P’s evidence on how the Occupied Area had been used.

82.Chung Lam also explained the extent of the use and income generated from storing materials on the Subject Area.  Whilst he may have tried to minimize the extent of the use and the income generated from it (whether generated separately or as he suggested in the box bundled with his general fees), on a balance of probabilities bearing in mind inherent probabilities having regard to his occupation, the size of the Subject Area and the photos produced by D showing some of the items/goods stored, I find that the scale of such operations would not be very extensive.  It appears consistent with Chung Lam’s broad description of storage being an ancillary service to his job as a delivery/transport worker rather than something of some scale.  This is something which may go to Issue 4 if P is successful on Issue 3.

83.D also called Chan Chi Chung, a neighbour who has lived in the neighbourhood since he was born.  He has been a friend of Chung Lam since the 1980’s and remains to this day his friend.

84.Regarding P’s children and brother, I have borne in mind they would naturally be expected to want to help P.  The same goes for Mr Chan Chi Chung due his friendship with Chung Lam.

85.I find that they were generally honest and reliable witnesses.  In any event, apart from a few areas of limited relevance (which I deal with specifically below) I did not consider their evidence to be particularly controversial.

86.I add that I understand Chan Chi Chung’s family may also be engaging in litigation with D over adverse possession claims.  I do not believe that the outcome of this litigation would affect any other litigation or potential litigation.  Each case depends on very specific facts.  In any event Chan Chi Chung’s evidence is not controversial and critical to the outcome of this case.

87.Finally, Fang Hui was called.  He is P’s younger brother.  It appears that the only reason why he was called was that his signature appeared in a letter dated 26 August 2003 to the Board relating to the Application.  He stated that he did not have any rights to the Subject Area but was not able to explain why he had signed on the said letter at the time.  Whether this was done at the behest of an official of some type/surveyor (as Fang Hui suggested) and presumably as some sort of witness or not does not matter.

88.Notwithstanding the fact that it is not at all clear why he signed,it would be a quantum leap to find that Fang Hui had an actual interest in the Subject Area.  There is no basis, and it was not put to him that he had an economic or legal interest.  In my view whilst it may be somewhat odd for him to have signed this letter it is clear that the Application was made by “I, Fong Kam Mui” as the letter started by reciting. 

89.I will also deal with my assessment of P.  It would appear from her viva voce evidence that she did not really fully understand the purpose of these proceedings or the relief she would be obtaining if she were successful. It is also fair to say P did not seem to be fully apprised of all the matters stated in her witness statement.

90.Whilst P denied at various times not to have seen documents disclosed by her, I am not prepared to find that she was deliberately dishonest about this.  Rather this is consistent with the fact that she paid no attention to these and must have passed them on to others to help and guide her on what to do and hence she may not remember them notwithstanding these would have passed through her hands (and this happened quite a few years ago).

91.While she gave evidence relatively clearly on matters concerning factual possession of the Occupied Area she seemed to be genuinely confused about a number of matters which arose after 2003 when some reaction was needed by reason of Government action.

92.It would appear that P’s general attitude was to try to at least delay those actions and stay on the Occupied Lot as long as possible.

93.The precise extent of her personal involvement in dealing with the authorities for eg the Board is impossible to know.  Third parties be they family or professionals must have assisted her in that process but it is not possible to exactly determine who precisely did what, and how.  I have taken into account her age, level of education as well as the fact that the sword of Damocles hanging over her ability to stay on the Subject Area clearly has caused her a degree of stress and distress.

ANALYSIS AND FINDINGS OF FACT

Issue 1

94.As I have explained above, D is not really in a position to advance a positive case that P was not in occupation or physical possession of the Subject Area.

95.D did not devote a material part of its submissions in its written closing and this was not touched upon orally.  In my view, given the state of the evidence as set out above and how D came into the picture, this was a reasonable and proportionate approach for D to take.  I will therefore deal with this point relatively swiftly.

96.P has given evidence and testified to how she first raised pigs in the Occupied Area for the first 11 years of occupation, and soon after her husband passed away she then resided there and also allowed her son to use some of the structures on the Occupied Area for storage purposes.  It is true that P’s memory was by her own accord not always good and she would sometimes get confused, but on those parts of her evidence relating to the occupation of the Subject Area from 1985 to 2014, I consider her evidence to be satisfactory and corroborated by her family members (Chung Yin) as well as Chan Chi Chung.  I accept, as submitted by D that she was not able to fully correlate the structure numbers used in her witness statement with the actual structures on the ground and that to some extent what was stated in her witness statement in that regard might have overstated the position.  The way I reconcile her evidence is to accept that her recollection of the structures is basically consistent with the plans she was invited to look at but that she did not check them structure by structure.  This does not materially undermine P’s claim for factual possession.

97.Although not all of the children were on the Occupied Area throughout all the years, they have visited their family home with such degree of regularity so as to have knowledge of these matters.

98.It is also to some extent backed up by some documentary evidence (for example the CLP receipt as well as the letter from the EPD) as well as various photographs P has produced.

99.There is nothing in the Surveyors Reports which would contradict P’s case on her account of the use of the Occupied Area.  The photos and the plans are broadly speaking supported by the evidence given by P and the members of her family who gave evidence.

100.I do not repeat the matters above regarding the fact P was unable to produce pre-2006 receipts or that there appears to be a ‘discrepancy’ in the address used in some of the papers. I find for the reasons set out above that the documents referred to by P all refer to the Occupied Area.

101.I therefore have little difficulty in finding Issue 1 in P’s favour, ie that she has proved factual possession over the Subject Area.

Issue 2: animus possidendi

102.In so far as this Issue is concerned there is in reality very little dispute on the actual facts; rather, there is a legal dispute over the legal significance of those facts.

Fenced property and exclusive control

103.Mr Chan rightly reminded me that the enclosure and the fact of P’s exclusive factual possession is an unequivocal act of possession and strong supporting evidence of animus possidendi.  I agree that this is clearly an indicator in support of P in so far as animus is concerned.

MOTs

104.P’s own evidence was that she had obtained the ‘right’ to occupy the Occupied Area by virtue of the Agreement which she had entered with Chan/Ip. This included in effect a transfer of the MOTs to her. 

105.To paraphrase Chow J’s judgment in Tsang Foo Keung (at first instance) “the reality is that it was only through the [MOTs] and nobody else [P] was allowed to occupy” the land, and farm on it in the first 11 years.  This is not a case of a squatter simply entering a land with no permission from anyone and squatting on it as his own.

106.Of course, as a matter of strict law these MOTs were not transferrable (this being one of the express conditions, see above) but this is how in effect P took them and relied upon them from 1985 onwards until they were revoked in 2005.  P accepts that the Agreement while not drafted by her, was drafted on her instructions by the letter writer.  The letter was reduced in writing and in Chinese.  It was very short and important to her, given she was handing over a handsome sum of money.

107.For the purpose of investigating P’s animus, the Court is concerned with the question of intention.  Here, P by taking Chan/Ip’s interest together with the two MOTs and by renewing them treated them as effectively having been transferred to her and the public authorities dealt with her effectively as such.

108.This de facto transfer is consistent with the fact that the Government would name P as one of the addressees for payment or in the 27 June 2003 letter when it noted the breach of the MOT.

109.The MOTs were clearly important to P.  Her evidence in the box was that she regarded them as akin to ‘licences’ which she would have acquired together with the structures.  These licences gave her, for want of a better word, an entitlement to remain on the Occupied Area.  When asked what she understood to be the consequences of the MOTs being terminated (in 2005) P first answered that this meant she would need to move out of the Occupied Area, before clarifying that this was still subject to her adverse possession claim.

110.P renewed the MOT for the next two decades and paid the annual fees.  In response to a question from the Court, she had explained that these MOTs were considered by her to be something akin to ‘rent for the land because she was living there’ (albeit this was not ‘rent’ paid to the owner of the land).  P’s understanding appears to be that as long as she continued to pay and renew the MOTs she would be allowed to stay on the Occupied Area. She recognized that she could not occupy the land just for free and some form of payment had to be made.

111.The vital importance of the MOTs for the purpose of P remaining on the Occupied Area can be seen from the event which triggered the Application, namely the letter from the District Lands Office dated 27 June 2003 (referred to above) which referred to the 1^st MOT (ie 10294), noted illegal extensions of structures permitted under the 1^st MOT and that the 1^st MOT may be revoked.  This would have, within the 20 year period brought to the attention of P (even if it were to be accepted she had not been aware prior to that) the vulnerability of her status.

112.Were it otherwise Landbase would not have applied for a temporary permission for three years.

113.I should mention that D relies on the fact that in the Application P did not describe herself as the owner apparently to disprove any animus possidendi.  The intention which needs to be proved is an intention to possess rather than an intention to own.  I therefore do not consider this to be a relevant consideration. There may be a host of reasons as to why P or those filling the form to help her filled the form in that way.  It is not relevant for the present exercise.

114.The existence of these MOTs was referred to by her in her application to the EPD regarding a survey conducted by it (see above).

115.Mr Chan, in a skillful and persuasive submission warned against any approach which would in reality consist of elevating conduct which on their face may amount to a tacit recognition by the squatter of another person being in possession, to effectively estoppel against animus possidendi on the part of the squatter.

116.I understand him to be submitting that the approach in ascertaining intention should not be mechanical or formulaic; but rather the whole of the evidence should be considered holistically focusing thus on all the evidence rather than highlighting one factor as being determinative.  I agree.

117.I am not dealing with hypothetical scenarios, but one where the squatter, from day one knew of the MOTs, paid the previous squatter for the structures together with MOTs (such that it was important enough to be recorded to in writing) and renewed them until they were cancelled in 2005 for the reason that she needed the MOTs and was aware of their importance as the foundation for her ‘entitlement’ to stay on the Occupied Area.   Where for example it could be shown that notwithstanding a MOT had been renewed but this was not known to P (because someone else had renewed it)this would of course give a completely different complexion to the same act. There is thus no inflexible rule that renewing or relying on an MOT which “acknowledges” or “recognizes” another person as being the owner would defeat the squatter’s claim for adverse possession.  This must depend on the context.

118.In the present circumstances having evaluated the overall evidence before the Court, I have concluded that P has failed to establish an intention to possess the Subject Area.

Squatter control point

119.Strictly speaking it is unnecessary for me to deal with this point given my conclusion in the preceding paragraph.  I will simply set out my understanding of the applicable legal principles.  Given my conclusion above, and the fact that this point may be re-litigated in the future I do not propose to say more than a few words.

120.In short, D relies on another part of the dicta of Lok J in Lee Siu Fong where he appeared to have considered that if structures on a disputed land were subjected to squatter control (as is the case here) then this would be an instance of a squatter showing lack of animus possidendi (at paragraphs 115 – 116).

121.His Lordship in a later case qualified those observations as obiter[7] clarifying that  “They are not support for a general proposition that once a squatter accepted the registration of an illegal structure on the land occupied by him under the Squatter Control Policy, that squatter then did not have the intention to possess that piece of land as a squatter.”

122.Notwithstanding the attractive submission by Mr Li to the effect that I should hold otherwise, I agree with Lok J that the registration of an illegal structure on the land occupied by him under the Squatter Control Policy cannot lead per se to the conclusion that a squatter therefore cannot show animus.

123.As explained above, it seems to me that in every case the act or omission of the squatter would have to be considered and the Court will need to scrutinize whether that act/omission is consistent with the squatter having shown an intention to possess or rather it is more consistent with a squatter having regarded another as having such intention to possess.  In some cases the act in question would be equivocal which would not be of assistance to the squatter.

124.In addition, one is dealing here, in so far as D is concerned, with structures on private land rather than government land (as distinctly noted by Lok J).

125.In short, no general and inflexible principle is to be derived from the existence of such registration.  What conclusion is to be to drawn would depend on the context and the specific facts of the case.

Issue 3: conclusion on P’s case

126.For the reasons above, I find that P has failed to make out her case on adverse possession.

Issue 4: public policy and its relevance to the declaratory relief

127.Strictly speaking, given my conclusion above on Issue 3 I do not need to deal with this.  Since I have heard submissions on this I propose to deal with this briefly only.

128.As Chow J noted in Tsang Foo Keung (at first instance)[8] that:

“ 77. The law on the consequence(s) of illegality on a claim of adverse possession is not yet settled. As mentioned in Jourdan QC and Radley-Gardner, Adverse Possession, 2^nd Ed, at paragraph 7-140, a number of possible approaches could be taken:

(1) a person should not be granted a remedy where he has to rely directly on unlawful conduct to succeed;

(2) an alternative approach would be to consider whether the policy behind the statutory prohibition in question would be infringed if a squatter was allowed to rely on acts committed in breach of the prohibition in support of a claim to title by adverse possession.

78. The nature and seriousness of the unlawful conduct in question would be relevant if the bar to making title by adverse possession is based on public policy considerations: see the discussion in Chung Man Yau v Sihon Co Ltd [1997] HKLRD 1221 (relating to a claim for loss of earnings from unlicensed hawking), at 1226 – 1228 per Mortimer VP, 1228 – 1229 per Godfrey JA, and 1229 – 1230 per V Bokhary J.

79. In view of the conclusions that I have reached on other issues above, the present case is obviously not the right occasion for me to conduct a detailed examination of this difficult area of the law.  I would merely say I am far from satisfied that the nature and seriousness of the unlawful conduct complained of in the present case would be sufficient to bar Jimmy Chu’s case on adverse possession had I come to the conclusion that it is otherwise well founded.”

129.In Hong Kong, Deputy High Court Judge S Leung in Choy Kuen Chi v Tat Fung Enterprises[9] admirably set out various propositions he had extracted from the authorities:

“ 69. Considering the abovementioned authorities, I venture to suggest the following propositions:

(1) There is no general principle of law that acts in breach of public law prohibitions could never lead to acquisition of rights. In the context of adverse possession, there is nothing in the LO to prevent a squatter who had committed a criminal offence in or in the course of taking possession of land from relying on the limitation provisions. Possession is possession.

(2) However, to suggest that the illegality of the means of possession is irrelevant will be an over-simplification of how the law operates in this context. There is the general principle under the maxim ex turpi causa non oritur actio.

(3) The general principle that a person should not be granted remedy if he has to rely directly on illegal conduct to succeed, if without more, could not be mechanically applied to the context of adverse possession. It is applied as an instrument of public policy, but not in circumstances where it does not serve the public interest.

(4) The requirement of public policy has to be ascertained by identifying the objective behind the legal prohibition and criminal sanction.Equally important is the context in which the legal prohibition, and thus breach, comes to be considered.

(5) A legal prohibition may make the very act of possession illegal, such as what happened in the cases of [R(Smith) v Land Registry [2009] EWHC 328 (Admin)] and [Collis v Amphlett (1917) 67 Sol Jo 37]. In such cases, the public policy behind the legal prohibition could well be to bar the acquisition of any right over the land by such acts. This may justify the denial of remedy to the squatter, notwithstanding actual possession with intent for the requisite period that would have entitled him to take advantage of the limitation provisions.

(6) A legal prohibition may have nothing to do with possession of the land but the act by which one comes to possess the land. Take the example of the act of breaking into the council flat in [Lambeth London Borough Council v Blackburn (2001) 82 P&CR 39]. As mentioned, it was not argued in that case that the act of criminal damage of the padlock would have prevented time from accruing in favour of the squatter. The authors of Jourdan, Adverse Possession (above) believed that such argument would have failed. However, had the prohibited act in question not been confined to criminal damage but the intended illegal entry as well, I would have thought that the subsequent possession would be tainted as part and parcel of the illegal entry. I would be surprised if the public policy behind the criminality of the act would not require the interest of the public to be guarded against such act of illegal entry and occupation by way of breaking-‌in. The nature and seriousness of such unlawful conduct would afford a good reason for denying the squatter the right to acquire right over the property as a matter of public policy.

(7)   The very act of occupying the land may not be illegal, but there are legal restrictions in respect of how the land may be used or what may be done on it.  The requirement of public policy behind such kind of restrictions would be case specific.  In [Glamorgan County Council v Carter [1963] 1 WLR 1], there was the town planning concern behind the prohibition against use of unoccupied land without permission.  In [Walton v Hedleyhope Parish Council [2012] EWLandRA 2011_0400], there was the concern about protection of the practical ability of the public to enjoy the green without interruption.”

130.The matter D relies on includes inter alia:

(1) P has acted in breach of the conditions of the Lease which provides that it may be used for garden/agricultural purposes only.  P submitted that as she is a squatter, she is not privy to the said Lease.  It seems to me that this approach is overly technical. If A squats on B’s land and by his acts breaches terms of B’s government lease, I cannot think in principle why this could not be considered as a relevant factor when assessing the public policy aspect of the declaration sought by A.

(2) A letter from the District Lands Office dated 27 October 2015 (more than three years ago) warned D of illegal structures having been erected on the Lot.  If no remedial action is taken, the government would reserve the right to take further action, including re-entry of the Lot and vesting D’s interest in the same to the Financial Secretary.

(3) A warning letter has been registered in the Land Registry by the government on 25 May 2017.

(4) When the Planning Department considered the Application to the Board it noted illegal occupation of government land, the fact the structures did not conform to the fact that it was a Coastal Protection Area (the Subject Area is close to the sea) and thus this raised some concerns from the point of view of environmental protection. 

(5) D had breached the MOTs (leading to their cancellation) and P’s son is using part of the Subject Area for storage.  As explained above, I accept that Chung Lam has probably sought to minimize the extent of the use of the Subject Area for storage and also perhaps sought to downplay the income he indirectly generated from the storage.  The evidence filed by D however (including the photos and the presence of hydraulic lifting machines) does not lead me to find that a storage business on a grand scale has been operated.

(6) P pleaded guilty in 5 December 2018 in the Magistrates’ Court by reason of her illegal occupation of government land.

131.Mr Chan reminded me that the underlying policy which underpins the concept of adverse possession was to encourage land use.  The land in question in the present case is agricultural land.  The rationale is particularly apposite in the circumstances of Hong Kong.  From 1985 until shortly prior to 2014, it would appear that P was the only person (together with her family) to have made use of the Occupied Area.  For 11 of the 20 years, pigs were reared and the government regulated that activity which presumably was consistent with its view of the public good.  Mr Chan also pointed to the MOTs having been renewed until 2015, and the continued existence of the squatter control numbers for many years as evidence of the authorities tolerating P’s activities.

132.It is also pointed out by Mr Li SC (and I accept) that there is a real risk that the government could re-enter the Lot without further notice.  This would result in a ‘lose lose’ situation where D loses the Plot to P who in turn loses it to the Government and therefore there would be no point in the Court exercising its equitable jurisdiction ‘in vain’.

133.On this last point I think that much depends on the context and any assessment of the situation can only be made by considering the evidence before the Court.  In the present case, it can be seen that the Government has not moved quickly nor aggressively to either enforce the terms of the Lease nor indeed occupation of government land until very recently.

134.While there is a real risk that the Government could re-enter the Lot in the sense that the risk is more than theoretical, there is nothing concrete before me to lead me to the conclusion that re-entry is likely or even probable.  If P had succeeded and a declaration had been obtained,presumably P would demolish the structures in order to avoid such re-entry.

135.I consider this to be a somewhat border-line case.  It is true that pig farming (and thus agricultural use) was being run for the first 11 years only.  However one should remember that this ceased soon after P’s husband passed away.  It is not a case of a trespasser using the land in a way completely against its designated uses from day one.

136.Bearing in mind the various factors urged upon me (as set out in the parties’ respective closings and which I hope to be forgiven for not listing all of them here, although I have firmly borne them in mind) weighing the nature and seriousness of the unlawful conduct identified and the public policy behind adverse possession, had I been persuaded that P had made out her case based on adverse possession I would not have considered that on the evidence before me the public policy considerations would be a sufficient bar to her case. 

137.I stress that I would have come to such a conclusion based on the evidence before me.  In particular, I did not consider that D could show on the evidence a probable risk of re-entry to the Lot, nor evidence of prompt government enforcement action or re-action to P’s various breaches which D has highlighted.

Other matters

138.I understand (see above) there may be future disputes about the status of other occupiers in or near the Lot and whether or not they have become owners by virtue of adverse possession.  Such claims, if brought,would ultimately be dependent on their own facts and it should not be thought that the findings in the present case and the legal consequences arising from these specific facts would necessarily be relevant to such cases.  

Costs and consequential directions

139.P’s claim will therefore be dismissed.

140.I will now hear the parties as to costs and consequential directions / orders as sought by D save that I award damages in the sum of $1 for trespass.

141.It remains for me to thank all counsel for their able assistance in this matter.

Mr Frederick H F Chan, instructed by Cheng & Wong, for the plaintiff

Mr C Y Li SC, leading Mr Jeremy Kwong, instructed by Sit, Fung, Kwong & Shum, for the defendant

Annex