KING, BENJI HENRY v ASIA HARBOUR INVESTMENT LTD AND OTHERS

HCMP 1823/2017 & HCMP 423/2018
(Heard Together)

[2019] HKCFI 1596

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1823 OF 2017

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 423 OF 2018

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(Heard together)

Before: Hon G Lam J in Court

Dates of Hearing: 12 13 June 2019

Date of Decision: 20 June 2019

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D E C I S I O N

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1.  These are two actions both begun by the plaintiff, Mr Benji Henry King, by originating summonses for declaratory relief in favour of adverse possession. Both actions concern the same rooftop flat (“Property”). The majority (48.0 m²) of the floor area of the Property falls within the Roof Floor of No. 22 Gillies Avenue South, Hung Hom, Kowloon (“Block 22”), which stands on the lot known as Section K of Sub‑section 9 of Section A of Hung Hom Marine Lot No. 1 and is the subject matter of the first action, HCMP 1823/2017. A small part of the Property (10.2 m²) lies on the Roof Floor of the adjacent contiguous property, namely, No. 24 Gillies Avenue South (“Block 24”), which stands on Section L of Sub‑section 9 of Section A of Hung Hom Marine Lot No. 1 and is the subject matter of the second action, HCMP 423/2018.

2.  In fact, the 12 buildings known as Nos. 2, 4, 6, 8, 10, 12, 14, 16, 18, 20, 22 and 24 Gillies Avenue South, all completed in about 1956, had the same structure and were built side by side, sharing the same party wall.  All these buildings are now subject to an application for compulsory sale for redevelopment under the Land (Compulsory Sale for Redevelopment) Ordinance (Cap 545) made by Asia Harbour Investment Ltd (“Asia Harbour”), the 1^st defendant in both actions, in the Lands Tribunal in proceedings numbered LDCS 4000/2017.

3.  In the case of Block 22, by the Deed of Covenant, ownership is divided into 14 undivided shares which are allocated to the Front Portion and Rear Portion of the Ground Floor, Mezzanine Floor and 1^st to 5^th Floors respectively.  When the action was commenced, Asia Harbour owned 10 units and hence 10 shares, with the remaining 4 units and shares being held in the names of the 2^nd to 5^th defendants in HCMP 1823/2017.  It is not in dispute that Asia Harbour has since acquired the interests of the 2^nd, 3^rd and 5^th defendants. 

4.  In the case of Block 24, ownership is also divided under the Deed of Covenant into 14 undivided shares which are allocated to the units in a similar way.  When HCMP 423/2018 was commenced, Asia Harbour held 11 of the units and shares and one unit and share were held by the 2^nd defendant in that action, while 2 units and shares appear to have been held by Country Cheer Ltd, a company which had been dissolved by deregistration on 23 June 2017.  Later land registration records show that those interests had been assigned to Asia Harbour in February 2015 although the instruments were not registered until December 2018.  Asia Harbour has also since acquired the 2^nd defendant’s interests.

5.  In other words, Asia Harbour has acquired all the units in Blocks 22 and 24 except the Rear Portion of 2/F of Block 22. None of the defendants other than Asia Harbour has taken part in these actions.

6.  In both buildings, no undivided share is allocated to the Roof Floor.  The Deed of Covenant each specifically provides that each owner has the right in common with other owners to use the roof.  The Roof Floor is therefore part of the common areas in both buildings.

7.  The plaintiff is the only factual witness.  His evidence is that in about 1982, when he was about 5 years old, his mother, who had separated from his father, entrusted him with her friends, Mr Woo Kam Yam and Madam Ho Jun Jun (“Mr Woo” and “Madam Ho” and together the “Guardians”).  In 1984, she executed a Deed formally to appoint them Guardians of the plaintiff.  Since 1982, the plaintiff had lived at the Property with Mr Woo and Madam Ho, who did not have any children of their own. 

8.  At that time there were also one Mr Lo Siu Nam (known to the plaintiff as Uncle Lo) who belonged to the same clan as Madam Ho, and Mr Woo Kam Wing, Mr Woo’s elder brother, living in the Property.  In 1984, Woo Yuk Ki, the son of the younger brother of Mr Woo, came from the Mainland and lived with them. They were all on good terms and lived there as a family.  The plaintiff was raised by his Guardians whom he treated as his parents.

9.  According to the plaintiff, his Guardians moved out of the Property in 1991 after being allocated a flat in a public housing estate in Fanling.  Uncle Lo moved out in 1995 as he was also allocated a public rental flat.  Woo Yuk Ki moved out in 1996 after he purchased a property.  Finally, Woo Kam Wing moved to an elderly centre in 1997.  The plaintiff has since lived in the Property on his own.  Mr Woo and Madam Ho died in October 2012 and June 2013, aged 82 and 86 respectively.

10.  The plaintiff was told by Mr Woo that he and Madam Ho purchased the Property in about 1970 and had been living there before the plaintiff joined them.  In all these years they did not pay any rent to anyone and regarded themselves as the owners of the Property.

11.  The Property is a self‑contained residential unit with living areas, bedrooms, a bathroom and a kitchen.  It has a metal door with a lock to which only the occupants have the keys.  After the others moved out in 1997, the plaintiff caused the lock to be changed and only he had the keys.

12.  The Property has water and electricity supply as well as a telephone line. 

13.  The water supply was initially shared between the Property and the neighbouring rooftop flat on Block 24.  The meter was originally registered in the name of Uncle Lo.  When he moved out, it became, and still remains, registered in the name of Woo Yuk Ki, despite that he had also long left the Property. 

14.  The electricity account was originally in the name of Uncle Lo until it was transferred into the plaintiff’s name in July 2011 when the Property underwent some minor repair works.  The plaintiff had been paying the electricity bills since before 2000.

15.  The telephone line was in the name of Mr Woo until it was transferred into the plaintiff’s name in December 2007.  The same telephone number (with prefix changes) had been in use for the Property for at least 30 years, as shown by the plaintiff’s school registration form dated 1989.

16.  On behalf of the 1^st defendant Mr Walker Sham criticised the plaintiff for certain apparent inconsistencies between his affirmations, in particular where the plaintiff stated that the other persons residing in the Property gradually moved out between 1990s and early 2000, and his oral evidence.  I recognise that the affirmations were less precise, and gave the impression that some of the other occupants remained until early 2000, whereas the plaintiff’s oral evidence at trial was that everyone except him had moved out by 1997.  The plaintiff was however able to explain, credibly in my view, why he had specific recollection of those specific years he mentioned in oral evidence.  I accept that in his instructions to his solicitors for making the affirmations the plaintiff did not think he needed to refer precisely to the times when each individual ceased to live in the Property.

17.  Furthermore, the evidence concerning his relationship with his Guardians and their occupation of the Property is supported by contemporaneous documents.  The Deed dated 3 September 1984 for the appointment of the Guardians specified Mr Woo’s and Madam Ho’s address to be No. 22 Gillies Avenue, Rear Portion, Roof Floor, Hung Hom. In the plaintiff’s school registration form dated September 1989, and in his registration documents for the Institute of Vocational Education dated July 2000, the address of the Property was also used.  It might be thought unusual that the plaintiff did not move out in 1991 with his Guardians when he was only 14.  However, his evidence was that he quitted school to work after Form 3 (and this is corroborated by an acknowledgment slip from the IVE in 2000), which shows he was quite an independent youngster at the time.  The plaintiff has also produced various bills and business correspondence from 2000 onwards addressed to him at the Property.

18.  Overall I find the plaintiff’s evidence credible and consistent with such documents as are available and with the inherent probabilities.  I accept his evidence.

19.  There is no disagreement between the surveyors who gave expert evidence.  They are both of the opinion that, while they could not say whether or not the Property had been erected by reference to the aerial photograph taken in 1969 because of its low quality, from the aerial photographs taken from 1973 onwards, the Property could be clearly identified and that there had been no significant change in its delineation despite some minor maintenance and repairing works having taken place over the years.

20.  On the evidence, it is quite clear, therefore, that the Property has existed in its present form and location probably since 1970, and certainly since 1973 at the latest, with the same boundaries throughout.  Mr Woo and Madam Ho had been living there probably since 1970, together with Uncle Lo and Woo Kam Wing from before 1982, the plaintiff since 1982, and Woo Yuk Ki since 1984.  Mr Woo and Madam Ho moved out in 1991, Uncle Lo in 1995, Woo Yuk Ki in 1996 and Woo Kam Wing in 1997.  When Mr Woo and Madam Ho moved out, they told the plaintiff to “look after” (打理) the Property.  The plaintiff has continued to live there on his own after 1997 up to now.

21.  There is no dispute on the law of adverse possession.  Counsel have referred me to the well‑known authorities of Powell v MacFarlane (1979) 38 P & CR 452, The Incorporated Owners of San Po Kong Mansion v Shine Empire Ltd (2007) 10 HKCFAR 588, and Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 5) [2007] 5 HKC 122, among others.  The burden lies on the plaintiff to prove adverse possession, by establishing both factual possession and the requisite intention to possess.  The plaintiff’s case being that the legal title owners’ cause of action accrued before 1991, the requisite period of possession is 20 years.

22.  There has clearly been factual possession of that part of the Roof Floor occupied by Mr Woo and Madam Ho since the 1970s.  They lived in and also licensed others to live in the Property which is an enclosed flat with a door secured by locks.  The Property was in their control rather than that of the legal title owners.

23.  Understandably, Asia Harbour has not been able to advance any positive case disputing that the Property had been used by the occupants to the exclusion of the world, and that Mr Woo and Madam Ho, having purchased it from someone, regarded themselves as its owners.  Instead, the main point taken by Mr Sham on behalf of Asia Harbour is this.  He submitted that even if adverse possession of the Roof Floor was established, it was the adverse possession by the Guardians.  Insofar as he occupied the Property, the plaintiff was simply a licensee of his Guardians.  Such licence lasted until their death in 2012 and 2013 respectively.  The Guardians’ possessory title did not devolve upon the plaintiff because they did not formally adopt him as a son and had died intestate.  Since the plaintiff himself has not completed 12 years of adverse possession counting from 2012 or 2013, his claim should be rejected.

24.  In contrast, Ms Lau who appeared with Mr Fong for the plaintiff submitted that the plaintiff was a squatter (together with his Guardians) with the requisite intention from the outset, and that the Guardians vacated the Property in 1991 before completing 20 years’ adverse possession (having begun in around 1973), leaving the plaintiff in sole adverse possession.  She also advanced certain alternative secondary contentions based on other factual scenarios.

25.  It is in my view unnecessary (and undesirable in the absence of anyone representing the Guardians’ estates) to decide the questions whether the Guardians had themselves completed 20 years of adverse possession, whether the plaintiff as a young boy in 1982 was capable of and went into adverse possession of the Property jointly with the Guardians, whether the plaintiff had in 1991 or 1997 begun to dispossess the Guardians during their lifetime, and so forth.  Instead, in my judgment, the following analysis is sufficient.

(1)   It may be that the plaintiff began his own adverse possession in 1997 after everyone else moved out and he changed the lock to the Property.  It is however unclear whether at that point he did intend to possess the Property to the exclusion of his Guardians.  As it is not essential to deal with this question, I shall assume that the plaintiff regarded the Property as belonging to his Guardians and lived there by their permission.  So did the other occupants until they had all left by 1997. 

(2)   Assuming the plaintiff was a licensee of his Guardians throughout their lifetime even after 1991 when they themselves vacated the Property, as Mr Sham accepted, the licence would nevertheless have been automatically terminated upon the death of Madam Ho, the last surviving licensor, in June 2013: Terunnanse v Terunnanse [1968] AC 1086, 1095G.

(3)   Thereafter, the plaintiff was not a licensee of anyone and would not have thought of himself as a mere licensee.  It would indeed be unreal to suggest that he continued to live in the Property on the understanding that he was being permitted to do so by someone, other than himself, who was entitled to the estate of Madam Ho (such as the Government, if her residuary estate had become bona vacantia). 

(4)   The plaintiff’s evidence was that he and his Guardians considered themselves the owners of the Property at all material times. I am conscious of the need to approach self‑serving statements on intention with caution: Powell v McFarlane at p 476.  What was said, however, is supported by the facts, and, in practice, the best evidence of intention is often found in the acts which have taken place: J A Pye (Oxford) Ltd v Graham & Another [2003] 1 AC 419, §70, per Lord Hope.  After Woo Kam Wing moved out in 1997, the plaintiff changed the locks and kept the keys himself without giving a copy to anyone.  In 2012 and 2013, the Guardians, whom the plaintiff treated as his parents, died.  From 2013 onwards at least, it seems to me that the plaintiff considered himself the sole owner and continued to live in the Property on that basis.  There was an intention on his part to treat the Property as his own and to exclude all other persons, including the legal title holders of Block 22 and Block 24, from the Property.

(5)   As observed in Wong Kar Sue & Others v Sun Hung Kai Properties Ltd (unrep, HCMP 1326/2005, 17 February 2006) at §6, a person can still acquire title by adverse possession even though he believes himself to be the true owner.

(6)   On this basis the Guardians were in joint adverse possession of the Property up to 2012, and Madam Ho (by survivorship) up to her death in 2013, through their licensee, namely, the plaintiff.  That possession was adverse to the paper title owners: see Sze To Chun Keung v Kung Kwok Wai David [1997] HKLRD 885, 888B‑E.

(7)   Although, on this basis, adverse possession by the plaintiff himself did not commence until 2013, the previous periods of adverse possession by the Guardians can be aggregated with the period of the plaintiff’s adverse possession which followed without interruption, even in the absence of an assignment of possessory rights: Cheung Yat Fuk v Tang Tak Hong & Others (2004) 7 HKCFAR 70, §4; Shelmerdine v Ringen Pty Ltd [1993] 1 VR 315; Chong Hing Bank Ltd v Fairview City Ltd & Others (unrep, HCMP 3225/2014, 25 July 2018), §§34‑36; Tower Hamlets London Borough Council v Barrett [2006] 1 P & CR 132, §36.  As explained in Megarry & Wade’s The Law of Real Property (9^th edition) at §7‑036, this is because time runs against the true owner from the time when adverse possession began, and so long as adverse possession continues unbroken, it makes no difference who continues it; see also s 13(2) of the Limitation Ordinance (Cap 347).

26.  As such, there has been continuous adverse possession of the Property for over 20 years before now, and indeed probably since 1970. 

27.  Mr Sham submitted that while the paper title owner cannot recover possession from a squatter who has been in adverse possession for the requisite period, this does not mean the paper title owner loses everything: he still has a good title against the whole world except that particular squatter and his successors in title, citing Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 5) [2007] 5 HKC 122, §§34‑35.  This submission, in my view, fails to deal with the situation where a second squatter is enabled to come into possession following the first squatter without interruption, thereby enabling him to “tack on” the period of possession of the first squatter.  For the reasons explained above, the title of the defendants as legal owners is not superior to the plaintiff’s possession as aggregated with his Guardians’.

28.  The plaintiff is therefore entitled in principle to succeed as against the defendants, which brings me to the question of relief.

29.  The first of the declarations sought by the plaintiff is that he has acquired, by way of adverse possession, ownership over the Property as against all the defendants.  At the hearing I raised with counsel whether it was appropriate to make that declaration, when other persons who might have an interest in the Property arising from their own adverse possession, particularly the personal representatives of estate of Mr Woo and Madam Ho, were neither parties nor before the court.  As Ms Lau recognised that any declaration would not be binding on such persons, I think it is in order to grant a declaration in each case that, as between the plaintiff and defendants, the plaintiff has acquired, by way of adverse possession, ownership over the Property as against all the defendants being the co‑owners of the Lot in question.

30.  I also grant a declaration in each case that any and all of the defendants’ rights and interests of and in the Property have been extinguished pursuant to s 17 of the Limitation Ordinance.

31.  In the originating summonses the plaintiff also claims a declaration that he is “entitled”, by virtue of his rights acquired by way of adverse possession, “to compensation for any loss or damage resulting from a compulsory sale pursuant to The Land (Compulsory Sale for Redevelopment) Ordinance … of all of the undivided shares in the Lot”. 

32.  It seems to me that the questions of compensation and application of proceeds of sale may well be matters for the Lands Tribunal in the proceedings for compulsory sale, already pending, rather than in such an action as the present before the Court of First Instance.  Mr Sham has foreshadowed an argument that no value should be attributed to the rooftop which was not allocated any undivided share in the Deeds of Covenants.  Moreover, it is in my view wrong in principle to make such a vague declaration of entitlement to compensation in the abstract especially when Ms Lau is unable to identify precisely the basis of the “entitlement” contended for.  The passage in Hong Kong Civil Procedure 2019, vol.1, §15/16/3, cited by Mr Sham, that “a declaration ought not to be made upon a preliminary point in an action brought for that purpose, where the substantive relief must be claimed in another action”, seems to me to be apt in the present case.

33.  Ms Lau relied on Chung Chiu Hing v The Personal Representative of Law Sam, deceased (unrep, HCMP 2384/2011, 9 June 2017) for her submission that the declaration sought is something that this court has jurisdiction to and should deal with.  With respect, Chung Chiu Hing is a materially different case.  There the plaintiff contended he had acquired title to a flat and the 1/364^th undivided share allocated to that flat by adverse possession.  The Lands Tribunal had ordered all the undivided shares to be sold by auction and they had been sold accordingly.  The proceeds of sale attributable to the property and share in question were already ascertained.  It was in these circumstances that B Chu J held in that case that, having found that the plaintiff had established adverse possession, there was no reason why the plaintiff could not be regarded by the trustee appointed for the compulsory sale to be the owner of the undivided share relating to the flat, and no reason why the entirety of the relevant part of the sale proceeds should not be paid to the plaintiff to discharge the encumbrance created by his possessory title.  In the present case, no undivided share is allocated to the Roof Floor, let alone the Property standing on that floor.  The dispute on compensation may involve argument not only about whether compensation should be paid, but also about the quantum of compensation payable and by whom or from which fund it should be paid.  It should finally be noted that even in Chung Chiu Hing itself, while B Chu J observed that she saw no reason why the trustee should reject the plaintiff’s claim for the sale proceeds, she did not actually make any declaration about entitlement to compensation (see §§137, 139).

34.  I decline therefore to grant the third declaration sought.  Nor does it appear there is such risk of disposition of the Lots in question without regard to the plaintiff’s interests as to necessitate a permanent injunction.

35.  Counsel agreed that costs should follow the event.  There will therefore be an order that Asia Harbour do pay the plaintiff the costs of both actions.

Ms Lorinda Lau and Mr Forest Fong, instructed by Chow Wong & Lawyers, for the Plaintiff in HCMP 1823/2017 & HCMP 423/2018

Mr Walker Sham, instructed by Vincent TK Cheung, Yap & Co, for the 1^st Defendant in HCMP 1823/2017 & HCMP 423/2018

The 2^nd to 5^th Defendants in HCMP 1823/2017 were not represented and did not appear

The 2^nd Defendant in HCMP 423/2018 was not represented and did not appear