Chea Shiu Chow v. Cheung Wai Keung, The Personal Representative of Cheung Chit Chiu, Deceased and Others

HCA 1346/2012

[2019] HKCFI 2478

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1346 OF 2012

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(By order to carry on dated 26th January 2017)

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(By order to carry on dated 26^th January 2017)

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Before: Deputy High Court Judge MK Liu in Court

Date of Hearing:  4, 5, 6, 9, 10 & 11 September & 4 October 2019

Date of Judgment:  14 October 2019

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J U D G M E N T

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INTRODUCTION

1.This is a case concerning whether a squatter has shown the requisite intention to possess in support of his adverse possession claim, while there is a tenancy agreement (“TA”) signed by the squatter before he came into possession of the land in question.

2.The land in question (“the Land”) is Lot No.539 in D.D. 84 (“Lot 539”) and Lot No.440 in D.D. 87 (“Lot 440”). The squatter is Mr Chea Shiu Chow (“Chea Senior”). The registered owners of the Land are Mr Cheung Chit Chiu (“Cheung CC”) and Mr Cheung Soon Chung (“Cheung SC”). The Land is in a village known as 李屋新村泥路(“the Village”). The TA was signed by Madam Cheung Sai Ying (“Cheung SY”) and Chea Senior and was dated 4 December 1994. Cheung SY and Chea Senior were respectively described as landlord (田主) and tenant (租客) in the TA.

3.Chea Senior and Cheung SY were alive at the beginning of these proceedings, but both of them have passed away before the commencement of the trial. Chea Senior passed away on 20 October 2016, and Cheung SY passed away on 6 July 2017.

4.The Plaintiff herein (“P”) is the estate of Chea Senior, the personal representative of which is Ms Chea So Man (“Chea SM”). Chea SM is the daughter of Chea Senior. The 1^st Defendants (“D1”) are the estate of Cheung CC and Cheung SC. The personal representative of the estate of Cheung CC is Cheung Wai Keung (“Cheung WK”). The 2^nd Defendant (“D2”) is the estate of Cheung SY, the executor of which is Cheung WK. Cheung CC is the maternal grandfather of Cheung WK, and Cheung SY is the mother of Cheung WK.

5.P’s case is that Chea Senior and his family have been in adverse possession of the Land since 15 March 1995, and have obtained a possessory title to the Land before the commencement of these proceedings.

6.The Defendants (“Ds”) accept that Chea Senior and his family have been in exclusive possession of the Land since 15 March 1995.  However, it is Ds’ case that Chea Senior entered into possession of the Land because of the TA, and Chea Senior paid rent in accordance with the TA (being HK$2,000 per year) until January 2012. In the circumstances, Chea Senior did not obtain a possessory title before the commencement of these proceedings.

P’s CASE

7.P’s case is that Chea Senior and his family leased several lands in the vicinity of the Land in early 1984 for farming activities. In late 1994, the landlord of those lands informed Chea Senior that the lease would not be renewed.

8.At about the same time, one Mr Wu Yuk Cho (“Wu”), who was living on the Land for many years, offered to sell the Land to Chea Senior. Chea Senior asked Mr Man Tung Sang (“Man”, Chea Senior’s brother-in-law) to negotiate with Wu on his behalf. Wu agreed to sell the Land at HK$270,000. On or about 12 December 1994, Wu and Chea Senior signed a sale and purchase agreement (“the SPA”) as “assignor” and “assignee” respectively, and Chea Senior signed the same as a witness. The terms of the SPA are as follows:

“本協意訂於一九九四年12月12日協意之一方為胡玉初 (持有香港身份証號碼: ......) 地址在 ...... (以下稱為‘出讓人’) 協意之另一方為文東生 (持有香港身份証號碼: ......) 地址在[the Yuen Long Address][1] (以下稱為‘承讓人’)

協意雙方同意條款如下:-

1. 出讓人同意出讓地段440約份87和地段539約份84及其上蓋物業。 (以下稱為‘該地段’)

2. 該地段之出讓價為港幣貳拾柒萬元正承讓人須按下述方式付款:-

a) 港幣柒萬元須在簽本協意之同時付清作為訂金

b) 港幣貳拾萬元須於一九九五年3月1日或之前付清作為出讓價之餘款。1995年3月15日清欠上述尾數(胡玉初簽署)

3. 出讓人須於收妥出讓價之餘款時將該地段交吉予承讓人。

4. 如承讓人未能履行本協意之條款以至本協意不能順利完成則已付之訂金將由出讓人沒收而出讓人有權再將該地段出讓與任何人唯出讓人不可再為此而向承讓人進一步追究責任或要求賠償損失。

5. 如出讓人在收取訂金後不依該協意條款將該地段出讓與承讓人則出讓人除須退還所有承讓人已付之訂金外,並須以同等數目之金額賠償給承讓人以彌補承讓人之損失, 唯承讓人不可要求進一步賠償逼使出讓人履行此協意。

協意雙方茲於上述年期日憑此親筆簽字為據

出讓人: (胡玉初簽署) (香港身份証號碼: ......)

承讓人: (文東生簽署) (香港身份証號碼: ......)

茲收到上述規定之訂金港幣柒萬元正

見證人: (車肇周簽署) (香港身份証號數: ......)”[2]

9.It is P’s case that eventually, possession of the Land was given by Wu to Chea Senior.  P contends that before the SPA, Wu had already acquired a possessory title to the Land. By reason of the SPA, Chea Senior had purchased that possessory title.

10.P’s alternative case is that Chea Senior and his family have been in adverse possession of the Land since 1995, and they have already obtained a possessory title to the Land before the commencement of these proceedings.

11.P denies that the TA is a genuine tenancy agreement.  P’s case is that some local villagers demanded Chea Senior to pay HK$2,000 per year as “road fee” if he wanted to ensure smooth transportation for his business to be carried out on the Land. The local villagers wanted to disguise the “road fee” as rent and demanded Chea Senior to prepare and to sign a bogus tenancy agreement to cover up this extortionate act of the local villagers. As a result, Chea Senior asked Man, who was then working in a law firm as a clerk, to draft the TA. Man did so and Chea Senior signed the TA. P claims that the TA is a bogus agreement or a sham agreement and has no effect at all.

12.Each year, before the lunar new year, Chea Senior would pay HK$2,000 to the Cheung’s clan, but that was a payment for “road fee”[3].

Ds’ CASE

13.Ds’ case is that the Land was originally registered in the names of Cheung CC and Mr Cheung Ka Piu (“Cheung KP”). They passed away in 1962 and 1975 respectively.

14.In about 1975, Cheung SY (who is the daughter of Cheung CC) was entrusted with the duty of managing the lands belonging to the Cheung’s clan, which included the Land.

15.The Land was previously occupied by a person called Wah Tau (華頭), who raised poultry on the Land.

16.Cheung SY (as the owners’ representative) and Chea Senior (as the tenant) signed the TA on or about 4 December 1994, in which the Land was let to Chea Senior at the annual rent of HK$2,000. The terms of the TA are as follows:

“租約訂於一九九四年十二月四日

張樨英 (持有香港身份証號數: ......) 地址在...... (以下稱為

‘田主’).

車肇周 (持有香港身份証號碼: ......) 地址在 [the Yuen Long Address] (以下稱為‘租客’).

租約雙方同意條款如下:

1. 田主同意出租地段440約份87和地段539約份84及其上蓋

2. 租金港幣貳仟元正 (每年計)

雙方茲於上述年月日憑此親筆簽字為據

田主: (張樨英簽署)

租客: (車肇周簽署)”

17.Pursuant to the TA, Chea Senior and his family started to occupy the Land in early 1995.

18.Throughout the years, the rent was collected in the following manner:

(1)  From 1995 to 1999, the rent was collected in December each year by Cheung SY, who would visit the Land to collect the rent together with Madam Fok Lai Ching (“Fok”, whose husband is the cousin of Cheung SY).

(2)  From 2000 to 2006, the rent was collected in December each year by Fok, who would visit the Land to collect the rent.

(3)  In December 2007, Fok, Cheung WK and Madam Wong Siu Kam (“Wong SK”, Cheung WK’s wife) went to the Land together to collect the rent.

(4)  In December 2008, Cheung WK went to the Land to collect the rent.

(5)  In December 2009, Chea Senior’s wife (“Mrs Chea”) requested to pay the rent at a later time. The rent was later deposited into Cheung WK’s bank account (“the Bank Account”) on 24 February 2010.

(6)  In December 2010, Mrs Chea again requested for postponing the payment of rent. The rent was later deposited into the Bank Account on 12 January 2011.

(7)  In January 2012, Cheung WK contacted Mrs Chea for the purpose of collecting rent. Chea Senior refused to pay rent and denied the existence of any tenancy.

(8)  On 11 June 2012, Cheung SY lodged a claim against Chea Senior in the Small Claims Tribunal for the unpaid rent of HK$2,000, and the ground of the claim was the TA (“the SCT Proceedings”). In response to the claim, Chea Senior filed a defence, in which he claimed that he would raise a claim of adverse possession.

19.The TA was duly forfeited on 3 March 2014. From 4 March 2014 onwards, P has been a trespasser in wrongful possession of the Land.

20.Ds are now claiming against P for vacant possession of the Land, and the outstanding rent and/or mesne profits.

THE AGREED ISSUES

21.Mrs Dora Chan for P and Mr Damian Wong (together with Ms Jenny Lok) for Ds have agreed that the issues to be resolved in this trial are as follows:

(1)  whether Chea Senior has obtained a good possessory title to the Land from Wu by paying full consideration under the SPA;

(2)  whether Chea Senior had the necessary animus possidendi for the application of the doctrine of adverse possession;

(3)  whether the TA is invalid and/or unenforceable;

(4)  whether the TA is a genuine tenancy agreement or a sham agreement dictated by the Cheung’s clan for smooth passage within the Village;

(5)  whether Chea Senior has paid any rent to Cheung SY.

22.The SPA has not been stamped. It is P’s case that Chea Senior has purchased the possessory title enjoyed by Wu under the SPA. The solicitor for P (“the solicitor”) has offered the personal undertaking (“the undertaking”) stipulated in s.15(1A)(a) of the Stamp Duty Ordinance. On this basis, if the SPA is a real conveyancing document passing some kind of interest in the Land from Wu to Chea Senior, notwithstanding the fact that the SPA has not yet been stamped, the SPA can still be admissible evidence in these proceedings.

23.Ds are relying upon the TA to defeat P’s case.  Counsel have agreed that the TA has already been duly stamped.  Hence, the TA can be admissible evidence in these proceedings.

THE PRINCIPLES

24.The principles concerning adverse possession have been summarized by the Court of Appeal in Tsang Foo Keung v Chu Jim Mi Jimmy^[4], in which Harris J (Cheung JA and Yuen JA concurring) said:-

“22. Before explaining the Judge’s reasons for rejecting the 1^st defendant’s case 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.” (Emphasis added)

25.The trespasser must adduce clear and affirmative evidence to show that he had the requisite intention to possess and had made such intention clear to 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 requisite intention to possess is not shown, and consequently adverse possession is not established. See Incorporated Owners of San Po Kong Mansion v. Shine Empire Ltd^[5].

26.In an adverse possession case, the registered owner is entitled to take the position of requiring the squatter to prove the adverse possession claimed by him. The registered owner is entitled to rely upon the paper title. The registered owner may test the squatter’s case and is entitled to judgment if the squatter fails to discharge the very high burden of proof required in establishing a possessory title. See Birkenhead Properties and Investments Ltd v Lam Kai Man^[6].

27.Adverse possession is possession as of wrong^[7]. If the occupier possessing the land pursuant to a tenancy or licence granted by the owner, there would be no adverse possession.  See Kan Kam Cho & Another v Kan Chiu Nam Raymond & Another^[8], in which Lord Scott of Foscote NPJ said:-

“38. The right of an owner of land to recover land to the possession of which he is entitled accrues as soon as the land is in the possession of some person in whose favour time can run (see Pye (Oxford) Ltd v. Graham [2003] 1 AC 419 at 435 and 445). As Simon Brown LJ (as he then was) said in Markfield Investments Ltd v. Evans [2000] 1 WLR 1321 at 1324:

‘the true owners’ cause of action accrues once his land is in adverse possession, and continues to be treated as accrued unless and until the land ceases to be in adverse possession.’

The Lord Justice went on to say this:

‘Adverse possession may cease (a) by the occupier vacating the premises, (b) by the occupier giving a written acknowledgment of the true owner’s title ... (c) by the true owner’s grant of a tenancy or licence to the occupier ... or (d) by the true owner physically re-entering upon the land’” (Emphasis added)

28.The Court has to approach the self-serving statements made by the squatter with circumspection, but would give considerable weight to the statements made by him which are against his interest. See Wong Tak Yue v Kung Kwok Wai & Another (No 2)^[9]:-

Per Li CJ[10]:

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

Per Litton PJ[11]:

“Here, the appellant has come nowhere near establishing adverse possession. He unequivocally declared that at all times he was ready willing and able to pay rent to the owners, and did not do so only because no one came along on behalf of the landlords to collect rent. Whether his acts and declarations in the course of the 1980 court proceedings amounted to an acknowledgment of the owners’ title in terms of s.23(1), or fell short of that, the fact remains that he had no intention to exclude the owners.” (Emphasis added)

Per Ching PJ[12]:

“I need only add that there can be no better evidence of the intention of an occupier of land than his express declaration against his own interest.” (Emphasis added)

29.In respect of evaluating the evidence given by witnesses, a valuable guidance can be found in Hui Cheung Fai and another v Daiwa Development Limited^[13], in which DHCJ Eugene Fung SC said:-

“77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce) ......

78. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: e.g. Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).

79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.

80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36-37 (Bokhary PJ)), or from the assessment of the witnesses’ character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)).”

30.Similar guidelines can also be found in Lee Fu Wing v Yau Po Ting Paul [2009] 5 HKLRD 513, in which DHCJ Au (as he then was) said:-

“53. In assessing the credibility of a party’s case on a particular issue, I accept the submissions of [counsel] that the Court should take into considerations the following:-

(1) Whether the party’s case is inherently plausible or implausible.

(2) Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable.

(3) Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment of his overall credibility.

(4) The demeanour of the witnesses.”

31.In respect of lies told by a factual witness on a central issue, the reminder given by Sir John Dyson in MA (Somalia) v Secretary of State for the Home Department[14] has to be borne in mind:

“31. ....... where a claimant tells lies on a central issue, his or her case will not be saved by general evidence unless that evidence is extremely strong. It is only evidence of that kind which will be sufficient to counteract the negative pull of the lie. But much depends on the bearing that the lie has on the case......

32. Where the appellant has given a totally incredible account of the relevant facts, the tribunal must decide what weight to give to the lie, as well as to all the other evidence in the case, including the general evidence......

33. ...... where the appellant tells lies on a central issue in the case, the [tribunal] may conclude that they are of great significance......It will be a matter for the [tribunal] to decide whether the general evidence is sufficiently strong to counteract what we have called the negative pull of the appellant’s lies.”

32.There is no dispute that the TA is a document signed by Chea Senior. I have drawn counsel’s attention to the principle mentioned by the Court of Final Appeal in Ming Shiu Chung & Others v Ming Shiu Sum & Others^[15], and I have asked counsel whether that principle has any application in the present case. In Ming Shiu Chung, Ribeiro PJ said:

“84. ... Reliance is universally placed on signatures appended to documents by persons of full age and understanding as signifying the signatory’s assent or adherence to what that document states. Where such a person has signed a document which purports to have legal effect, the law has never regarded it as enough to show that he signed without knowing its contents for the document to be disavowed. It is an everyday occurrence that people sign documents without reading the small (or even the large) print and therefore sign without actually knowing the terms (or all the terms) of the document signed. But they are held to the documents which they have chosen to sign unless there is shown to be a recognized legal basis for concluding that their apparent consent has been in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity.

85. Thus, in Saunders v Anglia Building Society [1971] AC 1004 at 1016, Lord Reid warned against an approach, like that of the Court of Appeal, which inverts the general rule:

‘We find in many of the authorities statements that a man’s deed is not his deed if his mind does not go with his pen. But that is far too wide. It would cover cases where the man had taken no precautions at all, and there was no ground for his belief that he was signing something different from that which in fact he signed. I think that it is the wrong approach to start from that wide statement and then whittle it down by excluding cases where the remedy will not be granted. It is for the person who seeks the remedy to show that he should have it.’

86. And in Bank of China (Hong Kong) Ltd v Fung Chin Kan & Another (2002) 5 HKCFAR 515 at p.533, Litton NPJ acknowledged:

‘... the fundamental principle that, generally speaking, when a person signs a legal document, he or she is bound by the act of signature: As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood.’”

33.Mrs Chan submits the principle in Ming Shiu Chung has no application in this case, for P is not seeking relief from fraud or forgery. According to Mrs Chan, P’s case is that the TA is a sham intended by both Chea Senior and Cheung SY, and hence Ming Shiu Ching has no application in the present scenario.

34.Mr Wong submits that Ming Shiu Chung is the authority for the principle that a person of full age and ordinary understanding will be held to the document which he has chosen to sign, whether he has read the document or not and whether he is ignorant of the precis legal effect or not, unless a vitiating factor is shown. This principle clearly applies in this case, for the TA is a document signed by Chea Senior.

35.In my view, the principle in Ming Shiu Chung applies in the present case. With no disrespect to Mrs Chan, I have no need to mention the authorities cited by Mrs Chan in her submissions. It would be sufficient for me to say that I am not convinced that the authorities cited by Mrs Chan support her submissions. In any event, Ming Shiu Chung is a decision by the Hong Kong Court of Final Appeal. If there is any variance between Ming Shiu Chung and the authorities mentioned by Mrs Chan, Ming Shiu Chung is the highest authority binding upon me and I have to follow and apply the principle pronounced by the Court of Final Appeal therein.

36.In my judgment, Chea Senior is bound by the TA unless a vitiating factor is shown, or the reliance on the TA by Ds falls into some category of unconscionable conduct justifying relief in equity. P is saying that the TA is a bogus or a sham agreement, the purpose of which is to cover the “road fee” demanded by the local villagers. Whether the allegation of “sham agreement” can be established is a key issue in these proceedings.

THE EVIDENCE

P’s witnesses

37.P has filed witness statements made by the following persons:

(1)  Chea Senior

(2)  Man

(3)  Chea SM

(4)  Mr Chea Tsz Hin (“Chea Junior”, son of Chea Senior)

(5)  Mr Ma Yick Ming (“Ma”)

(6)  Mr Ng Man Cheung (“Ng”)

38.As said before, Chea Senior has passed away before the commencement of this trial. He has filed a witness statement dated 23 June 2016 in these proceedings. On 7 October 2016, he has made an affirmation, in which he adopted all the contents of his witness statement. P is relying upon this affirmation as evidence in support of P’s case.

39.P has called Man, Chea SM, Chea Junior to give evidence in the trial. Mr Wong has no question for Ma, and Ma’s witness statement is admitted as evidence in the trial by consent. P has elected not to call Ng to give evidence in the trial.

Man

40.Man is the most crucial witness, for he is able to tell matters concerning the SPA and the TA from his own personal knowledge. These 2 documents no doubt are documents of vital importance in these proceedings.

41.Man is Chea Senior’s brother-in-law. Mrs Chea is the elder sister of Man’s wife. Between 1985 and 1997, Man worked as a clerk in the conveyancing department of a law firm.  Man said that he had knowledge on land law, including adverse possession and easement (including right of way), back in 1994.

42.In 1994, he was living in a property in Yuen Long (“the Yuen Long Address”) owned by the family of his wife. He was not particularly close to Chea Senior and they would not meet very often. Their respective families would meet once every 3 to 4 months, usually at festivals.

43.According to Man, in November 1994, Chea Senior told him that the owner of the land on which Chea Senior was living would take back the land, and Chea Senior needed to find another land. Chea Senior got to know that his neighbour, Wu, was selling the Land. Chea Senior worried that Wu might raise the price if Wu knew that Chea Senior was interested in buying the Land. Chea Senior asked Man to help by posing Man himself as the buyer. Man agreed. Chea Senior asked Man to help because Man was his relative, and Man was also working in a law firm and had some legal knowledge. All the negotiations with Wu were done by Chea Senior alone.

44.On 3 December 1994, Man conducted a land search on his own volition and found that Wu was not the registered owner of the Land. Man called Chea Senior and told him this finding. Man asked Chea Senior to clarify the matter with Wu. Shortly thereafter, Chea Senior told Man that Wu said that Wu’s family had used the Land for many years. Chea Senior also told Man that Wu had provided some documents (“Wu Documents”) to him.

45.In the afternoon on 3 December 1994, Man went to Chea Senior’s home to see Wu Documents[16]. Wu Documents only concerned Lot 440 and the earliest document was dated 1 February 1979, which at most could only show that Wu was on Lot 440 since 1979, ie for a period of 15 years only.

46.After perusing Wu Documents, Man was of the view that those documents could not be relied upon to prove Wu’s possessory title to the Land. He advised Chea Senior that it would be very risky to buy the Land. However, Chea Senior said that the Land was very close to where he was living and was suitable for his business and he had decided to buy it.

47.Chea Senior then told Man that a group of villagers with the surname Cheung had gone to his residence earlier that morning. They asked Chea Senior whether his relative was interested in buying the Land. They told Chea Senior that if his relative wanted to buy the Land, Chea Senior would need to pay a sum of HK$2,000 per year as “road fee”. Chea Senior also told Man that the villagers wanted the buyer to sign a tenancy agreement. Chea Senior asked Man to help to draft and to sign a tenancy agreement.

48.Chea Senior handed over a small piece of paper to Man, which contained the name, the HKID number, and the residential address of Cheung SY. Chea Senior told Man that the villagers had requested Cheung SY to be named as the landlord in the tenancy agreement. When Man saw that paper, Man realized that Cheung SY was not a registered owner of the Land.  Man did not want to sign the tenancy agreement, for he was not actually the person buying the Land.

49.Chea Senior told Man that the tenancy agreement was used to cover up the payment of “road fee”. Man refused to participate for he was of the view that the arrangement was illegal. Chea Senior then told Man that it was only a small matter, and Chea Senior himself would sign the tenancy agreement. Chea Senior asked Man not to tell Chea Senior’s family the payment of “road fee” in order not to make them worry.

50.Man said that he specifically told Chea Senior that if Chea Senior signed the tenancy agreement, it would amount to an acknowledgment of Cheung SY’s title which would defect Chea Senior’s claim for a possessory title to the Land. Chea Senior understood but insisted to sign the tenancy agreement requested by the villagers.

51.Man then drafted the TA. Chea Senior asked Man to put down the Yuen Long Address on the TA. Man did not object and did so. After finishing drafting the TA, Man gave the TA to Chea Senior. He did not witness Chea Senior signing the TA.

52.On 12 December 1994, Man went to Chea Senior’s home to sign the SPA. The SPA was drafted by Man at a time between 3 and 12 December 1994. Man and Wu signed the SPA as assignee and assignor respectively, and Chea Senior also signed the SPA as a witness. Thereafter, Man paid HK$70,000 to Wu as deposit. Chea Senior paid back the HK$70,000 to Man at a later time.

53.Later, Man learned from Chea Senior that Chea Senior had told Wu that the real purchaser in fact was Chea Senior himself, and Chea Senior paid the balance of HK$200,000 to Wu in the morning of 15 March 1995.

54.Man was asked why he did not specify in the SPA how long Wu had been in possession of the Land in order to make sure that Chea Senior would have purchased a good possessory title from Wu, Man said that this did not occur to him at the time of drafting the SPA.

55.Having considered Man’s evidence carefully, I am of the view that his evidence concerning the TA is not truthful.

(1)  Under cross-examination, Man admitted that he had knowledge concerning easement and right of way at the time of drafting the TA. Man agreed that it would not be improper or illegal for the grantor of a right of way passing over his land to demand the grantee to pay a fee in return. Accordingly, when he heard from Chea Senior the request for a “road fee” from the villagers, there should be no reason for Man to immediately form the view that the request was improper or illegal.

(2)  Man emphasized that the TA was not a real tenancy agreement but was a sham agreement used to cover up the illegal act of the Cheung’s clan. However, as said before, Man agreed that a request for payment of road fee itself was not illegal. Man was unable to say what illegal act was covered by the TA.

(3)  Man said that he deliberately omitted many details in the TA, for example, the commencement date of the lease term, the duration of the lease term, and the due date of the rent. He deliberately did so because he wanted to make the document not a real tenancy agreement. I am not convinced that Man was telling the truth. Firstly, Man was unable to tell the TA was used to cover what illegal matter. Before knowing what would be covered by the TA, it would not be able to know what should be put in the document to achieve the purpose and what could be omitted. In other words, while Man was not being able to tell the purpose of the TA, it would not be possible for him to figure out what should be the contents of the document. Secondly, with no disrespect to Man, he was not a sophisticated draftsman, as evidenced by his inadvertent omission of putting down “good possessory title” in the SPA, which was an important matter in the contractual bargain between Chea Senior and Wu. The lacking of some details in the TA may well be due to his inadvertent omission.

(4)  Man said that he had advised Chea Senior that if Chea Senior signed the tenancy agreement as requested, that would defeat Chea Senior’s claim to a possessory title to the Land. Notwithstanding this advice, Chea Senior still decided to prepare a tenancy agreement and to sign the same. I am of the view that this is inherently improbable. Chea Senior asked Man to help in the matters relating to the purchase of the Land because Man had some legal knowledge. According to Man, he had told Chea Senior that if Chea Senior signed the tenancy agreement, Chea Senior would not get a possessory title to the Land. If Chea Senior really intended to obtain a possessory title to the Land and become the real owner of the Land by purchasing the same from Wu, there would be no conceivable reason that Chea Senior would go against Man’s advice and signed the tenancy agreement.

(5)  Man was asked why a road fee agreement was not prepared when the villagers was merely asking for road fee. Man said he did not know why the villagers asked for a tenancy agreement and not a road fee agreement. I am of the view that Man was evasive on this. Given that a tenancy agreement would affect Chea Senior’s claim to a possessory title to the Land but a road fee agreement would not, and given that the villagers were only requesting for payment of road fee, naturally Man should have some discussion with Chea Senior on the preparation of a road fee agreement but not a tenancy agreement.

(6)  Man was asked if the villagers’ request involving anything illegal, why the villagers would give the name, the HKID number, and the residential address of Cheung SY to Chea Senior. Man could not offer any satisfactory answer on this.

56.The TA is a core issue in these proceedings. Since I am of the view that Man’s evidence on this core issue is untrue, the truthfulness of his evidence on other aspects is also doubtful. I refuse to accept his evidence.

Chea Senior

57.Since Chea Senior’s evidence in his witness statement and in his affirmation has not been tested by cross-examination, I decline to attach weight to the matters set out therein.

58.Further, I am of the view that Chea Senior’s evidence concerning the TA cannot be true. According to what Chea Senior said in his witness statement and in his affirmation, he did not remember the existence of TA until a time after the lunar new year in 2016. At that time, his daughter Chea SM related Man’s recollection concerning the TA to him, and Chea Senior started to remember the TA vaguely. In my judgment, it is inherently improbable that Chea Senior would forget the TA.

(1)  The TA is an important document signed by him shortly before he entered into possession of the Land. Signing of the TA was not a daily occurrence but was a special event in Chea Senior’s life. Further, Chea Senior agreed while he was in possession of the Land, he had paid HK$2,000 to the Cheung’s clan each year. That must be a reason behind this payment and this amount. Adding all these together, it is inherently improbable that Chea Senior would have forgotten the TA at all.

(2)  In mid-2012, Cheung SY relied upon the TA and sued Chea Senior in the SCT Proceedings. Chea Senior commenced this case in the High Court in 2012. Ds have been heavily relying upon the TA in the SCT Proceedings and in these High Court proceedings at all times. No doubt Chea Senior would appreciate that the TA is a very important document in all these proceedings. Chea Senior and Man are relatives and they would meet occasionally. Given all these, it is inherently improbable that Chea Senior would not ask Man the matters concerning the TA at any time from 2012 to 2015.

(3)  Chea Senior claimed that the HK$2,000 paid to the Cheung’s clan each year was road fee. If there is any truth in this claim, there is no reason why Chea Senior would have completely forgotten the origin of this road fee matter, and was only able to remember this after being reminded by the words of Man related to him through Chea SM.

Chea SM

59.Chea SM was Chea Senior’s eldest child. She was born in 1978. She was only 16 years old in 1994 and had limited knowledge concerning the SPA. She said that she had been handling the books and accounts of the garden run by Chea Senior on the Land (“the Garden”) since 1996 when she was still in secondary school, and hence she had good knowledge on the expenses incurred by Chea Senior on the Land. Her evidence mainly concerns the following matters:

(1)  Chea Senior had spent no less than HK$1 million to improve the Land; and

(2)  Chea Senior moved the fence surrounding the Land in 1995 and 2009 to widen the local road.

60.P is relying upon these matters to argue that Chea Senior treated himself not as a tenant but as an owner of the Land.

61.In respect of the alleged spending of no less than HK$1 million to improve the Land, including spending a substantial sum on the Land in the first few years after purchasing the Land from Wu, Chea SM’s evidence is problematic in various aspects. I do not regard her evidence as reliable.

(1)  Chea Senior’s evidence is that he had used up all his money to purchase the Land and he even needed to request an extension of 14 days to pay the balance of HK$200,000 to Wu. It is not clear how Chea Senior could have afforded to incur a substantial sum of money within a few years after the purchase of the Land, particularly when it is Chea SM’s evidence that the Garden had no profit in its first year of operation (ie 1996/97) and Chea Senior wrote a letter to the Inland Revenue Department (“IRD”) to inform the latter of the same.

(2)  There is no document to support Chea SM’s evidence that Chea Senior had spent much money within the first few years after the purchase of the Land.

(3)  Further, Chea SM’s evidence is directly contradicted by the accounting documents provided by her. According to Chea SM, the Garden obtained business registration and started operation in March 1996. Thereafter, they needed to file tax return to IRD. The Garden’s accounts had been handled by an accountant since about 1998.

(4)  If, as alleged by Chea SM, Chea Senior had spent a substantial sum of money for engineering and construction within the first few years after the purchase of the Land, such expenses should have been reflected in the Garden’s accounts in those years. The buildings constructed and the equipment purchased should have formed part of the Garden’s fixed assets and should have been shown in the asset and liabilities accounts. Likewise, there should be corresponding entries in the profit and loss account (“P&L account”) as “depreciation”.

(5)  However, no assets and liabilities account has been produced. For P&L accounts, only the P&L accounts for the years ended 31 March 1998, and for the years from 2005 to 2015 were produced.

(6)  There is no item for depreciation in the P&L account for 1998 (being the only account disclosed for the first few years). The said account ended on a date which is about 3 years after the purchase of the Land. If a substantial sum has really been spent as alleged, it would be inconceivable that there is no reason why there is no depreciation in the said account, bearing in mind that it is in the interest of the Garden to report depreciation and treat that as expense to reduce the tax payable. It is important to bear in mind that the said account was prepared by a professional accountant.

(7)  There is no satisfactory account document showing the alleged expenses of not less than HK$1 million as claimed by Chea SM.

(8)  Further, there is no documentary evidence showing that the expenses were for the improvement of the Land and not for running the business of the Garden.

62.In respect of the alleged moving of fence in 1995, Chea SM’s evidence does not appear to be reliable.

(1)  Chea SM mentioned in her 3^rd supplemental witness statement dated 23 November 2017 that after Chea Senior purchased the Land in 1995, the villagers requested Chea Senior to move the fence of the Land inwards to widen the village road. After consideration, Chea Senior agreed. Chea Senior had no need to seek and did not seek consent from anyone in making that decision.

(2)  The evidence on this matter in fact first appeared in Chea Senior’s witness statement and affirmation. Chea Senior in his evidence expressly mentioned that the moving of fence occurred in early 1995.

(3)  The evidence is contradicted by the joint land surveyors’ report dated 16 January 2017. It is the agreed opinion of the two land surveyors that there was no fence bounding all sides of the Land from 1992 to 1995 and the fences only appeared in 1996.

(4)  Mrs Chan refers me to a letter written by P’s land surveyor dated 7 July 2017, in which the land surveyor mentioned that no fence was observed along the road edge in 1995, but a fence was observed in 1996, and the fence was set back about 2 meters as compared with the 1995 road edge. Mrs Chan submits that this supports P’s case.

(5)  I respectfully disagree. What has been said by Chea Senior occurred in early 1995, not in 1996. This is contradicted and not supported by the experts’ evidence. When Chea SM made her 3^rd supplemental witness statement on 23 November 2017, she already had in her possession all the experts’ reports. No attempt has ever been made to clarify the discrepancy between Chea Senior’s evidence and the experts’ evidence.

(6)  In these circumstances, there is no reliable evidence showing the moving of fence inward in 1995 as claimed by Chea Senior and Chea SM.

63.In respect of moving of fence in 2009, Ds do not dispute this incident. However, it is Chea SM’s evidence that, after purchasing Lot 438A (which is next to the Land) in 2009, Chea Senior dismantled the south-east fences of the Land and reconstructed new fences inwards, so to provide sufficient area for different kinds of vehicle to access the newly bought neighbouring land. As a result, the Land lost an area of approximately 1,040 square. In my view, that area was not lost after moving of the fence. It was used by Chea Senior as an access road to Lot 438A newly purchased by him. I am of the view that P may not derive much assistance from this incident.

64.Chea SM also mentioned an incident in mid-2007 (“the 1^st Incident in 2007”). According to Chea SM, on a date in mid-2007, some strangers came to the Land and alleged that one of them was the successor of the owner of the Land. They requested Chea Senior to sign a tenancy agreement with them. Chea Senior refused. The strangers said that the Land was T’so land. Chea Senior disagreed and asked them to produce evidence. A dispute arose and someone reported the matter to the police.

65.The 1^st Incident in 2007 was also mentioned by Cheung SC in his evidence. I have said that I do not regard Chea SM as a reliable witness. On the other hand, for the reasons set out in [96] below, I accept Cheung SC as an honest witness who is broadly reliable. In respect of the 1^st Incident in 2007, Cheung SC’s evidence should be preferred.

66.Chea SM also said that in January 2011, while she was working in the Garden, she repeatedly received telephone calls from a Mr Cheung. Each time, Mr Cheung requested to speak to Chea Senior. Since Chea Senior was not available, Chea SM asked Mr Cheung to leave a message. Initially, Mr Cheung did not do so. Later, Mr Cheung told Chea SM that he was the son of the landlord and there was a tenancy agreement between the landlord and Chea Senior. Chea SM immediately told Mr Cheung that Chea Senior was the owner of the Land, he did not sign any tenancy agreement with anyone and had no need to pay rent to anyone. Chea SM then ended the telephone conversation.

67.Cheung WK has given evidence and said that in December 2010, he called Mrs Chea to remind her that the rent was due. The rent was later deposited into his account on 12 January 2011. Cheung WK’s evidence is supported by the bank passbook produced by him. According to Cheung WK, there was no telephone conversation between him and Chea SM in January 2011.

68.Cheung WK’s evidence is supported by the bank passbook produced by him. I prefer Cheung WK’s evidence to Chea SM’s evidence.

69.Save and except the matters which are not in dispute, I doubt the reliability of Chea SM’s evidence. I am of the view that it would not be prudent to rely upon Chea SM’s evidence to resolve the controversies in these proceedings.

Chea Junior

70.Chea Junior was born in 1981. He took no part in the matters relating to the SPA. He went to Australia for university studies in about 2001, and came back to Hong Kong to assist Chea Senior to manage the Garden in 2005.

71.According to Chea Junior, in late 2007 (“the 2^nd Incident in 2007”), a woman whom he had never met before, came to the Garden and introduced a Mr Cheung and his wife to them. The woman claimed that Mr Cheung was the son of the landlord. The woman did not introduce herself. Mr Cheung requested Chea Senior to sign a tenancy agreement. Chea Senior refused and said that the Land belonged to him, and it was not necessary for him to sign any tenancy agreement or pay any rent. Mrs Cheung then asked Chea Senior the lot numbers of the Land. Chea Senior asked them to leave.

72.The 2^nd Incident in 2007 was mentioned by Cheung WK and Fok in their respective evidence. According to them, in December 2007, Fok brought Cheung WK and Wong SK to the Land and introduced them to Chea Senior and Mrs Chea. Fok told Chea Senior and Mrs Chea that Cheung WK was the son of the landlord and would take over the rent collection matter from Fok. Cheung WK collected the rent of HK$2,000 from Chea Senior. Cheung WK also obtained a telephone number from Mrs Chea for the purpose of contacting them in future to discuss the rent collection matter.

73.In respect of the 2^nd Incident in 2007, I accept the version said by Cheung WK and Fok, and reject the version alleged by Chea Junior.

(1)  Chea Senior in his evidence expressly said that he was paying HK$2,000 to the Cheung’s clan each year.

(2)  As shown by the SCT Proceedings commenced by Cheung SY in 2012, after failing to get rent from Chea Senior, Cheung SY commenced legal proceedings against Chea Senior without any hesitation. If Chea Senior denied Cheung SY’s title and refused to pay any rent in the 2^nd Incident in 2007, Cheung SY would have had commenced proceedings against Chea Senior shortly after December 2007. However, Cheung SY did not take any legal action against Chea Senior at any time as a result of the 2^nd Incident in 2007.

(3)  Taking all these into account, in my view, Chea Senior did pay the rent of HK$2,000 to Cheung WK in the 2^nd Incident in 2007, as said by Cheung WK and Fok in their respective evidence. The version alleged by Chea Junior is inherently improbable, and the version mentioned by Cheung WK and Fok is the truth.

74.The crux of Chea Junior’s evidence is the 2^nd Incident in 2007. I am of the view that his evidence on the 2^nd Incident in 2007 is untrue. I refuse to accept his evidence.

Ma

75.Ma was a customer of Chea Senior and rented a piece of land inside the Land to grow orchids. His evidence is not relevant to the issues in dispute in these proceedings.

Ng

76.Ng in his witness statements mentioned the following:

(1)  He was living in the vicinity of the Land.

(2)  His father and his uncle became to be in possession of some lands now registered under the names of Cheung CC and Cheung SC many years ago. He himself was also in possession of some other lands registered under the names of Cheung CC and Cheung SC. No one had ever asked him to pay any rent.

(3)  The villagers knew that the Land originally belonged to Wu. In 1994, Wu told Ng that Wu had sold the Land to Chea Senior.

(4)  Ng’s father and him built a road inside the Village and would collect road fees from the users of the road, for the road was a private road.

77.P did not call Ng to give evidence. Hence, I attach no weight to the matters mentioned by Ng in his witness statements.

78.Mrs Chan submits that the reason for not calling Ng is because Ng cannot usefully add anything. In Mrs Chan’s submissions, the purpose of Ng’s witness statements is to prove P’s exclusive possession of Land, which is already not an issue in dispute. The “road fee” mentioned in Ng’s supplemental witness statement is different in nature from the road fees collected by the Cheung’s clan from Chea Senior.

79.Mr Wong submits that no reasonable explanation has been offered by P as to not calling Ng to give evidence. In Mr Wong’s submissions, P’s case is premised on the alleged demand of “road fee” and it is P’s case that the annual payment of HK$2,000 made by Chea Senior is “road fee”. It would therefore only be reasonable for P to call Ng to explain the practice of collecting road fees in the Village. Mr Wong invites me to draw an adverse inference against P that the real reason for not calling Ng to give evidence is Ng may reveal facts unfavourable to P.

80.As said in the above, the grantor of a right of way passing over his land may request the grantee to pay a fee in return. In my view, it is indisputable that a genuine demand for a “road fee” is proper and legal. I have no need to draw any adverse inference against P in order to reach this conclusion.

Ds’ witnesses

81.Ds have filed witness statements made by the following persons:

(1)  Cheung SY

(2)  Cheung WK

(3)  Cheung SC

(4)  Fok

(5)  Mr Cheung Yuk Shu Jackie (“Cheung YS”)

(6)  Wong SK

82.Cheung SY has passed away before the commencement of this trial. She has filed a witness statement dated 5 April 2016. Ds have called Cheung WK, Cheung SC and Fok to give evidence at the trial, but have not called Cheung YS and Wong SK.

Cheung SY

83.Mrs Chan submits that the witness statement made by Cheung SY should not be admissible evidence. In my view, the grounds of objection put forward by Mrs Chan relate to the reliability of the matters set out in that witness statement. The witness statement was filed in 2016. Cheung SY has passed away before the commencement of the trial. The witness statement has preserved Cheung SY’s evidence given by her during her lifetime. I would not say that the witness statement is inadmissible. However, since P has no opportunity to cross-examine Cheung SY and test the veracity of the matters set out in that witness statement, I would not attach weight to the matters mentioned in that witness statement.

Cheung WK

84.Cheung WK was born in 1951. He is the son of Cheung SY. His maternal grandfather is Cheung CC. He received university education in the UK, majoring in mechanical engineering. He left Hong Kong and moved to Australia in about 1988. He came back to Hong Kong in 1993 and held a teaching position at the VTC until his retirement in 2011.

85.He had no involvement in the matters concerning the Land until 2007. In 2007, he began to assist Cheung SY in collecting rent concerning the Land.

86.In his evidence, Cheung WK mentioned the 2^nd Incident in 2007. Details of his evidence on this issue are summarized in [72] above. For the reasons set out in paragraph 73 above, I accept his evidence concerning the 2^nd Incident in 2007.

87.Cheung WK mentioned that he successfully collected the rent from Mrs Chea in December 2008. In December 2009, he rang up Mrs Chea for the purpose of arranging a time for collection of rent. Mrs Chea asked for postponement as the business of the Garden was very busy at that time. Eventually, the rent was deposited into the Bank Account on 24 February 2010. In December 2010, he called Mrs Chea to remind her that the rent was due. The rent was later deposited the Bank Account on 12 January 2011. Cheung WK has produced his bank passbook to support his evidence.

88.In January 2012, Cheung WK called Mrs Chea to request for payment of rent. Later, Chea Senior returned call and said that there was no landlord, and Chea Senior refused to pay rent.

89.Cheung WK did not know whether the rent was paid in advance or in arrears. He also did not know why the rent was not increased over the years.

90.Mrs Chan has made various criticisms against Cheung WK’s evidence, including that Cheung WK claimed that he did not know whether the rent was paid in advance or in arrears. Mrs Chan submits that in Ds’ pleaded case, from 1994 to 2006, the rent was paid in arrears. However, from 2007 onwards, the rent was paid in advance. In my view, Cheung WK’s evidence may not be satisfactory on some aspects. However, the crucial matters in Cheung WK’s evidence are those set out in the paragraphs above. In respect of these matters, I accept that Cheung WK’s evidence is true and reliable:

(1)  In respect of the 2^nd Incident in 2007 Incident, for the reasons set out in [73] above, I am of the view that the version mentioned by Cheung WK is true.

(2)  In respect of the matters set out in [87] above, the following have to be borne in mind:

a.  Chea Senior himself agreed that each year he would made a payment of HK$2,000 to the Cheung’s clan.

b.  There are corresponding entries in the bank passbook produced by Cheung WK in support of Cheung WK’s evidence.

c.  As evidenced by the SCT Proceedings commenced by Cheung SY in 2012, while there was a non-payment of rent, Cheung SY would have commenced proceedings to sue Chea Senior for the outstanding rent without hesitation. However, no legal action was taken by Cheung SY at any time before 2012. This shows that there was a continuation of payment of rent each year before 2012.

(3)  With all these in mind, I accept the matters set out in [87] above as true and correct.

(4)  In respect of the matters in [88], it is not in dispute that Chea Senior refused to pay rent in 2012, and Cheung SY commenced the SCT Proceedings to claim for the rent.

Cheung SC

91.Cheung SC was born in 1954. He received primary education for 5 years in Mainland China. He was living in the Mainland, first worked as a farmer until he was about 20 years old. He then worked as a construction worker. He came to Hong Kong in 1979. He continued to work as a construction worker in Hong Kong until he retired in about 2010.

92.He entrusted the matters relating to the Land to Cheung SY. To his understanding, the rent received would be used in matters relating to ancestors worship and helping relatives in Mainland China.

93.Apart from the Land, Cheung SC also inherited various pieces of farmlands in the New Territories. Cheung SC said that the farmlands were worth very little unless there was a resumption by the Government. He had some lands which were not let out and left vacant.

94.On 19 July 2007, he together with Cheung YS, Mr Cheung Tai Man (Cheung YS’s father), and one estate agent visited the lands in the vicinity. They went to the Land and met Chea Senior and a young lady. Chea Senior told them that he had been paying rent to an old lady. When they asked Chea Senior to sign a tenancy agreement, dispute arose as Cheung SC was unable to produce any document to show that he was the son of the registered owner of the Land. Someone made a report to the police.

95.Mrs Chan has made various criticisms against Cheung SC’s evidence. In my view, Cheung SC has no personal knowledge concerning the SPA, the TA and the collection of rent from Chea Senior. The only part of his evidence which may have some relevance in these proceedings is the matters summarized in [94] above. Those matters should be the 1^st Incident in 2007 mentioned in Chea SM’s evidence.

96.In respect of the 1^st Incident in 2007, I prefer Cheung SC’s evidence to Chea SM’s evidence.

(1)  The only significant difference between Cheung SC’s evidence and Chea SM’s evidence is whether Chea Senior told Cheung SC that Chea Senior had been paying rent to an old lady. Given the existence of the TA and Chea Senior’s admission that he was paying HK$2,000 each year to the Cheung’s clan, it is more probable than not that Cheung SC’s version is correct.

(2)  Since Chea Senior had never met Cheung SC and Cheung SC was unable to produce any document to prove his identity, when Cheung SC requested Chea Senior to sign a tenancy agreement with him, understandably Chea Senior would refuse to do so.

(3)  Cheung SC’s evidence concerning the 1^st Incident in 2007 is inherently probable.

97.Although Cheung SC’s evidence may not be satisfactory on some aspects, I accept his evidence concerning the 1^st Incident in 2007 as true and correct.

Fok

98.Fok received education up to Form 4 through evening studies. She was living in Fanling and Cheung SY used to live in Tai Po. Since about 1994, she was asked by Cheung SY to accompany her to collect rent concerning the Land.

99.Fok accompanied Cheung SY to collect rent from Chea Senior for about 8 to 10 years. Thereafter, she went to the Land to collect rent alone for some 3 to 5 years, before passing the duty to Cheung WK in December 2007.

100.She first visited the Land in December 1994. At that time, she saw a person called Wah Tau who raised chicken on the Land.

101.In respect of each visit from about 1994 to 2004, Cheung SY would first call Mrs Chea to pre-arrange the visit. Each year, the visit would be in December. Fok would go to the Land together with Cheung SY on the date previously fixed.

102.During her visit in December 1995, Fok noticed that the covered chicken shed on the Land was gone and there were some plants on the ground. At that time, she met Chea Senior and Mrs Chea, and their two children. She saw some clothes were hanging there and some cooking in the kitchen. She believed that Chea Senior’s family was living on the Land.

103.Since about 2004, Cheung SY was getting old, and she asked Fok to go to the Land to collect rent on her behalf. From that time onwards, Fok took over the job of collecting rent. Each time, after collecting the rent, Fok would immediately go to Tai Po to pass the rent to Cheung SY.

104.In 2007, Cheung SY told Fok that she wanted her son Cheung WK to take up the job of collecting rent. As a result, in December 2007, Fok brought Cheung WK and his wife Wong SK to the Land, and introduced them to Chea Senior and Mrs Chea. Fok’s evidence concerning this incident, ie the 2^nd Incident in 2007, is summarized in [73] above.

105.Fok has never seen the TA. She did not know whether the rent was paid in advance or in arrears. She also did not know why the rent was not increased over the years.

106.Fok impressed me as an honest and straightforward witness. Mrs Chan has made criticisms on various aspects of Fok’s evidence. In my view, these criticisms concern peripheral matters and have no material impact on the reliability of Fok’s evidence on the major issue, ie she is the person having personal knowledge on the collection of rent from about 1994 to 2007. Bearing in mind Chea Senior’s admission that he paid HK$2,000 each year to the Cheung’s clan, there must be someone collecting the sum from Chea Senior each year. Fok has given clear and cogent evidence on the collection of rent from about 1994 to 2007. There is no convincing reason to doubt Fok’s evidence on this major issue. I accept her evidence.

107.For the reasons set out in [74] above, I also accept her version concerning the 2^nd Incident in 2007.

Cheung YS

108.Cheung YS is the nephew of Cheung SC and a cousin of Cheung WK. He is the son of a cousin of Cheung SY. He made a witness statement dated 24 June 2016. In his witness statement, he mentioned 2 matters:

(1)  the 1^st Incident in 2007, which was in line with the version set out in Cheung SC’s evidence;

(2)  the rental matters concerning the Land were managed by Cheung SY and her family, and by Fok.

109.Ds did not call Cheung YS to give evidence at the trial. Mr Wong submits that Ds have lost contact with Cheung YS and are unable to locate him. Cheung SC in his evidence mentioned that he was unable to contact Cheung YS since the Ching Ming Festival in this year.

110.Mrs Chan submits that an adverse inference should be drawn against Ds by reason of the absence of Cheung YS in the trial. Mrs Chan asks me to draw the inference that the matters set out in Cheung YS’s witness statement are not true, and the true words from Cheung YS would be unfavourable to Ds’ case.

111.I decline to draw the adverse inference suggested by Mrs Chan. Ds have offered an explanation why they did not call Cheung YS to give evidence, and this explanation is supported by Cheung SC’s evidence. Having seen and heard Cheung SC’s evidence, I have no reason to doubt the words of Cheung SC.

112.Further, in respect of the 1^st Incident in 2007, Cheung SC has given evidence on this and P has the opportunity to cross-examine Cheung SC. After hearing the evidence of Chea SM and the evidence of Cheung SC on this incident, I prefer the evidence of Cheung SC. While there is direct evidence on a matter, it would not be necessary to make a finding by inference.

113.In relation to the rental matters relating to the Land, Cheung YS’s evidence on this matter is hearsay evidence. Fok has given direct evidence on this matter and P has the opportunity to cross-examine Fok. Again, since there is direct evidence on this matter, it would not be necessary to make a finding by inference.

Wong SK

114.The only material event in Wong SK’s witness statement is the 2^nd Incident in 2007. Mrs Chan invites me to draw an adverse inference against Ds because of the absence of Wong SK in the trial. Mr Wong submits that the reason for not calling Wong SK to give evidence is that the incident has already been covered by Cheung WK and Fok in their respective evidence.

115.In my view, as said by Mr Wong, the 2^nd Incident in 2007 has already been covered by Cheung WK and Fok in their respective evidence. P has the opportunity to cross-examine both Cheung WK and Fok. For the reasons set out in [74] above, I accept Cheung WK’s evidence and Fok’s evidence concerning the 2^nd Incident in 2007. I do not see how these reasons could be affected by the absence of Wong SK in the trial.  I am not convinced that any adverse inference should be drawn against Ds in these circumstances.

116.Mrs Chan also submits that there are some inconsistencies between Wong SK’s witness statement and the evidence given by other witnesses called by Ds in the trial. In my view, these inconsistencies are all on trivial matters. An example of these matters is Wong SK said that the TA was retrieved by her in Cheung SY’s home in 2012, but Cheung WK said that the TA was found in 2010 when Cheung SY moved to live in an elderly quarter in Kowloon Bay in 2010. In my view, when the TA was found has no impact on the outcome of these proceedings. It is an undisputed fact that Chea Senior did sign the TA on or about 4 December 1994.

ANALYSIS

Agreed Issue 1

117.In my judgment, it is clear that Chea Senior did not obtain a good possessory title to the Land from Wu.

118.The only evidence suggesting Wu had a good possessory title to the Land is as follows:

(1)  Wu’s father and Wu had been in possession of the Land for many years before 1994; and

(2)  Wu Documents.

119.In respect of the allegation that Wu’s father and Wu had been in possession of the Land for many years before 1994, this is reported in Chea Senior’s evidence and is hearsay. There is no basis to attach any weight to this allegation. Further, this allegation is extremely vague and imprecise. Even assuming that the allegation is true, it is still not known that Wu’s father and Wu had been in possession of the Land since what time, and whether Wu had the exclusive possession of the Land and the requisite intention to possess throughout the alleged period of possession.

120.In respect of Wu Documents, those documents at most can show that Wu was in possession of part of Lot 440 since 1979. The documents cannot show that Wu had ever been in exclusive possession of the entire Land before 1994. Further, in order to acquire a possessory title to the Land in 1994, the adverse possession should begin in 1974. The documents cannot show Wu was in possession of any part of the Land before 1979.

Agreed Issues 2 to 5

121.It would be convenient to deal with these issues together at the same time.

122.The starting point is the TA, which is a document signed by Chea Senior before he entered into possession of the Land. In my judgment, the principle in Ming Shiu Chung applies. P bears the burden to show why Chea Senior should not be bound by the TA albeit he has signed the same. Mrs Chan submits that the TA is not binding upon Chea Senior because:

(1)  the TA is a sham agreement dictated by the Cheung’s clan for smooth passage within the Village and is not a genuine tenancy agreement;

(2)  the TA is invalid and/or unenforceable.

123.In respect of the allegation that the TA is a sham agreement, based upon the evidence accepted by the Court, this allegation is not proved. For the reasons set out earlier in this judgment, with no disrespect to Mrs Chan, I am of the view that P’s arguments concerning sham agreement are completely unconvincing.

124.Mrs Chan submits that the alleged rent of HK$2,000 per year has never been increased, and this shows that the TA is not a genuine tenancy agreement. With respect, I am of the view that there is no substance in this argument. One may also ask if the annual payment of HK$2,000 is an unwarranted demand from the Cheung’s clan, why the amount has never been raised for many years. Mr Wong submits that one may ask who would be more likely not to raise the amount, a landlord who is more than happy to have someone to look after the farmland which would otherwise be left vacant, or a local bully who try to blackmail villagers for money. Mr Wong submits that the answer is obviously. I accept Mr Wong’s submissions.

125.Mrs Chan also relies upon “the 2^nd page of the TA” to argue that the TA is not a genuine tenancy agreement.

(1)  In Cheung WK’s affirmation dated 2 January 2013, the TA produced by Cheung WK consists of 2 pages. The contents of the 1^st page are set out in [16] above. The contents of “the 2^nd page” are as follows:

“車肇周

地址: [the Yuen Long Address]

郵箱號碼: [PO Box]

電話:[Phone Number A] / [Phone Number B]”

(2)  On the face of it, there is a signature on the bottom right corner of “the 2^nd page”, which appears to be the signature of Cheung SY.

(3)  In Man’s evidence, Man said he was told by Chea Senior that when the Cheung’s clan got the TA, they saw that the TA was not signed by the purchaser of the Land, ie Man. The Cheung’s clan therefore required Chea Senior to provide the correspondence address of Man. Man said that was why the 2^nd page was produced.

(4)  Mrs Chan submits that the 2^nd page has a very telling feature. If the TA is a genuine tenancy agreement, the landlord would not need to care whether the tenant was the purchaser of the Land or not and would not ask for Man’s contact information. In Mrs Chan’s submissions, the Cheung’s clan asked for Man’s contact information, because they wanted to get the road fee from the purchaser of the Land.

126.I am unable to accept Mrs Chan’s submissions concerning “the 2^nd page”.

(1)  I have refused to accept Man’s evidence. Cheung WK has no knowledge in respect of the matters in 1994. Accordingly, there is no reliable evidence explaining the meaning and the purpose of “the 2^nd page”.

(2)  It is clear that the name of Man does not appear on “the 2^nd page”. Conversely, Chea Senior’s name is on “the 2^nd page”. Further, the PO Box stated on “the 2^nd page” was the Garden’s correspondence address. There is no documentary evidence showing that the PO Box ever belonged to Man. Phone Number A belonged to the Garden. Phone Number B did not belong to Man. “The 2^nd page” does not appear to be a document setting out the contact information of Man.

(3)  If there is any truth in Man’s evidence, it can be said that the Cheung’s clan wanted the purchaser of the Land to pay the rent stipulated in the TA. The 2^nd page itself cannot show that the TA is not a genuine tenancy agreement.

127.In respect of the validity and enforceability of the TA, Mrs Chan submits that the TA is invalid and unenforceable because (a) Cheung SY is not the registered owner of the Land; and (b) the TA does not have all the essential terms. With respect, I am unable to accept these submissions.

128.As a matter of law, I agree with Mr Wong that P cannot deny Cheung SY’s title to the Land, for P is estopped from doing so. The relevant principle is set out in Industrial Properties (Barton Hill) Ltd v. AEI Ltd, in which Lord Denning said[17]:-

“If a landlord lets a tenant into possession under a lease, then, so long as the tenant remains in possession undisturbed by any adverse claim - then the tenant cannot dispute the landlord’s title. Suppose the tenant (not having been disturbed) goes out of possession and the landlord sues the tenant on the covenant for rent or for breach of covenant to repair. The tenant cannot say to the landlord: ‘You are not the true owner of the property.’ Likewise, if the landlord, on the tenant’s holding over, sues him for possession or for use and occupation or mesne profits, the tenant cannot defend himself by saying: ‘The property does not belong to you, but to another’.

............

Short of eviction by title paramount, or its equivalent, however, the tenant is estopped from denying the title of the landlord. It is no good his saying: ‘The property does not belong to you but to a third Person’ unless that third person actually comes forward and successfully makes an adverse claim - by process in the courts or by the tenant’s attornment; or acknowledgment of it as by the tenant defending on an indemnity. If the third person, for some reason or other, makes no adverse claim or is debarred from making it, the tenant remains estopped from denying the landlord’s title. This is manifestly correct: for, without an adverse claim, it would mean that the tenant would be enabled to keep the property without paying any rent to anybody or performing any covenants. That cannot be right. ......” (Emphasis added)

129.In respect of the essential terms of a tenancy agreement, Mr Wong draws my attention to Street v. Mountford, in which Lord Templeman said that “[t]o constitute a tenancy the occupier must be granted exclusive possession for a fixed or periodic term certain in consideration of a permium or periodical payments”[18]. Relying upon this authority, Mr Wong submits that the essential terms of a tenancy agreement would be: (a) exclusive possession; (b) certainty of duration; and (c) rent or other consideration. I would add that certainty of the parties is also an essential term of a tenancy agreement. With this qualification, I accept Mr Wong’s submissions.

130.In my view, the TA is a periodic tenancy for one year renewable from time to time. All the essential terms can be found in the TA. In my judgment, the TA is a valid and enforceable tenancy agreement.

131.Even if I am wrong on this, since Chea Senior has signed the TA, the contents in the TA are Chea Senior’s own words. The contents of the TA therefore are statements against the interest of Chea Senior in his claim for adverse possession (ie Cheung Senior did not have the requisite intention to possess for the purpose of adverse possession), and should be given considerable weight.

132.Chea Senior admitted that after signing the TA, he paid HK$2,000 each year to the Cheung’s clan, but Chea Senior claimed that the payment was “road fee” and not rent. Based upon the evidence accepted by this Court, I find that the nature of the payment is not “road fee” but the rent specified in the TA.

133.I note that Chea Senior and Wu had signed the SPA, and apparently Chea Senior paid HK$270,000 to Wu under the SPA, which was a substantial sum in the mid-90s. One has to ask what was the purpose of paying this substantial sum to Wu.  Having considered all the evidence before the Court, in my judgment, the sum was paid by Chea Senior to Wu in exchange for Wu handing over the possession of the Land and the structures thereon to Chea Senior.

(1)  Even according to the evidence adduced by P, before Chea Senior signed the SPA with Wu, Man had already advised Chea Senior that there was no evidence showing Wu had a good possessory title to the Land. Accordingly, at the time of the SPA, Chea Senior clearly knew that he might not be able to obtain a good possessory title to the Land from Wu.

(2)  At that time, Wu was in possession of the Land. Notwithstanding the TA signed by Chea Senior and Cheung SY, the reality was without the cooperation of Wu, Chea Senior could not enter into the Land within a short period of time. At that time, Chea Senior would need to find a new home within a short time.

(3)  Against this background, Chea Senior was willing to sign the SPA with Wu and paid the sum stipulated therein to Wu. Chea Senior knew that the payment was for obtaining possession of the Land and the structures thereon from Wu.

(4)  Chea Senior knew that his possession of the Land was subject to the TA, which was executed shortly before the SPA.

134.Mrs Chan submits that Chea Senior had done various matters on the Land without any need to consult anyone, including subletting various areas in the Land. In Mrs Chan’s submission, all of these show that Chea Senior had the requisite intention to possess for the purpose of adverse possession. I respectfully disagree. As to the alleged moving of fence in 1995 and in 2009, I have dealt with these in the above. Chea Senior was running a Garden on the Land, which was his family business. Obviously, for the purpose of developing his business, he had to erect buildings and install equipment on the Land from time to time. Further, there is no provision in the TA prohibiting subletting. In my judgment, I do not regard the acts mentioned in Mrs Chan’s submission as compelling evidence showing that Chea Senior had the requisite intention to possess.

135.Conversely, the TA itself, and Chea Senior’s annual payment of the rent stipulated therein until 2012, are compelling evidence showing that Chea Senior did not have the requisite intention to possess before 2012.

136.Further, the TA itself is also evidence showing that Chea Senior entered into possession with the consent of Cheung SY[19], and hence Chea Senior’s possession of the Land cannot be regarded as adverse to Cheung SY.

137.I have to add that the outcome of this case does not really depend upon the credibility and reliability of Ds’ factual witnesses.  The burden to prove the requisite intention to possess by compelling evidence is on P. The burden to show that Chea Senior should not be bound by the TA signed by him is also on P. Even if I refuse to accept the evidence given by Ds’ factual witnesses, P would still fail if P has not discharged the aforesaid burdens. In my view, P has clearly failed to discharge those burdens.

138.The above would be sufficient for answering issues 2 to 5. P’s claim for adverse possession must fail and must be dismissed.

DISPOSITION

139.Counsel have agreed that in the event that P fails in these proceedings, the following reliefs should be given to D1 and D2 respectively:

(1)  Reliefs given to D1:

a.  vacant possession of Land be delivered to D1;

b.  mesne profit at $20,000 per month be paid to the D1 from 4 March 2014 until vacant possession of the Land has been delivered to D1.

(2)  Reliefs given to D2: HK$4,000 be paid to D2.

140.Mrs Chan submits that P would need time to make arrangements before handing over vacant possession of the Land to D1, and P requests for a grace period of 1 year. Ds are agreeable to give 6 months to P but not a longer period. In my view, a grace period of about 6 months is a very reasonable period. I would order P to deliver vacant possession of the Land to D1 within approximately 6 months. Of course, P has to continue to pay the mesne profit of HK$20,000 per month to D1 during this period.

141.Counsel have agreed that costs should follow the event. Mr Wong has confirmed that he would not seek a certificate for 2 counsel.

142.Having considered the above, I order that:

(1)  P’s claim be dismissed;

(2)  P do deliver vacant possession of the Land to D1 within 182 days;

(3)  Mesne profit at $20,000 per month be paid by P to D1 from 4 March 2014 until vacant possession of the Land has been delivered to D1;

(4)  P do pay HK$4,000 to D2;

(5)  Costs of these proceedings (including all costs reserved, if any) be paid by P to D1 and D2, to be taxed if not agreed.

143.I also make the following order nisi:

(1)  the mesne profit for a particular calendar month is due and payable on the last day of that calendar month;

(2)  there be interest on mesne profits at 1% above the best lending rate of HSBC from the respective due dates of these mesne profits until the date of this judgment, and at the judgment rate until full payment of the same;

(3)  in respect of the HK$4,000 to be paid by P to D2, there be interest:

(a)  on HK$2,000 at 1% above the best lending rate of HSBC from 31 December 2012 until the date of this judgment, and at the judgment rate until full payment of the same;

(b)  on the other HK$2,000 at 1% above the best lending rate of HSBC from 31 December 2013 until the date of this judgment, and at the judgment rate until full payment of the same.

144.Reasons for the aforesaid order nisi are as follows:

(1)  As a matter of completeness, I have to provide interest on the sums payable by P to Ds.

(2)  There is no clear evidence in this case showing while the TA was on foot, the annual rent was paid in advance or in arrears. To give P the benefit of doubt, I would specify that the rent for 2012 and the rent for 2013 should be due for payment on the last day of each calendar year. Further, I would specify that the mesne profits to be paid by P to D1 would be due for payment on the last day of each calendar month.

(3)  The interest rates adopted are the usual pre-judgment and post-judgment rates in civil cases.

(4)  Since I have not heard submissions on these matters, it would only be fair that that the order is made on nisi basis. The order nisi will become absolute unless an application is made by a party to vary the same within 14 days after the handing down of this judgment.

145.Since I have found that Wu has never acquired a possessory title to the Land or any part thereof, nothing concerning interest in any land has been passed from Wu to Chea Senior under the SPA. Accordingly, the SPA should not be chargeable with any stamp duty. I grant leave to release the solicitor from the undertaking.

146.Lastly, it remains for me to thank counsel for the helpful assistance rendered to the Court.

Mrs Dora Chan instructed by Cheung & Yip, for the Plaintiff

Mr Damian Wong and Ms Jenny Lok instructed by Johnnie Yam, Jacky Lee & Co., for the 1^st and 2^nd Defendants