Art Link Development Ltd v. Tang Shiu Ki (鄧兆姬), The Executrix of the Estate of Tang for Kui (鄧火炬), Deceased

DCCJ 3948/2017

[2020] HKDC 1085

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3948 OF 2017

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BETWEEN

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JUDGMENT

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1.The plaintiff and the defendant are the registered co-owners, each owning half share, of the plot of land known as Lot 1199 in Demarcation District 121 in Yuen Long (“Lot 1199”).

2.The plaintiff claims that, together with its predecessors, it has adversely possessed the defendant’s half share in Lot 1199, while the defendant counterclaims, among other relief, for a half share of the rent from Lot 1199 received by the plaintiff since 17 May 2017.

Significant common grounds

3.There are some twists to the background that need explaining.  Before I do that, I think it will help give a quicker understanding of this case by first setting out the following matters, which are common grounds, and are of significance.

4.The defendant accepts that since 1967, the plaintiff’s predecessors and later the plaintiff have been in continuous and exclusive possession of the entire Lot 1199.

5.There is no dispute over the use of Lot 1199, the erection of certain structures thereon at all material times and the state of those structures as set out in the respective reports of the surveyors proffered by the parties[1]. It is common ground that the defendant was not involved at all howsoever or whensoever with the erection or maintenance of the structures on Lot 1199, which the plaintiff and its predecessors and their tenants have been responsible for.

6.There is no dispute that the plaintiff’s predecessors and later the plaintiff have been renting out the entire Lot 1199 continuously since 1973 to date, and that the plaintiff and its predecessors since 1973 to date have never, not even once, paid or accounted to the defendant any of such rental incomes derived from Lot 1199[2]. The defendant also accepts that since the 1974 Action (defined below) until the filing of the Counterclaim herein in December 2017 - a period of 43 years, the defendant has not demanded for an account or any payment for rent earned by Lot 1199 and received by the plaintiff’s predecessors or the plaintiff[3].

7.There is also no dispute that the plaintiff’s predecessors had obtained from the Yuen Long District Office (“YLDO”), in respect of the unauthorized land use of Lot 1199,

(a) 3 “Forbearance to Re-entry Letters” respectively dated 17 May 1976, 3 May 1977 and 10 January 1978 (collectively, “the Forbearance Letters”);

(b) A Short Term Waiver No 1129 With Plan dated 7 October 1986 (“the Short Term Waiver”); and

(c) An Agreement Supplementary to Short Term Waiver No 1129 dated 19 June 1992 (“the Supplementary Agreement”).

8.There is no dispute that the payments periodically due and payable under the Forbearance Letters, the Short Term Waiver and the Supplementary Agreement have always been paid solely by the plaintiff and its predecessors.

9.There are produced by the defendant over 50 pages of old documents (“the Old Documents”)[4]. Their authenticity is not disputed.  Their purport however is not a matter of common ground either.  The Old Documents concerned events relating to Lot 1199 occurred between 1973 to early 1980s.  They include (a) correspondence between Tang For Kui (“TFK”) and his lawful attorney in Hong Kong, (b) correspondence between the solicitors acting for TFK and Hau Ping Chiu (“Hau”) and, (c) correspondence with YLDO related to the unauthorized land use of Lot 1199, and (d) pleadings of District Court Action No 9750 of 1974 (“the 1974 Action”).

10.Since the Old Documents are produced by the defendant, there is no objection by the defendant against the plaintiff’s reliance on the events as revealed by them and on their contents, and the trial has proceeded on that footing, even though technically such reliance has not been pleaded by the plaintiff.

Issues

11.The issues in dispute, termed broadly, are:-

(a) Whether, against the said common grounds and also the 1974 Action and other events, there has been adverse possession of the defendant’s half share for the requisite period.

(b) Whether there were acts done on the part of the defendant or her predecessor that negated discontinuance of possession on their part or negated their ouster by the plaintiff or its predecessor, as now alleged by the defendant (even if there has been adverse possession or ouster).

(c) Whether the defendant is entitled to an account of rent or occupational rents since 17 May 2017 as she counterclaims.

BACKGROUND

Paper title before 1967 the “1967 Oral Agreement”

12.Since 1936, Lot 1199 had been registered in the names of Mr Tang Sam Wo (“TSW”) and Mr Tang Tseung Hin (“TTH”), each holding a half share.  TSW was the older brother of TFK and cousin of TTH.  It is the defendant’s case that TSW held half share of Lot 1199 as the eldest male sibling on behalf of his younger brother TFK.

13.On 24 November 1964, TSW assigned his half share in Lot 1199 to TFK by an assignment by way of gift.

14.On 15 January 1966, TTH assigned his half share in Lot 1199 to Madam Wong Shuk Ying (“Wong”) at the price of HK$3,375.75.

15.Therefore, from 15 January 1966 on, Wong and TFK were registered co-owners of Lot 1199 each holding a half share.

The abandoned allegation regarding “the 1967 Oral Agreement”

16.Up to trial, the plaintiff’s case as to the background is this.  In May 1967 shortly before Wong died, she assigned her half share in Lot 1199 to her husband Hau.  Months later by late 1967, because TFK was minded to emigrate due to the unrest in Hong Kong, TFK agreed orally to sell his half share in Lot 1199 to Hau, the price of which was either paid in part or already paid in full and TFK allowed Hau to occupy the entire Lot 1199 (“the 1967 Oral Agreement”).  However, the 1967 Oral Agreement was never completed by the execution of a conveyance.

17.While opening the plaintiff’s case, its counsel Mr Wong relegated the 1967 Oral Agreement to just beliefs held by the plaintiff and sought to explain the background circumstances by relying instead on the 1959 Memorandum (which would be introduced below), and sought an amendment of the Amended Statement of Claim to introduce the 1959 Memorandum as part of the plaintiff’s case[5]. The defendant, very fairly and rightly in my view, consented to the amendment. The 1967 Oral Agreement itself and the circumstances surrounding it were effectively abandoned by the plaintiff in the course of trial.

18.It is now not seriously disputed that Wong and Hau came to possess the entire Lot 1199 in the circumstances described below.  As mentioned, their possession of the entire Lot 1199 since 1967 is not disputed by the defendant.  The defendant however does not accept that Wong and Hau was in possession of Lot 1199 any earlier than 1967.  Nothing turns on whether Wong and Hau possessed the entire Lot 1199 earlier than 1967.

The 1959 Memorandum

19.Registered in the Land Registry by memorial number YL183113 was a memorandum of sale in Chinese dated 23 March 1959 (“the 1959 Memorandum”)[6]. It was however only registered some 15 years later on 13 November 1974. Parties do not seek to dispute that it was caused to be registered then probably in connection with the 1974 Action.

20.The 1959 Memorandum recorded that TTH and TSW agreed to sell Lot 1199 to Wong.  At the end of the 1959 Memorandum, there were written the words “梁瑞卿代筆”, which literally meant “written by Leung Shui Hing on behalf of”.  It is not disputed that Madam Leung Shui Hing (“Leung”) was the wife of TFK.  So, apparently the 1959 Memorandum was written and/or signed by Leung on behalf of TSW and TTH.

21.Mr Hung, counsel for the defendant points out, which is accepted by both parties, that the price of HK$3,375.75 paid by Wong in 1966 for TTH’s half share was very likely half of the amount of consideration under the 1959 Memorandum calculated per the method provided therein.  It seems therefore that TTH had subsequently on 15 January 1966 assigned his half share in Lot 1199 to Wong pursuant to the 1959 Memorandum.

22.It is the defendant’s case that the 1959 Memorandum was not binding on TFK who had emigrated from Hong Kong in 1959, first to the UK and then to Netherlands.  As the validity or otherwise of the 1959 Memorandum is not an issue in this trial, I do not find it necessary to, nor can I and thus I will not, delve further into the details and merits of the dispute over its validity. However, the fact that it had been so disputed is significant, as we will see later.

23.It is now the plaintiff’s case that Wong and Hau entered into possession of the entire Lot 1199 sometime after the signing of the 1959 Memorandum and before TTH’s assignment of his half share to Wong on 15 January 1966.  It is also the plaintiff’s case that Wong, and later Hau, had been chasing for the execution of the conveyance of the other half share of Lot 1199 by TFK to her and later to him.

Since 1967

24.As mentioned, in May 1967 shortly before Wong died, she assigned her half share in Lot 1199 to Hau.  In 1968, Hau married Madam Cheng Siu Wah (“Cheng”).

25.From 1968 to late 1970s’, and as reported in the surveyors’ reports, structures were erected on Lot 1199 and their physical states had been changing.

26.It is the plaintiff’s case and not seriously disputed by the defendant that since 1973 Lot 1199 had been rented out by Hau for use as a factory (or factories), which was, as a matter of common ground, an unauthorized land use of Lot 1199.

27.There were then the events occurring from 1973 to mid 1980s as revealed by the Old Documents and documents registered in the Land Office.  As these events and contents of these correspondences now form a main part of the plaintiff’s case of adverse possession/ouster, I skip over them here and will examine them closely later on.

28.In 1979, Hau assigned his half share in Lot 1199 to himself and Cheng as joint tenants.

29.After and despite the events from 1973 to mid 1980s, including the 1974 Action, the plaintiff’s predecessors continued to be in possession of the entire Lot 1199, and had been renting it out and receiving the rental incomes, without accounting or paying the same to the defendant’s predecessor; nor had the defendant’s predecessor ever demanded any.

30.It is the defendant’s case that between 1987 to 2012, TFK had taken 7 trips back to Hong Kong and during a few of those occasions he had visited Lot 1199, and that those visits negated any discontinuance of possession on his part and/or negated any ouster.

31.In 1995, Hau passed away, whereupon Cheng became the sole owner of half of Lot 1199 by right of survivorship.

32.In 2002, shortly before Cheng passed away, she assigned the half share of Lot 1199 to the plaintiff company, which was and still is beneficially owned by Madam Chiang Ka Fung Cherry (“Chiang”), who was the daughter of Cheng from a former marriage, and therefore the step-daughter of Hau.

33.In 2014, TFK passed away and his estate is now represented by the defendant, who is his daughter and executrix.  The defendant relies on the fact that Lot 1199 was listed in the last Will of TFK dated 19 October 2012[7] as one of his properties devised thereby.

34.By letter of its solicitors dated 17 May 2017, the plaintiff demanded the defendant to sign the necessary documents to confirm its possessory title to half of Lot 1199.  The defendant refused, and this action was commenced in September 2017.

SURVEYORS’ REPORTS

35.Lot 1199 is in near rectangular shape.  It is about 1,172 square meters in size according to the plaintiff’s surveyor, and slightly larger according to the defendant’s surveyor.  The 2 surveying experts[8] are in general agreement over their findings from the aerial photos and survey sheets, and they have no disagreement on any issue.  I think I only need to set out in gist their findings from what were shown by the aerial photos:-

(a) In 1972, Lot 1199 was fully occupied by a number of structures;

(b) In 1977, one of the structures was renovated with a new roof;

(c) In 1985, a few small structures were seen in between the structures;

(d) In 1987, the few small structures first seen in 1985 became one single structure;

(e) In 1995, a new structure was seen occupying the northern half of Lot 1199;

(f) In 1997, the whole of Lot 1199 was occupied by one large structure; and

(g) From 1997 to 2017, the whole of Lot 1199 was occupied by one large structure.

WITNESSES AND THEIR EVIDENCE

36.Chiang gave evidence for the plaintiff.  The defendant and Mr Tang Sun Hi Sonny (“Sonny Tang”), the son of TSW, gave evidence for the defence. 

37.Chiang was born in 1954.  Since aged 17 (around 1971), she had been living abroad for studies and work in different periods, while in between returning to Hong Kong and staying for some years until 1997.  After 1997, she mainly lived in Europe.

38.Chiang gave evidence on what she remembered was told her by Hau and her mother Cheng mainly at the time before she went abroad for studies.  In gist, she remembered being told that Hau and Wong bought Lot 1199 and had paid the price for it.  She was not sure whether she was told as to whether the price was fully paid or just paid in part.  She recalled being told the event that a lady tried to return the price for the land to call off the deal but was decidedly refused by Hau.  Her parents had left her with no documentations regarding Lot 1199.  She admitted very frankly in evidence that she had put what she heard together with events and deduced that there was the 1967 Oral Agreement.  She said she was first shown the 1959 Memorandum by her lawyers shortly before this trial commenced.  Chiang has personal knowledge of the situation of Lot 1199 since 2002 but such is not in dispute.

39.In evidence, Chiang repeatedly testified that she was always given the belief by Hau and Cheng that her family had purchased and has always owned the entire Lot 1199.  She was very clear that her parents repeatedly expressed that they had no interest or intention to co-own the land with a member of the Tang clan, with whom they had no connection whatsoever.  I accept her evidence that such was the picture given to her by Hau and Cheng.

40.The defendant is now 60 years old.  She left Hong Kong to live abroad in around 1969 when she was 10 years old.  She frankly said that she had no knowledge about the matters relating to Lot 1199, save that she found the Old Documents inside a luggage belonging to her father TFK.  She also gave brief evidence in her supplemental witness statement regarding TFK’s alleged visits to Lot 1199.

41.Sonny Tang is the son of TSW.  He was educated in the UK and returned to Hong Kong in 1982.  His evidence concerned mainly the visits to Hong Kong by TFK between 1987 to 2012.

42.I find all 3 witnesses generally honest and reliable.  They however do not have much personal knowledge on the events occurring from 1973 to mid 1980s pertaining to Lot 1199.  The defendant’s and Sonny Tang’s evidence on the visits by TFK is of course pertinent and contested.  It will be dealt with later on.

LEGAL PRINCIPLES REGARDING ADVERSE POSSESSION GENERALLY

43.The legal principles regarding adverse possession generally is well settled and undisputed by the parties.

44.In a nutshell, for the adverse possessor to be successful, the squatter must show:-

(a) factual possession in that he has a sufficient degree of exclusive physical control of the subject land;

(b) the necessary animus possidendi, in other words an intention to possess the land to the exclusion of all other persons including the paper owner the best he can; and clear and affirmative evidence is required to show that such intention has been made sufficiently clear to the world; and

(c) he has such factual possession and animus possidendi continuously for the whole of the requisite time period.

(Powell v McFarlane[9], JA Pye (Oxford) Ltd v Graham[10] and  Wong Tak Yue v Kung Kwok Wai[11])

45.In our present case, it is common ground that the requisite time period is 20 years.

46.Furthermore:-

(a) Successive squatters can add their years of adverse possession together, so long as they have been continuous and unbroken, to complete the period of adverse possession (Ng Lai Sim v Lam Yip Shing & Anor. HCA 2963/1998).

(b) There is no rule of law that the factual possession and the requisite intention for the purpose of adverse possession cannot be established for a person who mistakenly believes himself to be the true owner and does not realize he is trespassing on another’s land  (Cheung Kwong Yuen v Sun Hui Fang [2016] 1 HKLRD 464; Pang Yiu Chor v Wong Wai Leung[12] [2017] 4 HKLRD 761).

LEGAL PRINCIPLES REGARDING ADVERSE POSSESSION BY ONE CO-OWNER AGAINST ANOTHER

47.From the authorities cited by both parties, the following principles in relation to adverse possession by a co-owner of land (whether joint tenants or tenants in common) against another can be distilled and summarized.  They are not disputed:-

(a) By virtue of the unity of possession, each co-owner is as much entitled to possession of the co-owned land as the other and each has a right to exercise acts of ownership over the whole property.  No action therefore lies in trespass by one co-owner against the other on the ground that he occupies or exploits the whole or any one part rather than another of the co-owned land.  A remedy of trespass is available against a co-owner only in cases of ouster (§§7.4.33, 7.4.35 & 7.4.36, Elements of Land Law, Gray & Gray 5^th ed).

(b) It is thus well settled that there has to be ouster before the possession of the co-owned land by a co-owner could be treated as adverse to the other co-owner or co-owners (Culley v Doe d Taylerson (1840) 11 Ad & El 1008, Chou Mei Iu v Kung Mui Fong HCMP 2026 of 2000, 28 February 2003, Lam J (as the learned VP then was), Lai Wai Kuen v Wong Shau Kwong [2004] 4 HKC 528, Tang Tak Sum v Tang Kai Fong [2015] 1 HKLRD 286).

(c) “Ouster comprises any unequivocal and express ‘denial of the title and right to possession’ of a co-tenant and is wide enough to cover not merely instances in which one-co-owner evicts or excludes another from the land, but also circumstances where he otherwise interferes with the common enjoyment of that land. … . The modern understanding of ouster is undoubtedly somewhat broader, extending beyond ‘actual’ ouster to include ‘constructive’ ouster (eg where an innocent co-tenant is indirectly caused to leave the co-owned property).  Although conduct which merely makes life ‘nasty’ for a co-tenant may not constitute ouster, ouster may occur with the unconsented introduction of a new partner to share co-owned premises or with a persistent denial of the title of the other co-tenant.” (§§7.4.36 Gray & Gray 5^th ed supra).

(d) “ ‘Actual ouster’ are simple words, they mean no more than dispossession in modern parlance.” (per Cheung JA, §37 in Tang Tak Sum v Tang Kai Fong supra).

(e) In cases where there is no or very flimsy evidence as to the circumstances under which the other co-tenant(s) ceased to have any dealings with the property, while there is a long period when such co-owner(s) did not have any occupation of the property and did not make any demand for account and there had been no payment of rent or profits to him throughout the years, and there was no acknowledgment of title, the court can, and often would, presume ouster in such circumstances (Doe d Fishar v Prosser (1774) 1 Cowp 217, Lai Wai Kuen v Wong Shau Kwong supra, Sum Yiu Ka v The Personal Representative of Wong Hau Chun, Deceased DCMP 1896/2016, unrep. 24 January 2018, Deputy District Judge Kam K.L. Cheung, Wong Chow Yun v Qwok Leung Mah DCMP 1752/2015, unrep., 1 March 2017, Deputy District Judge Elaine Liu).

(f) Where there is evidence as to the circumstances under which the other co-tenant(s) ceased to have any dealings with the property, the court will adjudicate whether there was ouster based on the circumstances found (see Lo Kau Kun v Cheung Yuk Yun HCA 152/2013, unrep, 24 February 2015 DHCJ Sakhrani (as the learned retired judge then was))

48.The defendant particularly relies on one passage in Doe d Fishar v Prosser :

“So in the case of tenants in common: the possession of one tenant in common, eo nomine, as tenant in common, can never bar his companion; because such possession is not adverse to the right of his companion, but in support of their common title; and by paying him his share, he acknowledges him co-tenant. Nor indeed is a refusal to pay of itself sufficient, without denying his title. But if, upon demand by the co-tenant of his moiety, the other denies to pay, and denies his title, saying he claims the whole and will not pay, and continues in possession; such possession is adverse and ouster enough.”

(Lord Mansfield, p 1053)(the defendant’s emphasis)

49.The plaintiff does not dispute that in such a situation, a mere refusal to pay the other co-owner his due share of rent or income from the land is not sufficient to show ouster.  The plaintiff’s case is that in the present case, there were clear denials of title.

50.The defendant also relies on the Court of Appeal case of Tang Tak Sum v Tang Kai Fong[13] in relation to the alleged visits by TFK between 1987 to 2012.  I will discuss this later when I deal with that point.

EVENTS FROM 1973 TO MID 1980S AS REVEALED BY THE OLD DOCUMENTS AND THE DOCUMENTS REGISTERED IN THE LAND OFFICE

51.By a Power of Attorney dated 9 April 1973 (“the PA”), TFK appointed his nephew Tang Chun Lam (“TCL”) as his attorney to deal with TFK’s real properties in Hong Kong.  Evidently, TFK was in Holland as the PA was signed before the British Vice-Consul there.

52.In 2 letters written in Chinese by TFK to TCL respectively dated 12 December 1973[14] and 2 January 1974[15], TFK wrote regarding Hau’s occupation of Lot 1199 and the 1959 Memorandum:-

“… 請你與律師研究，你認為用法律解決或者用其他方法解決由侄全權代表辦理 如果用法律解決時，追究他由一九六四年十一月廿四日至現在，我本人名份地租 其次追究住客及老侯未得我同意霸佔我的土地租與他人，關於家兄翔衍及三和以前所收訂金與我本人無關，我一切否認對律師方面也不承認這件事存在請轉知家兄鏡清無論如何否認這件事 官司才能勝利”

“有關唐人新村性侯之人，甚為狡猾，請記着無需要與他談話，無論如何請律師去函法院告他及住客未得我同意強佔我的土地收租 由一九六五年至現在租金，你父親收訂金時當時鄧翔衍和鄧火炬為業主這時我已經出國謀生關於這件事我一切不知道，同時有關你父親收訂金之事我一切不承認這件事在法律上對我本人無效因我當時依然在外國沒有授權任何人管理產業，收訂金是你父親簽名于我本人無關我根本沒有簽过任何字條給任何人有關這買賣之事有關老侯持有任何正件是偽造，于我本人無關請對律師說否認其事”

53.Thus, by late 1973, TFK regarded that his share in Lot 1199 had been occupied and rented out by Hau without his consent.  Then months later, TFK[16] and TCL engaged Messrs Woo, Kwan, Lee & Lo (“WKLL”) to issue a letter before action to Hau dated 15 August 1974.  In it, TFK demanded Hau to render an account of the rent received from renting out Lot 1199, and that failing amicable resolution, the problem would be resolved by legal means.

54.The defendant now relies on a sentence in the above letter from WKLL recording that Hau allegedly said to TCL that he was willing to pay a sum of HK$600 per year.  It is said that such amounted to an acknowledgment of title. I think such reliance is neither here nor there as that was a self-serving allegation on the part of TFK (which Hau never admitted in subsequent correspondence), and even if such were said by Hau, it was clearly superseded by the response from Messrs Yu, Tsang & Loong (“YTL”), acting for Hau, by their letter dated 11 September 1974.  In that letter, YTL enclosed a copy of the 1959 Memorandum, set out the circumstances in which it was signed and the repeated requests previously made to TFK to complete the sale, and called upon TFK to complete the sale and threatened an action for specific performance.

55.Then, sometime in late 1974, an action was commenced in the District Court with TCL named as the plaintiff against Hau.  In the Statement of Claim[17], it was pleaded that

(a) TCL became owner of one half share of Lot 1199 since 24 November 1964 (paragraph 2);

(b) Hau was assigned one half share of Lot 1199 by Wong by assignment dated 11 May 1967.

(c) Then in paragraphs 4 to 6, it was pleaded

“4. Since the said assignment of the half share of the said property by Wong Shuk Ying to Hou Ping Chiu, the said Hou Ping Chiu has let the whole of the said property to others without the lawful permission of the Plaintiff and has since then received rents from the persons in occupation thereof and as a result the Plaintiff has suffered damages.

5. Alternatively, even if the Plaintiff did consent to such letting, which is denied, the Defendant has failed to account to the Plaintiff in respect of the rents received from the occupiers of the said property.

6. The plaintiff therefore claims:-

(i) damages.

(ii) A declaration that the Defendant shall account to the Plaintiff in respect of the rents he has received from the occupiers of the said property since 11th day of May 1967.

(iii) Cost of this action.”

56.Pausing there, it was not known, nor explained in the correspondence nor now explained by the plaintiff, as to why TCL was alleged to be the owner of half share of Lot 1199 in that Statement of Claim.  However, nothing seems to turn on that.

57.The Defence dated 26 November 1974[18] was then filed in the 1974 Action (“the Defence”).  Since the defendant submitted that it did not amount to a denial of title, I will quote it in full. 

“ DEFENCE

1. Save as expressly admitted hereinbelow, no admissions are made as to paragraphs 1 and 2 of the Statement of Claim.

2. Tang Tseung Hin was at one time the owner of one-half share in the property known as Lot No. 1199 of D.D. 121 (hereinafter called “the said property”. The other half share of the said property was held by Tang Sam Woo in trust for Tang For Kui.

3. By an agreement contained in and/or evidenced by a Memorandum of Sale dated 23 March 1959 (hereinafter called “the said agreement”), the said Tang Tseung Hin and Tang Sam Woo (acting through Leung Shui Hing, the wife of the said Tang For Kui) agreed to sell the said property to the Defendant’s wife for the consideration stated therein. The Defendant will refer to the set agreement for is full terms and effect.

4. Pursuant to the said agreement, the Defendant and his wife (a) entered into possession of the said property (b) erected structures thereon, including chicken sheds and fences and (c) let out the said property together with the adjacent lots Nos. 1200, 1201 and 1202.

5. Paragraph 3 of the Statement of Claim is admitted. The said Tang Tseung Hin, pursuant to the said agreement, assigned his half share of the said property to the Defendant’s wife who on 11th day of May 1967 assigned the same to the Defendant.

6. The Defendant’s wife has since died intestate. The Defendant is her lawful successor within the meaning of Section 17 of the New Territories Ordinance.

7. Despite requests, however, the said Tang Sam Woo and/or Tang For Kui have neglected to assign or cause to be assigned the other half share of the said property to the Defendant’s wife or the Defendant.

8. The Defendant’s wife was at all material times able and willing to carry out her part of the bargain under the aforesaid sale and purchase agreement and the Defendant, as her successor, remains able and willing to do so.

9. Save as aforesaid, paragraph 4 of the Statement of Claim is not admitted.

10. It is admitted that the Defendant has not accounted to the Plaintiff in respect of rents received as pleaded in paragraph 5 of the Statement of Claim but the Defendant says that he is under no obligation to do so.

11. If for any reason the Defendant is liable to account for any part of the rents received (which is denied) the Defendant will seek to set-off the expenditure incurred and the outgoings in respect of the relevant share of the said property against the rents received.

12. In the premises the Plaintiff is not entitled to the relief as claimed or at all.

Sd. Denis Chang         

COUNSEL FOR THE DEFENDANT

Dated this 26^th day of November, 1974”

58.In relation to the 1974 Action, there were only 2 more letters from TCL shedding some light on its progress.  The first was dated 16 December 1974[19] in which TCL reported to TFK that he had agreed to engage counsel to represent them and that he and WKLL had decided, among others, to apply to court to declare the 1959 Memorandum invalid.  The second was dated a year later on 15 December 1975[20], in it TCL reported, among others, that there might be pressure on Hau to negotiate with them as TFK’s participation as co-owner would be required relating to the application for change of land use of Lot 1199 and that WKLL thought it might be more advantageous tactically to wait and see.

59.There were no more documents in the Old Documents showing further progress or the outcome of the 1974 Action.  A few of the letters mentioned below contained some hints.

60.It is common ground that it is not known what eventually had become of the 1974 Action.

61.There were amongst the Old Documents also correspondence with YLDO around this time regarding the unauthorized use of Lot 1199.  The sequence of events, to the extent they are revealed by the Old Documents and documents registered in the Land Office, were these.

62.On 20 August 1974, 5 days after WKLL had issued their letter before action to Hau, they also wrote to YLDO[21], enclosing the said letter before action, and requesting YLDO to consult TCL with regard to the issuance or renewal of all permits relating to Lot 1199.

63.Then there was the letter from YLDO dated 12 January 1976[22] offering to Hau and TFK a short term waiver for one year in respect of Lot 1199 at a fee per month.  There, YLDO also made clear that if the short term waiver offer was not taken up, then the structures erected on Lot 1199 need to be removed. This letter was issued to Hau and to TFK c/o TCL.

64.On 21 January 1976, WKLL responded to YLDO on behalf of TCL[23]. There WKLL stated clearly to YLDO that the structures were erected without TFK’s consent, that legal proceedings had already been instituted against Hau and indicated that “our client absolutely rejects your present offer of a Short Term Waiver”.

65.On 11 February 1976, YLDO replied to WKLL[24] that the dispute between TFK and Hau was a private one, but that because of the rejection by TFK of the offer, YLDO would notify Hau to clear the structures by 31 March 1976 and to revert Lot 1199 to agricultural use, failing which YLDO would recommend the government to commence procedures to re-enter Lot 1199.

66.Then on 17 May 1976 and 3 May 1977 respectively, YLDO issued the first 2 of the Forbearance Letters[25]. Both of these letters were sent to YTL and copied to WKLL.  Both expressed that the forbearance was given to allow settlement of the private legal matter between TFK and Hau.

67.Then on 10 January 1978, the third of the Forbearance Letters was issued by YLDO[26]. In it YLDO thanked YTL for their letter dated 14 November 1977[27], the contents of which YLDO noted.  This forbearance letter was also expressed to be given to allow settlement of the parties’ private legal matter.  It is worthy to note that this forbearance letter was not copied to WKLL, unlike the previous two.

68.So, apparently, by January 1978, the 1974 Action had not been resolved.

69.Then there was a letter dated 3 December 1979 from YLDO to WKLL.  In this letter, YLDO answered TCL’s query as to why YLDO said the unauthorized user of Lot 1199 was purged when there was still a rattan factory operated in the lot.

70.The last of the correspondence in the Old Documents was a short letter dated 13 August 1981 by WKLL to Hau personally[28], and no longer through his solicitors YTL, and copied to YLDO.  WKLL reiterated that TFK was the registered owner of one half share in Lot 1199 and said that TCL received a letter from YLDO dated 7 August 1981[29]. WKLL then “inform(ed)” Hau that unless Hau reverted Lot 1199 to agricultural user within the time prescribed by YLDO’s said letter, TFK would hold Hau fully liable for the damage suffered.

71.The Old Documents do not contain any further document that throw light on what happened afterwards.  None of the witnesses know either.

72.The land search of Lot 1199 revealed that the Short Term Waiver dated 7 October 1986 and the Supplementary Agreement dated 19 June 1992 were granted in respect of Lot 1199.

73.Of note is that the Short Term Waiver was only addressed to Hau and Cheng.  Hau and Cheng were introduced in the preamble thus “You are the registered owner of Lot 1199 in D.D. 121 held from the Government of Hong Kong … under Block Lease …”.  The Short Term Waiver was signed by Hau and Cheng.  In the Supplementary Agreement, again only Hau and Cheng were named as the parties on the one part.  In the Short Term Waiver and the Supplementary Agreement, TFK was not mentioned as having any interest in Lot 1199 nor was he named a party.

74.Thus, YLDO since 1986 apparently no longer regarded TFK as one of the registered owners of Lot 1199 and dealt with Hau and Cheng only as the Lot 1199’s registered owner.  There is no evidence indicating or evening hinting why that was so.  Also apparently, YLDO had by then completely disregarded the strong stance expressed by WKLL on behalf of TFK that TFK “strongly objected” against the granting of the Short Term Waiver.

75.Since the authenticity of the Old Documents is not disputed and there is no reason to suggest that their contents are untrue or unreliable and there being no evidence to the contrary, I find as facts the events spoken to or recorded in the Old Documents, as set out above.

WAS TFK OUSTED FROM LOT 1199 ?

76.Mr Hung submitted that this is just a case of non-receipt and non-demand of a co-owner’s share of rental and that there had not been any denial of title.  Mr Hung with his usual skill took the court through and analysed individual sentences and averments in the Defence and contended how each of such averments did not amount to a denial of title, and submitted therefore Hau did not deny the title of TFK whether in the Defence or otherwise.

77.Without disrespect, I cannot accept as correct or appropriate that in approaching the issue as to whether there was ouster this court is confined to minutely analyzing the Defence averment by averment.  This is too narrow an approach, particularly on the evidence and circumstances of this case.  Rather, I bear particularly in mind that I should ask myself whether in all the circumstances, “there was unequivocal and express denial of the title and right to possession of a co-tenant” (§§7.4.36 Gray & Gray 5^th ed supra) and whether he had been dispossessed (per Cheung JA, §37 in Tang Tak Sum v Tang Kai Fong, supra).

78.In fact and in my view, from looking at the Old Documents closely and at the events alluded to therein, as above set out, a clear picture of the state of affairs and the dispute emerges, and I find, as follows.

79.In late 1973, TFK regarded himself as one of the co-owners of Lot 1199 as he denied that his half share in Lot 1199 had been sold under the 1959 Memorandum.  As a co-owner, TFK took the view that Hau had wrongly occupied the whole of Lot 1199 and rented it out without his consent and permission and that Hau had not paid him his due share of the rent.  He made a formal demand through his solicitors.  Hau not only did not acknowledge the validity or meet TFK’s demand, but claimed that the entire Lot 1199 had been sold to Wong under the 1959 Memorandum and that he was obligated only to perform the agreement evidenced by the 1959 Memorandum and not obligated to TFK as a co-owner of Lot 1199.  That in my view was clearly the only substantive defence raised by Hau in the Defence.  In paragraph 10 of the Defence, it was clearly pleaded that Hau was “under no obligation to” account to TCL/TFK the rent received from Lot 1199.

80.In my view, Hau had been clearly asserting unequivocally and expressly all along, including in the 1974 Action, that TFK was no longer a co-owner beneficially, and on that basis Hau had been refusing to, and did not for once, account to or pay any rental income to TFK despite his formal demands and even legal action.

81.In light of my view reached and set out above, I do not find it necessary to embark on a discussion of various individual averments in the Defence as to whether each of them amounted to a denial of title, in the manner as submitted by Mr Hung.

82.Moreover, regarding the unauthorized land use of Lot 1199, and as seen from the correspondence with YLDO, Hau had been consistently and persistently disregarding TFK’s position that TFK did not consent to such unauthorized use.  Hau had been consistently and persistently disregarding objections and complaints made by TFK to the YLDO by solicitors’ letters.  Hau had through his solicitors been negotiating with YLDO about the granting of a waiver in complete disregard of TFK, and eventually obtained it in 1986 in the capacity as the “registered owner” of Lot 1199.

83.In my judgment, TFK clearly had thereby been ousted by Hau from Lot 1199.

TIME STOPPED TO RUN AFTER THE COMMENCEMENT OF THE 1974 ACTION ? TIME HAS STOPPED TO RUN FROM 1974 UNTIL NOW AND THEREFORE THE DEFENDANT IS NOT TIME BARRED ?

84.In his closing submissions, Mr Hung submitted that time stopped to run when TFK commenced the 1974 Action.  This is not controversial.  Mr Hung continued to contend that as there was no evidence showing what had become of the 1974 Action, it was prima facie still alive and therefore time has stopped to run from 1974 until now and the defendant therefore is not time barred.

85.I cannot accept that contention.

86.Firstly, this contention was not pleaded in the Amended Defence.  Has it been so pleaded, the plaintiff would have been fairly and properly alerted and could at least try to enquire with the court as to whether the court file of the 1974 Action could still be retrieved so as to find out the status of the 1974 Action.  Without such pleading, the plaintiff was caught by surprised.  I therefore hold that the defendant is not allowed to rely on this contention.

87.Secondly and in any case, I find that the 1974 Action must have been abandoned, latest by 1986, for the following reasons:-

(a) As alluded to in paragraph 58 above, in the last 2 letters between TCL and TFK shedding light on the 1974 Action, it was mentioned in the first one about engaging counsel to seek a declaration that the 1959 Memorandum was invalid, and then in the second letter dated 15 December 1975, that the strategy recommended was to wait and see as it was thought that Hau would need TFK’s cooperation to apply for a change in land use and would be pressurized to negotiate with TFK.

(b) However, as can be seen from the correspondence exchanged between YLDO, TFK and Hau since January 1976, Hau continued to negotiate with YLDO in complete disregard of TFK’s complaint and objection.  Thus, the strategy of wait and see and the perception that Hau would be pressurized to negotiate clearly did not pan out.  One would expect TFK to resume prosecuting the 1974 Action.

(c) Yet, no further documents relating to the 1974 Action were found being kept by TFK together with the Old Documents.  Had there been any, it is highly probable that TFK would have kept them in the same manner.

(d) Apart from the question of retention of documents, had the 1974 Action been prosecuted, with the attendant time and costs, it would be highly likely that the defendant would have heard about it from her father TFK. Moreover, TCL, who was the named plaintiff in the 1974 Action and the attorney of TFK, would have been much involved and should be in a position to give evidence about it.  Even with the passage of time, someone close to TCL should still be able to give at least some hearsay evidence about it.  Yet, no such evidence was proffered.

(e) The Forbearance Letters all expressed therein that the forbearance was granted to allow time for the co-owners to settle their private legal dispute.  Then in 1986, Hau obtained the Short Term Waiver which was registered in the Land Office.  The Short Term Waiver however no longer mentioned TFK as one of the registered owners.  It should have spurred TFK to action to protect his interest as a co-owner of Lot 1199.  Yet there was no suggestion or evidence of any action taken by TCL/TFK.

(f) Thus, all circumstances point to the fact that no further steps in the 1974 Action had been taken by TCL/TFK.  I so find.

(g) The 1974 Action therefore had not been prosecuted for about 43 years from the time the Defence was filed until the commencement of this action.

88.As Hau’s ouster against TFK had been continuing, and while time might have been stopped by the commencement of the 1974 Action, time would begin to run again upon the abandonment of the 1974 Action, latest by 1986.  Therefore and I find that by 2006, Hau together with his successors would have dispossessed TFK for the requisite 20 years.

ADVERSE INFERENCE TO BE DRAWN AGAINST THE PLAINTIFF ?

89.I think I only need to deal with this point briefly.  Mr Hung submitted that the court should draw an adverse inference against the plaintiff for failing to call as witness(es) the solicitor(s) in YTL who handled the 1974 Action on behalf of Hau to tell the court what had become of the 1974 Action. It is alleged by the defendant that the handling solicitor(s) of YTL was(were) involved in the affairs of certain companies related to the plaintiff.

90.Evidently, the same complaint can be made against the defendant for failing to call the solicitor(s) in WKLL who handled the 1974 Action on behalf of TCL/TFK.  I do not think the above allegation of the solicitor(s) involvement in the affairs of the plaintiff’s associate, even if true and I make no finding thereon, take the matters any further.  If I am persuaded to draw such an adverse inference against the plaintiff, the same adverse inference based on the same rationale should also be drawn against the defendant.

91.I understand that the parties have made efforts to enquire with the respective law firms as to whether their case files are still available after the lapse of some 40 odd years, and both parties have not met with success.

92.I am not persuaded that in the circumstances of this case the drawing of any such adverse inference against either party is appropriate.

VISITS BY TFK

93.In this part of the defence case, the defendant relied on Tang Tak Sum v Tang Kai Fong [2015] 1 HKLRD 286.  In that case, the Court of Appeal overturned the judgment below and held instead that the defendant there failed to adversely possess the land as against the plaintiff on the basis that evidence established that there were visits by the plaintiff onto the land and parked his car there without payment, while a visitor otherwise would be required to.

94.There the CA held that in respect of possession by the paper title owner, the slightest acts done by him will be found to negative discontinuance of possession because an owner who has the right to possession of land will be readily assumed to have the requisite intention to possess, unless the contrary is clearly proved.

95.The defence case is that TFK visited Lot 1199 on some of the occasions when he returned and stayed in Hong Kong between 1987 to 2012.

96.I accept the evidence from the defendant and Sonny Tang, as support by TFK’s travelling document, that TFK returned to and stayed in Hong Kong during the following periods:-

(a) 6 October to 3 November in 1987;

(b) for a period of 2 to 3 weeks from 12 November 1998;

(c) 23 June to 17 July 2000;

(d) 17 to 28 August 2002;

(e) 22 May to 1 June 2005;

(f) 23 February to 7 March 2012; and

(g) 14 to 23 October 2012.

97.I also accept Sonny Tang’s evidence that every time TFK visited Hong Kong, he would be informed in advance and he and TFK would meet each other.

98.The defendant gave her only evidence about these visits in her supplemental witness statement :

“I recall that on a few of those occasions (which I now cannot recollect precisely when), he told me that he had gone to the lands or properties owned by him; he did not tell me that he had been stopped by anyone nor did he tell me that he was evicted by others during his visits to his lands and properties.”[30]

99.Sonny Tang’s evidence in his witness statement about these visits is this:-

“I recall that on a few of those occasions, he told me that he had gone to the lands or properties owned by him.

I had a specific recollection of his return in June 2002 … I can recall that during that trip to Hong Kong [in June 2002], we had gone to yum cha together; during the meeting he talked about his properties and lands in Hong Kong; he told me that he had taken the opportunity to go and visited [sic] his lands and properties. As I understand, his lands and properties are all located in DD 121, 122 and 124 …”[31]

100.In cross examination, Sonny Tang gave evidence, which I accept, that he did not go with TFK to visit his properties on any of those occasions, that there was no one accompanying TFK during his visits to the properties, that he did not know what kind of transportation TFK took when he visited his properties.  When asked whether TFK described any of those properties he visited to him when TFK mentioned that he had visited the properties, Sonny Tang answered that TFK had many properties and he did not specifically mention any particular property.

101.To put matter in context, it is not disputed that TFK at the material times owned 13 pieces of land in Hong Kong either solely or as a co-owner owning half[32].

102.The evidence as to TFK’s visits to his properties is therefore most general and vague.  It is only said that TFK visited his properties on “a few of those occasions”.  There is no evidence as to when and in which of 7 occasions when he was in Hong Kong did TFK actually had such visits.  Sonny Tang spoke to an occasion in June 2002, while according to the travel document, TFK did not return to Hong Kong in June 2002, but in August 2002 instead.  As TFK had 13 pieces of land, there is no evidence as to what “his lands and properties”, if this was the actual expression used by TFK, meant or entailed. Particularly, there is no evidence that TFK actually visited Lot 1199, not to mention that there is no evidence that he actually entered Lot 1199, as opposed to looking onto it from afar or from close by.

103.As the evidence is so flimsy and vague, I do not find it proved on balance of probabilities that TFK actually visited onto Lot 1199 on any of those occasions as alleged.  The defence case that TFK had negated his dispossession or ouster by these “visits” is a non-starter.

RELIANCE ON TFK’S WILL

104.Certain reliance was placed by the defendant on the fact that Lot 1199 was listed in and devised by the Will of TFK dated 19 October 2012[33] as one of the properties belonging to him.

105.In my view, the fact that Lot 1199 was listed and devised in the Will is neither here nor there.  It is not disputed that TFK owned half of Lot 1199 at the material time.  The land search records, giving notice to the public at large, would say as much.  The case, as I find above, is that TFK had been ousted and dispossessed from Lot 1199 by Hau, despite TFK being the co-owner.  As a matter of principle, a mere expression, even a declaration to the public (just like the land search records), on the part of the one being ousted that he owns the land cannot negate the fact that he has been ousted or dispossessed.  I so hold.

106.Moreover, I hold above that TFK had already been ousted and dispossessed of his share of Lot 1199 for the requisite period of 20 years by 2006.  The Will was made 6 years later in 2012.  Therefore and in any case, the Will would not affect the adverse possession.

THE DEFENDANT’S COUNTERCLAIM

107.By reasons of the matters set out above, I would dismiss the counterclaim.

108.For completeness, I would mention briefly my view that had the plaintiff not been able to establish adverse possession, I would have held in favour of the defendant’s claim for her half share of the rental income since 17 May 2017 calculated, according to Mr Hung’s closing submissions as corrected orally, in the total sum of HK$248,499; and with interest at half of the best lending rate from 17 May 2017 until the date of this judgment and at judgment rate then after until full payment.

DISPOSAL

109.In the premises, I give judgment to the plaintiff and dismiss the counterclaim.

110.There be a declaration that

(a) The plaintiff has been in adverse possession of the half share of Lot 1199 registered in the name of Tang For Kui for a period of no less than 20 years prior to the commencement of this action, and the plaintiff has thereby acquired and is entitled to an indefeasible possessory title, interest and/or right in and/or over the half share of Lot 1199 previously registered in the name of Tang For Kui, now deceased and now registered in the name of Tang Shiu Ki, the executrix of his Estate; and

(b) The title, interest and/or rights of Tang For Kui, now deceased and Tang Shiu Ki, the executrix of his Estate in and/or over half share of Lot 1199 has been extinguished by virtue of section 17 of the Limitation Ordinance Cap 347.

111.Regarding costs, I have alluded to the abandonment by the plaintiff at trial of its case regarding the1967 Oral Agreement.  The 1967 Oral Agreement has been seriously contested by the defendant and a good portion of the witness statements have been devoted to it.  Such costs are thrown away and wasted, which I provisionally think the plaintiff ought to pay in any event.  Presently and in the round, I think it is fair that the plaintiff should be deprived of 20% of its costs.

112.I therefore order on a nisi basis that the defendant do pay the plaintiff 80% of the costs of this action, including the costs of the counterclaim and any costs reserved, with certificate for counsel, to be taxed if not agreed.  This costs order nisi will become absolute unless any party applies by summons to vary within the next 14 days.

113.I thank Mr Wong, Mr Hung and Mr Chan for their assistance.

Mr Paul Wong, instructed by Ruby Yeung & Co, for the plaintiff

Mr Andy Hung and Mr Daniel Chan, instructed by Alex To & Co, Solicitors, for the defendant