City Success Ltd v. Melofield Nursery and Landscape Contractor Ltd and Another

DCMP 744/2018

[2021] HKDC 128

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 744 OF 2018

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BETWEEN:

Coram: His Honour Judge Harold Leong in Court

Date of Hearing: 27-29 October 2020 and 3 November 2020

Date of Judgment: 28 January 2021

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JUDGMENT

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1.This is a straightforward adverse possession case: the plaintiff is the registered owner of two lots of land known as Lot 1188 (AB) and Lot 1189 (RP) in the Demarcation District No. 116, Yuen Long, New Territories, Hong Kong (collectively known as “the Lots”) and claims against the defendants for vacant possession and mense profits. The first named defendant, Melofield Nursery and Landscape Contractor Limited (“Melofield”), counterclaims by seeking a declaratory relief by way of adverse possession.

Background

2.It is not in dispute that the plaintiff has been the registered owner of the Lots since 1992 and that Melofield is currently in occupation of the Lots.

3.Melofield claims that it has entered into and occupied the Lots since 1997.

4.In any case, it is not disputed that around November 2017, the plaintiff received a letter dated 31 October 2017 from the District Lands Office, Yuen Long, Land Department informing the plaintiff of “illegal structures” on Lot 1189 (RP) in breach of the conditions of the Government Lease and demanding the demolishment of such.

5.The plaintiff instructed a surveyor, Mr. Wong Chi Wai (“Mr. Wong”) to conduct a site survey.

6.Mr. Wong visited the Lots on 2 occasions and reported, inter alia, of structures erected on Lot 1189 (RP) without the plaintiff’s knowledge or consent and that Lot 1188 (AB) had also been trespassed.

7.It is also not in dispute that, during one of the site visits by Mr. Wong, an employee of Melofield, Ms. Mona Wong, indicated to Mr. Wong that Melofield intended to buy the Lots from the plaintiff. This was confirmed by Mr. Lau Sum Yan (“Mr. Lau”), the managing director of Melofield, when giving evidence in court. Mr. Lau further confirmed that an offer of HK$5M was made but he had not heard further from the plaintiff regarding this.

8.The plaintiff commenced the current action on 12 March 2018.

Legal principles

9.The legal principle to establish adverse possession is trite: the claimant must prove both “factual possession” of and the requisite “intention to possess” (animus possidendi) the land for a duration, in this case, of 12 years.

Intention to possess

10.Before I even need to consider any disputes regarding “factual possession”, the undisputed fact that Melofield has made an offer to buy the Lots from the plaintiff is immediately fatal to its claim.

11.It is trite that, in making an offer to purchase the Lots from the plaintiff, Melofield was “quite clearly saying that as between himself (in this case, itself) and the person to whom he (it) makes the offer, he (it) realizes that the latter has a better title, and that would seem to be plainest possible form of acknowledgement.” (Edginton v Clarke & Anor. 1964 1 QB 367 at 376)

12.Mr. Chow, counsel for Melofield, submitted that this was no longer the position of the law in Hong Kong, quoting Wong Tak Yue v Kung Kwok Wai (1997-1998) 1 HKCFAR 55 at 69E-F, Li CJ:

“The 14^th defendant’s intention to pay rent if the owners had requested payment demonstrated that he was not intending to exclude the owner with the paper title but showed that he was treating himself as enjoying himself as enjoying possession under a lawful title from the owners. His intention to possess was not “as of wrong” but was “as of right”. Such intention is…held to be inconsistent with the intention to claim possession for the purposes of adverse possession.”

13.Mr. Chow’s logic, as far as I could understand, was that the Wong Tak Yue case was dealing with “an intention to pay rent being inconsistent the intention to possess”, but since this case is different in that it concerned with “an intention to buy”, it should follow that it is consistent with the “intention to possess”.

14.I have some difficulties following this line of logic: the Wong Tak Yue case was silent on what one should make of an “intention to buy” (so presumably, that was the reason that the plaintiff never sought to rely on this point). So quoting that case would not support Melofield’s case, no more than if one makes a submission that a rule that “a dog has 4 legs” should support an assertion that “therefore, a cat, being not a dog, must have three legs”: the rule is silent on how many legs that a cat has, and a negative cannot support a positive.

15.I therefore cannot agree with Mr. Chow that the Edginton case no longer applies in Hong Kong. If anything, both cases must have been decided by application of common sense: if one states that he would have paid rent if asked by the owner, or if one has made an offer to buy the property from the owner, either would have been “the plainest possible form of acknowledgement” that the owner has a better title.

Factual possession

16.Having found that Melofield does not have the requisite intention to possess, there is no need to go further. However, for the sake of completeness, I will proceed to consider where there is “compelling evidence” to show “exclusive and continuous possession” with “an appropriate degree of physical control”.

17.I find that Melofield falls far short of showing such.

18.Mr. Lau’s evidence is that since 1997, Melofield has been occupying the Lots and other surrounding land for its business including storing trees and plants, operation apparatuses as well as setting up offices, workshops and staff common rooms etc. However, the evidence provided in the witness statement was rather vague. What little particulars provided in the Supplemental Witness Statements were essentially just assertions that various plants and apparatus were placed in Lot 1188 (AB) and east of Lot 1189 (RP) from 1988 to 2001 and were left in same condition thereafter etc.

19.At the witness box, Mr. Lau was unable to provide much further details and, in any case, such were bare assertions and self-serving evidence.

20.As for “objective evidence” that Melofield relied upon, the “on-site” photographs adduced by Melofield were of little value to show the length of time of occupation of the Lots as Mr. Lau admitted that they were taken no earlier than 2016.

21.Further (supposedly) “objective” evidence was the opinion of Melofield’s expert surveyor, Mr. Leung Shou Chun (“Mr. Leung”) who opined in the Joint Statements of Experts (paragraph 9, page 391 of the Trial Bundle), that he was:

“of the opinion that since 1997, the subject lots nos. 1189 (AB) and 1189 (RP) were totally embraced as an integral part of the “Melofield Nursery”. Accordingly, the subject lots remained to be land under dispute without being affected by the changes of the outer boundary of “Melofield Nursery”.

22.But Mr. Leung also admitted that he relied upon information provided by Mr. Lau when drawing the occupation limits of Melofield on the aerial photographs over the years. There was no mention of any “objective” evidence like any markings of the boundaries (e.g. fences, gates) found on the aerial photographs.

23.When prompted by Mr. Chow under re-examination, Mr. Leung claimed that he would check for landmarks, features etc., if such were mentioned by Mr. Lau, in verifying any inconsistencies in the boundaries. But this appeared to be no more than an answer to a hypothetical question: Mr. Leung did not provide any specifications on what, if any, landmarks or features that Mr. Lau has mentioned, by what way, if any, he has verified such (especially when it may concern with alleged boundaries dating back some 20 years ago), nor what inconsistencies, if any, have been found and thus verified. Therefore, Mr. Leung failed to convince me that his “expert” opinion was based anything other than Mr. Lau’s bare assertions.

24.In fact, one would reasonably expect that if Mr. Lau actually has any landmarks or features to mark the boundaries of occupation, he would have mentioned them in his witness statements or when he was giving evidence in court. There was no such evidence.

25.Furthermore, even Mr. Lau’s own assertions of the boundaries were clearly inconsistent. As rightly pointed out by Mr. Koo, counsel for the plaintiff, the purported boundaries drawn by Mr. Leung in the aerial photographs taken in 2000 and 2001 in his expert report were very different from the boundaries drawn by Mr. Lau himself on the same photos (exhibited as “LSY-5” in his Affirmation filed on 7 June 2018). When questioned, Mr. Lau became very evasive and failed to provide any convincing explanation.

26.Mr. Chow, in the 1^st defendant’s closing submission, sought to explain this by submitting that: “…it should be understood that Mr. Lau is merely a layperson and there is no evidence that he has knowledge of surveying. Hence, there could have been mistakes made by him in making the markings. Whilst such mistakes may have bearings, it is not necessarily fatal.”

27.I disagree.

28.The burden is on Mr. Lau and Melofield to provide compelling evidence to show factual possession. I do not believe that a layperson would need knowledge in surveying to know the boundary of his land. One may be excused for making small inaccuracies. But here, there were very significant differences, including whether the boundary ran along what appeared to be a path in the middle of a cluster of trees or whether the boundary ran outside of this cluster.

29.Although these photographs were taken at a time before factually possession was required for the claim for adverse possession (12 years before the commencement of this action, or no later than 12 March 2006), such inconsistencies raise further questions on the credibility of Mr. Lau and the reliability of Mr. Leung’s “expert” opinion which was based on such.

30.As a passing comment, I find that Mr. Leung clearly does not understand his duty as an expert to the court: his opinion falls very far short of the standard expected of an independent expert. If an expert simply recites the assertions made to him by a witness from one party and passes that on as his own “expert” opinion without bothering to apply any critical assessment nor, at the very least, qualifying his opinion by stating whether it is based on subjective evidence provided by a witness only, or whether such subjective evidence is supported by objective evidence, such opinion is of no assistance to the court: I can hear the same evidence from the witness himself.

31.Further, there was clearly a road being built through Lot 1189 (RP) around 2002 and 2003 according to the aerial photographs. Mr. Lau’s evidence was that Melofield occupied this lot since 1997. Under cross-examination, Mr. Lau claimed that he had built this road himself. One would reasonably expect that the evidence of a squatter building a road on the land would have been very useful evidence but there was no specific mention of the building of this road in his witness statements. In fact, this road appeared to be a connection between a car park in the north and Lot 1190 (RP) in the south, both of which were not claimed to be occupied by Melofield.

32.The plaintiff’s witness, Li Yiu Man (“Mr. Li”), gave evidence that he and his business partner operated the car park and also occupied Lot 1190 (RP) so they built the road through Lot 1189 (RP) to provide access to Lot 1190 (RP) from the car park in 2002 and 2003. Mr. Li also said that he had continuously used the sides of the road in Lot 1189 (RP) for storage of his materials until about 2009.

33.I would accept Mr. Li’s evidence: his witness statement was a complete contrast to Mr. Lau’s: it provided plenty of details of his occupation of various pieces of land and the operation of his company over the relevant period of time. Further, Mr. Li does not have any interest in the Lots so he can be considered an independent witness, and his evidence was, more or less, not challenged by Mr. Chow.

34.A further problem with the “exclusive possession” issue is the evidence from Mr. Wong: during his two site visits, he was able to enter the Lots without any restrictions or physical barriers. It was clear that the Lots were not fenced off.

35.Although it is not absolutely essential to have the land fenced off in order to establish exclusive possession, this again highlights the lack of evidence, let alone any “compelling” evidence, to show that Melofield has “exclusive possession” of the Lots.

36.Melofield has also sought to rely on the payment of rates and Government rent as evidence of occupation of the Lots since 1997.

37.However, the two letters and the two First Demand for rates and / or Government rent were dated 7 October 2014 and Mr. Lau only made the payments on 21 January 2015. As such, it was not the case that the Melofield or Mr. Lau had first made the payment in the year 1997 and had been making the payment since then. Further, such payments were only with regard to Lot 1188 (AB) and not Lot 1189 (RP), and, for reasons not explained, the demand for Government rent dated back to 1997 but the demand for rates only dated back to 2012.

38.Under cross-examination, Mr. Lau explained that there was a visit by a government official in 2013 or early 2014 who was making inquiries regarding the land lots Melofield was using at the time.

39.There could be many reasons why Mr. Lau, in 2015, decided to pay rates and Government rent for Lot 1188 (AB) dating back to 2012 or 1997. The mere fact that he did so, given the circumstances of this case, would not offer compelling evidence that Melofield had “exclusive possession” of Lot 1188 (AB) (let alone Lot 1189 (RP)) since those times.

40.As such, Melofield’s claim for adverse possession must therefore fail.

Mense profits

41.There is no dispute between the parties regarding the expert valuation report which assessed the rental value of the Lots at 31 October 2017 at HK$17,000 per month.

42.The plaintiff claims mense profits from 8 February 2018, the date the plaintiff issued the notice to demanding Melofield for vacant possession for the Lots. I think this is reasonable.

Order

43.The court would give the following order:

a) The defendants do deliver vacant possession of the Lots within 28 days, failing which the plaintiff shall be at liberty to demolish and remove all buildings, structures and/or items, and/or any parts thereof, erected or found on or within the Lots, at the cost of Melofield;

b) Melofield do pay the plaintiff mense profits in the sum of HK$17,000 per month from 8 February 2018 until vacant possession together with interest at judgment rate from the date of judgment until full payment thereof;

c) Melofield’s counterclaim be dismissed; and

d) There be an order nisi for the costs of the action be to the plaintiff to be taxed if not agreed, with Certificate for Counsel.

Mr Ernest Koo leading Mr Alvin Chong, instructed by Wong & Poon, for the plaintiff

Mr Enzo Chow, instructed by Huen & Partners, for the 1^st defendant

The 2^nd defendant is not represented and did not appear