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DCCJ 2918/2020
[2021] HKDC 1475
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 2918 OF 2020
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華都大廈(高士威道)業主立案法團 |
Plaintiff |
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譚建華所經營裕華皮鞋 |
Defendant |
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Coram: His Honour Judge H. Au-Yeung in Court
Dates of Trial: 27 September 2021 and 4 November 2021
Date of Judgment: 25 November 2021
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JUDGMENT
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BACKGROUND
1.These proceedings, which were transferred from the Lands Tribunal, were brought by the Incorporated Owners of Waldorf Mansion (“the Building”) against the defendant who has registered a business known as “裕華皮鞋” (“the Shoes Shop”) at a structure situated at the back lane right next to the Building (“the Structure”).
2.It is undisputed that the Structure currently comprises of 4 parts:
(1) Part 1 thereof is 3.6 ft deep/wide, 16 ft long and 11 ft in height (“Part 1”);
(2) Part 2 thereof is 3.9 ft deep/wide, 12.4 ft long and 7.2 ft in height (“Part 2”);
(3) Part 3 thereof is 3.9 ft deep/wide, 13 ft long and 7.2 ft in height (“Part 3”); and
(4) Part 4 thereof is 3 ft deep/wide, 6.1 ft long and 7.2 ft in height (“Part 4”).
3.The aforesaid 4 parts formed a continuous structure which led from one end of the back lane (meeting Tung Lo Wan Road) to the back door of the Building, with Part 1 being the closest to Tung Lo Wan Road and Part 4 being right next to the back door of the Building.
4.The Structure was bolted to the external wall of the Building.
5.It is undisputed that the Structure was originally used by the defendant’s father (“Mr Tam Senior”) to operate the Shoes Shop since the 1970s. At that time, Mr Tam Senior was only using Part 1 and Part 2, as Part 3 and Part 4 were not in existence yet.
6.In the period between around October 1976 and 2006/2007, Mr Tam Senior had paid 補助管理費 (“Subsidiary Management Fees”) (or management fees) to the Mutual Aid Committee or the Management Committee (“Management Committee”), as the case may be, of the Building.
7.In around 2006/2007, the Management Committee decided not to collect Subsidiary Management Fees / management fees from Mr Tam Senior anymore.
8.On 13 October 2008, the Management Committee issued a letter to Mr Tam Senior and demanded him to remove the Structure. Further demand letters were issued in 2011 and 2017. However, Mr Tam Senior had ignored all those demands.
9.On 6 November 2014, the Building Authority issued a Superseding Order to the plaintiff, under which the plaintiff was ordered to demolish, among other things, the Structure (“the Superseding Order”).
10.Mr Tam Senior eventually passed away in June 2017.
11.As the plaintiff had failed to comply with the Superseding Order, the Buildings Department issued a summons on 27 July 2018 against the plaintiff, which pleaded guilty thereto and was fined $6,000 on 22 November 2018.
12.By this action, the plaintiff seeks an injunction against the defendant to remove the Structure and to reinstate the external wall. The plaintiff also asks for damages caused by the defendant’s breach of the Deed of Mutual Covenant of the Building (“the DMC”) in the sum of $6,000.
13.In his Defence and Counterclaim, the defendant contends, among other things, that the plaintiff and the owners of the Building no longer have any right of action to recover the area occupied by the Structure and the external wall possessed by the defendant by reason of adverse possession. He asks for a declaration that the plaintiff’s title has been extinguished. Alternatively, defendant states that he has an easement over the external wall of the Building and that the plaintiff has by its conduct acquiesced and/or estopped from denying the conduct of the defendant and his father.
14.At the beginning of the trial, it was agreed by the parties that the issues which have to be dealt with by the court are as follows[1]:
(1) Whether the land and the external wall occupied by the defendant are common parts under the Building Management Ordinance (Cap.344, Laws of Hong Kong) (“BMO”) and the DMC;
(2) If so, whether the plaintiff is entitled to the relief sought;
(3) On the defendant’s claim of adverse possession:
(i) Whether the defendant and/or his father can adversely possess the external wall;
(ii) Whether the 3-dimensional space occupied by the Structure (“the Space”) is capable of being adversely possessed;
(iii) Whether the defendant and/or his father had continuous and exclusive possession of the land, the external wall and the Space for over 20 years since November 1973[2];
(iv) Whether the defendant and/or his father had the requisite animus possidendi during their continuous possession of the land, the external wall and the Space;
(v) Whether the defendant and/or his father had, pursuant to sections 7(2), 17 and 38A of the Limitation Ordinance, extinguished the title of the relevant owner of the Building over the particular part of the land, the external wall and the Space in question;
(vi) Whether the defendant can rely on his father’s act of adverse possession (if any) to resist the plaintiff’s claim and/or obtain relief upon his counterclaim;
(vii) As a matter of law, whether the defendant needs to obtain a grant of probate or administration in order to continuously possess the Structure on the land, the external wall and the Space;
(4) Whether the plaintiff has by its conduct or any act acquiesced and/or estopped from denying the conduct of the defendant. If so, what is the effect over the plaintiff’s reliefs;
(5) Is the defendant liable for damages in relation to the summons issued by the Building Department.
WHETHER THE LAND AND THE EXTERNAL WALL ARE COMMON PARTS OF THE BUILDING
15.It is undisputed that the land on which the Structure is situated is common part of the Building.
16.The only dispute under this issue concerns the external wall.
17.Mr Yeung for the plaintiff submitted that the starting point of consideration is the BMO. Mr Mak did not agree. In his written closing submissions, Mr Mak suggested that the BMO is not applicable to the DMC in the present case because:
“(1) The predecessor of the BMO, Multi-storey Buildings (Owners Incorporation) Ordinance (Cap.344) came into effect on 19 June 1970.
(2) The DMC was entered before Cap 344 was enacted.”[3]
18.He relied on the case of Donpower Trading Limited v Apexcom Limited [2010] 1 HKLRD 915, in which Cheung JA, when dealing with the newly enacted section 13A of the Conveyancing and Property Ordinance (Cap.219, Laws of Hong Kong), had the following to say:
“36. Unlike section 13(5) [of the Conveyancing and Property Ordinance] which provides that
‘(5) This section affects only the rights and obligations of the parties to a contract for the sale of land entered into after the commencement of the section.’
there is no similar provision in section 13A confining its application to agreement entered into after the commencement of the section. In my view the silence is not an indication that the new section has retrospective effect because the fundamental principle on statutory interpretation is that unless a contrary intention appears, an enactment is presumed not to be intended to have a retrospective operation : Bennion On Statutory Interpretation 5th Ed, page 315. The rationale is that Courts recognize the sanctity of accrued rights and obligations. If retrospective effect is given to new legislation it will impair those rights and obligations. Hence in Yew Bon Tew and Another v. Kenderaan Bas Mara [1983] A.C. 553, Lord Brightman in the Privy Council held at 558 that
‘Apart from the provisions of the interpretation statutes, there is at common law a prima facie rule of construction that a statute should not be interpreted retrospectively so as to impair an existing right or obligation unless that result is unavoidable on the language used. A statute is retrospective if it takes away or impairs a vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability, in regard to events already past. There is, however, said to be an exception in the case of a statute which is purely procedural, because no person has a vested right in any particular course of procedure, but only a right to prosecute or defend a suit according to the rules for the conduct of an action for the time being prescribed.’”
(emphasis added)
19.The “prima facie rule of construction” quoted by Cheung JA is of course not absolute. It will not apply if “contrary intention appears”.
20.With greatest respect to Mr Mak, he had overlooked section 34C(1) of the BMO which has clearly expressed such “contrary intention”. This section is under Part VIA of the BMO which governs Deed of Mutual Covenant. It stipulates that:
“This Part, except where otherwise expressly provided, applies only to a building in respect of which a deed of mutual covenant is in force whether that deed came into force before or after the material date.” (emphasis added)
21.“Material date” has been defined in section 34D of the BMO as “the commencement of section 29 of the Multi-storey Buildings (Owners Incorporation) (Amendment) Ordinance 1993 (27 of 1993)”, which was 8 May 1993.
22.Section 34I (which is also found in Part VIA of the BMO) provides that:
“(1) No person may—
(a) convert any part of the common parts of a building to his own use unless such conversion is approved by a resolution of the owners’ committee (if any);
(b) use or permit to be used the common parts of a building in such a manner as—
(i) unreasonably to interfere with the use and enjoyment of those parts by any owner or occupier of the building; or
(ii) to cause a nuisance or hazard to any person lawfully in the building.
(2) Any person who contravenes subsection (1) shall be deemed to be in breach of an obligation imposed on him by the deed of mutual covenant in respect of the building.”
23.The term “common parts” has been defined in section 2 of the BMO. As a result, such a definition must be applicable to the DMC in the present case:
“common parts (公用部分) means—
(a) the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner; and
(b) unless so specified or designated, those parts specified in Schedule 1;”
24.“External wall” is a part specified under Schedule 1 to the BMO.
25.When the above was pointed out to Mr Mak, he had fairly accepted that the definition of “common parts” in section 2 of the BMO should be applicable to the present case.
26.Hence, the question is whether the external wall (i.e. the part to which the Structure is affixed) has been “specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner”.
27.The defendant submitted that both the First Assignment dated 1 September 1964 (“the First Assignment”) and the DMC did make such specification or designation. I will therefore consider these documents in turn.
The First Assignment
28.The First Assignment provides that:
“NOW THIS INDENTURE WITNESSETH that in pursuance of such agreement and in consideration of the sum of ONE MILLION AND TWO HUNDRED THOUSAND DOLLARS paid and satisfied by the allotment of the shares hereinbefore recited the Vendors DO and each of them DOTH hereby assign unto the Purchaser FIRST […] AND SECONDLY ALL THAT the full right and privilege to hold use occupy and enjoy to the exclusion of the other coowners of the said premises registered as aforesaid as Section E of Inland Lot No.1149 (hereinafter referred to as ‘the said premises’) ALL THOSE SHOPS A, B, C, D, E, F, G And H on the GROUND FLOOR of the said Buildings as are shown on the said Plan marked No.1 and thereon coloured Pinkand SHOPS A, B, C and D on the FIRST FLOOR of the said Buildings as are shown on the said Plan marked No.2 and thereon coloured Pink (hereinafter collectively referred to as “the said Shops”) […]” (Mr Mak’s emphasis)
29.Mr Mak drew this court’s attention to the Plan marked “No.1” annexed to the First Assignment, and submitted that as the external wall was also coloured pink, it is clear evidence that the external wall at the Ground Floor is owned privately. He relied on the case of Tam Sze Man v Shan Tsui Court (IO) [2011] 5 HKLRD 434 in which Fok JA (as his Lordship then was) stated in paragraph 33 of the Judgment that:
“Turning to the present case, in considering the construction of the relevant instruments, I agree with Mr Mak that the context in which they are to be construed includes the following facts. First, the DMC does not specify the partition wall as common area. Secondly, the other owners of the building had no right to enter Flats 3 and 4 and there would be no purpose for them to make use of the partition wall. Thirdly, the assignment plans of both Flats 3 and 4 included the partition wall as the property of their respective flats: the colouring of the partition wall on the plans of both of the two flats provides an indication that the partition wall belongs at least to the owners of those two flats jointly rather than to all the owners of the building.”
30.With respect, I do not accept Mr Mak’s argument.
31.First of all, it is important to bear in mind that the subject matter involved in the case of Tam Sze Man was a partition wall between two undisputedly privately-owned flats, and it was because of this Fok JA opined that “the colouring of the partition wall on the plans of both of the two flats provides an indication that the partition wall belongs at least to the owners of those two flats jointly rather than to all the owners of the building”. The position is different in the present case because we are concerned with the external wall of the Building.
32.Secondly, I do not agree that the pink colour appearing on the plan marked “No.1” of the First Assignment covers the external wall.
33.Thirdly, the descriptions by words in the First Assignment on what were conveyed thereunder did not mention about external wall at all. This indicates that the external wall was not included in the transaction.
34.I therefore conclude that the First Assignment did not specify or designate the external wall as being for the exclusive use, occupation or enjoyment of any owner.
35.It would be absurd if an opposite result is lightly arrived at. What Kwan VP and Chu JA said during the hearing in Kong Wai Hsien and Fung Lai Sheung v Tai Wai Glamour Garden (IO) [2019] 5 HKLRD 672 (which were referred to by Au JA in the Judgment) should be borne in mind:
“As pointed out by Kwan VP at the hearing, other than the prescribed uses, the External Walls by providing the external framework to the Building also serve to hold and support the Building and prevent damage to its interior. All the co-owners or occupiers of the Building have the right to enjoy such use. Chu JA has also observed that it is with the External Walls that all the co-owners would be able to have peaceful enjoyment of their respective individual units of the Building.”
The DMC
36.Mr Mak has quoted 2 clauses of the DMC and submitted that “clause 4 in particular provides that a private owner (Third Owner) may have exclusive use, occupation and enjoyment of external wall”[4].
37.Clauses 3 and 4 of the DMC read:
“3. The roof of the said Building and the external wall about ten feet in width at the corner of Causeway Road and Tung Lo Wan Road shall be reserved unto the Third Owners who shall have the sole right and privilege to the exclusive use thereof particularly the right to hire or grant licence or licences to others the said roof and the said external wall or any part thereof for the purpose of exhibiting advertisements thereat and to erect and install and maintain neon lights […].
4. Each owner shall be entitled to display any signboard on all the exterior walls of the shop or flat of which he is entitled to the exclusive use, occupation and enjoyment but shall not display any neon light sign on any part of the exterior wall facing Tung Lo Wan Road.”(emphasis added)
38.These two clauses seem to be the only clauses in the DMC which expressly referred to the external wall.
39.It is clear that Clause 3 of the DMC has no application to the present case, because that clause only concerns a part of the external wall which is at the corner of Causeway Road and Tung Lo Wan Road. The external wall to which the Structure was affixed, on the other hand, is facing a back lane with one end of it meeting Tung Lo Wan Road. It is perhaps because of this that Mr Mak placed his emphasis on Clause 4 but not Clause 3 of the DMC.
40.However, I do not think Clause 4 would assist the defendant’s argument either. It is clear to me that the phrase “the exclusive use, occupation and enjoyment” was describing “the shop or flat”, but not the external wall.
41.Furthermore, in any event, the right granted by virtue of Clause 4 of the DMC was to display signboard on the external wall only. There is no other exclusive right to use, occupy and enjoy such part of the external wall.
42.The interpretation that the external wall remains a common part despite the granting of the aforementioned right is consistent with Clause 1 and the Schedule of the DMC. The said Clause 1 provides that:
“Each of the parties hereto shall at all times hereafter, subject to the provisions of Clause 14 hereof, have the sole and exclusive ownership and the full right and privilege to the use occupation and enjoyment of the whole of the Shop and/or the Flat and/or Roof of the said Building and the rents and profits thereof which are more particularly described and set out in the Second Column of the Schedule hereto opposite to the name of such party set out in the First Column of the said Schedule.”
43.The description of the Second Column of the Schedule of the DMC reads:
“The Shop and/or the Flat and/or the Roof of the said Building to be exclusively used occupied and enjoyed by the party whose name appears in the First Column directly opposite to the reference to such Shop and/or Flat and/or the Roof in this Column”
44.Against the name of the “Third Owner” in the First Column, a number of shops, flats and “the Roof” may be found in the Second Column. “External wall” was not included. In other words, “Third Owner” was only entitled to the exclusive right to use, occupy and enjoy certain shops, flats and the Roof, but not the external wall.
Conclusion
45.It is therefore my finding that the external wall is a common part of the Building.
ARE THE DEFENDANT AND HIS FATHER BOUND BY THE DMC
46.The 2nd issue agreed by the parties was: “If the land and the external wall occupied by the defendant are common parts under the BMO and the DMC, whether the plaintiff is entitled to the relief sought”.
47.Having read parties’ respective submissions, it seems to me the real question to be answered under this issue (and what the parties are disputing) is: whether the plaintiff can enforce covenants in the DMC against a trespasser who is not an owner of the Building.
48.Mr Yeung for the plaintiff submitted that covenants in the DMC are enforceable against occupiers. He relied on the case of The Incorporated Owners of Mountain View Mansion v Heart Cuisine & Others [2012] 4 HKLRD 628 in which section 34I of the BMO and section 41(3) of the Conveyancing and Property Ordinance (Cap.219, Laws of Hong Kong) (“CPO”) were considered.
49.I have already quoted section 34I of the BMO in the earlier part of this Judgment and I will not do that again here. Section 41(3) of the CPO provides that:
“Notwithstanding any rule of law or equity but subject to subsection (5), a covenant shall run with the land and, in addition to being enforceable between the parties, shall be enforceable against the occupiers of the land and the covenantor and his successors in title and persons deriving title under or through him or them by the covenantee and his successors in title and persons deriving title under or through him or them.”
50.Pursuant to section 41(2) of the CPO, section 41(3) covers both positive and negative covenants.
51.In paragraph 20 of the Judgment in The Incorporated Owners of Mountain View Mansion, Cheung JA held that:
“[…] Further the principle in Nisbet and Potts’ Contract is clearly applicable because once the service lane is found to be a common part then whoever occupies it, be it another owner from the building or a trespasser who acquired a possessory title by adverse possession, he is bound by the terms of the DMC. The latter cannot be in a stronger position because his paper title is still subject to the covenants in the DMC and he cannot use the service lane to the exclusion of the owners of the building. […]
52.Mr Yeung also referred to the case of Incorporated Owners of No 27A Chatham Road, Kowloon v Mr Lee or Unlawful Occupier (Lee Kai Kong, Lo Hung Cheong) [2001-2003] HKCLRT 273, in which it was held by the Court of Appeal that:
“[…] The word ‘person’ under section 34I simply refers to any person who occupies the common parts. The Ordinance empowers an owners incorporation to manage the common parts, and this certainly includes granting the incorporation the power to take legal proceedings against any person who occupies the common parts. What the Presiding Officer said means that the incorporation would not be able to take legal action against those persons because they were not bound by the deed of mutual covenant. This would run against the legislative intent of empowering the incorporation to manage the common parts.” (at paragraph 19 thereof)
53.On the other hand, Mr Mak relied heavily on the Court of Appeal case of Wong King Lim v Incorporated Owners of Peony House [2013] 4 HKC 295. He first of all quoted what Yuen JA held in paragraph 34 of the Judgment therein:
“[…]. The owners of the Building had covenanted only with one another to possess the Lane in common and not exclusively. The plaintiff was not a party to the DMC. The learned judge found that as far as possession of the Lane was concerned, the plaintiff’ intention was to exclude all the owners (and the IO) of the Building. Accordingly at the end of the relevant period under the Limitation Ordinance, the plaintiff extinguished the title to the Lane which was adverse to his own, ie the title of all the owners of the Building (and the IO). By then it did not matter what were the restrictions imposed on the use of the Lane by the owners under the express provisions in a deed of mutual covenant, or by the IO under the incorporated provisions of s.34I BMO. Once their title to the Lane was extinguished, the owners (and the IO) no longer had any right to it which they could enforce against the plaintiff, unlike in Nisbet v Potts where the statute of limitations had no effect on the covenantee (the owner of land B) who therefore retained his right to enforce the covenant binding land A, which was separate and distinct from the original owner and covenantor’s adverse title against the squatter. It is important to note that in LLC v Allen [1914] 3 KB 642, at 660 the English Court of Appeal held: ‘the doctrine in Tulk v Moxhay does not extend to the case where the covenantee has no land capable of enjoying, as against the land of the covenantor, the benefit of the restrictive covenant.’ ”
(emphasis added)
54.In the same Judgment, Lam JA (as his Lordship then was) also said as follows:
“37. Under common law, a squatter does not succeed to nor take over the title of the paper owner whom he has dispossessed, see Fairweather v St Marylebone Property [1963] AC 510. As observed by Keith J in Chung Ping-kwan v Lam Island Development [1995] 2 HKLRD 228 at p.235, ‘the squatter’s possessory title was an independent title …’ The title of the squatter stems from his possession of the land and it was defeasible by the paper owner’s title until the right of the paper owner against him has been extinguished under the Limitation Ordinance by dispossession for the requisite period of time. In Fairweather, the majority of the House of Lords held that the paper owner’s title was only extinguished vis-à-vis the squatter. It remains as a title as between the paper owner and his lessor and it could be surrendered, and upon such surrender the lessor’s right of possession started to accrue and basing on that right the lessor could recover the land from the squatter. This outcome vividly demonstrates the proposition that a squatter does not acquire the title of the paper owner and the Limitation Ordinance does not operate as a statutory conveyance of that title to the squatter.
38. Thus, a squatter is a total stranger to the parties to the deed of mutual covenants. But there are instances where persons other than immediate parties to a deed of covenants will be bound by the covenants.
39. By reason of the equitable doctrine of Tulk v Moxhay (1848) 2 Ph 774, restrictive covenants which relates to use or enjoyment of land can ‘run with the land’. The doctrine was explained by Farwell J in Re Nisbet and Potts Contract [1905] 1 Ch 391 at p.396-7,
‘Covenants restricting the enjoyment of land, except of course as between the contracting parties and those privy to the contract, are not enforceable by anything in the nature of action or suit founded on contract. Such actions and suits alike depend on privity of contract, and no possession of the land coupled with notice of the covenants can avail to create such privity: Cox v Bishop. But if the covenant be negative, so as to restrict the mode of use and enjoyment of the land, then there is called into existence an equity attached to the property of such a nature that it is annexed to and runs with it in equity: Tulk v Moxhay. This equity, although created by covenant or contract, cannot be sued on as such, but stands on the same footing with and is completely analogous to an equitable charge on real estate created by some predecessor in title of the present owner of the land charged ...’
40. This doctrine has been extended by section 41 of the Conveyancing and Property Ordinance Cap 219 which is in the following terms, […]
41. Section 41 and Re Nisbet and Potts Contract [1906] Ch D 386 (CA) was relied upon by Mayo VP in Incorporated Owners of Man Hong Apartments v Kwong Yuk Ching [2001] 3 HKC 116. As my Lady pointed out, that was a case concerning encroachment of common parts by parties who owned a shop unit in the building. We are dealing with a different situation.
42. The scope of s 41 was examined by Lord Hoffmann NPJ in Sky Heart v Lee Hysan Co Ltd (1997-98) 1 HKCFAR 318 at p.341-2. Referring to the principle that a restrictive covenant in gross will not run with the land and the rule in London Country Council v Allen [1914] 3 KB 642, Lord Hoffmann NPJ held that ‘covenantee’ in s 41(3) means a covenantee who still has an interest in the land for the benefit of which the covenant was taken. Thus, whether for the purpose of s 41 or the equitable doctrine of Tulk v Moxhay, a covenant cannot be enforced by a person having no land to be protected by it.
43. Applying that in the present context, upon adverse possession by the Plaintiff being established over the Lane, the Defendant IO ceased to have any interest over the dispossessed land to be protected by the covenants in the DMC. In this connection, I respectfully agree with the analysis of my Lady that the DMC was made to govern how the co-owners of the Building were to exercise their right of possession (as an incidence of their co-ownership), including the possession of the common parts. Unlike what happened in Re Nisbet and Potts Contract, the covenants in the DMC was not made by an owner of an adjoining piece of land in favour of his neighbour. The land intended to be affected by the DMC is the land subject to co-ownership. The Plaintiff has never been a co-owner. As explained, upon dispossession for the requisite period of time, the Plaintiff acquired an independent title whilst the Defendant IO ceased to have any right to enforce any claims, including claims based on the covenants, in respect of that portion of land.
44. My Lady has already explained the rationale of Re Nisbet and Potts Contract. I would only add that in contrast with the position of the covenantee in that case, the Defendant IO’s right under the DMC (and the deemed obligation under the DMC created by Section 34I) has been infringed from the very beginning of the dispossession by the Plaintiff over the portion of the land in question. Thus, the basis of the judgment of Collins MR in that case (viz time should not start to run until the right of the covenantee is affected) has no application to our case. The extinguishment of the title to the land under section 17 of the Limitation Ordinance Cap 347 encompasses the title to enforce the DMC in respect of that portion of the land.
45. Section 34I of the BMO has to be construed against such common law background. Section 34I(2) stipulates the legal consequence for a contravention of sub-section (1): the person in contravention shall be deemed to be in breach of an obligation imposed on him by the DMC in respect of the building. If the DMC cannot be enforced against a squatter (by reason of the extinguishment of title on the part of the IO), Section 34I does not confer upon the IO any additional right of action.
46. Insofar as the dicta at para 20 in the judgment of IO of Mountain View Mansion v Heart Cuisine [2012] 5 HKC 361 suggests otherwise, I respectfully beg to differ. That paragraph fails to take account of the different nature of the covenants in Re Nisbet and Potts Contract and the covenants in a DMC. It also fails to take account of the independent nature of the title of a squatter. Further, as explained by Yuen JA, that was a case of encroachment by a co-owner as opposed to dispossession by a squatter.”
(emphasis added)
55.Mr Mak submitted, on the basis of Wong King Lim, that the plaintiff cannot enforce the DMC covenants against a trespasser who is not a party to the DMC.
56.With respect, I do not agree that Wong King Lim supports such a proposition.
57.In my view, as the highlighted portions of the Judgment in Wong King Lim quoted above show, the Incorporated Owners would only lose its right to enforce covenants in the DMC against a trespasser upon such a trespasser’s establishment of adverse possession. Before the end of the relevant period under the Limitation Ordinance, such right of enforcement should still remain, as there is still interest over the dispossessed land to be protected by the covenants in the DMC.
58.Therefore, whether the plaintiff is entitled to enforce the covenants in the DMC against the defendant depends on whether he will succeed in his claim for adverse possession. If the defendant has already extinguished the title of the owners of the Building, then the plaintiff would no longer be entitled to enforce those covenants, otherwise, the plaintiff should still be entitled to enforce such covenants.
ADVERSE POSSESSION – PLEADING POINTS
59.Before I proceed to consider the defendant’s claim of adverse possession, I have to deal with 4 “pleading points” raised by Mr Yeung for the plaintiff. The plaintiff’s propositions are as follows:
(1) The defendant’s pleaded case is that Mr Tam Senior was in adverse possession since 1972 for 20 years. Since no alternative case has been pleaded, the defendant is not entitled to argue that adverse possession only began after 1 July 1991 (when the limitation period for recovery of land claims was reduced from 20 years to 12 years) and took advantage of the shorter limitation period;
(2) The defendant only pleaded adverse possession by Mr Tam Senior, and no case of joint or successive possession has been pleaded. It is therefore not open to the defendant to run any case based on any possession by himself, whether successively or jointly with Mr Tam Senior;
(3) The Incorporated Owners in the present case was only incorporated on 4 January 1999. No adverse possession could possibly run against the Incorporated Owners before that date. Hence, the defendant’s claim which relied on adverse possession commencing before 1991 must fail; and
(4) in order to run an adverse possession claim over common parts (which are owned by all owners of the Building) in respect of any period prior to the incorporation of the Incorporated Owners, the defendant must extinguish the title of every co-owner of the Building, and “this means, until the Defendant had extinguished the title of every co-owner of the Building, time will start to run afresh every time someone becomes a co-owner of the Building”[5].
Pleading of 20 years vs 12 years of adverse possession
60.In support of the proposition which he advocated, Mr Yeung referred this court to the case of Chan Ching Mui, by Poon Chi Ming, her next friend v City Breeze Limited [2018] HKDC 16.
61.In the Chan Ching Mui case, the plaintiff therein pleaded that she and her cohabitee had been in exclusive possession of the subject land, and had the intention to possess the same exclusively since about 1961. At the beginning of the trial, she applied for leave to amend her amended statement of claim so as to, among other things, add an alternative case that she had been in exclusive possession of the subject land for a continuous period of 20 years since 1 July 1971 or 1972, and add a further alternative case that she had been in exclusive possession of the subject land for a continuous period of 12 years since 1 July 1991. The amendment application was refused by the trial Judge, HH Judge MK Liu, on the ground that the proposed amendments would introduce entirely different factual scenarios, and that introducing these new matters at that stage would seriously prejudice the defendant, as the defendant was not expected to meet these alternative cases in the trial. Despite such refusal of leave, in the plaintiff’s final submission, it was submitted that even on the basis of the unamended pleadings, the plaintiff was entitled to argue the 2 alternative cases contained in the disallowed proposed amendments. The plaintiff’s counsel therein referred the court to 2 Court of Appeal decisions:
(1) In Yu Sin Cheuk v Realray Investments Ltd (CACV 181/2009, unreported, 10 November 2009), Cheung JA had this to say:
“17. For the purpose of establishing his claim, the plaintiff has to establish that for at least 20 years prior to the issue of writ in February 2007 he has been in continuous adverse possession of the property thereby defeating the paper title of the defendant. This means that he must show that he has been on the property since at least 1987. For the purpose of deciding whether the defendant’s title has been defeated by limitation the Court does not need to decide the precise point of time when the plaintiff entered the property so long as it is satisfied that the plaintiff has proved that he has been there for twenty years with the necessary intention to possess. This is what the Court which is seized of the matter should decide. The plaintiff has, of course, stated he was there even earlier in 1979. If that is the case, then the title of the defendant would be defeated at an earlier time in 1999.
18. Even if the plaintiff cannot establish that he first entered in 1979, the Court still has to address the issue of the 20 years’ adverse possession. It is true that the plaintiff had not put forward some other specific alternative date or dates when he entered into possession of the property. He had chosen not to do so but it does not mean that the Court could ignore the plaintiff’s case that he had been in continuous possession since 1979 which encompasses the 20 years’ adverse possession issue.
19. The plaintiff certainly did not confine his case that either he had entered in 1979 or he had not entered at all. To the contrary he had called evidence on the use of the land since he entered into possession […]
20 – 28. […]
29. At the hearing before us, I raised the issue whether the plaintiff could also rely on 12 years’ adverse possession to defeat the title of the defendant. In the statement of claim the plaintiff has certainly pleaded that he has been in adverse possession of the property in excess of 20 years and also ‘in excess of 12 years’ before the commencement of the action. It is true that for the purpose of deciding whether a 20 years’ or 12 years’ limitation period will apply, the plaintiff has said that he has entered prior to the cutoff date of 1991 and hence has to establish a 20 years’ adverse possession. But if the objective evidence shows that adverse possession only began at a much later day but is long enough to cover a period of 12 years prior to the commencement of the action (namely in February 1995), I cannot see any reason why the plaintiff is not entitled to rely also on the shorter period to establish his claim.”
(2) In Lee Theatre Realty Limited v Tong Wah Jor and Others (CACV 279/2009, unreported, 2 May 2013), the Court of Appeal held that a claim for adverse possession in respect of a portion of the land within the entire disputed area could be allowed, even if such an alternative claim was not expressly set out in the pleadings.
62.On the other hand, the defendant’s counsel in the Chan Ching Mui case relied on the case of On Yip Property Development Company Limited v Kwok Tai Kuen Alan (HCMP 3192/2013, unreported, 15 April 2014), in which the Court of Appeal affirmed the decision of the court below that the claimant for adverse possession should not be allowed to run an alternative case by relying on the 12-year limitation period as this had never been pleaded.
63.Having considered the above authorities, His Honour then concluded as follows at paragraph 25 of his Judgment:
“The plaintiff’s pleaded case is that the adverse possession began in about 1961, which is well before the cutoff date of 1 July 1991. The plaintiff has never pleaded the 12-year limitation period in her pleadings. Having considered the submissions made by Mrs Chan and Mr Chan and the authorities mentioned by them, in my judgment, the plaintiff is entitled to argue that she has acquired a possessory title to the Subject Area or any part thereof by adversely possessing the same for more than 20 years, counting from a time in or about 1961, or from a later time which is before 1 July 1991. The plaintiff is not entitled to argue that she was not in adverse possession of the Subject Area or any part thereof prior to 1 July 1991, and the adverse possession only began on or after 1 July 1991.”
(emphasis added)
64.The same approach was followed in 2 subsequent District Court cases, namely, Lee Sui Heung v Cheung Yiu Company Limited [2018] HKDC 1188 and Richlands Properties Limited v The Occupier(s) of Lot No 1347 in Demarcation District No 102, Yuen Long, New Territories, Hong Kong & Another [2021] HKDC 940. Mr Mak reminded this court that these two cases concerned with rural lands in the New Territories rather than multi-storey buildings and therefore the court should exercise caution when applying these authorities in the present case. With respect, I do not think the requirements on pleadings applicable to rural lands in the New Territories should be any different from those applicable to cases involving multi-storeys buildings.
65.I agree on the approach adopted in these cases. If a squatter’s primary case is that time has started to run before 1 July 1991, the limitation period of 20 years should be applicable pursuant to section 38A of the Limitation Ordinance (Cap.347, Laws of Hong Kong). In the event he has any alternative case that the time would only start to run after 1 July 1991 such that the applicable limitation period would become 12 years instead of 20 years, this has to be pleaded expressly, otherwise, the squatter should not be allowed to run such an alternative case as this would take the paper owner by surprise.
66.The desirability of such an approach is indeed supported by the way the parties framed the issues to be tried by this court. It may be recalled that one of the sub-issues agreed by the parties on adverse possession was “Whether the defendant and/or his father had continuous and exclusive possession of the land, the external wall and the Space for over 20 years since November 1973”. The limitation period of “12 years” was not mentioned at all. I agree with the plaintiff that it would be unfair if the defendant is allowed to rely on a case which is not pleaded.
67.Mr Yeung for the plaintiff herein also referred this court to the case of Yip Yan Cheung Gary also known as Yip Yan Cheung v Chow Tin Choi [2018] HKCA 70. In this case, the defendant squatter’s primary case was that he and his family had been in possession of the subject land since 1960s. The plaintiff paper owner pleaded in the Reply and Defence to Counterclaim that the subject land was leased to the defendant’s parents in about 1964 and the land was repossessed in 1981. The Court of Appeal held that the defendant should have responded to such a case by a subsequent pleading (with leave, if necessary) if the defendant had an alternative case that he and his family continued/resumed possession from 1981 or any time thereafter for 20 years (or 12 years if the adverse possession started after July 1991).
68.Mr Mak submitted that Mr Yeung’s proposition was contradicted by the Court of Appeal case of Grand Wayfair Investment Company Limited v Chan Yung Kan trading as Luk Yau Yau Organic Vegetable & Others (CACV 238/2013, unreported, 26 September 2014). He relied on what Lam VP (as his Lordship then was) said in paragraph 17 thereof:
“Mr Chan submitted that the 2nd Defendant cannot do that because he did not plead or advance a case of possession starting to run from 1993. We do not accept this submission. The 2nd Defendant’s case on the facts remains the same as that pleaded and testified to: his family was in continuous possession from 1960 to 2007. It is inherent in such a case that the 2nd Defendant had been in possession from 1993 to 2007. The 2nd Defendant did not at any time run a case that he only came into possession after 1993. Because the Plaintiff did not file any Reply (and also did not make any reference to the 1993 judgment in its pleadings or witness statements), it had not put the 2nd Defendant on notice that it would challenge the right of the 2nd Defendant to rely on pre-1993 possession by reference to the 1993 judgment. Under such circumstances, it would be unfair to entertain Mr Chan’s objection based on lack of alternative plea. We also find it unreal for Mr Chan to suggest that the 2nd Defendant should plead a case of him entering into possession after 1993 when this is plainly not his case.”
69.In my view, the case of Grand Wayfair Investment Company Limited cannot assist the defendant herein, because it is unclear in the Court of Appeal’s Judgment whether the “12-year limitation period” was pleaded in his Defence and Counterclaim.
Joint or successive adverse possession
70.The second “pleading point” that Mr Yeung took was that the only adverse possession case pleaded was that Mr Tam Senior, but not the defendant himself, who had entered possession adversely. Therefore, it was said that it is not open to the defendant to run any case based on any possession by himself, whether successively or jointly with Mr Tam Senior.
71.In support of his argument, Mr Yeung relied on the case of Chan Ting On v Multi-Skill Investments Limited (DCCJ 2786/2013, unreported, 20 June 2017), in which the plaintiff tried to run a case at the trial that he together with his family as a unit had been in continuous and exclusive possession of the subject land. The trial judge did not allow the plaintiff to do so as this was not the pleaded case. From paragraph 2 of the Judgment, it seems that what the plaintiff therein pleaded was that only he has been in continuous and exclusive possession of the disputed land since 1979/1980. In such circumstances, it is totally understandable why the learned Deputy Judge refused to let the plaintiff run his case as he attempted.
72.Mr Yeung has fairly drawn this court’s attention to the authority of Cheung Wing Wah v On Yip Property Development Company Limited [2021] HKCFI 156 in which the case of Chan Ting On was distinguished on the facts. In this case, the plaintiff pleaded that he and his family had been continuously and still were in exclusive possession of the subject land, that they had built, occupied and were still occupying a farmhouse and that they had been farming on the subject land. As a result the learned trial judge accepted that the plaintiff therein had pleaded a set of facts which could support a case based on joint possession. The learned judge also took the view that the defendant, having read the plaintiff’s pleadings as a whole, should not have been taken by surprise by the basis of joint possession, and that it is sufficient for the pleader to state the material facts; he need not state the legal result.[6]
73.In the present case, the defendant pleaded in the Amended Defence and Counterclaim, among other things, that:
“7(1) 答辯人父親從1972年已經開始在有關地方經營裕華皮鞋業務。於2013年底，答辯人父親已80歲，仍然堅持工作，但有感年紀大，他吩咐答辯人以裕華皮鞋(YUE WAH SHOES)在同一地點作商業登記，經營同一鞋業。2017年6月答辯人父親去世，答辯人在有關地方以裕華皮鞋經營同一鞋業。”
“7(4) 裕華皮鞋業務超過20年佔用該土地，申請人從未反對，也無權反對，因為佔用已經超過20年。”
74.In my view, the defendant’s case has been adequately and clearly pleaded in the Defence and Counterclaim, in that it was his father who initially possessed the Structure and ran the Shoes Shop thereat; the defendant joined in late 2013, and carried on with what his father had been doing after the demise of Mr Tam Senior.
75.Hence, I do not agree with Mr Yeung’s argument that the defendant’s case has not been adequately pleaded.
Adverse possession against Incorporated Owners
76.The 3rd “pleading point” taken by Mr Yeung was that since the Incorporated Owners in the present case was only incorporated on 4 January 1999, no adverse possession could possibly be run against the Incorporated Owners before that date. Hence, it was suggested that the defendant’s claim which relied on adverse possession commencing before 1991 must fail.
77.I do not accept this submission.
78.Section 16 of the BMO provides that:
“When the owners of a building have been incorporated under section 8, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners, and accordingly –
(a) any notice, order or other document which relates to any of the common parts of the building may be served upon the corporation at its registered office; and
(b) any proceedings in the tribunal in respect of any of the common parts of the building may be brought and pursued by or against the corporation.”
79.In Hang Yick Properties Management Limited v Incorporated Owners of Tuen Mun Kar Wah Building [2005] 2 HKLRD 499, Woo VP explained the effect of the said provision as follows:
“18. It is plain that a major purpose of the incorporation of owners of flats in buildings at which the Ordinance expressly aims to facilitate is to provide convenience in suit and to avoid the problems that might arise from the multiplicity of parties and suits involving such owners which may be numerous. S 16 is specifically designed for such purpose, so that after incorporation under the Ordinance, the rights, powers and privileges of the owners in relation to the common parts of the building shall be exercised and the duties of the owners in relation thereto shall be performed by the corporation to the exclusion of the owners, and that the liabilities of the owners in relation thereto shall be enforceable against the corporation to the exclusion of the owners. The corporation is intended to be the sole representative of all the owners regarding matters within the ambit of s 16.
19. The owners are no longer liable to be sued for their liabilities in relation to the common parts; only the corporation is so liable. As the owners are not liable to be sued under s 16, their liabilities in relation to the common parts, as enveloped in s 16, have been eliminated save where the court grants leave pursuant to s 17 of the Ordinance for any judgment against the corporation to be enforced against any individual one of them.
20. But are the liabilities of the owners in relation to the common parts limited to those incurred by them after incorporation or do they include those incurred before incorporation? The contentions of the parties before us are diametrically opposed. I consider that the answer depends on the facts of each particular case. Sometimes, the liability of an individual owner in relation to the common parts is personal, and thus such liability should not be covered by s 16, or else the other owners would be unfairly prejudiced by the corporation being sued and if the suit is successful, for the judgment being enforced against them or each of them pursuant to s 17. This kind of personal liability, depending on the facts of each case, can be tortious or contractual in nature, it matters not. But where the liability is that owed by the owners as a whole, then the liability of suit passes onto the incorporated owners. This is clear from the words ‘owners’ in the plural used in s 16, as opposed to the singular.”
80.It is clear that while the plaintiff was only incorporated in 1999, it does not mean that no adverse possession could be run against the owners as alleged. It should be borne in mind that the plaintiff is as a matter of fact only a representative of all the owners. While the “Incorporated Owners” was not in existence before 1999, the individual owners were. Hence, time could be run against the individual owners before the incorporation of the Incorporated Owners, but once it was incorporated, it should be the Incorporated Owners rather than the individual owners who should be sued for adverse possession of the common parts of the Building.
81.This brings me to the last “pleading point” raised by Mr Yeung.
Adverse possession against co-owners
82.The last “pleading point” taken by Mr Yeung is that, in order to run an adverse possession claim over common parts in respect of any period prior to the incorporation of the Incorporated Owners, the defendant must extinguish the title of every co-owner of the Building.
83.In support of this argument, he relied on the case of The Incorporated Owners of Chungking Mansions v Shamdasani, Murli Pessumal [1991] 2 HKC 342, in which Deputy High Court Judge Jerome Chan (as his Lordship then was) considered the question of whether adverse possession had to be established against all the co-owners of a building for the period before the incorporation of the Incorporated Owners. It was held that:
“[…] Thus, the defendant says, it is not necessary to establish the commencement of the running of time against each and every co-tenant individually.
I am unable to accept the defendant's submissions. Firstly, one essential feature of a tenancy in common is that apart from the unity of possession the interest of each is separate and distinct. It is generally open to a tenant in common to deal in whatever way he desires with his own undivided share. He can lease his share or dispose of his right to possession to a stranger as he likes. ‘And if tenants in common all joined in one lease, it operated as a lease by each of his respective shares, and a confirmation by each as to the shares of the others’ (see Woodfall on Landlord and Tenant, vol.1, p.58, para.1-0134). Likewise, each tenant in common is entitled to enforce his interest in the land on his own without joining the other co-tenants. Thus, a tenant in common, being entitled to possession of the entirety of the land, can maintain an action for trespass on his own against a trespasser. A tenant in common is entitled likewise to enforce his legal rights against another co-tenant without joining all other co-tenants. He is entitled to sue on his own one of several co-tenants who had ousted him from the land. Or, in days prior to Cap.344, to sue on his own one of several co-tenants who had breached a covenant in a Deed of Mutual Covenants.
Secondly, the scheme under the Limitation Ordinance is to prohibit the bringing of action by a person in whose favour a right of action had accrued before the limitation period. And the extinction of his title and interest in land under section 17 is predicated upon his lost of such a right to bring an action to enforce his said title or interest. Under the former Statutes of Limitation, only the remedy and not the right was barred (see Incorporated Society v. Richards (1888) 7 Dr. & W. 258 at 289). The right only became barred by virtue of section 17 of the Limitation Act 1980 which replaced section 16 of the 1939 Act. The Ordinance only regulates the relationship between the person being dispossessed and the person dispossessing him, and no others. Usually this would suffice for the one claiming the benefit of the statute. But in some cases, it would not be so. Thus where a lessee's rights in respect of the land have been statute-barred as against a third party, his estate vis-a-vis the lessor would still survive. It would be possible for that lessee to surrender his estate in the remainder of his term to the lessor, and the third party would not be able to claim any benefit of limitation as against the lessor, unless the lessor’s rights on the reversion are also statute barred (see St. Marylebone Property Co. Ltd. v. Fairweather (1963) A.C. 510). This personal characteristic of the operation of the statute perpetrates throughout the various provisions of the Ordinance. Section 7(2) speaks of the accrual of a right of action ‘to him’ and not ‘to him and any one having parallel right or interest as him.’ It is necessary to provide expressly in the same section that ‘if it first accrued to some person through whom he claims, to that person.’ An examination of other provisions, such as the saving of a barred trustee's rights if the beneficiary’s rights have not been barred (section 10), and the necessity to provide for deeming provisions to deal with the various situations where there exist more than one mortgagor or mortgagee in an acknowledgement (section 25), highlighted this personal characteristic inherent in the barring of right of action.
Since the interest of tenants in common are separate and distinct, and the operation of limitation is to bar the right of action personally as against the one whose particular right has been infringed, it must necessarily follow that: (a) it is possible for time to run as from different dates as against different tenants in common, and (b) it is possible for possession to be adversed to some but not all of the tenants in common.
‘If it be the case that one only of such occupiers authorised a third person to come onto the land. Then plainly the third person is, vis-a-vis that occupier, a lawful visitor. But he may not be a lawful visitor vis-a-vis the other occupiers.’ (per Lord Goff in Ferguson v. Welsh (1987) 3 ALL ER 777 at 785, H.L.). Whether the third person is a lawful visitor vis-a-vis the other occupiers would depend on the circumstances as to whether the authorising occupier has authority (express, implied, ostensible or usual) to give the permission to the third party on behalf of the other occupiers. Thus, where a tenant in common without the concurrence of his co-tenants purports to authorise a stranger to have exclusive possession of the land, he could have no cause of action against the stranger for tresspass, though that stranger remains a trespasser vis-a-vis the other co-tenants who could maintain an action for possession against him. It had been suggested in Robson-Paul v. Farrugia (1969) 113 Sol. Jo. 346, C.A., that a licence granted by one of two tenants in common without the concurrence of the other could be terminated by that other co-tenant. As against the stranger the authorising tenant in common cannot be heard to dispute the right of the stranger to exclusive possession. An estoppel will lie as against that tenant in common in favour of the stranger. The fact that the other co-tenants may not be bound by his purported permission, and may be entitled to enforce their separate and distinct rights against the stranger, cannot affect the personal position between the authorising tenant in common and the stranger as regard the right of action.
[…]
In the premises, if a tenant in common authorises or permits, albeit impliedly, the occupation by a stranger of a common part of a building to the exclusion of the other co-tenants, no right of action could accrue to him in respect of such occupation by the stranger. Likewise, if a tenant in common permits or waives, albeit impliedly, the breach by one of the co-tenants of the covenant governing the use of the common parts of a building, no right of action could accrue to him in respect of such breach. It is not necessary to consider whether the first tenant in common could in law validly or lawfully confer a right to exclusive possession on the offending co-tenant, whether in contravention of a deed or otherwise. The issue here is not solely the consideration of whether there has been a valid and effective creation of a legal right. If such a legal right exists, there can, of course, be no question of any adversed possession. But short of that, there can be a middle ground. The consideration could also be whether the first tenant in common can maintain an action against the offending co-tenant, which does not necessarily depend on the existence of a valid and effective legal right good against all co-tenants of the building being created. It can rest solely on a personal defence available only as against the first tenant in common and no others. It follows, therefore, the time for commencement of adversed possession and the incidence of possession being adversed would not necessarily be the same as against all tenants in common of land. Normally, this problem would rarely arise. But in the present case, it does.
The defendant must, for the period prior to the incorporation of the plaintiffs, establish adversed possession against each and every holder of the other undivided shares in the land and building not assigned to him. No evidence has been called to establish the history in respect of the titles of the co-owners of Chungking Mansions save in respect of the undivided shares of the defendant and P.W.2. […]”
(at 352G – 355E)
84.So far so good. However, Mr Yeung then went on to argue that until the defendant has extinguished the title of every co-owner of the Building, time will start to run afresh every time someone becomes a co-owner of the Building, and that it would be for the defendant to adduce evidence that no one had become a co-owner of the Building during the 20-year period of adverse possession. He gave an example as follows.
“[…] Hence, even if [Mr Tam Senior]’s adverse possession had commenced in November 1972, if someone became a co-owner of the Building in, say, October 1992 (just before the end of the 20-year period), time would still have to start to run afresh against that new co-owner from October 1992 onwards.”[7]
85.While I have no doubt about the general principle explained by the learned Judge in The Incorporated Owners of Chungking Mansions, I do not accept Mr Yeung’s argument that time would start to run again upon each conveyance, as I take the view that that is not the effect of what the learned Judge held. In fact, as the learned Judge pointed out:
“[…] the time for commencement of adversed possession and the incidence of possession being adversed would not necessarily be the same as against all tenants in common of land. Normally, this problem would rarely arise [...]” (at 355D)
86.On the other hand, section 9(3) of the Limitation Ordinance provides that:
“No person shall bring an action to recover any estate or interest in land under an assurance taking effect after the right of action to recover the land had accrued to the person by whom the assurance was made or some person through whom he claimed or some person entitled to a preceding estate or interest, unless the action is brought within the period during which the person by whom the assurance was made could have brought such an action.”
87.The effect of this provision is that once time has started to run, no conveyance of the land by the paper owner will stop time from running (see Adverse Possession by Stephen Jourdan QC and Oliver Radley-Gardner (2nd edition, 2011), at paragraph 15-06). In other words, contrary to what Mr Yeung contended, time will not run afresh whenever one of the co-owners of the Building sold his undivided shares in the Building to another.
88.Support on this view may be found in the case of Kan Kam Cho & Another v Kan Chiu Nam Raymond and Kan Kam Lok as the intended managers of Kan Ng Wo Li (or Lee) [2008] 11 HKCFAR 538. In this case, the Court of Final Appeal considered the question of whether the letting of land to a tenant stops the running of a limitation period which had started to run against the paper owner prior to such letting. Lord Scott of Foscote NPJ held that:
“36. […] in a case where adverse possession has commenced to run against the paper title owner, the grant by that owner of a tenancy of the land in question is no more an interruption of the adverse possession than would be a sale of the land. The grantee, whether a lessee or a purchaser, takes the land and acquires the right to possession of it, subject to whatever possessory incidents may exist at the time. If it is in adverse possession at the time, the adverse possession continues against landlord and tenant alike until there is a discontinuance of possession [...]
37.[…]
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.’
There is no mention of the grant by the true owner of a tenancy of the land to a third party. The reason, as I have said, why that event does not bring about a cesser of the adverse possession is that the tenant is claiming through the landlord and the adverse possession, formerly against the landlord, becomes adverse against both landlord and tenant. There is no cesser of the adverse possession.”
WHETHER THE EXTERNAL WALL CAN BE ADVERSELY POSSESSED IN LAW
89.The Structure was bolted to the external wall of the Building. The defendant therefore claims that his father and he had adversely possessed the external wall for more than 20 years. The question is: whether the external wall could be adversely possessed as such.
90.The answer is clearly “No”.
91.In Sunbroad Holdings Limited v All Occupiers (whose names are unknown) and Others (HCMP 1852/2008, unreported, 24 June 2011), the subject matter of the appeal concerned an external wall. The plaintiff therein was the registered owner of the ground floor of the building of which the said external wall formed part. The 3rd defendant had constructed certain structures at a part of the said external wall, and counterclaimed against the plaintiff that he had acquired all the possessory right, title and interests, including the right to exclusive physical occupation of the part of the external wall at which he had constructed the said structures. The plaintiff sought summary judgment against the 3rd defendant and applied at the same time to strike out the 3rd defendant’s counterclaim. The matter came before Mr Recorder Anderson Chow SC (as his Lordship then was) who stated in his Judgment as follows:
“5. The Structures were erected by the 3rd Defendant. According to the 3rd Defendant:-
(1) In around 1972, he constructed a small metal box (the ‘Small Metal Box’) on the External Wall for storage of shoes pending customers’ collection and as a show case for leather belts and other goods.
(2) In around 1984, he constructed a large metal box (the ‘Large Metal Box’) on the External Wall above the Small Metal Box for the same purpose.
(3) In around 1986, he constructed a canopy (the ‘Canopy’) above the aforesaid 2 metal boxes to protect them from sunlight and rain.
(4) The Small Metal Box, the Large Metal Box and the Canopy make up the Structures complained of by the Plaintiff in this action.
6. It is not in dispute that the 3rd Defendant erected the Structures, which are physically attached or affixed to the External Wall, without the consent, licence or permission of the Plaintiff, or its predecessors in title. It is the 3rd Defendant’s contention that from around 1972, he has been in exclusive possession of and has been using the External Wall without the consent or licence or permission in whatever form of the owner of the External Wall, such that he has acquired a good title to the External Wall by adverse possession.
[…]
20. The question which thus arises is whether, as a matter of law, the concept of ‘adverse possession’ can apply to a vertical plane or surface such as the surface of the External Wall in the present case.
21. Miss Ho for the Plaintiff submits that, as a matter of law, whatever is acquired by means of exclusive possession must be measurable by precise metes and bounds and in some way cubically [...]
22. […]
23. […] I am inclined to accept Miss Lo (sic)’s submission as a matter of principle. In any event, as is apparent from Mr Liu’s argument at the hearing, his case is not that the 3rd Defendant has acquired title, by way of adverse possession, to only the surface of the External Wall; his case is that the 3rd Defendant has acquired title to half of the thickness of the External Wall as well as the surface of External Wall facing the Stall. However, I am unable to see how, from the mere fact that the 3rd Defendant has attached or affixed certain structures to the External Wall and used those structures for a long time, it can be inferred that the 3rd Defendant has taken adverse possession of half of the External Wall to the exclusion of the Plaintiff, or its predecessors in title, or that the 3rd Defendant intended to exclude the Plaintiff or its predecessors in title from having the use or possession of the External Wall or half of it (as opposed to merely a surface of the External Wall).
24. As rightly pointed out by Miss Ho, at all material times, the Plaintiff or its predecessors in title have had the use of the External Wall, as a means of enclosure of the backyard of the Property.
25. In the circumstances, I do not consider that the 3rd Defendant’s case, taken at its highest, whether on the basis of his pleadings or his evidence, can begin to make out a case of adverse possession of the External Wall or half of it. I am satisfied that the 3rd Defendant has not raised any arguable or triable defence to the Plaintiff’s claim against him for trespass of the External Wall.”
92.The 3rd defendant then appealed to the Court of Appeal. In his Judgment(Sunbroad Holdings Limited v All Occupiers (whose names are unknown) and Others [2012] 2 HKLRD 599), Tang VP (as he then was) stated:
10. Mr Horace Wong, SC, who together with Ms Jane T C Ho, appeared for the Plaintiff on appeal, has referred us to Leung Kwok Kau v Tam So Wa [1968] HKLR 673. There the question was whether a lease of the surface of the outer wall of a building could be created. The Full Court held that it could not. Their lordships explained why:
‘… A corporeal hereditament … has always included an area of the surface of the earth or of some horizontal plane either below, or in a building erected above, the surface of the earth. The area need not be large, but it must have some substance. …’ Per Huggins J held at 680.
‘… It is possible to grant a lease of a wall but that is because a wall is situated on the ground and in effect a lease of a wall is a lease of the ground on which the wall is standing together with the wall itself. However, this is not to say that there can be a tenancy of the surface of a wall by itself as was argued in this appeal. I do not think that that is possible. The surface of a wall of its very nature has no depth, it is not standing on any part of the ground: and therefore it cannot in my view be the subject matter of a lease.’ Per Briggs J held at 675.
‘… In the absence of a defined portion of the soil, to which a letting can be distinctly related, no lease or tenancy can arise. Where the subject matter of an alleged lease or tenancy is but the bare surface of such a wall, it has no width or breadth of soil to support it, as a lease or tenancy. No estate or interest in land is created; I use the word 'land' in its widest sense. …’ Per Mills-Owens J at 679.
11. With respect, I agree that just as there could not a lease of the surface of a wall, there could be no adverse possession of such surface.
12. The learned recorder then dealt with another argument relied on by Mr Liu (for the 3rd Defendant) that the 3rd Defendant had adversely possessed the Blue Wall to half of its thickness, which the learned recorder also rejected. I agree with the learned recorder that one could not infer from the fact that the 3rd Defendant had attached or fixed certain structures to the Blue Wall and used those structures for a long time, that the 3rd Defendant had taken adverse possession of half of the Blue Wall to the exclusion of the Plaintiff; or that the 3rd Defendant had intended to exclude the Plaintiff from having the use or possession of half of the thickness of the Blue Wall.”
93.As Mr Mak rightly accepted, the Court of Appeal’s Judgment in Sunbroad Holdings Limited is binding on this court.
WHETHER THE 3-DIMENSIONAL SPACE CAN BE ADVERSELY POSSESSED IN LAW
94.In Mr Mak’s written opening submissions, he referred to the case of 鄧秀蓮 (Tang Sau Lin) v Youngfield Limited & Others [2019] HKCA 903 (in respect of which he highlighted the fact that the case of Sunbroad Holdings Limited was distinguished therein) and submitted that the 3-dimension space occupied by the Structure can be a subject matter of adverse possession.
95.As I pointed out to Mr Mak during his opening submissions, I did not understand why the law of adverse possession on “3-dimensional space” is relevant in the present case, because the Structure which we are concerned with herein is not a hanging structure as in 鄧秀蓮 (the subject matter therein was an over-hanging cabinet (立體吊櫃)) but a structure which touches the ground. In my view, in such circumstances, the fact that the Structure was allegedly affixed to the external wall would not make any difference.
96.After some exchanges between the Bench and the Bar table, it was agreed that this issue might be allowed to stay for the time being, pending the clarification from the witnesses on whether the whole Structure was touching the ground.
97.It is now clear from the evidence that the whole Structure was placed on the ground rather than a suspended structure as such.
98.It might be because of this that Mr Mak has now submitted in his written closing submissions that “the distinction between an overhanging structure and a structure touches the floor but not affixed to it is a distinction without a difference in relation to whether there was possession”[8].
99.That being the case, without disrespect to counsel, I shall not go further on this issue, as it will not have any bearing on the result of the present case.
THE DEFENDANT’S CLAIM OF ADVERSE POSSESSION
The legal principles
100.While the legal principles on adverse possession are generally well-known, I would set them out for the sake of clarity. In the Court of Final Appeal case of Incorporated Owners of San Po Kong Mansion v Shine Empire Limited [2007] 10 HKCFAR 588, the principles explained in Powell v McFarlane [1979] 38 P&CR 452 were stated as follows:
“(1) …
(2) If the law is to attribute possession of land to a person who can establish no paper title to possession, he must be shown to have both factual possession and the requisite intention to possess (‘animus possidendi’).
(3) Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly. … The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances…acts of possession done on parts of land to which a possessory title is sought may be evidence of possession of the whole. Whether or not acts of possession done on parts of an area establish title to the whole area must, however, be a matter of degree….is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.
(4) … the animus possidendi involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow.
… An owner or other person with the right to possession of land will be readily assumed to have the requisite intention to possess, unless the contrary is clearly proved. This is why the slightest acts done by or on behalf of an owner in possession will be found to negative discontinuance of possession. The position, however, is quite different from a case where the question is whether a trespasser has acquired possession. In such a situation the courts will require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world. If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the courts will treat him as not having had the requisite animus possidendi and consequently as not having dispossessed the owner. (pp470-472)”
101.It is undisputed that the person claiming adverse possession (the defendant herein) has the burden of proving both exclusive physical control and the requisite intention. Although the standard of proof is still the normal civil standard (i.e. 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.[9]
Whether there was continuous and exclusive possession of the land for over 20 years
102.As explained at the beginning of this Judgment, it is undisputed that the Structure currently comprises of 4 parts – Part 1, Part 2, Part 3 and Part 4. The defendant’s case is that Mr Tam Senior took over Part 1 and Part 2 in 1972, added part 3 in the 1980s and then added Part 4 in the late 1990s.
Parts 1 and 2
103.According to the evidence of the defendant, his father (Mr Tam Senior) initially ran his leather shoes business in North Point in around 1970. However, as his shop there was going to be demolished, he had to look for another place to run his business. In around November 1972, Mr Tam Senior took up certain structures at the back lane of the Building to continue his business. Although the defendant was only around 9 years old at that time, he could still remember that he had accompanied Mr Tam Senior to go to the “new shop”. He said he saw that Mr Tam Senior had used a key to open the shop and see the condition inside.
104.This part of the defendant’s case is supported by a written agreement dated 11 November 1972 (“the Written Agreement”) which reads:
“黃少波 黃順 茲將銅鑼灣道壹號地下左側橫門波記士多檔生財器及木蓋房間兩間電話電錶水喉等全部出讓與 雷根 譚鈿裕承受 (訂明承頂費港幣捌千伍佰元正) 已銀物交妥以後如有華洋膠轕承受人概不負責議明每月租金港幣壹佰貳拾元在三年內不能任意加租三年期滿雙方再行協議恐口無憑立此為據。
出讓人 黃少波 黃順
承受人 譚鈿裕
見証人 雷根
公元一九七二年十一月十一日立”
105.It was also written either on the reverse page of the document or on another paper:
“並已收按金壹個月壹佰貳拾元正”
106.A Business Registration Certificate issued on 24 January 1973 to “Yue Wah Shoes-Maker” has also been disclosed in the present action. The defendant said in court that this is the earliest Business Registration Certificate which he could find. While the address of the business was initially stated thereon to be “Hut Sch5A22, Pek King St., North Point, H.K.”, it was amended in red by handwritten words to “1, Tunglowan Rd., G/F., H.K.”. Although the address of the business was not stated in the said certificate to be “2 – 6 Causeway Road” (which is currently used as the address of the Building), I am satisfied that the certificate is referring to the location of the Structure because “1, Tunglowan Rd., G/F., H.K.” was the address used in the Written Agreement, and there is no dispute herein that the huts involved in the Written Agreement were located at where the Structure is.
107.Mr Chan Shu Sun, the only witness called by the plaintiff, only bought a flat in the Building in 1996, and he had no knowledge about the alleged condition of the Structure back in 1972. Therefore, he could not give any evidence to contradict the evidence adduced by the defendant.
108.In these circumstances, I accept that Mr Tam Senior had used Part 1 and Part 2 since around 1972 to run the Shoes Shop.
109.Mr Yeung had drawn this court’s attention to the fact that the glass cabinet currently put in the Structure was admittedly not there back in 1972. I am of the view that this is an irrelevant matter. The question to ask is whether Mr Tam Senior had been in continuous and exclusive possession of Part 1 and Part 2 of the Structure at the material time. The fact that he had replaced some old cabinets with new ones in the course of his occupation would not affect the court’s consideration of the said question.
110.As to whether there had been exclusive possession, I have referred to the defendant’s evidence above that the shop had to be opened by the use of a key. He had further told us in court that Mr Tam Senior had to remove 10 – 11 “doors” everyday so as to start doing business in the morning. I accept his evidence. The huts which were sold to Mr Tam Senior were previously used to run a store (士多) and naturally there must be stocks of goods kept there for sale. It is against common sense that when the store was closed, anyone could walk into the store freely. The same logic applies to the Shoes Shop run by the defendant’s father.
111.The fact that the Shoes Shop was not enclosed during daytime would not affect the above analysis. Mr Tam Senior must have been at the shop when it was opened for business. For this reason, Mr Yeung’s reliance on the photographs published in Apple Daily in 2011 to show that Mr Tam Senior’s shop was “more like an open unenclosed working space, accessible by anyone” is misconceived, as the photographs were apparently taken while Mr Tam Senior was there.
112.The defendant’s case that his father had continuously run the Shoes Shop since the time he took over the Structure was not challenged.
113.It is therefore my finding that Mr Tam Senior had continuous and exclusive possession of Part 1 and Part 2 since 1972.
Part 3
114.The defendant’s pleaded case is that Part 3 of the Structure was added in the 1980s. However, in his evidence, he could not say when exactly between 1980 and 1989 it was so added. He could only say that:
(i) Mr Tam Senior had hired 4 shoe-makers to work for him in the 1980s, and as a result, Part 3 of the Structure was built;
(ii) The last shoe-maker hired by Mr Tam Senior left the employment in 1988, and that shoe-maker was working in Part 3 of the Structure before he left.
115.He further stated that at that time, a polisher (打磨機) which had to be used for the purpose of the business would be stored inside Part 3 at night. It would be moved to Part 4 during day-time. No one could enter Part 3 freely.
116.Again, the above evidence of the defendant was not contradicted by any other evidence. I therefore accept the same. However, since the defendant could only say positively that Part 3 was already there in 1988, I would only find that Mr Tam Senior had continuously and exclusively possessed Part 3 of the Structure since 1988 but not earlier.
Part 4
117.Part 4 is located at the end of the Structure.
118.According to the defendant’s evidence:
(1) When Mr Tam Senior’s shop was extended to Part 3 in the 1980s, a canopy was built. This canopy did not only cover the top of Part 3, but also that of Part 4 of the Structure;
(2) At that time, as aforesaid, a polisher was stored in Part 3 at night, and it would be taken out and placed in Part 4 of the Structure for use during daytime;
(3) However, at that stage, Part 4 was not an enclosed area at all, and anyone could enter Part 4 freely;
(4) In the 1990s (he could not remember the exact year), Mr Tam Senior found an abandoned iron box (“the First Iron Box”) in the back lane where the Structure was located. This iron box was very big, with a dimension of around 5 ft (length) x 5 ft (height) x 2 ft (depth). Mr Tam Senior, probably with the assistance of his friends, placed the First Iron Box under the canopy of Part 4. Since then, the polisher was put inside the First Iron Box when it was not used;
(5) The First Iron Box was not affixed to the wall. The defendant did not deny that anyone could have removed it from the area of Part 4, but he said that it would require 4 persons to move it even if it was empty because it was very heavy;
(6) As the First Iron Box had become rusty, Mr Tam Senior asked someone to make another iron box (“the New Iron Box”) for him in around 2010 to replace the First Iron Box;
(7) Part 4 was enclosed only when the New Iron Box was put in place in around 2010.
119.There is no reason why I should not accept the defendant’s evidence. However, since he could not remember when exactly did his father move the First Iron Box to Part 4 of the Structure other than saying that it was in the 1990s, I would assume that that was in 1999.
120.Since Part 4 was not enclosed at the time when the First Iron Box was moved under the canopy covering Part 4 of the Structure, I find that Mr Tam Senior only started possessing the area occupied by the First Iron Box (5 ft (length) x 2 ft (depth)) in 1999. He only exclusively possessed the entire Part 4 of the Structure from 2010 onwards when Part 4 was enclosed.
121.What this court cannot tell (as there was no evidence adduced on this matter) is where exactly the First Iron Box was placed within Part 4 which is occupying an area of 3 ft (depth) x 6.1 ft (length). However, it will be seen below that the court’s inability to make any finding on this matter does not have any impact on the ultimate outcome of this case.
Animus possidendi
Part 1, Part 2 and Part 3 of the Structure
122.When Mr Tam Senior took possession of Part 1 and Part 2 of the Structure in 1972, he was clearly doing it pursuant to the Written Agreement which he entered into with 黃少波 and 黃順. The Written Agreement has been set out in full in the earlier part of this Judgment.
123.The defendant stated in his evidence that he was told by his father that 黃少波 was a watchman of the Building at the material time, and that since the 大業主 of the Building (which is normally understood to mean someone who owns a large part of a building/development) had sympathy on 黃少波 who had a low salary at the time, 黃少波 and his younger brother 黃順 were allowed to set up a structure at the back lane of the Building so as to run their business “波記士多”.
124.According to the Written Agreement, the two wooden huts set up by the Wong brothers were sold to Mr Tam Senior. The Written Agreement further provided that Mr Tam Senior had to pay monthly rent in the sum of $120 for 3 years, and that the amount of monthly rental after the expiry of 3 years shall be further negotiated between the parties. It also appears that Mr Tam Senior had paid a deposit of $120.
125.When he gave his evidence, the defendant did not agree that the Written Agreement was a tenancy agreement. He said the payment of $120 was only management fee. I do not think any weight should be given to this part of the defendant’s evidence. He was only 9 years old when his father took possession of the wooden huts, and he accepted that his father did not discuss with him about this agreement including the question of whether he (his father) had paid rent during those 3 years. There is nothing which renders it appropriate for this court to find that the Written Agreement did not mean what it stated.
126.Mr Tam Senior knew that 黃少波 was permitted to use the back lane as he did by the 大業主. Taking into account what was agreed under the Written Agreement, I am of the view that it is clear that Mr Tam Senior did not have the intention to dispossess such owner(s) of the Building during the term of the Written Agreement.
127.There is no evidence on further negotiation between Mr Tam Senior and 黃少波/黃順 upon the expiry of the 3 years’ term in November 1975, even though according to the evidence of the defendant, 黃少波 only passed away in 1976.
128.However, what we do know, which is undisputed, is that Mr Tam Senior started to pay Subsidiary Management Fees to the Mutual Aid Committee in October 1976. When the Incorporated Owners was established in 1999, the payment was made to the Management Committee instead. Such payments were made all the way up to 2006/2007 when the plaintiff refused to receive any further management fee from Mr Tam Senior.
129.The defendant alleged that his father had told him that, when the Mutual Aid Committee was set up, his father was consulted by the said Committee on the collection of management fees, and that his payment would only be accepted by the said Committee if his father agreed to pay. The defendant was further told by his father that since the latter thought that it was reasonable to pay management fees, such payment was charged.
130.It is difficult to accept that the Mutual Aid Committee had really consulted Mr Tam Senior as such. But in any event, the undisputed fact is that Mr Tam did make such payment from 1976 to 2006/2007. In my view, no matter whether he had made such payment willingly or not, it would not affect the analysis on whether he had the requisite animus possidendi during the said period of time.
131.In The Incorporated Owners of Chungking Mansions v Shamdasani, Murli Pessumal [1991] 2 HKC 342, the learned Judge held that:
“The plaintiffs had been collecting management fees from the defendant's predecessors-in-title for the ‘A’ units. The defendant says this would not amount to a licence to occupy as the plaintiffs had no right or authority to grant such a licence in contravention of clause 2 of the Deed of Covenant. I do not accept that the owners incorporation of a building does not have the authority to let out any common part of the building under the provisions of Cap.347 as examined before. The co-owners’ rights in respect thereof are to be exercised by the owners incorporation, which would be vested with all the rights and powers of all the owners jointly. If all the owners jointly can let the common parts out, as the defendant conceded, so can the owners incorporation. The collection of management fees for the ‘A’ units is an unequivocal act of permission to occupy from the owners incorporation, albeit they were they labouring under a mistake of law, and perhaps of facts as well.” (at 356F – H) (emphasis added)
132.I agree with the view of the learned Judge.
133.The same conclusion can be reached even without the guidance given in The Incorporated Owners of Chungking Mansions. In the circumstances of the present case, in my view, the Mutual Aid Committee must be aware of Mr Tam Senior’s usage of the common area at the back lane of the Building back in 1976 when the said Committee was first established, and there must have been discussion between Mr Tam Senior and the Mutual Aid Committee at that time about the collection of the Subsidiary Management Fees. The fact that such fees were charged by the Mutual Aid Committee shows that the Mutual Aid Committee permitted Mr Tam Senior’s occupation of the said area. On the other hand, Mr Tam Senior’s agreement to pay such fees, in my view, shows that his possession was not adverse at all.
134.Mr Mak relied on the case of Cheung Kwong Yuen v Sun Hui Fang [2016] 1 HKLRD 464 and argued that there is no rule of law that the elements of adverse possession “cannot be established for a person who mistakenly believes that he has good title”.
135.In my view, this authority does not assist him. Attention should be paid to the following statement made by Saville LJ in Hughes v Cork [1994] EGCS 25 which was quoted by Kwan JA (as she then was) in paragraph 12 of the Judgment in Cheung Kwong Yuen:
“Obviously if the possessor knows or believes someone else has the paper title to the land he must intend to exclude that person along with everyone else. […] ”
(emphasis added)
136.As mentioned above, it is the evidence of the defendant that Mr Tam Senior knew that the 大業主 had permitted 黃少波 to run his business at the wooden huts, and 黃少波 in turn allowed Mr Tam Senior to use the back lane. Subsidiary Management Fees were then paid. In these circumstances, the defendant cannot establish that his father had any intention to exclude the 大業主.
137.Mr Mak also submitted that there was no evidence on whether the Mutual Aid Committee had authority of all the owners of the Building to collect Subsidiary Management Fees from Mr Tam Senior. With respect, whether it had authority or not is neither here nor there. We are not concerned with whether Mr Tam Senior should have been liable to pay such fees, but the implication of his payments which were made pursuant to the request of the said committee.
138.The defendant further argued that the payment of Subsidiary Management Fees on the part of Mr Tam Senior was only for the purpose of obtaining the service of watchmen patrolling around the back lane and the use of the toilet inside the Building. I do not accept his evidence on this.
139.As the defendant accepted in court, the watchmen are still seen patrolling the back lane currently. The relationship between the payment of management fees and the patrolling duties of the watermen is therefore not established.
140.On the use of toilet, the defendant stated in paragraph 18 of his witness statement:
“於2006年3月份，華都大廈拒收補助管理費。自來水喉亦被除去。事源大約在2006年2月份，本人的母親進入華都大廈去洗手間，遇到當時的大廈委員會主席黃女仕，她跟本人的母親說 ‘不可進大廈的洗手間’，母親回應說 ‘我們有交管理費的’。此後大廈退回補助管理費的支票，自來水亦被截去。”
141.I do not think the defendant’s evidence in terms of the aforesaid paragraph alone is adequate in establishing that there was any link between the conversation on the use of toilet and the refusal on the part of the plaintiff to receive further management fees.
142.On the other hand, Mr Chan, who had been a member of the Management Committee since 2003, told the court that the plaintiff had refrained from collecting further management fees from Mr Tam Senior some years later because it was considered inappropriate to do so. I accept his evidence in this regard.
143.I therefore do not accept the defendant’s argument that the collection and payment of management fees (or Subsidiary Management Fees) had nothing to do with the animus possidendi on the part of Mr Tam Senior.
144.Pausing here, I note that there is a difference between the parties’ respective cases as to when the plaintiff stopped collecting management fees from Mr Tam Senior. The plaintiff alleged that it was in 2007, while the defendant stated that it was in March 2006.
145.In this regard, the following pieces of evidence are relevant:
(1) Among the receipts of management fees[10] disclosed in the present action, the one bearing the latest date was dated 26 February 2006;
(2) In Mr Chan’s witness statement, he stated that: “2006年新一屆業主立案法團上任後，認為收取譚伯管理費不恰當，故即時停止收取該費用”;
(3) In Mr Chan’s oral evidence, he said that the motion to stop collecting management fees from Mr Tam Senior was moved in a Management Committee meeting in around October 2006;
(4) In a letter dated 10 August 2006 issued by the Lands Officer of Hong Kong East of the Lands Department to the management company of the Building (“Lands Department’s Letter”), it was stated that:
“多謝貴公司二零零六年七月十日之來信。
據本處之記錄顯示有關之鞋舖乃座落於貴大廈之私人土地上，故有關此鞋舖之事宜乃貴大廈與此鞋舖之間的合約問題，只能由貴大廈自行處理。
就貴大廈現不欲再向此鞋舖收取費用之問題，基於上述之原則，本處建議貴大廈尋求私人法律顧問之意見，再自行決定下一步之行動。”
(emphasis added)
146.While Mr Tam Senior had paid management fees / Subsidiary Management Fees for around 30 years, only 5 receipts in relation thereto had been exhibited to the defendant’s witness statement. Those receipts were dated 29 October 1976, 25 February 1977, 12 May 1997, 30 August 1999 and 26 February 2006 respectively. There was no explanation as to why only those receipts were so exhibited. These show that Mr Tam Senior had been paying management fees at least up to February 2006, but it does not mean per se that he did not pay further management fees afterwards.
147.While it was the defendant’s evidence that the plaintiff had stopped receiving management fees from his father since March 2006, this was contradicted by (i) Mr Chan’s evidence and (ii) the Lands Department’s Letter. Given the long lapse of time, I think the court should give more weight to documentary evidence. The Lands Department’s Letter referred to the management company’s letter dated 10 July 2006 which Mr Chan said he could not find among the plaintiff’s documents. From my reading of the Lands Department’s Letter, it appears that the management company had by virtue of its letter dated 10 July 2006 raised some issues on Mr Tam Senior’s occupation of the back lane of the Building, and indicated that it did not intend to collect further management fees from him (“現不欲再向此鞋舖收取費用”). This implied that when the letter dated 10 July 2006 was issued, the Management Committee was still collecting management fees from Mr. Tam Senior.
148.This is consistent with Mr Chan’s evidence that it was only in October 2006 that it was proposed in the Management Committee meeting that no further management fees should be collected from Mr Tam Senior. According to Mr Chan’s witness statement set out above, it was decided that no further management fees should be collected from Mr Tam Senior with immediate effect.
149.It is therefore my finding that Mr Tam Senior had paid management fees up to October 2006.
150.Hence, up to at least October 2006, there was no requisite animus possidendi on the part of Mr Tam Senior.
151.What about the period thereafter?
152.In my view, even though no management fee was demanded to be paid from November 2006 onwards, and no such payment was made, it does not necessarily mean that Mr Tam Senior had the requisite animus possidendi immediately. The defendant has to prove that his father’s possession was “adverse”, for example, by showing that even if the plaintiff had asked for such payment again, his father would have refused to pay; or alternatively, his father did not agree to leave despite being asked to do so.
153.According to Mr Chan, in 2007, as the plaintiff was preparing to undertake a major renovation project at the Building, they wanted Mr Tam Senior to leave. However, taking into account Mr Tam Senior’s old age and the expectation that he might be retiring soon, the Management Committee decided only to ask him to leave orally without taking further actions.
154.On the basis of the aforesaid evidence, it is this court’s finding that Mr Tam Senior had refused to leave despite the oral requests made by the plaintiff in 2007.
155.Therefore, I am satisfied that Mr Tam Senior had the requisite intention sometime from 2007 onwards. However, for reasons to be explained below, the above analysis is only applicable to Part 1, Part 2 and Part 3 of the Structure.
Part 4 of the Structure
156.The above analysis is not applicable to Part 4 of the Structure in the sense that, given the circumstances of the case, I do not think the defendant can successfully prove that Mr Tam Senior had the requisite intention in relation to Part 4 of the Structure as from 2007.
157.To recap, Part 4 was first used by Mr Tam Senior in 1990s when he placed the First Iron Box there. The defendant accepted that, unlike Part 1, Part 2 and Part 3, the area of Part 4 was not enclosed at the time. Anyone could enter Part 4 freely. Theoretically, anyone could take the First Iron Box away, even though it was a very heavy box, and would require 4 persons to move it even if it was empty. The First Iron Box was subsequently replaced by the New Iron Box in around 2010. It was at that time that Part 4 was enclosed.
158.In Powell c McFarlane (1977) 38 P & CR 452, Slade J said that:
“These activities, done, as they were, […] were in my judgment equivocal within the meaning of the authorities in the sense that they were not necessarily referable to an intention on the part of the plaintiff to dispossess Mr McFarlane and to occupy the land wholly as his own property. At first, surely, any objective informed observer might probably have inferred that the plaintiff was using the land simply for the benefit of his family’s cow or cows, during which periods as the absent owner took no steps to stop him, without any intention to appropriate the land as his own.” (at 478)
159.He then continued:
“In view of the drastic results of a change of possession, however, a person seeking to dispossess an owner must, in my judgment, at least make his intentions sufficiently clear so that the owner, if present at the land, would clearly appreciate that the claimant is not merely a persistent trespasser, but is actually seeking to dispossess him.” (at 480)
160.In my view, it is inadequate for Mr Tam Senior to “make his intentions sufficiently clear” by placing a box on an open space without enclosure. Even though Mr Tam Senior had at the material time enclosed Part 1, Part 2 and Part 3 of the Structure, and had demonstrated his intention to treat those parts of the back lane as his own from 2007 onwards, an objective informed observer would probably have inferred that Mr Tam Senior, by placing the box there as he did, was simply using the area of Part 4 for convenience but without any intention to appropriate the land.
161.The situation only changed in 2010 when Mr Tam Senior enclosed Part 4 of the Structure.
162.I therefore find that, as far as Part 4 of the Structure is concerned, Mr Tam Senior only had the requisite intention from 2010 onwards.
Conclusion on the claim of adverse possession
163.To sum up my findings above:
(1) The external wall is not capable to be adversely possessed;
(2) The adverse possession claim of the land and the Space in question can be considered together because the “Space” is as a matter of fact touching the ground of the back lane rather than an over-hanging structure;
(3) In relation to Part 1 and Part 2 of the Structure, while Mr Tam Senior had been in continuous and exclusive possession of the same since 1972, he only had the requisite intention from 2007. The defendant has failed to prove adverse possession for 20 years. Even if the defendant is allowed to rely on an alternative case of “12-year” limitation period (which I do not agree), by the time when the plaintiff’s action was commenced in the Lands Tribunal on 9 October 2018, the said 12 years’ period had not yet expired. Hence, the defendant’s claim for adverse possession of Part 1 and Part 2 of the Structure must fail.
(4) In relation to Part 3 of the Structure, I have found that Mr Tam Senior had only been in continuous and exclusive possession thereof since 1988. The analysis on the requisite intention in respect of Part 1 and Part 2 is applicable to Part 3 as well. Hence, the defendant’s claim for adverse possession of Part 3 also fails.
(5) Mr Tam Senior only had continuous and exclusive possession of Part 4 since 2010. The defendant’s claim in relation thereto must fail.
Whether the defendant can rely on Mr Tam Senior’s act
164.In the light of my conclusion above, I will only deal briefly with this issue.
165.When I dealt with the plaintiff’s second “pleading point”, I had already expressed my view that the defendant had pleaded adequately his case that he had joined his father in the continuous and exclusive possession of the Structure since late 2013, and carried on with what Mr Tam Senior had been doing after his demise.
166.Having heard the evidence, I accept that the defendant had proved what he pleaded as referred to in the preceding paragraph. He remained in possession of the Structure after the death of Mr Tam Senior. The defendant could therefore rely on his father’s adverse possession and may apply for a declaration in his own right.
167.Mr Yeung argued that there is no objective evidence that Mr Tam Senior had allowed the defendant to enter into the possession of the Shoes Shop. That may be so. However, there is no reason for me to doubt the defendant’s evidence in this regard.
Necessity of a grant of probate
168.For the above reason, there is no need for the defendant to obtain a grant of probate.
ACQUIESCENCE AND ESTOPPEL
169.In Mr Mak’s written closing submissions, he stated that:
“156. […] Further, D only proceed with his defence of acquiescence and estoppel until 25 July 2011 when P through solicitors requested [Mr Tam Senior] to leave.
157. In this regard, D says that:
(1) The owners of the Building must have been or were actually well aware of the existence of the possession of [Mr Tam Senior] of the Structure, since 1972, as the signage was prominent.
(2) The owners had chosen not to object.
(3) It was not disputed that [Mr Tam Senior] had paid HK$11,000, and incurred expenses : improved the Structure by expanding the Structure into Part 3 and Part 4 over the years, and payment of the subsidiary management fees, water and electricity charges.
(4) Therefore P when taking over the management of the Building on 4 January 1999 and had not taken action, has acquiesced the conduct of [Mr Tam Senior]. Further, P is also estopped from denying that it had agreed to the conduct of [Mr Tam Senior].
(5) Since [Mr Tam Senior] is not party to these proceedings, P is not entitled to its claim.
(6) P’s loss, if (which is denied) P is entitled to enforce the DMC and the BMO, is limited to $6,000. There was no evidence of any other loss suffered by P.”
170.Mr Yeung submitted that the defendant has not pleaded the basis for any estoppel at all in his Defence and Counterclaim. No representation or detriment had ever been pleaded and particularised. I agree with this submission. I would not allow an improperly pleaded issue to be “slipped-in” in this way.
171.In any event, there is nothing in the evidence which supports any allegation that the expansion of the Structure or the payment of management fees and various other charges had anything to do with any promise given by the plaintiff or on the basis of any inaction on the part of the plaintiff or other owners.
172.The defence of estoppel must therefore fail.
173.On the question of acquiescence, in The Incorporated Owners of Champion Court v Pang Ping Fan Peter & Another [2008] 5 HKC 312 (the Court of Appeal’s Judgment starts at page 319), Yuen JA had the following to say:
“15. In any event as the judge rightly pointed out, it is the statutory duty of the Plaintiff to enforce the provisions of the DMC and unlike the breach of a covenant which incorporated owners are capable of acquiescing in (e.g. painting the lift lobby outside an owner’s flat in a colour of the owner’s choice), the Plaintiff cannot acquiesce in the retention of illegal structures.
16. First, that the structure on the roof was illegal is clear. The Buildings Department was informed of the subject structure by a letter from the Plaintiff dated 16 June 2004 and after an inspection of the structure on the roof (but not the opening between Flat 23A and the roof which required internal access), the Buildings Department replied on 4 December 2004 confirming that the illegal structure on the roof was an unauthorised building work and that enforcement action will be taken. There were therefore breaches of cl. 10(a) and (b).
17. Secondly, that incorporated owners cannot acquiesce in the retention of illegal structures is by now well-established. The rationale is that since it is not within the power of incorporated owners to expressly permit illegal structures to be constructed, it is consequently not within their power to acquiesce in their retention: see e.g. The Incorporated Owners of Chungking Mansion v Shamdasani, Murli Pessumal [1991] 2 HKC 342 and The Incorporated Owners of Hoi Luen Industrial Centre & anor v Ohashi Chemical Industries (Hong Kong) Ltd [1995] 2 HKC 11, where Godfrey JA held:
‘What cannot be done expressly cannot be done impliedly. Although equity will sometimes restrain a plaintiff in the exercise of his legal rights because it would be inequitable and unjust in all the circumstances to allow him so to exercise those legal rights, equity will not hold him bound by acquiescence to allow something which he could not have allowed by express grant’. ”
174. The Incorporated Owners of Champion Court was followed in The Incorporated Owners of Triumph Court v Law Ping Patsy The [2020] 4 HKC 100, in which Yuen JA stated that:
“the construction and maintenance of [an unauthorized building work] which the [Building Authority] has ordered to be removed (in contrast, say to displaying a sign at the entrance of a flat) is not of the type of breach of an DMC that an IO can acquiesce in or waive.” (at paragraph 29)
175.In the present case, the Building Authority had, on 6 November 2014, issued the Superseding Order under section 24(1) of the Buildings Ordinance (Cap.123, Laws of Hong Kong), informing the plaintiff that there was “a structure erected on the side lane on G/F leading to Tung Lo Wan Road”. According to the plan annexed to the Superseding Order, the said structure occupied from one end of the back lane all the way up to a door. Comparing this plan to the photographs produced in the present case, I am satisfied that that that door was the back door of the Building. In other words, the “structure” mentioned in the Superseding Order is the entire Structure which is the subject matter of the present case.
176.It is stated in the Superseding Order that the “structure” covered by the said order had been built without first obtaining approval from the Building Authority. The plaintiff was therefore ordered to demolish the said structure.
177.There is therefore no doubt that the Structure is an illegal structure.
178.Pursuant to section 18(1)(b) of the BMO, the plaintiff is obliged to carry out such work as may be ordered in respect of the common parts of the Building by any public officer or public body in exercise of the powers conferred by any Ordinance.
179.In such circumstances, the defendant’s reliance on acquiescence must fail. Indeed, in his reply submissions, Mr Mak was unable to answer Mr Yeung’s argument at all.
180.Mr Mak has also argued that the plaintiff is not entitled to its claim since Mr Tam Senior is not a party herein. I do not understand why that is so. If anything, it only shows that the defendant is not entitled to raise a defence which is only available to his father (as to which I do not agree).
THE PLAINTIFF’S CLAIM OF DAMAGES
181.There cannot be any dispute that:
(1) By various letters, including letters dated 13 October 2008, 25 July 2011 and 13 June 2017 respectively issued by the plaintiff’s solicitors, the defendant and/or his father had been demanded to remove the Structure, but they had failed to do so;
(2) The Superseding Order was issued on 6 November 2014 which required the removal of the Structure;
(3) a summons was issued by the Buildings Department on 27 July 2018 to the plaintiff (“the Summons”) for its failure to comply with the Superseding Order;
(4) Upon its plea of guilty to the said summons, the plaintiff was fined $6,000 on 22 November 2018.
182.The plaintiff now claims against the defendant for reimbursement of the fine of $6,000 as damages for the defendant’s breach of the DMC. Under Clause 9 thereof, it is stipulated that:
“Each of the parties hereby covenants with the other parties as follows:-
(a) Not to make any structure alteration to the said Building or to the Shop and/or the flat and/or the roof of which he is entitled to the exclusive use, occupation and enjoyment and not o make any alternation to any installation or fixture so as to affect or likely to affect the supply of water, electricity or has to other parts of the said Building of which he is not entitled to the exclusive use, occupation and enjoyment and not to cut or damage any of the main walls or beams or floors of the said Building or do anything whereby the structural strength thereof may be affected,
(b) – (c) […]
(d) Not to do anything in any part of the said Building in common use which may be a nuisance or cause annoyance to the occupiers of the said Building or any of them.
(e) […]
(f) Not to place anything in or to occupy any part of the said Building intended for common use and not to use such part of the said Building otherwise than for access to and from his shop or flat and/or roof,
(g) – (m) […]”
183.As discussed under the section “Are the defendant and his father bound by the DMC” above, Mr Tam Senior and the defendant are bound by the DMC because they have not extinguished the owners’ title.
184.Mr Mak argued that:
“151. The Order issued under the Buildings Ordinance:
(1) was instigated by P for the collateral purpose of evicting [Mr Tam Senior];
(2) was instigated by P on the wrong premise that the Structure has caused structural safety concerns;
(3) resulting in a fine of $6,000 was entirely the wrong doings of P;
(4) was not addressed to D and not affected D
and hence irrelevant.”
185.With greatest respect to Mr Mak, these arguments are totally unmeritorious.
186.I see nothing wrong even if it was the plaintiff who informed the Buildings Authority about the existence of the Structure which led to the issuance of the Superseding Order. After all, the plaintiff had a duty pursuant to section 18(1) of the BMO to do all things reasonably necessary for the enforcement of the obligations contained in the DMC.
187.This conduct on the part of the plaintiff would not be “tainted” even if it had any “ulterior motive” to evict Mr Tam Senior and the defendant at the material time.
188.Further, the fact that the Superseding Order and the Summons were not issued to the defendant or his father is totally irrelevant.
189.Neither is the point on “safety concern” relevant. Whether the Structure is safe or not, it cannot be denied that it is an illegal structure which has to be removed pursuant to the Superseding Order.
190.I therefore hold that the defendant is liable to reimburse the plaintiff for the sum of $6,000.
ORDER
191.By reasons of the aforesaid, I make the following orders:
(1) An injunction against the defendant to remove the Structure and to reinstate the external wall of the Building to which the Structure is affixed;
(2) The defendant do pay damages in the sum of $6,000 to the plaintiff;
(3) The defendant’s counterclaim be dismissed.
COSTS
192.I make a costs order nisi that the defendant shall bear the plaintiff’s costs of the action (including all costs reserved, if any), with certificate for counsel.
193.The above order nisi shall become absolute in the absence of application to vary (which shall be made by letter, if any) within 14 days hereof. Any application to vary the costs order nisi shall, with the consent of the parties[11], be dealt with on papers.
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( H. Au-Yeung ) |
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District Judge |
Mr Geoffrey Yeung, instructed by C W Chan & Co, for the plaintiff
Mr Andrew Mak, instructed by Chung & Kwan, for the defendant
[1] There were originally other proposed issues concerning the safety of the Structure and the defendant’s claim of easement. These are no longer pursued.
[2] There was probably a typo in the list of issues prepared by the parties – the date should be November 1972
[3] Paragraph 59 of the defendant’s written closing submissions
[4] Paragraph 132 of the defendant’s written closing submissions
[5] Paragraph 70 of the plaintiff’s written closing submissions
[6] Paragraphs 78 to 83 of the Judgment
[7] Paragraph 70 of the plaintiff’s written closing submissions
[8] Paragraph 134(3) of the defendant’s written closing submissions
[9] Tsang Foo (also known as Fu) Keung and Key Kwong Development Limited v Chu Jim Mi Jimmy being sued as the personal representative of the estate of Yu Lai Ying, deceased and the personal representative of the estate of Chu Kwok Chung, deceased & Others [2017] 3 HKC 527, at paragraph 22(4)
[10] Altogether 5 receipts had been produced in this action. Apart from the receipts dated 29 October 1976 and 25 February 1977 which described the payments as “Subsidiary Management Fees”, all the other more recent receipts (dated 12 May 1997, 30 August 1999 and 26 February 2006 respectively) described the payments as “management fees”
[11] Parties have given their consent at the trial
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