Man King Chuen and Others v. The Personal Representative(S) of Wai Tze Hang Alex, Deceased and Another

HCA 1463/2010 and
HCA 299/2011
(Heard Together)

[2023] HKCFI 1435

HCA 1463/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1463 OF 2010

__________________

__________________

HCA 299/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 299 OF 2011

__________________

__________________

(Heard together)

____________________

JUDGMENT

____________________

Index

A.  Introduction

B.  Directions on the trial, and amending the name of D2

C.  The background facts

C.1.  The Subject Lot, the HLY Land, the School Land, and the parties

C.2.  The 2 Agreements

C.3.  The 2 Actions

D.  Parties’ pleaded cases

D.1.  HCA 1463

D.2.  HCA 299

E.  Ps’ Application to amend

F.   The Issues

G.  The witnesses

G.1.  An overview

G.2.  Summary of the evidence of the factual witnesses

G.2.a.  The evidence of Man King Chuen

G.2.b.  The evidence of Man Chiu Fook in HCA 1463

G.2.c.  The evidence of Man Wai Chung and Man Wai Yip

G.2.d.  The evidence of Li

G.2.e.  The evidence of JAS

G.2.f.  The evidence of Man Chiu Fook in HCA 299

G.3.  Acceptance of the factual evidence

G.4.  The expert evidence

H.  Issue #1. 51

H.1.  Whether null and void

H.2.  Whether frustration

H.3.  Whether abandonment

H.4.  Whether Alex Wai’s capacity to complete lapsed

H.5.  Whether rescission and termination

H.6.  Issue #1 – Conclusion

I.    Issue #2

J.   Issue #3

J.1.  The relevant general legal principles on adverse possession

J.2.  D1’s factual possession

J.2.a.  The doctrine of encroachment applicable to a tenant

J.2.b.  Occupation as a licensee – the legal principles

J.2.c.  Evidence on the nature of D1’s occupation

J.2.d.  Conclusion of D1’s factual possession

J.3.  D1’s intention to possess

J.4.  Whether the limitation period has expired

K.  Issue #4

K.1.  D2’s factual possession

K.2.  D2’s intention to possess

K.2.a.  Coming into possession as a result of the 2 Agreements

K.2.b.  The P6 Leases

K.2.c.  Mistaken belief – Cheung Kwong Yuen

K.2.d.  Back to the facts

K.2.e.  Conclusion on intention to possess

K.3.  Accrual of action

L.   Issue #5

L.1.  The effects and reasoning of Leung Kuen Fai

L.2.  Leave to adduce expert evidence

L.3.  Parties’ submissions

L.4.  Discussion

L.4.a.  Leung Kuen Fai

L.4.b.  The Professors’ opinions

L.5.  Issue #5 – Conclusion

M.Ps’ claims in HCA 299

N.  Ps’ claims in HCA 1463

O.  Overall disposition

A.  Introduction

1.This is the trial of HCA 1463/2010 (“HCA 1463”) and HCA 299/2011 (“HCA 299”, and collectively the “2 Actions”).

2.The disputes in both actions relate to Lot 357 (“Lot 357” or the “Subject Lot”) in Demarcation District No.7, Tai Po, the New Territories.  In gist:

(a)  In respect of HCA 1463:

(i)     HCA 1463 concerns the validity and effects of 2 sale and purchase agreements dated 18 February 1981[1] and 29 December 1982[2] (the “1^st Agreement” and “2^nd Agreement” respectively, and together the “2 Agreements”) that have been registered against the Subject Lot in the Land Registry since 1983, and the claim for their vacation;

(ii)   There are 7 plaintiffs (“P1” to “P7”, and collectively “Ps”). P1 to P6 are suing as managers of the tsos which they belong (“P1 Tso” to “P6 Tso” respectively, and collectively the “6 Tsos”);

(iii)  There are 2 defendants (“D1/1463” and “D2”).  D1/1463 is named as the personal representatives of Wai Tze Hang Alex (“Alex Wai”). D1/1463 has not participated in the proceedings.  D2 is also sued in HCA 299 as the 2^nd defendant;

(b)  In respect of HCA 299:

(i)    It concerns the right of those same Ps to recover vacant possession of the Subject Lot from the 1^st defendant (“D1”) and D2 (“Ds” collectively);

(ii)   Ds have been occupying different parts of the Subject Lot.  They are resisting Ps’ claim, and are counterclaiming on the basis of adverse possession.

3.Mr Edward Chan SC leading Mr Jeremy Kwong appeared for Ps.  D1/1463 did not appear.  Ms Denise Souza appeared for D1.  Mr Bernard Man SC leading Mr Keith Lam appeared for D2.

B.  Directions on the trial, and amending the name of D2

4.I record that on the first morning of the trial, I gave the following directions:

(a)  By Order of 18 March 2016, Master Hui ordered that the 2 Actions be tried by the same judge at the same time or one after the other as to be directed by this Court;

(b)  I formally ordered that the 2 Actions be tried at the same time;

(c)  By Order of 9 January 2019, Master Ho ordered inter alia that, subject to further direction of this Court, the evidence and documents disclosed, filed and served in one action be treated as evidence and documents for both;

(d)  I made no order to the contrary;

(e)  The Pre-trial Review of the 2 Actions took place before Au-Yeung J on 2 August 2022.  With reference to §7 of the order made on that day, I ordered that the trial be conducted in English.

5.I record that in the course of Ms Souza’s closing submissions, I sought clarification from her about the current name of D1.  According to the Summary of Undisputed Facts prepared by the parties, D1 changed its name in 2020 to International College Hong Kong Hong Lok Yuen Association Limited.  Ms Souza confirmed that that is indeed D1’s current name.  I note however that no corresponding amendment has been made to the pleadings.  With consent from all parties, I allowed liberty to amend D1’s name accordingly.  

C.  The background facts

6.The following background facts are mainly adopted from the Summary of Undisputed Facts and Agreed Chronology of Events.

C.1.  THE SUBJECT LOT, THE HLY LAND, THE SCHOOL LAND, AND THE PARTIES

7.The Subject Lot is located in Hong Lok Yuen. 

8.According to the Block Crown Lease dated 27 March 1905[3], the Subject Lot was granted to 7 individuals: (1) Man Sui Tso, (2) Man Nim Tso, (3) Man Tseung Tso, (4) Man Wing Tso, (5) Man Tsik Hung, (6) Man Wong Shi, (7) Man Wong Ho (“Grantee 1” to “Grantee 7” respectively, and collectively the “Grantees”[4]).

9.The Subject Lot is now co-owned by the 6 Tsos together with P7, each holding 1/7 part or share thereof[5].

10.The 6 Tsos are all Chinese tsos:

(a)  Man Sui Tso Tso (文遂祖祖, i.e. P1 Tso), its current managers being collectively P1,

(b)  Man Nim Tso Tso (文念祖祖, i.e. P2 Tso), its current managers being collectively P2,

(c)  Man Cheung Tso Tso alias Man Tseung Tso Tso (文暢祖祖, i.e. P3 Tso), its current managers being collectively P3,

(d)  Man Wing Tso Tso (文榮祖祖, i.e. P4 Tso), its current managers being collectively P4,

(e)  Man Chik Hung Tso alias Man Tsik Hung Tso (文籍洪祖, i.e. P5 Tso), its current managers being collectively P5, and

(f)  Man Wong Shi Tso (文黃氏祖, i.e. P6 Tso), its current managers being collectively P6.

11.P1 Tso to P6 Tso were formed in commemoration of Grantee 1 to Grantee 6 as their respective focal ancestors.

12.The appointments of P1 to P6 as managers of their respective tsos have all been registered pursuant to section 15 of the New Territories Ordinance, Cap 97[6].

13.P7 are 3 natural persons.  They are the successors[7] to the 1/7 share of the Subject Lot previously belonging to the estate of Grantee 7 (文黃好), who passed away on 11 February 1961.

14.D2 is the developer of Hong Lok Yuen:

(a)  D2 was incorporated on 10 September 1976;

(b)  By New Grant No. 11239 dated 2 March 1977 (the “New Grant”), Lot No. 1945 was granted to D2, which was subsequently modified by various extension letters and modifications letters[8] (the “HLY Land”);

(c)  D2 developed the HLY Land into Hong Lok Yuen, a low-rise residential estate;

(d)  D2 became a subsidiary of the Sun Hung Kai Properties Group in 1991;

(e)  D2 has been put into member’s voluntary liquidation since 13 February 1995;

(f)  The HLY Land includes the land adjacent to the Subject Lot on which a school is being operated[9] (the“School Land”).  The School Land consists of:

(i)    Subsection 1 of the Remaining Portion of Lot No. 1945 (“Lot 1945 RP ss1”);

(ii)   Subsection 2 of the Remaining Portion of Lot No. 1945 (“Lot 1945 RP ss2”);

(iii)  part of the Remaining Portion of Lot No. 1945; and

(iv)  part of Section B of Lot No. 1945;

(g)  Subsequently, some time prior to November 2000, D2 assigned some parts of the School Land to its sister companies.

15.In respect of D1:

(a)  D1 operates a school called Hong Lok Yuen International School (the “School”) on the School Land[10];

(b)  The School was first established in September 1983, and was then called Hong Lok Yuen Primary School;

(c)  D1 changed its name to the current one of International College Hong Kong Hong Lok Yuen Association Limited on 17 June 2020.

16.The School Land has been leased by D2 to D1 since 1 September 1983[11]. The Subject Lot has never been leased as such as part of the School Land.

17.The Subject Lot is of irregular shape.  It has been (and is currently still) occupied:

(a)  partly as a playground of the School (the “Playground”);

(b)  partly by a flowerbed; and

(c)  partly by a road.

18.The relative location of the School Land, Subject Lot, and the Playground is illustrated in the plans attached to this Judgment as Annexure A[12] and Annexure B[13].  For ease of presentation during the trial, the Subject Lot has been divided into and identified as Portions A, B, and C (“Portion A”, “Portion B” and “Portion C”).  Portion A[14], of about 1,640m² in size, is the portion of the Subject Lot being occupied partly by a flowerbed and a road.  Portions B and C[15], of about 2,528m² in total size, are the Playground (with Portion C[16] being more precisely an outdoor playfield).  Except the side which adjoins Portion A, Portions B and C are surrounded by the School Land.   

C.2.  THE 2 AGREEMENTS

19.The 2 Agreements have been registered in the Land Registry against the Subject Lot since 11 January 1983, the 1^st Agreement by Memorial No. TP211048, and the 2^nd Agreement by Memorial No. TP211049.

20.In relation to the 1^st Agreement:

(a)  It is on its face a sale and purchase agreement dated 18 February 1981 made between:

(i)    Man Kwok Leung and Pang San Ho as the 1^st vendors (the “1^st Vendors”),

(ii)   Man Kwok Leung and Man Ho Siu as the 2^nd vendors (the “2^nd Vendors”),

(iii)  Man Kwok Leung, Pang San Ho and Man Ho Siu as the 3^rd vendors (the “3^rd Vendors”, and collectively the “Vendors”), and

(iv)  Alex Wai as the purchaser;

(b)  In §§(2) and (3) of the Recitals, the ownership of the Subject Lot is recited to be vested in:

(i)    the Vendors, in different combinations, and together with some other persons recited to have passed away, as managers of the P1 to P5 Tsos (Recitals (2)(i) and (2)(ii));

(ii)   Grantee 6 through 4 trustees (Recital (2)(iii))[17]; and

(iii)  Grantee 7 (Recital (2)(iv));

(c)  Under the 1^st Agreement, the Vendors agreed to sell and Alex Wai agreed to purchase 3/4^th parts or shares of and in the Subject Lot (the “3/4^th Shares”) for a consideration of HK$1,682,505 (HK$450,000 of which recorded[18] to have been paid);

(d)  Specifically, Recital (4) recited that:

“The 1st Vendors (as the two of the three surviving managers for [P1 to P4 Tsos]), the 2nd Vendors (as the two surviving managers for [P5 Tso]) and the 3rd Vendors claim that they are together entitled and/or otherwise beneficially entitled to sell to the Purchaser 3/4ths shares and interest of and in the [Subject Lot] and the Purchaser has agreed with the Vendors to purchase the same at the price and on the terms and conditions hereinafter contained:”

(e)  The following clauses are also relevant[19], that:

“3. The purchase shall be completed … as and when the Vendors are in a position and have obtained proper legal title to execute a proper Conveyance of the properties hereby agreed to be sold to the Purchaser …

4. Upon the signing of this Agreement:-

…

(ii) The 1st Vendors shall instruct and shall be deemed to have instructed Messrs. Ho and Wong to apply to the said District Officer for his consent to the sale of the said Properties;

(iii) The 1st Vendors shall proceed with due diligence and speed and will use their best endeavours to procure the said MAN CHUNG YIU (one of the three surviving managers for [P1 Tso, P2 Tso, P3 Tso & P4 Tso] to join in the application for consent to the sale of the said properties and to concur and join in the execution of the Conveyance or Conveyances of the said properties in favour of the Purchaser;

(iv) The 2nd Vendors shall instruct and shall be deemed to have instructed Messrs. Ho and Wong to apply to the said District Officer for his consent to the sale of the said properties;

…

(vi) The 3rd Vendors shall instruct and shall be deemed to have instructed Messrs. Ho and Wong to take all necessary steps and to do all necessary acts, matters and things to apply for a grant of representation to the respective estates of [Grantee 6] and [Grantee 7] and/or to apply to the court for an order or declaration that the 3rd Vendors are entitled to convey the said properties to the Purchaser;

…

(viii) The Purchaser shall be entitled to possession (where this is physically possible) and the rents and profits of the said properties;

…

8. All costs and expenses of and incidental to the obtaining of the consent of the said District Officer and to the obtaining of estate duty clearance papers and to the obtaining of such grant of representation or court order or declaration as aforesaid shall be borne and paid by the Purchaser …

…

10. Time shall in every respect be of the essence of this contract.

11. Should the Purchaser fail to observe or comply with any of the conditions herein contained the deposit shall be absolutely forfeited to the Vendors who may (without tendering a Conveyance to the Purchaser) rescind the sale …”

21.In relation to the 2^nd Agreement:

(a)  It is on its face a sale and purchase agreement dated 29 December 1982 made between Alex Wai as the vendor and D2 as the purchaser of the 3/4^th Shares subject to and with the benefit of the terms and conditions contained in the 1^st Agreement;

(b)  In effect, Alex Wai agreed thereby to sub-sell the 3/4^th Shares to D2;

(c)  The purchase price was the same price of HK$1,682,505, HK$450,000 of which also recorded to have been paid[20];

(d)  Clause (3) provided that the purchase shall be completed in accordance with and subject to the terms of the 1^st Agreement, and that Alex Wai would join in that conveyance for the purpose of directing the Vendors in the 1^st Agreement to convey the 3/4^th Shares to D2.

C.3.  THE 2 ACTIONS

22.Ps first commenced HCA 1463 on 29 September 2010 for vacation of registration of the 2 Agreements from the land register of the Subject Lot.

23.Alex Wai had by then died[21]. No one has ever appeared to represent the estate of Alex Wai in HCA 1463.  The proceedings were on 22 December 2015 ordered[22] by Master Hui to be proceeded with in the absence of a person representing the same.

24.HCA 1463 is defended by D2.

25.On 23 February 2011, Ps commenced HCA 299 against D1 and D2 to recover vacant possession of the Subject Lot.  As said, D1 and D2 resist the same on the basis of adverse possession.  They are counterclaiming on the same basis.

D.  Parties’ pleaded cases

D.1.  HCA 1463

26.In their Re-amended Statement of Claim(“Ps/RA-SOC/1463”), Ps plead and rely, inter alia and principally, on the following matters:

(a)  Lack of interest and authority on the part of the Vendors to sell, in the sense that (i) Man Chung Yiu, being at the material time one of managers of P1 Tso to P4 Tso and P6 Tso, was not a signatory to the 1^st Agreement, (ii) absence of any partition, division or severance enabling the Vendors to sell the 3/4^th Shares, and (iii) the fact that Grantee 7 had died before the 1^st Agreement with no grant of representation;

(b)  Failure to give or obtain the requisite notices and consent from members of their tsos and the District Officer, and failure to follow the necessary execution and attestation procedures as required by section 15 of the New Territories Ordinance;

(c)  Failure on the part of Alex Wai to pay for the application for consent from the District Officer, which Ps say constituted repudiatory breach by Alex Wai of Clause 8 of the 1^st Agreement;

(d)  By the latest, and by the service of the Writ therein on 29 September 2010, Ps on behalf of the owners of the Subject Lot terminated and/or rescinded the 1^st Agreement;

(e)  The P6 Leases (defined below)[23], which Ps say evidenced discharge or abandonment; and

(f)  That the Vendors and Alex Wai have long since the 1^st Agreement died, so that the 1^st Agreement has become impossible to be performed.

27.Ps therefore seek, on further or alternative bases, declarations to the effect the 1^st Agreement has been terminated and that the owners of the Subject Lot are no longer bound by its terms[24], that the 1^st Agreement is void[25], that it has been rescinded[26], that any personal representative of the estate of Alex Wai is no longer entitled to complete the same[27], and/or that it has been frustrated[28] and/or abandoned[29] so that the parties thereto are discharged.  They seek consequently vacation of the registration of the 1^st and 2^nd Agreements.

28.As has been mentioned above, no one has appeared to represent the estate of Alex Wai.

29.The current version of D2’s Defence is its Re-Re-Amended Defence (“D2/RRA-Def/1463”). D2 has pleaded a number of defences.  It maintained that the 1^st Agreement continued to be valid and binding[30], and that it still was willing, ready and able to perform the 1^st Agreement in place of Alex Wai[31].  I said “maintained’ and “was” because, as will be explained immediately below, those are no longer D2’s stances.   

30.Despite the pleadings, D2’s legal advisers by letter of 28 October 2022 confirmed that D2 is no longer taking any issue on the invalidity and unenforceability of the 1^st and 2^nd Agreements, and would not contend that they remain registrable.

31.However, as will also become clear below, despite D2’s latest stance, its pleadings in HCA 1463 remain relevant when it comes to parties’ respective cases in HCA 299.  Of particular relevance are the following paragraphs of D2/RRA-Def/1463, wherein D2 avers that:

“13. … the 1st Agreement is still valid and binding on [P1 to P6] …

14. … [the Personal Representative of Alex Wai] is still in a capacity to complete the 1st Agreement … Further and/or alternatively, [D2] has the right to seek for specific performance of the 1st Agreement and/or the 2nd Agreement and vesting order, if needed.

17. …the 2nd Agreement is still subsisting and is capable of taking effect and is enforceable …

19. … by clause 4(viii) of the 1st Agreement, at least one tenant in common, i.e. [P5 Tso], had granted an irrevocable contractual licence to Mr. Alex Wai to occupy the Subject Lot. This irrevocable contractual licence was assigned by Mr. Alex Wai to the [D2] under the 2nd Agreement.

20. … on or around a date between 29 December 1982 and 1 September 1983, [Ps] discontinued possession of the Subject Lot, and since then, [D2], whether by itself or by its tenant, Hong Lok Yuen School Association Limited running the [School]and/or by its licensee Hong Lok Yuen Horticulture Limited(‘Horticulture Company’),has been continuously and still is in exclusive physical control and/or possession of the Subject Lot by,

(a) developing the Subject Lot and regarding it as part of the Hong Lok Yuen estate in the development of the estate;

(b) allowing the Horticulture Company to use, occupy and possess part of it for its business to provide horticulture and to build thereon structures, flowerbeds and fixtures to accommodate, cultivate and grow plants to supply to the management company and/or residents of the Hong Lok Yuen estate; and

(c) allowing and permitting the School to use, occupy and possess the remaining part as its playground and fencing it off as part of the School premises together with the land leased to the School by [D2].

21. Hence, [D2], whether by itself and/or by its tenant and/or by its licensee, has been in adverse possession of the Subject Lot for a period in excess of 20 years before the commencement of this action.”

D.2.  HCA 299

32.Ps first took out the Writ on 23 February 2011.  The cause of action is trespass.  They seek vacant possession of the Subject Lot, a number of injunctions requiring reinstatement and restraining further entry, and damages.

33.I record that in the course of Mr Man’s oral closing submissions, Mr Chan confirmed that given the long lapse of time, Ps would no longer seek any injunction requiring reinstatement.

34.D1 filed its Defence and Counterclaim on 3 May 2011 (“D1/D&C/299”). It pleads that it has since its establishment in 1983 been a tenant of Lot 1945 RP ss2 from D2, and that it has been occupying part of the Subject Lot and been using it as a playing field (i.e. Portions B and C, as coloured yellow on the plan attached to D1/D&C/299).  Relying on the doctrine of adverse possession, it resists Ps’ claim for vacant possession, and seeks amongst others on that same basis a Declaration for possessory title.

35.D2 filed its Defence and Counterclaim also on 3 May 2011.  The current version is the Amended Defence and Counterclaim of 17 September 2019 (“D2/A-D&C/299”). D2 has pleaded a number of defences, as follows:

(a)  In §2 thereof[32], that:

“ … [D2] contests [Ps’] claim in [HCA 1463] and has filed its defence stating that the 1st and 2nd Agreements … remain to be valid and effective and [D2] has beneficial interest in or a contractual licence to occupy the Subject Lot to the extent as derived from the 1st and 2nd Agreements. Further and/or alternatively, it has adversely possessed the Subject Lot as more particularly set out below.”

(b)  Specifically in relation to the defence of contractual licence, D2 refers to the 2 Agreements and plead in §12 that:

“ … by clause 4(viii) of the 1st Agreement, at least one tenant in common, i.e. [the P5 Tso], had granted an irrevocable contractual licence to Mr. Alex Wai to occupy the Subject Lot. This irrevocable contractual licence was assigned by Mr. Alex Wai to [D2] under the 2nd Agreement”;

(c)  Proprietary estoppel is pleaded §13, and

(d)  In relation to adverse possession, D2 pleads:

(i)    3 leases averred to have been granted by P6 Tso to it in relation to the Subject Lot over the period from 1 January 1984 to 30 December 1997[33] (the “P6 Leases”);

(ii)   in §15, that:

“By virtue of the 1st Agreement, since in or about 18 February 1981, [Ps] discontinued possession of the whole or 3/4 parts or shares of and in the Subject Lot and delivered the same to Mr. Alex Wai. By virtue of the 2nd Agreement and the [P6 Leases] …, since a date between 29 December 1982 and 1 September 1983, [D2] whether by itself and/or by its tenant, [D1] running the [School] and/or its licensee [Horticulture Company] has been continuously and still is in exclusive physical control and/or possession of the Subject Lot.”[34].

(iii)  in §16, that:

“Without prejudice to its contention that 1st Agreement and 2nd Agreement continue to be valid and binding as pleaded in [HCA 1463] and set out in paragraph 2 above, further and/or alternatively, [D2], whether by itself or by its licensee or tenant, has been in adverse possession of the Subject Lot against each of [Ps’] parts or share of and in the Subject Lot for a period in excess of either 12, or alternatively 20, years before the commencement of this action.”

36.One sees therefrom that D2 has in D2/A-D&C/299 referred to its defences pleaded in D2/RRA-Def/1463, and has in effect incorporated the same into D2/A-D&C/299.

37.By letter of 17 October 2022, D2’s legal advisers stated that D2 would no longer rely on the pleaded defences of contractual licence and proprietary estoppel.  As confirmed by Mr Man in his written closing[35], D2 does not contend that the 2 Agreements validly gave it the right to possess or occupy the Subject Lot.

38.However, despite D2’s abandonment of the other pleaded defences, Ps aver that D2’s pleadings in relation to those abandoned defences (together with those which D2 has pleaded in HCA 1463 given their incorporation into D2/A-D&C/299) remain relevant to the issues as to whether Ds’ occupation of the Subject Lot was “adverse”, and whether Ds had the requisite intention to possess for the purpose of adverse possession – hence those pleadings have been set out in some details above.

39.Subject to Ps’ application to amend which I will deal with next, Ps’ current replies and defences to counterclaims can be found in their Amended Reply and Amended Defence to Counterclaim of D1 refiled on 27 September 2013 (“Ps/A-R&DC/D1”) and the Re-Amended Reply and Re-Amended Defence to Counterclaim of the D2 refiled on 21 January 2020 (“Ps/RA-R&DC/D2”).

40.The gist of Ps’ replies, insofar as those parts that are still relevant, are as follows:

(a)  In respect of D1’s case:

(i)    Issues are joined;

(ii)   If D1 has been in possession of any part of the Subject Lot, Ps deny that the possession was adverse to Ps or their predecessors-in-title;

(iii)  Ps rely on the doctrine of encroachment, so that any adverse possession claim could not be vested in D1 but D2 as its lessor;

(iv)  In the light of the nature of the 6 Tsos and their holding in the Subject Lot, D1’s claim of adverse possession fail by reason of what has been described as the principle in Leung Kuen Fai v Tang Kwong Yu (or U) T’ong or Tang Kwong Yu Tso [2002] 2 HKLRD 705 (the “Principle in Leung Kuen Fai”).

(b)  In respect of D2’s case:

(i)    The matters which Ps has pleaded in Ps/RA-SOC/1463 are adopted and repeated.  They aver that for those reasons, the “1^st Agreement has been effectively terminated or rescinded or that the 1^st Agreement is null and void or has been frustrated or has been abandoned by the parties thereto.”  For those same reasons, they “specifically denied that when the Vendors executed the 1^st Agreement the Vendors were capable of binding the Tsos or any of the Tsos and/or the estate of [Grantee 7]”[36];

(ii)   Ps deny having been dispossessed or having discontinued possession of the Subject Lot;

(iii)  “Insofar as necessary, [Ps] will contend that [D2’s] occupation was referable to the [P6 Leases]”[37];

(iv)  Ps plead that D2’s averments in D2/RRA-Def/1463 are inconsistent with any intent to possess in any claim for adverse possession, and D2 does not have the requisite intent to possess the Subject Lot; and

(v)   Ps similarly rely upon the Principle in Leung Kuen Fai.

E.  Ps’ Application to amend

41.By summons of 9 November 2022 in HCA 299 (the “Summons”), Ps sought leave to amend their Ps/A-R&DC/D1 and Ps/RA-R&DC/D2 as per the drafts attached thereto.

42.The submissions in support and opposition were made as part of counsel’s opening submissions.  That made sense as background was important in considering the Summons.  On the third day of the trial, upon conclusion of counsel’s oral opening submissions, I refused the application.  I indicated that I will give reasons in the Judgment, which I now do.

43.The proposed amendments related to a letter dated 4 May 2001 from the Executive Officer of D1[38] (the “4/5/2001 Letter”).  It was first disclosed in Ps’ List of Documents of 11 August 2015 filed in HCA 299.  It was written on D1’s letterhead, and signed by Ms Chang Chui Yu Claudia (“Claudia Chang”).  Claudia Chang was D1’s business manager at that time.  It was addressed to 彭新好女士.  It reads:

“本校得知 閣下擁有部份Lot 357之業權。現誠請 台端能與本人聯絡，一談此事。”

44.彭新好 used to be a manager of 2 of the 6 Tsos, namely P1 Tso and P6 Tso.  She passed away in 1987, some 14 years prior to the issue of that letter.

45.The 4/5/2001 Letter is referred to in §16 of Man King Chuen’s witness statement filed on 19 September 2016 (“MKC/WS/299).  Man King Chuen is one of Ps’ witnesses.  He says therein that:

“I am further advised that [D1] and [D2] has in fact each acknowledged title to the ownership by [Ps]”.

46.That letter is also referred to in §9 of Man Chiu Fook’s witness statement filed on 17 January 2020 (“MCF/WS/299), wherein he says that:

“I also refer to … a letter written by the executive officer on behalf of [D1] dated the 4th day of May 2001. If [D1] has all along been under the belief that it could use any part of the Subject Lot or was allowed to use the same, there would be documentation to such effect. Although it is unclear as to what was the purpose behind the said Chinese letter, it clearly shows the acknowledgement of title by the School.”

47.While the 4/5/2001 Letter has been referred to by Man King Chuen and Man Chiu Fook, acknowledgement of title has not been pleaded in Ps/A-R&DC/D1 or Ps/RA-R&DC/D2.  By the Summons, Ps sought leave to add to each of them a paragraph to the effect that the 4/5/2001 Letter constitutes acknowledgment under section 23(1)(a) of the Limitation Ordinance, Cap 347.

48.Relevant to the application, Mr Chan referred this Court to a number of minutes of the meetings of D1’s Board of Governors recently discovered by D1 – see the affirmation of Mr Douglas Stephen Clark filed on 8 November 2022.  Mr Chan submitted that reading the 4/5/2001 Letter with those minutes makes it clear that D1 issued that letter with the intention of seeing whether it could purchase the Subject Lot from its owners.

49.Whilst those minutes provided background and context to the 4/5/2001 Letter, it was not Mr Chan’s position that that letter only constitutes acknowledgment when read together with the minutes, or that Ps had not until disclosure of those minutes appreciated what they say are the effects of that letter.  In other words, the recent discovery of those minutes does not justify the absence of pleadings in relation to the averment of acknowledgment.  Nor do those minutes explain the lateness of the present application, the reason put forward in the course of submissions being simply that despite §16 of MKC/WS/299,the Ps/A-R&DC/D1 and Ps/RA-R&DC/D2 had been omitted and forgotten to be amended along that same line.

50.Mr Chan’s main arguments were that the 4/5/2001 Letter was first disclosed, and the averment of acknowledgment first made, several years ago. Ds had had ample chance to address the issue.  Whilst the application for amendment was admittedly made late, Ds could not be said to have been taken by surprise.  Mr Chan relied on 廈門新景地集團有限公司v Eton Properties Limited & Ors, (HCMP 13, 15, 18 & 21/2012, 14 February 2012).  He relied in particular on §30 thereof, wherein Cheung CJHC (as the Chief Justice then was) observed that lateness does not necessarily mean that the court must refuse the amendments, bearing in mind in particular the “primary aim” in exercising the case management (or other) powers of the court is to secure the “just resolution of disputes in accordance with the substantive rights of the parties”.

51.Both Ms Souza and Mr Man objected.  The main bases of the objection were the unexplained lateness, and the prejudice that Ds would suffer if the proposed amendments were to be allowed at such late stage.  They together cited a number of authorities in support of their opposition, which include Kwok Chin Wing v 21 Holdings Ltd & Anor (2013) 16 HKCFAR 663 at §21, Liu Hon Wong & Ors v Liu Chee Kwan & Anor [2022] HKCFI 3157 at §§18-27, China Forestry Holdings Co Limited & Ors v KPMG [2021] HKCFI 1519 at §§19, 22-25, and Securities and Futures Commission v Andrew Liu [2022] HKCFI 697 at §§20-23.

52.Amongst those authorities, the reminder Ma CJ gave in §21 of Kwok Chin Wing is of particular significance, and is worth reciting:

“… The basic objective is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues: Wing Hang Bank Ltd v Crystal Jet International Ltd. It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced. As the Court of Appeal remarked in Wing Hang Bank Ltd v Crystal Jet International Ltd:

(2)      In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues.  Where issues are sought to be introduced that have not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties has been obtained.  It will simply not do for unpleaded issues to be ‘slipped in’ when evidence is being given in the hope that the other side is not sufficiently alert to object.”

53.For the following reasons, I refused the application:

(a)  The averment of acknowledgement has to be pleaded.  By taking out the Summons, Ps (if only tacitly) accepted that.  To the extent of Mr Chan seeking to submit that the averment has been adequately covered by any general plea of Ps’ right and title not having been extinguished or the limitation period not having expired, I do not accept those submissions;

(b)  It has not been pleaded.  Whilst the 4/5/2001 Letter and the averment of acknowledgment have been mentioned in witness statements, I respectfully repeat the reminder by Ma CJ in Kwok Chin Wing, that it is the pleadings which define the issue and the scope of the evidence.  Witness statements cannot take the place of pleadings;

(c)  Mr Chan submitted that Ds had had ample chance to investigate and address the issue.  In this regard, I accept Mr Man’s submissions that parties are entitled to prepare their cases on the bases of the pleadings, but not witness statements.  They are entitled not to address unpleaded issues;   

(d)  The application was made extremely late, only 2 clear working days prior to the commencement of a 10-day trial;

(e)  The 4/5/2001 Letter was produced by Ps, and has presumably always been available to them.  It was disclosed in 2005 and first mentioned on the face of witness statement in 2006.  No valid explanation has been given for the delay in the application.  The Summons is in fact not supported by any affirmation;

(f)  I accept Mr Chan’s submissions in reply that there is no rule of law that an application for amendment has to be supported by an affirmation, or that the existence of unexplained delay is necessarily fatal.  But the extreme lateness in which an application for amendment is made coupled with absence of valid explanations are however important considerations;

(g)  The proposed new averment based on acknowledgment is put forward as a complete defence to Ds’ pleas of adverse possession.  If established, it has the effecting of restarting the clock in May 2001.  By the time when the Writ in HCA 299 was taken out in February 2011, 12 years would not have lapsed;

(h)  Given the potential significance of the averment, Ds are entitled to fully investigate the same;

(i)  I accept Ms Souza’s and Mr Man’s submissions that there would indeed have been material factual issues to be investigated had the averment been made earlier;

(j)  The averment of acknowledgment is a statutory plea based on sections 23 and 24 of the Limitation Ordinance, which relevantly stipulate that:

“23. Fresh accrual of action on acknowledgment or part payment

(1) Where there has accrued any right of action (including a foreclosure action) to recover land or any right of a mortgagee of personal property to bring a foreclosure action in respect of the property, and—

(a) the person in possession of the land or personal property acknowledges the title of the person to whom the right of action has accrued; or

…

24. Formal provisions as to acknowledgments and part payments

(1) Every such acknowledgment as aforesaid shall be in writing and signed by the person making the acknowledgment.

(2) Any such acknowledgment or payment as aforesaid may be made by the agent of the person by whom it is required to be made under section 23, and shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made.”

(k)  Whether Claudia Chang had the requisite authority to signed the 4/5/2001 Letter as Ds’ agent (or either of them) is one factual area to be investigated.  The position is not made easier by the fact that she had left D1’s employ some years ago;

(l)  Mr Chan in reply pointed to Mr Clarke’s affirmation.  §7 thereof reveals a search by D1 of the school minutes.  That was prompted by matters discussed in relation to the 4/5/2001 Letter during conference which it had with Ms Souza on 28 October 2022.  Mr Chan submitted that the necessary investigation had therefore been made;

(m)  I do not accept Mr Chan’s submission in that regard.  That late exercise to search through the school minutes was no substitution for a focused investigation had the averment been pleaded, and did not include any enquiry with Claudia Chang, which had long left D1’s employ;

(n)  The recipient side of the alleged acknowledgment causes even more concern.  The question is whether彭新好 was an agent of Ps to whom an acknowledgment could validly be made.  This is an area for investigation.  It is relevant to repeat the fact that 彭新好 was only a manager of 2 of the 6 Tsos, and had in any event passed away some 14 years prior to the issue of that letter.  Who actually received the 4/5/2001 Letter?  What was the status of the recipient vis-à-vis 彭新好’s estate and the 6 Tsos?  Was the recipient a manager, and if so of which tso(s).  I note that Mr Chan in his reply did not address those factual issues at all.  I note further that neither Man King Chuen nor Man Chiu Fook has in their witness statements given any particulars as to how Ps got hold of that letter;

(o)  It is obviously correct that the primary aim in exercising powers of the court is to secure the just resolution of disputes in accordance with the substantive rights of the parties.  But “just resolution” involves justice to all parties.  In the present case, Ps have had years to make the present application.  Ds are entitled to look at the pleadings and prepare their cases accordingly.  Allowing the Summons at this late state would be allowing Ps a further opportunity to plead a hitherto unpleaded averment, and would be prejudicial to Ds’ interest in the manner as discussed above, to the extent of rendering the resolution not just;

(p)  As has been made clear in various authorities, gone are those days when delay, even though inordinate and unexplained, will be forgiven as long as there is no prejudice and costs are paid, and a fortiori when there is serious potential prejudice;

(q)  Having taken into account all circumstances, I exercise my discretion against the application, which I dismiss with costs against Ps.  I record that 3 hours have been spent on the Summons.

F.  The Issues

54.The issues agreed upon between the parties were:

(a)  Issue #1 - Whether the 1^st Agreement:

(i)    is null and void;

(ii)   has been terminated or rescinded;

(iii)  has been frustrated;

(iv)  can no longer be completed by Alex Wai as his capacity to do so has lapsed; and/or

(v)   ;has been abandoned;

(b)  Issue #2 - Whether the registration of 1^st Agreement and 2^nd Agreement against the Subject Lot at the Land Registry should be vacated;

(c)  Issue #3 - In respect of D1’s claim of adverse possession, whether D1 has established adverse possession in respect of Portions B and C. In particular:

(i)    Whether D1 had sufficient degree of factual possession to the exclusion of others;

(ii)   Whether D1 had the requisite intention to possess (animus possidendi);

(iii)  Whether the limitation period has expired;

(d)  Issue #4 - In respect of D2’s claim of adverse possession, whether D2 has established adverse possession in respect of the Subject Lot. In particular:

(i)    Whether D2 had sufficient degree of factual possession to the exclusion of others;

(ii)   Whether D2 had the requisite intention to possess (animus possidendi);

(e)  Issue #5 - In respect of both D1 and D2’s claims of adverse possession, whether Ps’ right and title to the Subject Lot has not been extinguished under the Limitation Ordinance by reason of the Principle in Leung Kuen Fai.

G.  The witnesses

G.1.  AN OVERVIEW

55.On facts, the witness statements that have been filed are:

(a)  In HCA 1463:

(i)    For Ps, one each of Man King Chuen[39] (“MKC/WS/1463”) and Man Chiu Fook[40] (“MCF/WS/1463”);

(ii)   For D2, that of Li Ching Kam (“Li”, “Li/WS/1463”)[41];

(b)  In HCA 299:

(i)    For Ps, one each of Man King Chuen[42] (i.e. MKC/WS/299), Man Wai Chung[43](“MWC/WS/299”), Man Wai Yip[44] (“MWY/WS/299”) and Man Chiu Fook[45] (i.e. MCF/WS/299);

(ii)   For D1, that of James Alexander Soutar (“JAS”, “JAS/WS/299”)[46];

(iii)  For D2, that of Li (“Li/WS/299”)[47];

56.Despite the filing of those statements, counsel in the course of Mr Chan’s oral opening informed this Court that in the light of Ms Souza and Mr Man’s acceptance of the following matters (the “2 Exceptions”), all of the above witness statements may be treated as read in court without cross-examination:

(a)  In JAS/WS/299 at §56, JAS says, inter alia, that:

“… Further, Man Mo Leung, a member of one of the Plaintiff Tsos, used to be a governor of the School. His children Benjamin Man and Melanie Man were our students. They graduated in year 1995 and 1999 respectively.”

(b)  Ms Souza has confirmed that D1 will not rely on that part of that paragraph;

(c)  At §69(2) of Mr Chan’s written opening, Mr Chan submits that:

“D2’s evidence is that for P1 and P6 Pang San Ho was not a manager ([Li/WS/299/§12] [A/310]), but plainly she was appointed on 16 December 1960 in place of a deceased manager [C1/12, 13]. Also, D2’s case was that one Man Kwai Ho was a manager of P1, P2, P3, P4 & P6. However, as stated in the 1^st Agreement (at [C/16] Recital (3)), Man Kwai Ho died before the agreement.”

(d)  Mr Man has confirmed that D2 accepts the accuracy of those submissions.

57.On Chinese customary law, upon D2’s application, and after a contentious hearing, Recorder Yvonne Cheng SC (as Her Ladyship then was) granted leave for expert evidence on the following questions (the “CCL Questions”) to be filed[48]:

(a)  In respect of land held by a Chinese Tso, who is the owner of such land, and in particular, whether Chinese customary law separates the ownership of land between several legal entities; and

(b)  Under Chinese customary law, at what time (if ever), or upon the happening of what event, would a member of a tso become an owner of, or acquire a direct vested interest in, land held by a tso.

58.The following expert reports have consequentially been filed on the CCL Questions:

(a)  by D2, the Expert Report of Professor Michael Palmer dated 17 January 2019 (“Professor Palmer” and the “Palmer Report”)[49];

(b)  by Ps, the Expert Report of Professor Hugh Baker filed on 18 January 2019 (“Professor Baker”, and the “Baker Report”)[50]; and

(c)  the Joint Report of Professor Palmer and Professor Baker dated 23 April 2019 (the “Joint Report”)[51].

59.On the mesne profit of the Subject Lot, the following expert reports have been filed:

(a)  Single Joint Expert Report on Mesne Profit by Wong Chi Wai dated 19 February 2019 (“Mr Wong”, and “Grandmax Report #1”)[52];

(b)  Supplemental Expert Report on Mesne Profit by Mr Wong dated 10 January 2020 (“Grandmax Report #2”)[53].

G.2.  SUMMARY OF THE EVIDENCE OF THE FACTUAL WITNESSES

G.2.A.  THE EVIDENCE OF MAN KING CHUEN

60.Man King Chuen is a manager of 5 of the 6 Tsos.  He is also one of the 3 persons constituting P7.

61.In MKC/WS/1463:

(a)  He sets out the background of the 6 Tsos, their managers, and their ownership of the Subject Lot together with P7.  He says that the Man clan has been residing in an area in the vicinity of the Subject Lot for hundreds of years;

(b)  He describes how the managers, in the course of managing the assets of the 6 Tsos, discovered the registration of the 2 Agreements against the Subject Lot.  He states that there are various problems fundamentally affecting the validity of the 1^st Agreement, and in turn also the 2^nd Agreement.  They include the lack of proper authority of the signatories on the part of the Vendors, the impropriety as to the interest in the Subject Lot purportedly being sold under the 1^st Agreement, the lack of necessary consent from members of the 6 Tsos and the District Officer, and the rescission, frustration, abandonment and repudiation by the purchaser of the 2 Agreements;

(c)  He sets out some details about those alleged problems:

(i)    He traced through the historical appointment of managers of the 6 Tsos. He says that Man Chung Yiu was at the time of the 1^st Agreement a manager of P1 to P4 and P6.  In particular, at that time:

(1)  P1 Tso and P6 Tso had 3 surviving managers, being Man Kwok Leung, Man Chung Yiu and Pang San Ho;

(2)  P2 Tso, P3 Tso and P4 Tso had 2 surviving managers, being Man Kwok Leung and Man Chung Yiu; and

(3)  P5 Tso had 2 surviving managers, being Man Kwok Leung and Man Ho Siu;

(ii)   Man Chung Yiu was not amongst the Vendors, and was not a signatory to the 1^st Agreement;

(iii)  Grantee 7 died in 1961, long before the 1^st Agreement.  It was only in 2009 when P7 were registered in the Land Registry as the lawful successors of Grantee 7’s interest in the Subject Lot;

(iv)  There was “no consent given by the then other managers of the 6 Tsos (who did not sign on the 1^st Agreement) and/or all of the other members of each of the 6 Tsos (who did not sign on the 1^st Agreement) whether before or after the entering of the 1^st Agreement for [the Vendors] to enter into the 1^st Agreement”[54];

(v)   There had not been any partition, division or severance of the 6/7^th parts or shares of the Subject Lot in such a way that the Vendors would become authorized representatives to deal with the 3/4^th Shares;

(vi)  No notice of the sale of the 3/4^th Shares had been given to members of the 6 Tsos;

(vii) No consent of the same had been sought from the District Officer.  Nor was the 1^st Agreement attested in accordance with section 15 of the New Territories Ordinance;

(viii)He points to Clauses 4(ii), (iv), 8, 10 and 11 of the 1^st Agreement. He says that Alex Wai, or his estate after his death on 28 December 1991, have failed to make payment for the application of consent from the District Officer, contrary to Clauses 8, 10 and 11 of the 1^st Agreement;

(ix)   He points to the P6 Leases.  He says that they show that the 1^st Agreement had long been rescinded or otherwise terminated;

(x)    All the Vendors had died by October 1987 (Man Kwok Leung on 4 December 1982, Man Ho Siu on 27 September 1985, and Pang San Ho on 7 October 1987) without completing the performance of the 1^st Agreement;

(xi)   There has been no grant of representation of the estates of Man Wong Ho and Alex Wai.

62.In MKC/WS/299:

(a)  Man King Chuen again sets out the background of the 6 Tsos and their Managers.  He describes in details how the title to the Subject Lot has devolved from the Grantees upon the 6 Tsos and P7;

(b)  He recites what D2 has pleaded in D2/RRA-Def/1463 about its occupation of the Subject Lot.  He says that D1 and D2 have been trespassing upon the same;

(c)  He referred again to the P6 Leases, which he says, in the context of Ds’ plea of adverse possession, show that D2 was while the P6 Leases were extant not a trespasser;

(d)  He sets out the birthdates of the following 6 living male descendants (the “6 Descendants”), one from each of the 6 Tsos:

Name	Year of Birth[55]	Of which Tso(s)
Man Hin (文鶱)	1992	P2 to P4, P6
Man Chak Kwan Walter (文澤鈞)	1992	P1 to P4, P6
Man Lok (文諾)	1994	P2 to P4, P6
Man Adrian Ho Hin (文浩軒)	2000	P1 to P4, P6
Man Hiu Chung (文曉聰)	2005	P2 to P6
Man Nok Hin (文諾軒)	2008	P2 to P6

63.As I have set out above, Man King Chuen in §16 of MKC/WS/299 makes reference to the 4/5/2001 Letter.  I have refused the Summons.  I ignore the advice which Man King Chuen says he has received in relation to that letter (that Ds have acknowledged Ps’ title).

G.2.B.  THE EVIDENCE OF MAN CHIU FOOK IN HCA 1463

64.Man Chiu Fook is one of the managers of the 6 Tsos.  In MCF/WS/1463, he states that no notice of the 1^st Agreement had been given to members of the 6 Tsos, that consent had not been sought form the District Officer, and that the 1^st Agreement was not signed in the presence of or attested by any District Officer.  His evidence does not add much to that of Man King Chuen.

G.2.C.  THE EVIDENCE OF MAN WAI CHUNG AND MAN WAI YIP

65.Man Wai Chung is the father of Man Hiu Chung, one of the 6 Descendants.  Man Wai Yip is the father of Man Nok Hin, another of the 6 Descendants.  They confirm the birth of their respective sons, and their status amongst the 6 Tsos as set out in the table above.

G.2.D.  THE EVIDENCE OF LI

66.Li’s evidence in Li/WS/1463 may be summarized as follows:

(a)  Li is the liquidator of D2.  His evidence is made with reference only to the documents or sources identified by D2.  He otherwise has no personal knowledge of the matters;

(b)  He gives background facts on the grant of the HLY Land, its ownership, and the development of Hong Lok Yuen.  He talks about the establishment of the School pursuant to Special Condition 41 of the New Grant.  He says that the Subject Lot is enclosed by the HLY Land, which in turn has been fenced off since about 1982 by metal fences.  He states that all individuals or vehicles entering into and leaving Hong Lok Yuen have to go through security check.  The entrance is patrolled by security guards on a 24-hours basis;

(c)  In respect of the 2 Agreements, he states his belief that in accordance with the terms of the 2^nd Agreement, possession of the Subject Lot was handed over by Alex Wai to D2 upon execution of the 2^nd Agreement and payment of HK$450,000 as deposit and part payment of the purchase price.  D2 has since 29 December 1982 till date been in possession or control of the whole Subject Lot, notwithstanding that the sale and purchase was only for the 3/4^th Shares, as the Subject Lot has not been further partitioned;

(d)  He states that the School Land was first leased to the D1 by a lease dated 9 April 1984 with effect from 1 September 1983 (the “First Lease”).  Since then the School Land has all along till the time of his statement been leased, initially by D2 and subsequently by D2’s sister companies, to D1 for the running of the School;

(e)  Since the First Lease, D2 has further allowed D1 to develop part of the Subject Lot, which was initially a bare piece of land, into a playground and field for use by the School.  The Playground has been regarded as an important part of the School until now;

(f)  The Horticulture Company was incorporated in 2004.  D2 has since then allowed it to use, occupy and possess the remaining part of the Subject Lot for its horticulture business, and to build thereon structures, flowerbeds and fixtures to accommodate, cultivate and grow plants to supply to amongst others Hong Lok Yuen Property Management Company Ltd (“HLY Management”) and residents of Hong Lok Yuen.  He says further that before that, since 1990, the area had been used for similar purposes as a plant nursery by HLY Management serving only Hong Lok Yuen;

(g)  He refers to certain documents and correspondence relating to the demands by Ps for repossession of the Subject Land upon the expiry of the P6 Leases;

(h)  He has given his views and opinion on the pleaded defences of contractual licence and estoppel, which, apart from the fact that they are no longer being pursued, are of limited evidential value anyway;

(i)  His views and opinion on the plea of adverse possession (as stated in §34 therein) are also of little evidential value.

67.The contents of Li/WS/299 are materially the same as Li/WS/1463.

G.2.E.  THE EVIDENCE OF JAS

68.JAS was between 2010 and 2018 a member of the Board of Governors of D1. Between 2013 and 2018, he served as the Chairman or Co-Chairman of the Board.  He has been living in Hong Lok Yuen since 2002.

69.He gave some factual background about the development of Hong Lok Yuen and the School.  The School started off as Orchard Kindergarten.  It was operating in April or May 1982.  Round about that time, Hong Lok Yuen School Associated Limited was incorporated.  It was a non-profit making private limited company formed for the purpose of operating a school in Hong Lok Yuen. On 20 July 1982, D2 entered into an agreement with Hong Lok Yuen School Associated Limited.  Pursuant thereto, in September 1983, Hong Lok Yuen Primary School was established.  In 1984, a 4-storey building (the “Old Block”) was built on Lot 1945 RP ss1 adjacent to the Subject Lot.  Part of the Old Block encroached upon the Subject Lot.  He mentioned a number of leases between D2 and the School in relation to the School Land.  The first one was dated 9 April 1984.  The last one he mentioned expired on 31 August 2013. The leases between D1 and D2 has never included any part of the Subject Lot.

70.JAS states that in around 1982, there was an agreement between the School and D2 that the land between the Old Block and the nearby railway line, which included part of the Subject Lot, would be used as a playing field.  The School subsequently understood that D2 paid rent to Ps for use of part or the entire Subject Lot from 1984 to about 1997.  He also refers to some discussions with D2 about that use, and certain of the School’s early promotional materials relevant to that.

71.D2 started seeding the Subject Lot for grass in about September 1984. By 1986, the Subject Lot had been grassed and turfed.  In 1986, a building to the northeast of the Old Block was erected on the School Land for the use of the kindergarten (the “Kindergarten Block”).

72.By 1986, a chain-link fence was built to fence up the playing field and the school area.  It was built in order to prevent persons other than the School’s staff members, students and other persons permitted by the School from entering the playing field and the School’s premises.  Since the construction of the fence, the only proper way to enter the playing field is through the entrance of the School, which is always guarded during school hours and locked after school hours.  The fence remains in place to date.

73.In 1990, a new block between the Old Block and the Kindergarten Block was built as an additional building for the primary school (the “New Block”). In the same year, the School was renamed “Hong Lok Yuen International School”.

74.The School has been maintaining and improving the playing field.  Kar Wo Fertilizer & Seed Company had been engaged from about 1998 to at least 2011 for that purpose.  Various facilities have been built on the playing field in the meantime: planter concrete wall for flowerbeds in 2007[56], an outdoor playground in 2009[57], a combination house in 2010[58], and a sand pit for long jump also in 2010[59].

75.As a result of those improvement, the playing field is now an extensive grassed area consisting of:

(a)  2 football pitches of 32 x 38 metres each;

(b)  an outdoor playground;

(c)  a sand pit for long jump;

(d)  a running track of 100 metres long; and

(e)  flowerbeds surrounding these facilities.

76.Since about 1986, the School has been using the playing field for physical education lessons and other extra-curricular activities such as open days, sports days, football competitions and various sports team practice.

77.At §56, JAS states that the School has been using the playing field openly, and Members of the 6 Tsos living nearby have been aware of such use.  I repeat Ms Souza’s confirmation that the balance of that paragraph will not be relied upon.

78.The School has never paid any rent or fees for the use of the Subject Lot.

79.The Old Block was as said built in 1984.  Over the years, there have been no complaint about its encroachment upon the Subject Lot.  If the School is now ordered to deliver vacant possession of the Subject Lot to Ps, the Old Block will have to be demolished or re-built.

80.The extensive playing field is a unique feature of the School, and is rare in Hong Kong.  It is essential to the students’ development and the School’s future success.

G.2.F.   THE EVIDENCE OF MAN CHIU FOOK IN HCA 299

81.MCF/WS/299 was filed in reply to JAS/WS/299.  Man Chiu Fook states that Man Mo Leung is not a member of any of the 6 Tsos.  Ms Souza has accepted that.  The contents of MCF/WS/299 otherwise comprise mostly Man Chiu Fook’s comments on JAS/WS/299, which are more akin to submissions as opposed to being factual.  I have recorded above that he has referred therein to the 4/5/2001 Letter.  Again, save its existence, I ignore his assertion that that letter “shows the acknowledgment of title by the School”.

G.3.  ACCEPTANCE OF THE FACTUAL EVIDENCE

82.Subject to the 2 Exceptions, all the statements for the factual witnesses have been adduced without cross-examination.

83.I have considered the facts contained therein. They have not been challenged.  They are materially consistent with contemporaneous documents and photographs.  They are not inherently improbable.  There is no material inconsistency amongst themselves, even amongst the evidence and facts adduced by Ps and Ds.  I accept them.  I will consider their implications as necessary later.

84.I have italicized the word “facts” above.  I make clear for avoidance of doubt that it is only the facts contained in the factual witness statement which I accept.  Such facts do not include witnesses’ conclusions and opinions drawn from or expressed on those facts.  As said, I will consider independently the implications of those facts which I accept.  I may ultimately agree with some of the witnesses’ conclusions or opinions.  But if so, that will be the result of my own consideration, but not as a result of their say-so.    

G.4.  THE EXPERT EVIDENCE 

85.I have set out the questions on which leave for expert evidence was granted.  They relate to the operation of the Principle in Leung Kuen Fai.

86.Professor Baker and Professor Palmer have both been called.  They have been cross-examined.

87.In the context of the present disputes, the most material difference between the two Professors relates to the nature of the interests which members of a tso have in tso properties.  As Professor Palmer puts in at [47] of Palmer Report[60], that “clearly has implications for the way in which periods of adverse possession against a tso or tong is calculated”.

88.On that issue, Professor Palmer summarizes his views by way of Executive Summary at [7] of Palmer Report[61] as follows, with point (e) being the most important point in the context of the present case:

“(a) A tso is a kinship-based group holding property in common, commemorating the memory of the male person in whose name the tso has been created. It is a Chinese customary form of landholding. It is not analogous to the English concept of a trust.

(b) The members of the tso are sometimes referred to, loosely, as ‘co-owners’ of the tso property. But, save for adult members who have become ‘heads of household’ upon family division, members of the tso do not have vested interest in the property. The use of the term ‘co-owners’ in this report should be understood against this qualification.

(c) The basic principle for most New Territories land in respect of income and proceeds from any sale of the tso land is per stirpes (as opposed to per capita). This reflects the fundamental fact that the tso was a kinship organisation, subdivided into branches or kinship segments, but not to reflect the interests of individuals per se.

(d) For a tso organized on a per stirpes basis, the basic unit in the process of distribution of income or other proceeds was the jia or household (in Cantonese pronunciation ‘ka’). The head of the jia (jiazhang, household head) is the person entitled to receive proceeds and to represent the jia affairs as they relate to the tso.

(e) In other words, it is the household head from time to time who has a vested interest in the tso property. Male members of the jia who are not the household head only have contingent or expectant rights, which may become vested upon division of the jia (fenjia).

(f) In particular, male members of the jia who are not the household head may not compel a fenjia, or disposition of the property which he may regard as his expectant right. A son may be adopted out of his family, in which case he will lose his expectant right. An unmarried son can also be expelled from the lineage on grounds of misconduct. An unmarried son may also marry uxorilocally, in which case he may also lose his expectant right.

(g) This is the effect of the Da Qing Lil Li on the division of family property, which is closely analogous to interests in tso property, although the division of tso property was not subject to express provisions in the Da Qing Lil Li.”

89.Professor Baker takes a different view.  As he has stated in §29 of Baker Report[62]:

“A member might benefit from a Tso on sundry occasions, such as at periodic distributions of cash or pork, or if some Tso land were resumed by Government and the Tso members all agreed to distribute the compensation money per stirpes, per capita, or by some other scheme among themselves. But so long as the Tso remained in existence a member was not able to realise his ‘share’. He would come into actual ownership only if during his lifetime the Tso were extinguished either through force majeur, such as the resumption of the Tso’s entire land-holdings, or through a unanimous decision of all members to realise and distribute all its assets. Thus he was a beneficiary and co-owner of the Tso, but could only take his share if and when the Tso ceased to exist.”

To the same effects is what Professor Baker has stated at [05] and [07] of the Joint Report[63], which I will come to below.

90.I will consider their opinions and state my findings when I consider Issue #5 below.

91.On mesne profit, Grandmax Report #1 and Grandmax Report #2 have been produced, which I will consider as appropriate below.

H.  Issue #1

92.Although D1/1463 has not entered appearance, and D2 is no longer contending for the validity of the 2 Agreements, Issue #1 still warrants careful consideration.  There are 2 reasons for this.

93.Firstly, Ps are seeking declaratory relief.  It is not the normal practice of the court to make a declaration without a trial – Hong Kong Civil Procedure 2022 §19/7/20.

94.More substantively, D2 has pleaded that at least P5 Tso pursuant to the 1^st Agreement had granted to an “irrevocable contractual licence to Mr. Alex Wai to occupy the Subject Lot” who assigned the same to D2 under the 2^nd Agreement.  Referring to Ps’ unity in possession as co-owner of the Subject Lot, Mr Chan reminded this Court that any one of them had the capacity to grant a valid licence or lease over the Subject Lot.  Mr Man acknowledges[64] that, for the duration when the licence remained valid, D2’s possession would not be adverse and time not begin to run.  The time when the 2 Agreements became invalid hence will have an impact on D2’s claim of adverse possession.   

H.1.  WHETHER NULL AND VOID

95.Section 15 of the New Territories Ordinance, in addition to providing for the appointment of managers and the approval of such appointments, stipulates that a manager upon approval and registration:

“Registration of manager of 't’ong', etc.

… shall, after giving such notices as may be prescribed, have full power to dispose of or in any way deal with the said land as if he were sole owner thereof, subject to the consent of the Secretary for Home and Youth Affairs, and shall be personally liable for the payment of all rents and charges and for the observance of all covenants and conditions in respect of the said land.  Every instrument relating to land held by a clan, family or t’ong, which is executed or signed by the registered manager thereof in the presence of the Secretary for Home and Youth Affairs[65] and is attested by him, shall be as effectual for all purposes as if it had been executed or signed by all the members of the said clan, family or t’ong ...”

96.In Light Ocean Investments Ltd v Enway Development Ltd [1994] 3 HKC 31, Litton JA observed[66] that section 15 of the New Territories Ordinance governs the right of sale of tso land, and that every sale of tso land effected by the manager is subject to the consent of the Land Officer, without which any agreement for sale entered into by the manager can, at best, only be a conditional sale and cannot pass a good title.  Nazareth JA observed[67] that consent of the Land Officer is on the plain meaning of section 15 necessary, and cannot be dismissed as surplusage or insignificant given the object of the legislation.  That object was explained by Litton JA[68], citing the views of Briggs J in Lai Chi Kok Amusement Park Co Ltd (No 2) v Tsang Tin-sun [1966] HKLR 124, 130, as follows:

“The mischief envisaged by the section is this: land held by a t’ong could, in the usual way, be conveyed only if the conveyance were executed by all the members of the t’ong. That would as time went on become increasingly difficult, if not practically impossible. The object of the Ordinance of 1905 was to facilitate transactions relating to land. It may well be in the interest of the t’ong, that the land should be leased or sold and a convenient means of effecting the conveyance was sought. This was found in the appointment of managers, but at the same time, it was necessary to protect members of the t’ong against malpractices on the part of managers. For this, the personal supervision of any transaction entered into by the manager was desirable.”

97.Where there are more than one managers, they must act unanimously – Tang Kam Wah v Tang Ming Yat (HCA 10141/1998, 26 November 2002) per Chu J (as the Vice President then was) at §72.  Absence of such unanimous consent renders the instrument or agreement void – Tsang Shu Wo v Person Unknown in Occupation of Lot [2020] 1 HKLRD 1234, §§59 to 60.

98.According to the evidence, Man Chung Yiu was at the time when the 1^st Agreement was executed one of the surviving managers of P1 Tso to P4 Tso, and P6 Tso.  He was not one of the Vendors.

99.It is Man King Chuen’s evidence that no consent had been given by Man Chung Yiu or all members of the 6 Tsos for the Vendors, whether before or after the execution of the 1^st Agreement, to enter into the same.

100.His evidence that Man Chung Yiu had not given his consent is consistent with the terms of the 1^st Agreement, and in particular Clauses 3 and 4(iii) thereof, which I have reproduced above.

101.In the absence of Man Chung Yiu’s consent, and for this reason only, the 1^st Agreement could not have been binding upon Ps, and could not have passed any title to Alex Wai.

102.The above however did not render the 1^st Agreement void ad initio.  Man Chung Yiu could subsequently join in the conveyance (though on the evidence he never did).  Title could still have passed.  Indeed, that was specifically contemplated by the parties – see Clause 4(iii) of the 1^st Agreement.

103.The evidence in my view also establishes that section 15 of the New Territories Ordinance had never been complied with.  In particular, the 1^st Agreement was not executed in the presence of and attested by the Secretary for Home Affairs, and that no consent[69] of the same had been obtained from the Secretary for Home Affairs.

104.But again, such non-compliances did not render the 1^st Agreement void ad initio.  As observed by Huggins J in Lai Chi Kok Amusement Park at p.140, the intention and effect of requiring execution and attestation of the instrument in the presence of the Land Officer was to provide a method of conclusive proof (1) that the Land Officer had in fact consented to the disposition and (2) the identification of the Land Officer concerned.  In Light Ocean Investments, as noted above, the absence of such consent rendered the sale a conditional one, but that if consent were to be obtained subsequently, title could still be passed[70]. I do not accept Mr Man’s submissions to the contrary[71].

H.2.  WHETHER FRUSTRATION

105.The evidence in my view establishes that the 1^st Agreement has been frustrated.  As observed by Liu JA in Chan Choy Fong v Secretary for Home Affairs [1998] 1 HKLRD 431 at 438I-J, a manager is chosen by a tso for the confidence reposed in him.  The relationship is a personal one.  Personal service is expected.  The authority conferred upon a manager to so act terminates upon the manager’s death.

106.All the Vendors had by 1987 died (one in 1982, the other in 1985, and the last one in 1987).  The 1^st Agreement had been frustrated latest by then.

H.3.  WHETHER ABANDONMENT

107.The evidence also supports the inference that the 1^st Agreement had been abandoned sub silentio – see Chitty on Contracts (34^th Ed.) at §25-029 and Paal Wilson v Partenreederei Hannah Blumenthal [1983] 1 AC 854 at p.924.  There had been long inactivity after its execution.  The non-compliance of section 15 of the New Territories Ordinance had not been rectified.  No subsequent consent from the Secretary for Home Affairs had been obtained. The P6 Leases were (or at least purportedly) granted in 1984 and 1985 (after the death of one of the 3 Vendors).  The transaction had remained uncompleted in 1987 when all the Vendors had died.  In my view, the clear inference is that the 1^st Agreement had been abandoned latest by 1987 when all the Vendors died.

H.4.  WHETHER ALEX WAI’S CAPACITY TO COMPLETE LAPSED

108.Alex Wai died on 28 December 1991.  It is true that there has been a very long lapse of time since then, and no grant of representation has been made in respect of his estate.  However, Alex Wai’s role as a purchaser is not a personal one, as in the case of the Vendors in their capacity as managers.  No reason has been put forward suggesting why, if representation is now sought and granted, the personal representative may not, ignoring for this purpose all other problems discussed above, seek the performance of the 1^st Agreement.  I am therefore not persuaded that Alex Wai’s capacity to complete has lapsed.  I would rather treat his death and absence of application for grant of representation as evidence of abandonment.

H.5.  WHETHER RESCISSION AND TERMINATION

109.The theory of rescission and termination is premised upon the alleged breach by Alex Wai of Clause 8 of the 1^st Agreement in having failed to pay for the costs and expenses of and incidental to the obtaining of consent of the District Officer, so that Alex Wai had committed a repudiatory breach of the 1^st Agreement, which breach was accepted by Ps upon issue and service of the Writ in HCA 1463.

110.I accept Mr Man’s submissions that there is no evidence showing that an application for consent had actually been made, so that there were outstanding costs and expenses to be settled, and which Alex Wai had failed to pay.

111.It should also be noted that it is Ps’ case that whether before or afterwards, Man Chung Yiu had never given his consent to the sale and purchase.  That being the case, the inherent probability is that no application had been made to the District Officer for consent.  It would have been futile to do so.  If no application for consent had been made, there would have been no costs and expenses for Alex Wai to defray.

112.In my view, the pleading point made by Mr Chan in the course of his oral closing (about condition precedent being implied according to Order 18 rule 7) adds nothing to this claim.

113.I am not satisfied that Ps have established any repudiatory breach on the part of Alex Wai as alleged.

114.Further, this limb of Ps’ case is premised upon the extancy of the 1^st Agreement up till the issue of the Writ in HCA 1463, so that the option had till then remained open for Ps to choose not to accept the alleged repudiatory breach but to hold Alex Wai to the deal.

115.That premise is inconsistent with my views expressed above, that the 1^st Agreement had been frustrated and abandoned by 1987 at the latest when all the Vendors passed away.  The 1^st Agreement was no longer extant afterwards.  In other words, upon my conclusions above on frustration and abandonment, this alternative limb of Ps’ claim based on rescission and termination is simply not engaged.

116.My conclusion on this sub-issue however does not affect my view on the overall unenforceabiliy of the 1^st Agreement.  As Mr Chan has submitted[72], which I accept, the overall circumstances are such that the 1^st Agreement can no longer be performed even without the express termination of the same by Ps.

H.6.  ISSUE #1 – CONCLUSION

117.For the reasons set out above, my conclusions on Issue #1 and all its sub-issues are as follows.

118.In relation to Issue #1(i), I am not inclined to declare the 1^st Agreement null and void.  The 1^st Agreement could have been, at best or worst, a conditional one.  A better way to describe the situation is to say that the 1^st Agreement has never validly passed any title in the Subject Lot to Alex Wai.

119.In relation to Issue #1(ii), I do not accept that the evidence establishes any repudiatory breach as alleged.  The premise upon which termination and rescission are contended for is in any event inconsistent with the other conclusions which I have reached.

120.In relation to Issue #1(iii), I find that the 1^st Agreement has been frustrated, and had been frustrated by 1987 latest.

121.In relation to Issue #1(iv), and for the reasons set out above, I answer it in the negative.

122.In relation to Issue #1(v), I find that the 1^st Agreement has been abandoned, and had been abandoned by 1987 latest.

123.I will set out the consequential Declarations that I am prepared to give at the end of this Judgment.

I.  Issue #2

124.As explained above,the 2^nd Agreement was in effect a sub-sale of the 3/4^th Shares by Alex Wai to D2.  Whether Alex Wai had the title or interest to do so was dependent upon the validity of the 1^st Agreement.

125.Under section 2 of the Land Registration Ordinance, Cap 128, only those classes of instruments and judgments stipulated therein by which “any parcels of ground, tenements, or premises in Hong Kong many be affected” could be registered.

126.This Court has the inherent jurisdiction to vacate the registration or purported registration of any instrument in the Land Registry which does not affect or no longer affect lands – Wong Kum Chi v Lee Tit Ying [2003] 1 HKLRD 594 at §16 (and the authorities cited therein).

127.Given my conclusions on Issue #1, the 2 Agreements had by the time when the Writ in HCA 1463 was issued ceased to, and in any event by now no longer, affect the Subject Lot.

128.I order that their registration be vacated.

J.  Issue #3

129.Issue #3 is discussed in this section without reference to the Principle in Leung Kuen Fai, which will be discussed in Section L below.

J.1.      THE RELEVANT GENERAL LEGAL PRINCIPLES ON ADVERSE POSSESSION

130.The relevant sections in the Limitation Ordinance are sections 7(2) (no action be brought to recover any land after the expiration of 12 years from the date on which the right of action accrued), 8(1) (accrual of right of action through dispossession or discontinuation of possession), 13(1) (no accrual of right of action unless the land is in the possession of some person in whose favour the period of limitation can run (labelled[73] as “adverse possession”)), and 17 (extinction of title upon expiration of period).

131.A person claiming adverse possession has to prove 2 elements: (i) factual possession; and (ii) the requisite intention to possess (animus possidendi).  They are questions of fact.

132.What they entail, and how the evidence should be approached, have been explained and summarized in many cases, which include,as cited to me, Powell v McFarlane (1979) 38 P&CR 452at p.470-471, Wong Tak Yue v Kung Kwok Wai & Anor (No 2) (1997-98) 1 HKCFAR 55 at 68E to 70B, Pye (2003) at p.436-437, Incorporated Owners of San Po Kong Mansion v Shine Empire Ltd (2007) 10 HKCFAR 588 at §7, Cheung Kwong Yuen at §11, Tsang Foo Keung v Chu Jim Mi Jimmy [2017] 3 HKC 527 at §§2.6 and 2.7, Lau Kwai Ping Joyce, the Executrix of the estate of Tsang Fung Ying (deceased) v Fulland International Limited [2020] HKCFI 1501 at §§13-33, and Jourdan and Radley-Gardner on Adverse Possession (2^nd Ed.) §§7-37, 7-39, 7-127, 9-18 to 9-19, 9-23 to 9-24, 13-04, 13-09 to 13-11, 13-23 to 13-29, 13-49 and 13-59.  I do not believe another summary of the general principles is called for.

133.On the facts of this case, there are specific aspects of the law on adverse possession that are in issue: and in particular whether “adverse” is an element of adverse possession, occupation by licencees or tenants, occupation under mistaken belief that there was a right to occupy, and the Principle in Leung Kuen Fai.  I will address those specific issues in turn below.

J.2.      D1’S FACTUAL POSSESSION

134.D1’s case relates to Portions B and C only.

135.I have set out above the unchallenged evidence of Li and JAS.  I point in particular to JAS’s unchallenged evidence about the seeding of the Subject Lot in about September 1984, the construction of the Old Block (in 1984), Kindergarten Block (in 1986) and the New Block (in 1990) on adjoining or adjacent land, the construction of a chain-link fence in 1986 around the playing field and the school area (supported by the relevant aerial photograph[74]) to prevent unauthorized entrance, the use of Portions B and C since about that time as playing field and outdoor playground, and the engagement of various contractors over the years to maintain and to build on the playing field various facilities (including planter concrete wall for flowerbeds, an outdoor playground, a combination house, and a sand pit for long jump[75]). His evidence is amply and cogently supported by the aerial photographs between 1984 and 2010[76], and all the contemporaneous documents which he has produced (which include the discussions between D1 and D2 in 1984 on the use of the Portions B and C[77], the School’s early promotional materials in 1983[78], the School’s Board meetings[79], and photographs of the Playground and the activities held thereon[80]).

136.The various leases between April 1984 and August 2017 have been produced[81]. The Subject Lot did not form part of the leases.

137.Mr Chan submits[82] that neither the School nor D2 has given any evidence on the up-to-date position of the landlord and tenant relationship between them, and that this Court could only conclude that the tenancy held by the School has expired on 31 August 2013.  Ds have in fact adduced evidence in this regard.  In Li/WS/299 at §18, Li says that since the First Lease, “the School Land has all along until today’s date been leased to [D1]”.  An extension letter signed by D1 and D2 dated 18 December 2013 extending the preceding lease to 31 August 2017 has also been produced[83].  I note also that according to §14 of the Summary of Undisputed Facts dated 3 November 2022, the “School Land has been leased by D2 to D1 since 1 September 1983” (emphasis added).

138.To the extent shown by the evidence discussed above, I find that D1 has been in continuous and uninterrupted possession of Portions B and C since 1984.  I also find that D1’s possession, occupation and use of Portions B and C have been to the exclusion of all others (apart from D2 which I will next discuss), including Ps. 

139.Has D1 also excluded D2?

140.In the context of adverse possession, the factual possession has to be exclusive physical possession or control.  As explained in Powell v McFarlane at p.470-471:

“Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession … Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed … what must be shown as constituting factual possession 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.”

141.The issue hence becomes this, whether the occupation, possession and use by D1 of Portions B and C has been exclusive also of D2 so as to qualifies as sufficient factual possession for the purpose of adverse possession.

142.On the nature of D1’s occupation of Portions B and C and the legal consequences arising, all three parties’ stances differ:

(a)  D1’s position is that it has been occupying Portions B and C in its own right and for its own benefit as owner;

(b)  D2’s case is that D2 as the licensor has itself been in exclusive possession of Portions B and C by permitting D1 as the licensee to use, occupy and possess the same[84]; and

(c)  Ps’ position is that D1, by virtue of it being D2’s tenant in respect of the School Land, is subject to the doctrine of encroachment.  Mr Chan accepts that that doctrine applies only to tenants but not licensees.  He otherwise submits[85] that:

“the School’s possession of Portions B and C was by way of encroachment and its possession was presumed to be intended to be annexed to the demised land under its tenancy from D2, and the School would have to surrender Portions B and C to D2 upon the expiration of the School’s tenancy …”

J.2.A.   THE DOCTRINE OF ENCROACHMENT APPLICABLE TO A TENANT

143.The doctrine of encroachment has application both in cases involving encroachment upon the landlord’s land beyond the boundary of the demised land, and encroachment upon land which belongs to a third party.  Its operation is different in each of the two cases.  We are only concerned with the latter scenario.

144.As explained by Ribeiro PJ in Secretary for Justice v Chau Ka Chik Tso(2011) 14 HKCFAR 889 at §20:

“Where the area of encroachment belongs to a third party, the doctrine takes effect where, on the facts, the tenant has by adverse possession barred the third party’s right of action and extinguished his title to the land. Then under the doctrine, a presumption arises (unless previously rebutted) that the encroached upon land has been occupied as an addition to the landlord’s land and the right to possession vests in the landlord at the end of the tenancy. The land encroached upon is not treated as land acquired by the tenant by adverse possession for his own benefit.”

145.The fact that the landlord was not aware of the encroachment during the limitation period might not prevent him from acquiring possessory title by virtue of the doctrine upon expiry of the limitation period – Tower Hamlets LBC v Barrett[2006] 1 P & C.R. 9 at §84.

146.That presumption is a rebuttable one.  As observed by Lord Scott of Foscote NPJ in Chau Ka Chik Tso at §108, the presumption “can be rebutted by evidence that the tenant intended to occupy the encroached-upon land not simply as tenant but as owner.”[86]

147.Whether the presumption has been rebutted is a factual issue.  In Lau Wing Hong v Wong Wor Hung [2006] 4 HKLRD 671, Recorder McCoy SC noted that the lessor wholly disclaimed any interest, right or entitlement to the encroachments, that he “positively washed his hands of the whole issue”, that he did not claim the encroachments, expressly disclaimed them, and disassociated himself from any interest in the encroachments to his land.  The learned Recorder further referred to Stackhouse v Wade (1950) 26 MPR 312, wherein Richards CJ of the New Brunswick Supreme Court concluded, which conclusion the learned Recorded observed to be in accordance with A-G v Tomline (No 3) (1880) LR 15 Ch D 150(CA), that the presumption may be rebutted where a lease is renewed and the landlord does not include the encroachment in the new lease.  That was what happened in Lau Wing Hong. On the facts before him, the learned Recorder held that the presumption had been rebutted.

148.Tomline was a case involving a copyhold tenement.  The Court of Appeal gave no opinion as to whether the doctrine of encroachment could apply to an encroachment acquired by a copyhold tenant, but held that even if it did, the presumption had on the facts of that case been rebutted.  Cotton LJ in this regard observed at p.160 that:

“… In Whitmore v. Humphries [Law Rep. 7 C.P. 1, 4.], Mr. Justice Willes says: ‘By the rule of law applicable to this subject the landlord is entitled at the determination of the tenancy to recover from the tenant not only the land originally demised, but also any land which the tenant may have added to it by encroachment from the waste, such encroachment being deemed to be made by him as tenant as an addition to his holding, and consequently for the benefit of his landlord, unless it is made under circumstances which shew an intention to hold it for his own benefit alone, and not as part of his holding under the landlord.’ Assuming that this rule might apply in the case of a copyhold tenant as well as in the case of a leasehold tenant, it is liable to be rebutted not only by the circumstances under which the encroachment or accretion was acquired, but by any dealings between the landlord and tenant in determining their rights. If we find that there are subsequent grants by the lord to the copyhold tenant, or by the landlord to his leasehold tenant, of the original tenement by a description which clearly does not include the encroachment, then in my opinion the presumption that it was made as an accretion to the original holding cannot apply. In the present case we find that there have been, subsequently to the taking of possession of this piece, admittances to the original copyhold by a description excluding this piece of land. In my opinion, therefore, the presumption does not arise, and it must be held that the title of the Plaintiffs to this piece of land is what under ordinary circumstances it would be …”

J.2.B.   OCCUPATION AS A LICENSEE – THE LEGAL PRINCIPLES

149.As explained in Jourdan at §§7-127 to 128:

“7-127 …if a person takes possession by virtue of a licence granted by another, it is the licensor who is treated as being in possession …

7-128 In Brazil v Brazil, Sze v Kung[87] was followed.  It was held that a permission to use the disputed land given by someone other than the true owner prevented the squatter from being in adverse possession, and meant that his possession was that of the person who gave the permission …”

150.Mr Chan submits[88], which I accept, that for the same reason, if a person should claim that he is in occupation by virtue of a right under a license he does not have the necessary intention to possess for the purpose of claiming adverse possession.

151.In Sze To Chun Keung, the squatter came into possession of a piece of land.  The Crown, under the mistaken belief that the land was crown land, granted the squatter a permit entitling him to occupy the same.  The mistake was subsequently discovered.  The land was in fact privately owned. The licence was cancelled.  The squatter however remained in possession.  The actual owners were not aware of those arrangements between the Crown and the squatter.  They subsequently commenced action to evict the squatter.  The squatter sought to plead by amendment a defence based on adverse possession. Interlocutory applications for striking out and amendments were made.  The appeal ultimately reached the Privy Council.  The Privy Council was of the opinion that the proposed defence was an arguable one.  Lord Hoffmann observed that the plaintiffs had been dispossessed when the squatter went into possession.  On the effects of the permit whilst extant for the purpose of the doctrine of adverse possession, His Lordship observed at p1235 E-G that:

“After the grant of the Crown permit, the defendant remained in physical possession of the land. It was wholly enclosed and the defendant manifested the outward intention of excluding all other persons, including the owner and the Crown, which had granted him a right of exclusive occupation. So far as third parties, including the plaintiffs, were concerned, he was in possession: see Ho Hang-wan v. Ma Ting-cheung [1990] H.K.L.R. 649. But the effect of the permit was that he possessed on behalf of the Crown. By accepting the benefit of the permit, he became estopped from denying that the Crown had the right to allow him to occupy.

For the purposes of limitation, therefore, possession from 1961 must be regarded as having been in the Crown, which possessed through its licensee, the defendant.  Was that possession adverse to the plaintiffs?  Their Lordships consider that it was…”

J.2.C.   EVIDENCE ON THE NATURE OF D1’S OCCUPATION

152.D1 first came into occupation of the School Land under the First Lease as the tenant of D2.  The First Lease, though dated 9 April 1984, commenced on 1 September 1983.

153.The First Lease did not cover Portions B and C.

154.It may be recalled that not long before the First Lease, in December 1982, D2 entered into the 2^nd Agreement whereby Alex Wai agreed to sub-sell to it the 3/4^th Shares.  It may further be recalled that under Clause 4(viii) of the 1^st Agreement, Alex Wai “shall be entitled to possession (where this is physically possible)”.

155.Based on the 2^nd Agreement, D2 must have expected to become owner of a substantial interest in the Subject Lot, and be able to decide its use.

156.At the early stage when D1 started to occupy the School Land, whether it could also occupy Portions B and C, and if so their uses, had not been decided.

157.As recorded in a document entitled “MEMORANDUM concerning the proposal for joint usage of the school playing field” dated 23 March 1984[89] prepared by D1:

(a)  There had been discussions between the School and D2 during the preceding 18 months, and still on-going, regarding the playing field;

(b)  At a meeting with Mr Clifford Wong (D2’s then Managing Director) in September 1982, “it was agreed that the land between the school and the railway line would be turfed for use as a playing field”;

(c)  According to the plan attached to that memorandum[90], the intended playing field comprised a “Mini Football/Minor Games Pitch” at location which covered where Portion B now is, and an “Adventure Playground Area” (the “Adventure Playground”) at essentially where Portion C now is;

(d)  There was a recent proposal, in context must have been from D2, that the area allotted for the playing field should be jointly used as a golf driving range for the Hong Lok Yuen Country Club;

(e)  The School for a number of different reasons expressed disagreement to the proposal;

(f)  D2 was urged to reconsider the proposal.  As an alternative, another suitable area should be allotted to the School for its exclusive use as a playing field.

158.According to a letter also of 23 March 1984[91] from Mr John Bent (the School’s then Chairman of Governors) to Mr Clifford Wong, the School expressed its poor reaction to the proposal.  It stated that “As a result of assurances received from you in 1982 and subsequently regarding the provision of a playing field, the Board of Governors have had no hesitation in advising parents both verbally and by means of marketing literature as to the early provision of a school playing field.”  It was further said that “[u]nrestricted access to a playing field even if it is not adjacent to the school would be far preferable.”

159.D2 replied on 5 April 1984[92]. Amongst other things, it was said that:

“We do intend that the School should have access to a playing field facility, but cannot undertake that such access will be exclusive. Indeed, exclusive use of the playing field area has never been contemplated …

…

It is our intention that the area be seeded in April, and that the driving range be brought into use in September. Provided that the grass growth is satisfactory, there is no reason why you should not commence use of the area in September as well.

It is important that, in the intervening months, we should establish the sharing basis for use of the area …”

160.Given D2’s then recent execution of the 2^nd Agreement, and given those records, it is quite clear that the School first came into occupation of Portions B and C upon the agreement and assurances of D2, and that it started to occupy and use the same with D2’s consent and permission.  D2 was also in the position to decide on the use of the land to be provided, and whether the School’s use of it was going to be exclusive.  The seeding was also intended to be done by D2.

161.According to the minutes of the School’s Board of Governors meeting on 3 May 1984[93], there was suggestion that rather to have any binding agreement with D2 on the use of the “golf driving range/playing field”, it might be better to have one based more on trust.  There were further discussions during that meeting as to whether the Adventure Playground should be financed by the School or built by D2.

162.This other way to look at it is this.  The evidence is against any conclusion that D1 entered into possession of Portions B and C in its own right as owner.

163.It is apparently that the driving range proposal ultimately did not go ahead.  It is not clear why the Playground subsequently became used by the School’s exclusively. 

164.But the fact that the Playground has since certain stage become used by the School exclusively cannot alter the fact that it was first allowed into occupation of Portions B and C by D2 and with its consent and permission.

165.There is also no evidence that that initial consent by D2 has at any time been withdrawn.

166.The evidence is not clear as to whether the Playground was fenced off at the School’s costs.  Ms Souza at §41.d. of her written closing submits that it was “apparently financed by the School alone”.  The evidence is by no means clear.  If Ms Souza is relying on the Board minutes of 3 May 1984[94], it should be noted that the relevant discussion during that meeting concerned the Adventure Playground only, but not the entire Playground, as she apparently suggests.

167.The evidence does suggest that the School had been maintaining the Playground at its own costs.  But given its exclusive use of the same, that is at best equivocal as to whether it was occupying with D2’s permission or in its (D1’s) own right.  

168.Ms Souza further relies on the Board meetings in early 2001 during which the School explored the idea of buying Portions B and C from the paper owners.  Those discussions in my view are again equivocal, and does not suggest any revocation of consent by D2.

169.On the other hand, there is the exchange between Ps’ legal advisers and the School in August 2009:

(a)  By letter of 20 August 2009[95], Ps legal advisers wrote to D1 and informed it of Ps’ intention of conducting a survey on the Subject Lot.  D1’s assistance was sought, and was asked to provide the date and time when Ps could do so;

(b)  By letter of 6 October 2009[96], D1 said that:

“As you may know, the School occupies its premises under lease from Isperine Estates Ltd., a subsidiary company of Sun Hung Kai Real Estate Agency Ltd, and as such it is necessary to consult them as to your request. I will let you know as soon as we have heard from them.”

(c)  It is quite obvious from the reply that D1 in 2009 thought that D2 was required to be consulted on matters relating to Portions B and C.  That supports the view that those Portions were still being occupied with D2’s consent, and that D1 has not been dealing with them as an occupying owner might have been expected to deal with them.

170.Ms Souza relies on Roberts v Swangrove Estates Ltd [2007] 2 P&CR 17 §34 for the proposition thatin claims of adverse possession by licensors through their licensee, there must be proof of fees or rent payable under the licence.  As Ms Souza has fairly pointed out[97], as discussed in Jourdan at §17-129, it is doubtful whether the payment of fees should always be determinative in this context.  I do not accept that it is.  If it were intended to be propounded as a rule of law, I respectfully decline to follow it.

171.On the evidence, I accept Mr Man’s submissions[98] that Portions B and C have been used by D1 with D2’s permission given separately from the leases of School Land.  There was no encroachment of any nature which triggers the presumption (to the effect that Portions B and C were presumed to be intended to be annexed to the demised School Land).

172.I note that Portions B and C have never been added to the School Land upon the repeated renewals of the First Lease.  That is perfectly consistent with the conclusion reached above.  Portions B and C have not been occupied as an addition to the School Land.  The facts in Lau Wing Hong or Tomline are very different from those in the present case.  The facts in Sze To Chun Keung are much closer.  Irrespective of whether D2 actually had the interest to grant D1 any licence or permit to occupy Portions B and C, similar to the position of the Crown in Sze To Chun Keung, and borrowing the words of Lord Hoffmann in that case, “the effect of the permit was that [D1] possessed on behalf of [D2].  By accepting the benefit of the permit, [it] became estopped from denying that [D2] had the right to allow [it] to occupy.” The doctrine of encroachment has no application.

173.Insofar as Mr Chan seeking to take a pleading point to the effect that that D2’s case in the regard has not been pleaded, I refer to §15 of D2/A-D&C/299 and disagree.  With particular reference to Particulars (c)(ii) under §15 of D2/A-D&C/299, I am of the view that the facts in support of a licence by D2 to D1 to use and occupy Portions B and C have been sufficiently pleaded.   

J.2.D.   CONCLUSION OF D1’S FACTUAL POSSESSION

174.For the reasons set out above, I find and conclude on the evidence that whilst D1’s possession, occupation and use of Portions B and C have since 1984 been exclusive of everyone else, they have not been exclusive of D2. D1 has been occupying the same upon D2’s agreement and permission.  I find that that is in effect a license arrangement.  D1’s possession, occupation and use of the same are to be viewed in such light.  D1 has not“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”.

175.I conclude also that the doctrine of encroachment has no application. 

J.3.      D1’S INTENTION TO POSSESS      

176.For the same reasons as I have given in Sections J.2. to J.2.c. above, I find and conclude that D1 has been occupying Portions B and C upon D2’s agreement and permission.  D1 lacks the requisite intention to possess for the purpose of claiming adverse possession.  It lacks the requisite “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”[99], or the “intention to occupy and use the land as one’s own” or “using the land in the way one would expect him to use it if he were the true owner”[100].

J.4.      WHETHER THE LIMITATION PERIOD HAS EXPIRED

177.For the above reasons, D1’s claim for adverse possession in its own right must fail, irrespective of the issue as to whether the relevant limitation period has expired.  This sub-issue is not engaged.  However, if necessary, I will adopt the same discussion as I will set out in Section K.3. below.

K.  Issue #4

178.Similar to Issue #3 above, Issue #4 is discussed in this section also without reference to the Principle in Leung Kuen Fai, which will be discussed in Section L below.

K.1.  D2’S FACTUAL POSSESSION

179.I have set out the material clauses of the 2 Agreements.  I reiterate for this purpose in particular Clause 4(viii) of the 1^st Agreement, which stipulated that “The Purchaser shall be entitled to possession (where this is physically possible) …”

180.I find that D2 came to take possession of the Subject Lot as a result of the 2 Agreements and in anticipation of their performance.

181.This context supports the views that D2, anticipating to be the owner of the Subject Lot, would start to use the land in advance of completion, and that it would immediately put the Subject Lot to use as an owner would.

182.The subsequent conduct of D2 is consistent with and support the above. The Subject Lot was land-locked by the HLY Land.  It has in effect been used for the purpose of the development of Hong Lok Yuen.

183.I reiterate my findings in respect of the permission given by D2 to HLY Management and then later Horticulture Company to occupy and use Portion A. 

184.In respect of Portions B and C, I have found and concluded above that whilst D1’s possession, occupation and use of the same have since 1984 been uninterrupted and exclusive of everyone else, they have not been exclusive of D2.  I have also found on the evidence that D1 has been occupying the same upon D2’s agreement and permission, by virtue of what is in effect a license granted by D2 to D1.

185.D1’s “possession was that of the person who gave the permission”[101], namely D2.  I apply also Sze To Chun Keung.

186.From those findings, I find and reach the conclusion that D2 has through D1 been in exclusive and uninterrupted possession of Portions B and C since 1984.

187.That leaves Portion A.

188.At §48 of his written closing, Mr Chan points to §10 of Li/WS/299[102] and submits that Li “did not attempt to say for how long before 2004, Portion A of the land had been so used by HLY Management.  There is no other evidence to show that D2 was in possession of Portion A.  Accordingly, D2 failed to show that Portion A had been in adverse possession for more than 12 years before the writ in [HCA 299]”.

189.I note however that there is in fact other evidence on the point:

(a)  Li in the same statement at §20[103] says this:

“Currently, apart from the part used and occupied by the School as playground and field, [D2] has allowed [Horticulture Company] to use, occupy and possess the remaining part of the [Subject] Lot for its horticulture business since its incorporation in 2004 and to build thereon structures, flowerbeds and fixtures to accommodate, cultivate and grow plants to supply to HLY Management, residents of Hong Lok Yuen and other Group companies. Prior to that, it was used by HLY Management since 1990 as a plant nursery.” (Emphasis added)

(b)  The aerial photographs taken in 1988 to 1990[104] support his evidence.  They show structures being built on Portion A.  The one taken in 1990 shows that Portion A was mostly covered with structures.  The aerial photograph taken in 2010[105] shows that there remained structures on Portion A;

(c)  I repeat that Li’s evidence has not been subject to any challenge;

(d)  On the evidence, I accept Mr Man’s submissions that given that D2 was the developer of Hong Lok Yuen and the intended purchaser of the Subject Lot, the inference was that such use was with the permission of D2.

190.It is also important and relevant to note, as submitted by Mr Man which I accept,that th eSubject Lot is surrounded and land-locked by other lands owned by D2.  According to Li[106], and supported by Annexure A and the number of maps he has produced[107], the Subject Lot is enclosed by HLY Land, that the HLY Land has been fenced off since sometime in or before 1982 by metal fences, and that electric fences were further installed at certain parts in around 2011 to enhance security.  The Subject Lot has in practice been incorporated into, and has been used as, part of the Hong Lok Yuen development that was planned and developed by D2. 

191.I find on the evidence that the occupation of Portion A has been continuous, uninterrupted and exclusive.

192.On the evidence, I find that D2 has through initially HLY Management and then later Horticulture Company (upon its incorporation in 2004) been in exclusive and uninterrupted possession of Portion A since 1990. 

K.2.  D2’S INTENTION TO POSSESS

K.2.A.  COMING INTO POSSESSION AS A RESULT OF THE 2 AGREEMENTS

193.I have set out above D2’s pleaded case in HCA 299.  I have also summarized above the principal basis of Ps’ case against D2 on the question of animus possidendi, which is that D2’s averments in D2/RRA-Def/1463 are inconsistent with any intention to possess in any claim for adverse possession of the Subject Lot.  Mr Chan submits[108] that:

“Even though shortly before the trial on 28 October 2022, D2 has confirmed that it would no longer contest the claim in the 1^st action the statements made in the defence in the 1^st action and also in the 2^nd action aptly indicated that any possession of the Land by D2 was as a purchaser in possession in anticipation of the completion of the agreement and as such the possession cannot be intended to exclude the vendor until completion.”

194.On the evidence, I have found that D2 indeed came to take possession of the Subject Lot as a result of the 2 Agreements and in anticipation of their performance.

195.As submitted by Mr Chan[109], a purchaser entering into occupation under an uncompleted sale and purchase agreement before the full payment of the purchase price could only do so as a licencee of the vendor.

196.That in fact is also D2’s pleaded position.  See §12 of D2/A-D&C/299 and Clause 4(viii) of the 1^st Agreement which I have set out above.

197.Relevant to §12 of D2/A-D&C/299 I observe also this.  I reiterate the evidence that Man Chung Yiu was at the time when the 1^st Agreement was executed one of the surviving managers of P1 Tso to P4 Tso and P6 Tso, but that he was not one of the Vendors.  What D2 has pleaded in §12 of D2/A-D&C/299 (with emphasis added, that “by clause 4(viii) of the 1st Agreement, at least one tenant in common, i.e. [the P5 Tso], had granted an irrevocable contractual licence to Mr. Alex Wai to occupy the Subject Lot”) should be understood against that evidence.  It is not D2’s pleaded case that the P5 Tso had separately granted any licence to Alex Wai.  To the extent of Mr Chan submitting that that was so[110], I do not accept that.

198.I have found that the 1^st Agreement was not void ad initio, but that it was frustrated and abandoned by 1987 latest.

199.Flowing from those findings, I find that any interest D1 had in the Subject Lot that might have arisen from the 2 Agreements, including any license by Clause 4(viii) of the 1^st Agreement, ceased to exist by or came to an end in 1987 latest.

K.2.B.  THE P6 LEASES

200.In the meantime, there were the P6 Leases.  I have set out above D2’s pleaded case in respect of the P6 Leases, and how Ps say they may affect Ds’ claim for adverse possession.

201.I accept that the P6 Leases were meant to have been granted.  It is evidenced by 3 receipts for payment of rent, covering the periods from 1 January 1984 to 31 December 1984, and from 28 March 1985 to 30 December 1997.

202.P6 is one of the tenants in common.  The concept of unity of possession was explained by Lord Hope in Pye (2003) at §70 as follows:

“The general rule, which English law has derived from the Roman law, is that only one person can be in possession at any one time. Exclusivity is of the essence of possession. The same rule applies in cases where two or more persons are entitled to the enjoyment of property simultaneously. As between themselves they have separate rights, but as against everyone else they are in the position of a single owner.”

203.Hence, even though the other tenants in common had not joined in, P6 could in law grant the P6 Leases itself.

204.Whilst I have accepted that the P6 Leases were meant to have been granted, there are some niceties in law as to whether they had been validly granted, in terms of whether the consent of the authority under section 15 of the New Territories Ordinance had been obtained.  In Man Ping Nam v Man Mei Kwan (CACV 193/2002, 11 December 2002), Le Pichon JA observed obiter with Stone J agreeing that letting of land did not require the consent of the Land Officer.  Cheung JA however in a dissenting judgment took the contrary view.  In Tang Man Kit v Hip Hing Timber Co Ltd [2003] 4 HKC 278, the Court of Appeal held that renting of land did not require such consent, but that decision was held by the Court of Final Appeal on appeal[111] as being a nullity.  In Tang Man Kit v Hip Hing Timber Co Ltd (rehearing) (CACV 137/2012, 13 May 2005), Cheung JA at §79 maintained his dissenting view expressed in Man Ping Nam, but accepted that the majority in Man Ping Nam prevailed as a matter of legal precedence.

205.In the end, I accept Mr Chan’s submission[112] that the better view is that there is no need for a manager of a Tso to get the consent of the authority for letting the property of the Tso.

206.There are in any event Mr Chan’s further submissions that even if the P6 Leases were for any reasons not legally valid, there is no reason not to conclude that at least the underlying agreement would have amounted to a licence agreement, so that the right on the part of P6 to evict D2 would not have accrued until 31 December 1997.  I see clear force in these submissions, which I accept.

207.On the evidence before this Court, the P6 Leases expired in the end of 1997.  I refer in particular to the notice to quit of 7 October 1997[113] served upon D2 by Messrs Lawrence Ong & Chung (who claimed to be “instructed by [the Subject Lot’s] owners”).

208.However, D2 did not quit, and possession of the Subject Lot was not surrendered.

209.Upon the expiry of the P6 Leases, and as submitted by Mr Man which I accept, D2 became in effect an overholding tenant.

210.The net result of the above is that from early 1998, D2 remained in possession of the Subject Lot as an overholding tenant, but with a mistaken belief arising from the 2 Agreements as to its title or interest. 

211.The issue then is this: what the effects if any of such a mistaken belief has upon D2’s intention to possess.

K.2.C.  MISTAKEN BELIEF – CHEUNG KWONG YUEN

212.In Cheung Kwong Yuen, Kwan JA held at §§11 that there is no rule of law that the elements requisite to a claim of adverse possession cannot be established for a person who occupied the trespassed land with a mistaken belief of their title or status as tenant.  “Adverse” is not an element of adverse possession.  Her Ladyship’s observation at §§10 to 14 are important in this regard, which I shall cite in full:

“10. The first is a point of law. In [20] of his judgment, Member Pang took the view that Madam Sun cannot rely on adverse possession as a matter of law on the basis that this doctrine is not available to those who claim they are tenants or purchasers of the disputed property, citing Wong Tak Yue v Kung Kwok Wai (No 2) (1997 – 98) 1 HKCFAR 55, 69D – E.

11. Whether a squatter could establish factual possession and the requisite intention for the purpose of adverse possession is a question of fact depending on the circumstances of the case. There is no rule of law that these elements cannot be established for a person who mistakenly believes that he has good title or that he is a lawful tenant and does not realise he is trespassing on another’s land. As stated by Lord Hope in [sic Pye (2003)] at [69], the use of the term ‘adverse’ in this context is a convenient label only, in recognition simply of the fact that the possession is adverse to the interests of the paper owner. The right of action of the paper owner is treated as accruing as soon as the land is in the possession of some other person in whose favour the limitation period can run. In that sense, and for that purpose, the other person’s possession is adverse to his. But the question whether that other person is in fact in possession of the land is a separate question on which the word ‘adverse’ casts no light.

12. Ms Pauline Leung, counsel for the registered owner, accepted on appeal that there is no principle of law by which a person who mistakenly claims to be the lawful tenant or purchaser would be precluded from invoking adverse possession and that the correct position is as stated by Saville LJ in Hughes v Cork [1994] EG 25 (CS):

The learned judge appears to have held that it is impossible for someone who believes himself to be the true owner to acquire title by adverse possession since such a person cannot, ex-hypothesi, have an intention to exclude or oust the true owner. If this were the law then only those who knew they were trespassing, that is to say doing something illegal, could acquire such a title, while those who did not realise that they were doing anything wrong would acquire no rights at all. I can see no reason why, as a matter of justice or common sense, the former but not the latter should be able to acquire title in this way. What the law requires is factual possession, ie an exclusive dealing with the land as an occupying owner might be expected to deal with it, together with a manifested intention to treat the land as belonging to the possessor to the exclusion of everyone else.

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. But in the absence of such knowledge or belief it is in my judgment sufficient for this part of the second requirement simply to establish a manifest intention to exclude everyone.

13. The law as stated in Hughes v Cork has been applied in a number of cases of first instance in Hong Kong (Wong Luen Chun v Secretary for Justice [1998] 4 HKC 122, 129C–I; Tsun Wai Man v Cheung Yung (unrep., HCA 14202/1999, [2001] HKEC 944) (9 August 2001), at [38]–[39]; Wong Kar Sue v Sun Hung Kai Properties Ltd [2006] 2 HKC 600 at [6]; Lau Kam Tai v Dao Kin Ming (unrep., HCA 913/2010, [2014] HKEC 426) (13 March 2014), at [51]–[53]; Yu Fung Co Ltd v Olympic City Properties Ltd (unrep., HCMP 1084/2008, [2015] HKEC 1523) (30 July 2015), at [63]–[74]).

14. Insofar as Member Pang held that there is a principle of law by which a person who mistakenly claims to be the lawful tenant or purchaser would be precluded from invoking adverse possession, he is wrong in law.”

213.In the earlier case of Ho Hang-wan v Ma Ting-cheung [1990] 1 HKLR 649, the issue was whether the belief by the occupier that she had a licence to occupy from the landowner which had since without his knowledge been terminated in law upon the subsequent death of the landlord negatived the occupier’s animus possidendi.  The Court of Appeal held that the claimant’s possession after the death of the landlord was certain and unequivocal, and attributable to no continuing licence, and that the “mental reservations sought to be attributed to her as a hypothetical honest or reasonable licensee”[114]was not effective to negative animus possidendi.

214.In Ofulue v Bossert [2009] Ch 1 Arden LJ observed at §63 that:

“… What emerges from [Pye (2003)] is that it is necessary only to show that the person who claims to have acquired property by adverse possession was in possession without the consent of the paper owner and intended to possess. A person who wrongly believes he is a tenant can occupy property in such a way that he has possession, just as much as a squatter. He does not have to show that he had an intention to exclude the paper owner.”

215.That view was endorsed and reiterated by the House of Lords on appeal[115], wherein Lord Neuberger observed at §67 that:

“The concept of adverse possession was considered and explained by your Lordships’ House in [Pye (2003)]. The effect of the reasoning in that decision on the facts of this case is that, subject to the effect of the earlier proceedings and the correspondence in 1991 and 1992, Ms Bossert was indeed in adverse possession of the property for more than 12 years, namely from some time before June 1989, when the earlier proceedings were started, until 30 September 2003, when the instant proceedings were started. In particular, the fact that the Bosserts may have believed that they were in possession as tenants, in law or equity, of the Ofulues does not prevent their possession having been ‘adverse’. The decision in [Pye (2003)] made it clear that (provided that there is no other reason to defeat the claim) all that is normally required to make good a claim that section 15 applies is an intention to possess coupled with actual physical possession.”

216.As Mr Man has set out at §65 of his written closing, which cases cited therein I have considered, Cheung Kwong Yuen has been followed and applied in a number of subsequent cases, which include Pang Yiu Chor v Wong Wai Leung [2017] 4 HKLRD 761,per Anthony Chan J at §§47-54, Ng Yuk Pui Kelly v Dung Wai Man [2019] HKCFI 210, per L Chan J at §§485-487, and Lee Yin Mui Catherine v Lau Sau Kong John [2019] HKCFI 2462, per Deputy Judge Leung at §22.

217.I have considered Wong Tak Yue:

(a)  Wong Tak Yue was a case in which the affirmation of the claimant for vacant possession (the fourteenth defendant) and that of his daughter “established as a matter of fact that since the expiry of the seven-year tenancy in April 1964, his intention had been that he was willing to pay rent to the owners if they had requested payment and that he was ready and able to do so”;

(b)  Li CJ observed that that intention demonstrated that he was not intending to exclude the owner with the paper title but showed that he was treating himself as enjoying possession under a lawful title from the owners;

(c)  Ho Hang Wan was however not overruled, and was observed by Li CJ as being not inconsistent with the approach His Lordship adopted, that (at 69G-I):

“I should refer to the judgment of the Court of Appeal in Ho Hang Wan v Ma Ting Cheung (Personal Representative of Ma Sz Tsang, deceased) [1990] 1 HKLR 649 on which reliance was placed by Mr Erik Shum. I would make three observations. First, there is nothing in that judgment which is inconsistent with the approach I have adopted here. Intention is a question of fact and in determining it, the court has to assess all the circumstances. Secondly, the decision should be regarded as one on its own special facts. The Court presumed the requisite intention from the occupier’s exclusive possession after the termination of the licence by death of the licensor although the licensee did not receive notice of death. Thirdly, there is nothing on the facts in that case equivalent to the evidence we have here of the fourteenth defendant’s intention as regards the payment of rent.”

(d)  Those three observations make it clear that the Court of Final Appeal was not in Wong Tak Yue propounding any question of law on the effects of mistaken belief or mental reservations attributed to the claimant.  The question of intention to possess is a question of fact to be determined upon assessment of all the circumstances.  Any room for misunderstanding in this regard has further been removed by the Court of Appeal in Cheung Kwong Yuen. In this regard, the observations of B Chu J in Wong Koon Wah v All persons in occupation of Lot 775 in DD 216 [2020] HKCFI 3094 at §283 are to the same effect.

K.2.D.  BACK TO THE FACTS

218.With the above in mind, I come back to the facts.

219.As I have said, from the outset, D2 took possession in anticipation of the completion of the 2 Agreements.  In that context, D2 is expected to possess and use the Subject Lot as an owner would.  Its subsequent conduct has been consistent with that.

220.As suggested in Jourdan at §13-08:

“The grant of a licence to make some specified use of land is an indication that the licensor considers himself to be in control of the land, and thus is an indication that he has the animus possidendi.”

221.Between 1984 and 1997 when the P6 Leases were extant, D2 remained in possession of the Subject Lot as a tenant having exclusive possession of the same. 

222.After the expiry of the P6 Leases, D2 remained in possession in effect as an overholding tenant who used to have exclusive possession under the P6 Leases.

223.This feature of the present case distinguishes it from Cheung Chun Yan v Chan Man Kwong (unrep., CACV 268/2003 12 February 2004).  I accept Mr Man’s submissions[116] in this regard.

224.Any mistaken belief or mental reservations which the 2 Agreements had given rise, whilst a relevant factor, in my view does not negative D2’s intention to possess.  If anything, any belief on D2’s part that it would be the future owner, though mistaken since 1987 latest, would have reinforced its intention, in its own name and on its own behalf, to exclude the world at large.

225.All the above, together with the objective evidence of possession, occupation and use by D1, HLY Management and Horticulture Company which D2 permitted, in my view support the conclusion that D2’s intention to possess has been established.

K.2.E.  CONCLUSION ON INTENTION TO POSSESS

226.For the above reasons, and as analyzed, I make the factual finding that as from early 1998 upon the expiry of the P6 Leases, D2 had the animus possidendi required for its claim for adverse possession.

K.3.  ACCRUAL OF ACTION

227.The P6 Leases expired on 31 December 1997.  The cause of action for possession therefore accrued after July 1991.  The applicable limitation period is hence 12 years[117] from January 1998, which had expired by the time when HCA 299 was commenced on 23 February 2011.

L.  Issue #5

L.1.  THE EFFECTS AND REASONING OF LEUNG KUEN FAI

228.I first of all consider the effects and reasoning of Leung Kuen Fai.

229.In that case Deputy Judge Johnson Lam (as the Permanent Judge then was) considered the application of the doctrine of adverse possession to land registered in the name of a tso.

230.The learned Deputy Judge first of all considered the nature of a tso and the interest of its members.  He considered a number of authorities, which included Chu Tak-hing & Ors v Chu Chan Cheung-kiu & Ors [1968] HKLR 542, Tang Kai-chung & Anor v Tang Chik-shang & Ors [1970] HKLR 276, Kan Fat-tat v Kan Yin-tat [1987] HKLR 516 and Tang Yau Yi Tong & Anor v Tang Mou Shau Tso & Ors [1996] 2 HKLR 212.  Of importance are the following observations of Mills-Owens J in Tang Kai-chung at pp.279 to 280, which the learned Deputy Judge cited at §16, that:

“Speaking generally, a Tso may be shortly described as an ancient Chinese institution of ancestral land-holding whereby land derived from a common ancestor is enjoyed by his male descendants for the time being living for their lifetimes and so from generation to generation indefinitely. Thus, every male descendant of the common ancestor automatically becomes entitled at birth to an interest in the land for his lifetime; on his death his interest merges so as automatically to enlarge the interests of the surviving male descendants; thus his interest at any given moment during his lifetime depends on the number of male descendants then living and on his death it forms no part of his estate.”

231.From those authorities, the learned Deputy Judge derived, inter alia, the following propositions (§24):

“…

(b) In the context of Hong Kong law, it has been established that the concept of trust is applicable to a Tso with the managers as trustees and the members as beneficiaries. It is to be noted that this is an application of concepts of English law to a Chinese customary institution. However, by reason of the local circumstances, certain concepts in English trust law were held to be inapplicable, eg the rule as to perpetuity.

(c) The members of a Tso are the living male descendants of the focal ancestor from time to time. They have the beneficial interest in the property. The managers could not dispose of the property against the wishes of the members.

(d) In practice, with unanimous consent of all the members, the Tso property could be sold, partitioned or distributed. The members could also decide on the use of the surplus income generated from Tso property. However, as noted by Deputy Judge Robert Tang QC, Chinese customary law did not provide for that. Rather, it was allowed to happen because no-one would raise objection given the unanimous consent of the members.

(e) In the absence of a sale or partition or distribution, each member only has a life interest in the Tso property.  As observed by Mills-Owens J, the interest of a member arose automatically by birth. Likewise, it extinguished automatically upon death of the member.  Since the interest would not form part of the estate of a deceased member, there is no question of succession.  The extent of the life interest at any point in time depends on the number of living members in the Tso.”

232.Specifically in relation to the positon of existing members, and on the authorities cited before him, the learned Deputy Judge observed at §32 that it is obvious that the existing members of the tso have beneficial interests in the tso, and that such interests come within the meaning of equitable interest in land in section 10(1) of the Limitation Ordinance.

233.The learned Deputy Judge then considered the Limitation Ordinance, and in particular sections 2, 7, 10, 20 and 22 thereof.  He held at §§43 to 44 that members of a tso do not need to claim through the managers in seeking to recover the tso land against strangers.  It follows that on the question of limitation, the interests of the members have to be considered independently from the rights of the managers.  Further, even amongst members of the tso, limitation periods could be different for different members since one does not claim through another.

234.The learned Deputy Judge then held at §§45 and 46 of the judgment that:

“45. Whenever a new member is born, a new equitable interest in the Tso property is created. A new limitation period under ss7(2) and 22 would start to run. The new limitation period would not expire until six years after the member ceases to be an infant.

46. By reason of s.10(2) of the Limitation Ordinance, the title of the trustees would not extinguish so long as there is at least one beneficial owner whose right to recover the land is not barred ...”

235.For ease of reference, I set out the relevant parts of sections 10 and 22(1) of the Limitation Ordinance:

“10. Provisions in case of land held on trust

(1) Subject to the provisions of section 20(1), the provisions of this Ordinance shall apply to equitable interests in land, including interests in the proceeds of the sale of land held upon trust for sale, in like manner as they apply to legal estates, and accordingly a right of action to recover the land shall, for the purposes of this Ordinance but not otherwise, be deemed to accrue to a person entitled in possession to such an equitable interest in the like manner and circumstances and on the same date as it would accrue if his interest were a legal estate in the land.

(2) Where any land is held upon trust, including a trust for sale, and the period prescribed by this Ordinance has expired for the bringing of an action to recover the land by the trustees, the estate of the trustees shall not be extinguished if and so long as the right of action to recover the land of any person entitled to a beneficial interest in the land or in the proceeds of sale either has not accrued or has not been barred by this Ordinance, but if and when every such right of action has been so barred, the estate of the trustee shall be extinguished.

(3) Where land is held upon trust, including a trust for sale, an action to recover the land may be brought by the trustees on behalf of any person entitled to a beneficial interest in possession in the land or in the proceeds of sale whose right of action has not been barred by this Ordinance, notwithstanding that the right of action of the trustees would apart from this provision have been barred by this Ordinance.

22. Extension of limitation period in case of disability

(1) If on the date when any right of action accrued for which a period of limitation is prescribed by this Ordinance, the person to whom it accrued was under a disability, the action may be brought at any time before the expiration of 6 years from the date when the person ceased to be under a disability or died, whichever event first occurred, notwithstanding that the period of limitation had expired …”

L.2.  LEAVE TO ADDUCE EXPERT EVIDENCE

236.As said, leave for expert evidence was granted by Recorder Yvonne Cheng SC on the CCL Questions after a contested hearing.  The main reasons for the learned Recorder’s decision are:

(a)  as summarized at §39 of the judgment:

“There is therefore no authority which suggests that expert evidence of Chinese customary law is not admissible, or that the Court should not exercise its discretion to admit it, by reason only of the fact that there is a binding judicial precedent on the points of Chinese customary law in question. The general practice of the courts in receiving expert evidence on Chinese customary law continues to apply in such cases. Whilst previous authorities will be one source of Chinese customary law on which the court can draw, the court is not limited to this source. It should be borne in mind that since customs may have varied from time to time, or from place to place, a principle established in one particular case may or may not turn out to be of universal application in all other cases. Depending on the facts of the case, the court may find expert evidence to be of assistance even where there are already authorities on the point in question.”

(b)  whilst the Court of Appeal in Wong Shing Chau v To Kwok Keung [2008] 5 HKC 372 and Tsang Kwong Kuen v Hau Wai Keung Gaius [2014] 5 HKLRD 622 referred to and applied Leung Kuen Fai in reaching its conclusions, the correctness of Leung Kuen Fai was not considered, so that those two cases “do not constitute binding authorities on the propositions of Chinese Customary law from Leung Kuen Fai”^[118].

L.3.  PARTIES’ SUBMISSIONS

237.Mr Man effectively accepts that on the facts of the present case, and given in particular the birth of the 6 Descendants, if this Court is to apply the Principle in Leung Kuen Fai, Ds would not have a limitation defence[119]. Mr Man however submits that this Court should not apply Leung Kuen Fai.  He submits that Leung Kuen Fai was the result of the learned Deputy Judge having done his best he could without the assistance of any expert assistance to reach a view on the issue, basing the decision as the learned Deputy Judge did on foreign trust concepts.  Given the evidence of Professor Palmer now before this Court, which Mr Man submits should be preferred to that of Professor Baker’s, and despite previous authorities suggesting otherwise, Mr Man invites this Court to accept the following propositions[120]:

(a)  “the owners of the land held by a Tso when the Tso is extant are the heads of household (or ‘家長’) of the clan”;

(b)  “other members who are not heads of household had no vested interest in the land held by the Tso – they would only have a vested interest if they become the heads of households upon a family division”;

(c)  “it follows that new-born members would not have any vested interest in the land which would enable them to bring an action for trespass”;

(d)  “The result of the above is that section 10(3) of the [Limitation Ordinance] would not be engaged – the limitation period for recovery of the land held by the [P1 Tso to P6 Tso] would expire and would not be extended by reason of the birth of the new-born members”.

238.Mr Chan’s submissions on Leung Kuen Fai may be summarized as follows:

(a)  Leung Kuen Fai is good law.  The reasoning is sound.  It is based on the long-established principles accepted by all Hong Kong Courts that the relationship between the managers and members of a tso is that of trustees and beneficiaries.  It has also been applied by the Court of Appeal in Wong Shing Chau and Tsang Kwong Kuen;

(b)  D2 seeks to challenge the correctness of Leung Kuen Fai by relying on the expert evidence from Professor Palmer.  But:

(i)   the nature of the relationship between the managers and members of a tso is a matter of law and not evidence.  One cannot rely on the view on an expert witness to trump the long-established legal principles lay down by the court;

(ii)  Professor Palmer’s thesis is in any event unsound, because:

(1)  it is based on an unjustified assumption that it was Chinese customs that when a Tso distributes proceeds of sale of its land or from resumption of its properties, the monies would be paid on a per stirpes basis only to the heads of the families and that members of the families would not be entitled to anything and such sum they may receive would be at the mercy of the family heads;

(2)  Professor Palmer borrowed from concept on enjoyment of family property under the pre-1898 Chinese customs which was not applicable to and is not part of the law in Hong Kong.

L.4.  DISCUSSION

L.4.A.  LEUNG KUEN FAI

239.Whilst section 13 of the New Territories Ordinance says that “the court shall have power to”, the Courts are in fact mandated to and must recognise and enforce in any proceedings in relation to land in the New Territories any Chinese custom or customary right affecting such land. 

240.Due mainly to the reasons that judges and lawyers might not have been formally trained in respect of such Chinese law and custom, and the possibility of their local variance and changes over time, a practice has developed over the years allowing such Chinese law and custom to be proved by expert witnesses.

241.The development of such a practice however does not affect the status of Chinese law and custom as being part of the domestic law of Hong Kong on particulars areas of the law and on land in the New Territories.

242.Indeed, the practice of allowing expert witnesses to prove part of the domestic law has been described as being “a curious feature of our legal system” – per Roger JA in Chan Chiu Lam v Yau Yee Ping [2000] 3 HKLRD 443 at p.454F.

243.Hence, whilst Chinese law and custom can be proved by expert evidence, their proof is not confined to such.  They can be subject-matters of judicial notice, and can also be ascertained from previous judicial decisions, textbooks and other sources in manner similar to the ascertaining of common law – see Wong Yu Shi v Wong Ying Kuen [1957] HKLR 420 at p.438, To Kan Chi v Pui Man Yau (HCMP 562/1992, 26 November 1998) at §4.7, and Tang Tak Sum v Tang Kai Chung [2015] 1 HKLRD 286 at §25.

244.Given the other means open to ascertain Chinese law and custom, this practice of calling expert witnesses for proof may perhaps be more important in the older days when reported decisions on them were scant and sketchy.

245.Parties are in dispute as to whether certain decided cases on Chinese law and custom constitute “binding” precedents on the question in issue, and whether expert evidence should be admissible on the same point if there are such “binding” precedents.  Related to them, Mr Man has further argued that given the decision of Recorder Yvonne Cheng SC granting leave for the CCL Questions, the doctrine of issue estoppel precludes Ps from taking any point to the effect that consideration of Chinese law and custom evidence is precluded by previous binding decisions.

246.However, seeking to describe whether a prior decision as simply binding or not in a binary manner in my view over-simplifies the “curious feature of our legal system” in proving Chinese law and custom.

247.In Ng Kuk Mui v Yu Bik Fong Rebecca (HCAP 2/1997, 29 April 2000), a decision cited by the learned Recorder[121], Deputy Judge Carlye Chu (as the V-P then was) observed that:

“… While the court may derive assistance from decided cases as to the essential requirements for a Chinese customary marriage, it has to be borne in mind that no two cases have the same identical facts. It is also to be noted that customary law is not static, a proposition readily accepted by counsel. Accordingly, the kind of marriage rites that is required for a valid Chinese customary marriage may differ from one part of China to another and depend also on the time of the marriage and the social conditions prevailing at the time. It cannot be safely assumed that the form of ceremony accepted as sufficient to constitute a valid customary marriage in one case will necessarily support a finding of a valid marriage in another case… ”

248.When granting leave for the CCL Questions, and as is obvious from §39 of her Decision, the learned Recorder clearly had the considerations in Ng Kuk Mui in mind.  At that stage of the proceedings, the learned Recorder was, in my respectful view, correct in doing so.

249.Now this Court has had the opportunity to consider the expert evidence filed and adduced.  This Court is in a much better position to gauge the binding nature of any decided cases in the light of the nature of the issues in dispute, whether the issues involved are facts sensitive, and whether there is any local variance or evolution over time.

250.If not, and if the issue involved is a point of law which a higher court has considered and decided, I see no reason why the decision ought not to be a binding precedent on that point applying the usual stare decisis considerations.

251.The existence of that “curious feature of our legal system” may have to be considered when applying the rules on stare decisis, but it cannot alter them.

252.Relevant to the Principle in Leung Kuen Fai, issues have been raised as to the nature of a tso, the nature of members’ interest in the tso’s properties, and the relationship between its managers and members.  D2 has not pleaded any local variance, or time evolution, or how that relationship is otherwise facts sensitive.

253.In my view, those issues as explored before this Court are matters of law.  They are not facts-sensitive, at least not in the present case.  I agree with Mr Chan in this regard.  I am of the view that prior decisions on those same issues are proper judicial precedents.  Otherwise, it would in effect become permissible for a Chinese law expert to be called in a subsequent case to overrule a previous judicial decision on a question of domestic law.  That cannot be right.

254.In fact, Professor Palmer at [39] of Palmer Report[122] says that:

“The question of whether the manager should be regarded as a trustee in the eyes of Hong Kong law is an important but separate question and is one to be answered by the Hong Kong courts, having due regard to the nature of the position under Chinese customary law.”

255.There is a long line of cases discussing, recognizing and confirming tso as a form of trust and the manager of the tso registered under section 15 of the New Territories Ordinanc eatrustee:Tang Kai-chung at pp.279-280 and 304-305 per Mills-Owens J, Secretary for Justice v To Kan Chi & Ors (2000) 3 HKCFAR 481 at p.486 wherein Bokhary and Chan JJA cited with approval the dicta of Mills-Owens J in Tang Kai-chung at pp.279-280[123], Kan Fat-tat per Deputy Judge Robert Tang (as he then was) at pp.533-534, Light Ocean Investments Ltd at p.36F-G per Nazareth JA, Tang Yau Yi Tong, where Liu JA at 215 E observed that “Manager, trustee and Sze lei are synonymous”, Tang Kam Wah at §68 per Chu J, Tang Che Tai & Ors v Tang On Kwai [2007] 5 HKC 277 at §43 per Deputy Judge To, Ho Kang Yau v Ho Chun Wing [2011] 3 HKLRD 491 at §§21-22 per Cheung JA, and Tsang Shu Wo at §45 per Anthony Chan J.

256.From the above list of cases, I highlight the following:

(a)  In Secretary for Justice v To Kan Chi, in their joint judgment, Bokhary and Chan PJJ[124] cited with approval the dictaofMills-Owens Jin Tang Kai-chungat pp.279-280[125].  Importantly, in respect of the nature of a tso, the Court of Final Appeal endorsed and confirmed that every male descendant of the common ancestor automatically becomes entitled at birth to an interest in the land for his life-time, and his interest at any given moment during his lifetime depends on the number of male descendants then living;

(b)  I recite further specifically the following observations by Cheung JA in Ho Kang Yau at §§20-21, that:

“20. The courts in Hong Kong have consistently held that the manager of a tso or t'ong is in the nature of a trustee and he has the fiduciary duty to account to the members who are beneficially entitled to the properties of the tso or t'ong: see Tang Kai Chung v Tang Chik Shang [1970] HKLR 276; To Kan Chi v Pui Man Yau (unrep., CACV 32/1999, [2000] HKEC 136); Tang Yau Yi Tong v Tang Mou Shau Tso [1996] 2 HKLR 212; Man Ping Nam v Man Fong Hang (2006) 9 HKCFAR 674.

21. We are not satisfied that there is any room for challenge of these well-recognised principles.”

(c)  To Kan Chi and Ho Kang Yau are, on those principles, and in the absence of any local variance or time evolution, binding on this Court.

257.I have considered the submissions made in section F8 of Mr Man’s written closing seeking to distinguish those cases in that line on their facts or the issues, or that in some of them no expert evidence was called.

258.In respect of the Courts’ explanations on the nature of a tso and the relationship between the managers and members of a tso, I do not accept that the specific issues and facts before the Courts in those earlier cases affect their validity and authoritative.  Borrowing the words of Cheung JA in Ho Kang Yau, there is not any room for challenge of those well-recognised principles.

259.Mr Man submits[126] in relation to the consideration of the Principle in Leung Kuen Fai, that “the correct approach must be to ask what the nature of a Tso is and the nature of the interest of a member of the Tso under Chinese customary law, and then consider whether the English or common law concepts of trust would apply to them, or how the relevant provisions of the [Limitation Ordinance] should be applied to lands held by a Tso”.

260.Given the line of authorities discussed above, and in particular on the nature of a tso, the relationship between the managers and members of a tso, and that every male descendant of the common ancestor automatically becomes entitled at birth to an interest in the land for his life-time, I do not accept that that is the correct approach.  This Court in my view can and indeed should, as Deputy Judge Johnson Lam did in Leung Kuen Fai, consider the nature a tso and the relationship between the managers and members in the light of the authorities, and then to decide in that light the operation and effects of sections 10 and 22 of the Limitation Ordinance.  In my view, given the strength and state of the authorities and the nature of the issues, that is the only correct approach.

261.With the above discussions in mind, I accept Mr Chan’s submissions that the decision of Leung Kuen Fai is sound.  It is consistent with decided authorities on the nature of tsos.  I respectfully also agree with the reasoning of Deputy Judge Johnson Lam as explained therein.

262.Leung Kuen Fai has been applied by the Court of Appeal in Wong Shing Chau and Tsang Kwong Kuen.  Although Leung Kuen Fai was not challenged in those appeals, those two Court of Appeal decisions are at the very least highly persuasive.

L.4.B.  THE PROFESSORS’ OPINIONS

263.The 2 Professors agree on most matters.  In particular and relevantly:

(a)  the “tso” ([zu: 祖] literally, “ancestor”, also a group of persons agnatically descended from a common male ancestor, or lineage) was a traditional Chinese local organisation of ancient origins.  A substantial number of tsos were registered as landholders, sometimes with numerous holdings of land;

(b)  a tso has several possible ways of managing its property.  In particular, it could use a per stirpes arrangement or per capita system, and that the former was the more common;

(c)  in the process of family division (分家: fenjia) family property was divided amongst the房fang of the family;

(d)  ownership of land was often separated among several different entities;

(e)  younger tso members were not involved in tso decision making;

(f)  whatever the nature of the interest held by a tso member, it might not be realized except in so far as all members simultaneously realized it, as there was unified ownership by the entire tso, that interest being contingent upon unanimous agreement on whether and if so how to distribute.

264.They disagree on 2 main areas.  The first one relates to tso property holding:

(a)  In respect of this area, the two Professors’ views are set out at [05][A] of the Joint Report[127]:

“Professor Baker has referred to the tso as an ‘ancestral trust’ and a ‘customary land trust’, to its silei as ‘trustees’ and to its members as ‘beneficiaries’. In this he has followed the lead of a number of High Court and Appeal Court judgments, including that of HO Kang Yau CACV 42/2011 at paragraphs 20 and 21 quoted in [Baker [Report] 25]. His understanding is that these judgments do not suggest either explicitly or implicitly that a tso is to be equated with a ‘trust’ in every respect. He is at one with Professor Palmer in asserting that the mode of inheriting property in the traditional Chinese family was per stirpes, but does not consider it to be logically the case that ‘since both the tso and the family were quintessentially kinship organizations, the per stirpes principle was in imperial statutory law the most suitable model for organizing the tso.’

Professor Palmer sees the tso as a traditional land-holding kinship organisation that should not be characterized as a ‘trust’.  While acknowledging that there are a number of Hong Kong cases which have chosen to characterize the tso as a trust, Professor Palmer holds that these characterizations were made on the basis of judicial assumption only.”

(b)  This also links to the 1^st proposition put forward by Mr Man[128], that there is no reason to assume that a tso and a trust are the same “in every respect”;

(c)  But it is not part of Ps’ case, nor Professor Baker’s view, that a tso and a trust are the same “in every respect”.  The validity of this proposition does not advance D2’s case.  The fact that a tso and a trust are not the same “in every respect”, and that they have developed from different cultures, do not exclude the possibility and result that a tso in particular respect shares the character of a trust so that sections 10 and 22(1) of the Limitation Ordinance apply.

265.The second main area of disagreement is the most important one for the purpose of this hearing, and relates to the interests of tso members:

(a)  In respect of this area, the two Professors’ views are summarised at [07] of the Joint Report, that:

“Professor Baker considers that tso members at birth can acquire a direct vested interest in tso property, and that from birth until death, and where the custom of a tso allows, this is shown by their right to periodic distributions from the tso in cash or in kind, as well as to their share of the compensation in the event of Government resumption of tso land [Baker [Report] 29]. However, the diversity of custom and practice among tsos is great and renders generalization of uncertain value.

Professor Palmer advises that tso members at birth acquire only a contingent interest in the tso property.  If certain conditions are met, this interest is later transformed into a direct vested interest.”

(b)  The above also links to the other propositions put forward by Mr Man[129], that:

“172.2 Under Chinese customary law, a Tso is a kinship-based property holding institution. It is meant to be inalienable, indivisible and perpetual. It is thus not often that the question of who is the owner of the property held by a Tso would be asked.

172.3 A family (家) is also a kinship-based property holding unit in Chinese customary law. In respect of property, especially land, held by a family, only the ‘head of family’ (家長) have a vested interest in the property at any given time. Other members of the family have no vested interest, even if they may benefit from the family property. Thus, it is the family head who is the owner of the property.

172.4 Such principles relating to family property should apply also to lands owned by the Tso, in respect of the question who is the owner of the Tso property. This is because a Tso and a family are both a kinship-based land holding unit, and the family property concept is indeed how traditional Chinese customary law views land ownership.

172.5 It follows that members of the Tso except the family head have no ownership or interest in the land held by the Tso.”

(c)  The 2^nd and 3^rd Propositions put forward by Mr Man are in fact individually not controversial;

(d)  The nature of tso property has been discussed in many authorities.  For examples, in Kan Fat-tat at p.540G-H, tso property is described as being “intended to be inalienable, indivisible and perpetual”.  In Tang Che Tai & Ors v Tang On Kwai [2008] 3 HKC 521, Cheung JA on appeal observed at §59 that “Inalienability is the hallmark characteristic of a Tso or Tong land.”  In Lam Yui Ming as a manager of Lam Lok Yee Tso registered under section 15 of the New Territories Ordinance (Cap 97) v Lam Yui Pun & Ors [2020] HKCFI 2011, Deputy Judge William Wong SC at §84 observed that “Tso property, by its nature, is to remain in the Tso in perpetuity for the purpose of producing benefits for all Tso members, particularly the male descendants to carry out the focal ancestors’ bloodline”;  

(e)  Though no longer part of the law of Hong Kong[130], the nature of family property had been clear, but distinct and different from tso property:

(i)    As described by in Jamieson, Chinese Family and Commercial Law (1921)[131]:

“Next as to the mode in which the family property is divided. This consists not only of all ancestral inherited property and the accumulations made by the head of the family, but also of all property acquired by the sons. Prior to division, the family is an undivided whole, holding all things in common. The father is nominal owner, but each of the sons has an expectant interest in his share, of which he cannot be deprived. The earnings of every member are brought into a common fund, and no one has a right to compel a partition or to withdraw from the society until it is dissolved by mutual consent or by the natural demise of the head. The division of the property is therefore an important event.”

(ii)   In Kan Fat-tat, Deputy Judge Robert Tang recited the expert evidence adduced before him as follows[132]:

“… prior to division of the ka and its property, in customary law the father and his sons constitute a single property owning unit which is epitomized in the classical maxim tongju gongcai or in Cantonese tung-kui kung-tsoi, the literal meaning of which is ‘living together with property in common’. When each son is married, however, he and his wife, and eventually their children and grandchildren, constitute a sub-unit within the ka, known as a fang or in Cantonese fong, literally ‘a room’. Although certain property may be attributed to a fong as such, including in particular the dowries brought in by women marrying into it, as between the members of the ka the property of the ka remains undivided until the division takes place. Once the division of the original ka takes place each of the fong, headed by one of the sons, becomes a new ka in its own right, taking an equal share of so much of the property of the original ka as is divided. Within each new ka, if there are already married grandsons of the father of the original ka, there will then automatically be further fong and new fong will be constituted as and when each unmarried grandson is married.”

(iii)  In Liu Ying Lan v Liu Tung Yiu [2003] 3 HKLRD 249 at §18(11), Cheung JA observed that:

“Under s.88 [of the Qing Code], the concept of a household (戶) is an important unit for various purposes… In the Chinese family, the father, or senior male ascendant, has control over his sons, his grandsons and their wives as well as over servants and slaves. The father is vested with the family property and he alone can dispose of it. At his death, his eldest son takes his place and the family goes on as before. It may continue so undivided for several generations and is still deemed a single unit. The father or the head of family alone is capable of conducting the ancestral worship.”

(f)  Tso property and family property are therefore materially different in terms of their amassing, nature, mode of holding, purpose, and means of passing on.  In particular, in the case of family property, the head of family alone can dispose of it, and a division at some stage is usual; whereas in the case of tso property, the managers cannot effect disposition against the wishes of the members, and tso property is meant to be inalienable and perpetual;

(g)  Specifically in terms of the method of passing on family and tso properties, I have considered Professor Baker’s opinion[133]. Having contrasted the perpetual, indivisible and inalienable nature of tso tong with “the family which by virtue of the inheritance system was divisive and fragmenting”, he explains that:

“It therefore seems less misleading to consider a tso tong not as belonging fully to the inheritance system, but rather as being a parallel vehicle for transmission of property, a stabilising counterweight to the fissive inheritance system;”

(h)  I accept his opinion in this regard, and I agree;

(i)  Professor Palmer’s view is that only the heads of families within a tso has got the vested interest, and that other members of the tso only have a contingent interest in the property.  He confirmed that to be his view during cross-examination.  When asked what the meanings of “vested interest” and “contingent interest” are in that context, he said that:

“The vested interest is that as a member of the tso, if it is dissolved, then you are as a member entitled to the proceeds of the sale of the land. Whether you chose to pass any of the monies received or distributed to members of your family was a decision for the family heads themselves.”

(j)  But as submitted by Mr Chan, that will leave the further distribution of any proceeds in the hands of family heads at their mercy.  I have serious reservation as to how that would work in reality;

(k)  Even more importantly, as further submitted by Mr Chan, there cannot be any custom as to how the proceeds of sale would be disposed of, as tso property is meant to be inalienable;

(l)  The two professors are also on common ground that a tso has several possible ways of managing its property.  In particular, it could use a per stirpes arrangement or per capita system, though that the former was the more common;

(m)  Professor Palmer’s view is also inconsistent with the Chinese customary law that disposition of tso property must be, subject to local custom to the contrary, by the unanimous consent members of the tso – see Kan Fat-tat[134], or at least that any member is in the position to object[135];

(n)  As submitted by Mr Chan, there have been previous occasions when parties sought to apply by analogy the concept of family properties to tso affairs – see Lee Sun Kiu vHo Kay Fuk(HCA 195/2001,20 August 2004)at§§70-73, and Tang Chun Kit v Tang Lo Ping (HCMP 5529/2000, 10 September 2004) at §25.  Those attempts have been rejected given the differences between family and tso properties;

(o)  Given such differences, Mr Man’s 4^th Proposition that “principles relating to family property should apply also to lands owned by the Tso” involves a big and unjustified jump.  I do not accept the same.  I consequently also do not accept his 5^th Proposition;

(p)  I have considered Professor Baker’s oral evidence.  Towards the end of the cross-examination, certain propositions were put to the Professor, that:

“Q. 1^st proposition … is that in respect of property where family property principles apply, so when we are talking about family property, only heads of family have a vested interest in the property at any given time. Correct? I am not talking about tso tong land for the time being, for this proposition, I am taking about in cases where family property principles apply, it is the family head who has the vested interest in the property at any given time.

A. May I just ask does vested interest rule out an expectant interest?

Q. Yes, the ownership, who owns the land, to the question who have it, where in Property where family property principles apply, to the question who owns the land, it is the family heads.

A. Yes, I suppose that is right.

Q We say, and I want to get your comment on it, I put to you, that family property principles should apply also to lands owned by tso in respect of the question of who owns it, so to answer the question who owns it, I suggest to you that family property principles also should apply because that is how Chinese traditional Chinese law understands land ownership.

A I would agree.

Q It follows I suggest that members of the tso except the family heads have no ownership or interest in the land held by the tso.

[Question asked to be repeated]

A. I would have thought that they do.

Q So you disagree with that.

A.       Hm.”

(q)  Mr Man relies on those answers;

(r)  It is noteworthy that Professor Baker disagreed with the last proposition put to him.  Importantly, he further clarified during re-examination as follows:

“Q. … In certain questions my friend put the question on the basis of vested interest. Now what you understand as to what is required to be able to describe the person as the owners of property, for I think that is the most important thing. So what does ownership entail from what you understand when you give the answers to my friend’s question?

A. My understanding of the way in which membership of the tso work is that as of birth, they born into that membership of that tso, and that endow you with ownership.”

(s)  I accept Professor Baker’s evidence and explanation as to why he does not accept the last proposition put to him by Mr Man.  They are also consistent with Professor Baker’s opinion as set out in the Baker Report and the Joint Report;

(t)  Professor Baker’s opinion in the above regard is also consistent with the propositions set out by Deputy Judge Johnson Lam in Leung Kuen Fai, and in particular at §24(e);

(u)  I add that whilst, as agreed between the Professors, younger tso members were not involved in tso decision making, that was not due to any lack of interest on their part.  As explained by Professor Baker in Baker Report at §19:

“…the principle at any rate was firmly established:

…For whatever reason, if even only one of the group should hold a contrary opinion, ritual property may not be divided up …

Consensus should be taken to mean ‘consensus of all adult members’ rather than ‘consensus of all members’, because while minors became members and beneficiaries from birth, they clearly could have no part in discussion or decision-making at a time when their understanding was deemed not to be fully developed.”

266.For the above reasons, I prefer the opinions of Professor Baker to those of Professor Palmer in cases of differences.  I do not find the analogy with family property principles helpful.  In particular, in relation to the interests of tso members, I accept Professor Baker’s opinion as stated at [07] of the Joint Report.

L.5.  ISSUE #5 – CONCLUSION

267.For the reasons set out above, I with respect conclude that Leung Kuen Fai is good law.  I reach the same conclusion whether on the strength of the authorities, or on the evidence before me, or when they are considered and analysed together.

268.I apply the Principle in Leung Kuen Fai.  Given the birthdates of the 6 Descendants, I conclude that Ps’ right and title to the Subject Lot has not been extinguished.

M.       Ps’ claims in HCA 299

269.For the reasons set out above, Ps shall have vacant possession of the Subject Lot.

270.As recorded above, Mr Chan is no longer seeking any injunction compelling reinstatement.  I refuse Prayers (b), (c) and (d).

271.By Prayer (e), Ps seek an injunction against any entrance or use.  I bear in mind Ds’ long occupation of the Subject Lot and the uses which they have been put to.  There is also no evidence at this stage that Ds would not orderly surrender vacant possession of the same.  I am of the further view that in the circumstances, an injunction with immediate effect will bring upon hardship in particular to D1.  I in my discretion decline in the circumstances to make one at this stage.  Needless to say, should Ps deem it necessary, enforcement action may be taken.  This is however a matter for them.

272.I next consider the question of damages or mesne profit.

273.Mr Chan is seeking damages for trespass only from 23 February 2005 (6 years before the issue of the Writ in HCA 299).

274.I have considered Grandmax Reports #1 and #2.

275.Grandmax Report #1 does not take into account the factor that the Subject Lot is “land-locked, in the sense that it is surrounded completely by land owned by [D2] (and/or its associated companies) with no free access to the Subject Lot other than through such land”[136].

276.I accept Mr Man’s submissions that the Subject Lot is clearly landlocked in the sense as described in Grandmax Report #2.

277.With that factor in mind, Mr Wong readjusted his original assessments as set out in Grandmax Report #2.  I adopt those readjusted assessments, which are, relevantly:

	Date of valuation	Market Rent - No Free Access (HK$ per month)
8	29/12/2003	4,000
9	29/12/2006	4,300
10	29/12/2009	4,800
11	29/12/2012	6,000
12	29/12/2015	7,700

278.Adopting those assessments, the damages from 23 February 2005 are therefore calculated as follows:

Period	Market Rent (per month)	No. of months	Damages
23/02/2005 – 28/12/2006	$4,000	22 months + 6 days	$88,774
29/12/2006 – 28/12/2009	$4,300	36	$154,800
29/12/2009 – 28/12/2012	$4,800	36	$172,800
29/12/2012 – 28/12/2015	$6,000	36	$216,000
29/12/2015 – Delivery	$7,700

N.  Ps’ claims in HCA 1463

279.I now come back to HCA 1463.

280.For the reasons above, I make the following declarations:

(a)  The 1^st Agreement has never validly passed any title in the Subject Lot to Alex Wai, and that the owners of the Subject Lot are no longer bound under any terms of the 1^st Agreement;

(b)  The 1^st Agreement has been frustrated, and had been frustrated by 1987 latest.  The parties thereto have since such frustration been discharged from further performance of the same;

(c)  The 1^st Agreement has been abandoned, and had been abandoned by 1987 latest.  The parties thereto have since such abandonment been discharged from further performance of the same;

(d)  The registration of the 1^st Agreement in the Land Registry with Memorial Number TP211048 be vacated; and

(e)  The registration of the 2^nd Agreement in the Land Registry with Memorial Number TP211049 be vacated.

O.  Overall disposition

281.In respect of HCA 1463, I grant Ps judgment against both D1/1463 and D2 as follows, that:

(a)  Declarations as set out above be granted;

(b)  A costs order nisi that D1/1463 and D2 shall bear the costs of the action, with certificate for 2 counsel, to be taxed if not agreed.

282.In respect of HCA 299, I grant Ps judgment against both D1 and D2 as follows, that:

(a)  D1 and D2 shall deliver to Ps vacant possession of the Subject Lot;

(b)  D1 and D2 shall pay damages/mesne profit to Ps from 23 February 2005 on the rates and as calculated above;

(c)  An interest order nisi that interest on all damages/mesne profit payable be paid from date of writ to date of judgment at half the judgment rate, and thereafter at judgment rate till payment;

(d)  The Counterclaims of both Ds be dismissed;

(e)  A costs order nisi that the costs of the claim and counterclaim be to Ps, with certificate for 2 counsel, to be taxed if not agreed.