Chan Lok See Lilyan v. The Incorporated Owners of Wing Lee Building

DCCJ 3736/2022 & DCCJ 3877/2022

[2024] HKDC 833

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3736 OF 2022

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3877 OF 2022

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DECISION

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Introduction and the Plaintiffs’ pleaded cases

1.There is before me an application by each of the Plaintiff (“P”) in these two actions under O 19, r 7 of the Rules of the District Court, Cap 336H (“RDC”) by Inter-Partes Summons dated 12 April 2024 (“the Summons”), essentially seeking declarations to the effect that:

(1)  P, on her own and/or through her tenants and/or licensees, has been in adverse possession of the specified parts of the common area and space of Wing Lee Building, 27-33 Kimberley Road, Kowloon, Hong Kong (“the Building”); and

(2)  before the commencement of the respective action by P, the rights, title and interest of the Defendant (“D”) to those specified parts of the common area was extinguished.

2.D is the Incorporated Owners of the Building.

3.According to the Amended Statement of Claim in DCCJ 3736/2022, D is the incorporated owners of parts of the common area and space next to Flat number 22 on Ground Floor and Mezzanine Floor of the Building (identified as “Area A” and “Area B” and coloured pink and indigo respectively on the plan annexed thereto).

4.It is pleaded that since 2006, P, on her own and/or through her tenants and/or licensees, has been openly, continuously and exclusively possessing and controlling Area A and Area B to the exclusion of the whole world.

5.In particular, in 2006, P removed the staircase in Area A, and installed a door and lock at Area B to use as a storage room.  Since 2012, P permitted the owner of a restaurant on the ground and mezzanine floors of the Building to place a food display cabinet in Area A.

6.It is further pleaded that P did have the intention to take possession and control of Area A and Area B for her own use and/or benefit to the exclusion of the whole world, and such intention was sufficiently vindicated to the whole world.

7.Therefore, P claims that she has been in adverse possession of Area A and Area B for a period in excess of 12 years before the commencement of this action and D’s title to those areas was extinguished by virtue of s 17 of the Limitation Ordinance, Cap 347 (“the Ordinance”).

8.According to the Amended Statement of Claim in DCCJ 3877/2022, D is the incorporated owners of the following common areas and spaces located:

(1)  next to Flat number 23 on Ground Floor of the Building (identified as “Area A” and coloured pink on the first plan annexed thereto (“Plan 1”));

(2)  next to Flat number 17 on Ground Floor of the Building (identified as “Area B” and coloured pink on Plan 1);

(3)  next to Flat number 22 on Mezzanine Floor of the Building (identified as “Area C” and coloured pink on the second plan annexed thereto (“Plan 2”));

(4)  next to Flat number 22 on Mezzanine Floor of the Building (identified as “Area D” and coloured pink on Plan 2);

(5)   next to Flat number 23 on Mezzanine Floor of the Building (identified as “Area E” and coloured pink on Plan 2); and

(6)   next to the staircase at the roof of the Building (identified as “Area F” and coloured pink on the third plan annexed thereto).

9.It is pleaded that since 1990, P has been openly, continuously and exclusively possessing and controlling Area A, Area B, Area C, Area D, Area E, and Area F (collectively, “the Areas”) to the exclusion of the whole world.  In particular:

(1)  P delineated Area A with walls, installed a door and lock outside Area A, and has used Area A as a storeroom and since 2019, as an estate agency office;

(2)  P delineated Area B with bricks, installed a lock and used it as a storeroom;

(3)  P installed a rectangular structure at Area C and leased it as a residential space;

(4)  P installed a rectangular structure at Area D and leased it as a residential space;

(5)  P installed an inverted T structure in Area E and leased it as a storeroom and residential space; and

(6)  P delineated Area F with wooden blocks, installed a lock and leased it as a residential space.

10.It is further pleaded that P did have the intention to take possession and control of the Areas for her own use and/or benefits to the exclusion of the whole world.

11.P therefore claims that she has been in adverse possession of the Areas for a period in excess of 20 years before the commencement of the present action and D’s title to the Areas was extinguished pursuant to s17 of the Ordinance.

12.In each action, P seeks declarations inter alia that: (1) D’s title, interest and/or rights in and/or over the specified common areas have been absolutely distinguished; and (2) P has acquired possessory title, interest and/or rights in and/or over those specified common areas.

Procedural History

13.The Writ of Summons together with the Statement of Claim was issued in DCCJ 3736/2022 and DCCJ 3877/2022 on 23 September 2022 and 5 October 2022 respectively.

14.Although D, whilst acting in person, had filed Acknowledgement of Service of the Writ in each action, to date, it has not filed any Defence.  D has since December 2023 been legally represented in both actions.  Ms Hui, counsel for D, confirmed at today’s hearing no defence has been filed nor did D intend to file any defence.

15.In each of these two actions, prior to the taking out of the Summons, by a Consent Summons dated 24 January 2024 (“1^st Consent Summons”), parties sought to obtain similar declarations as that sought in the Summons.

16.However, on 26 February 2024, Deputy District Court Judge Brian Mak (“the learned DDJ”) observed and directed:

“The relief sought by the parties is in declaratory nature. A declaration can only be made after proper argument and could not be made merely on admission by the parties (Para 15/16/2 HKCP refers). Please explain why the Court should depart from the general approach in this case.”

17.By way of Joint Submissions of P and D lodged on 13 May 2024 (“the Joint Submissions”), it was submitted inter alia that:

(1)  It was both parties’ view that the dispute between the parties could be disposed of by Consent Summons instead of taking out a Summons (that said, it was also stated that on 9 April 2024, P in each of these 2 actions took out a Summons under O 18, r 19 seeking default judgment against D[1]);

(2)  Whilst generally a declaration should only be granted after proper argument and cannot be made merely on admissions by the parties whether in pleadings or otherwise, the rule of the court that a declaration will not be granted when giving judgment by consent or in default without a trial is a rule of practice and not of law;

(3)  Such rule of practice will give way to the paramount duty of the court to do the fullest justice to the plaintiff to which he is entitled;

(4)  In the present case, the requirements for the grant of declaratory relief as laid down by the Court of Appeal in Convoy Global Holdings Ltd & Anor v Kwok Hiu Kwan & Anor [2021] HKCA 1594 were satisfied; and

(5)  The declarations would serve useful purposes to P and the rule of practice against the grant of declarations should be displaced to do fullest justice to P in both actions.

18.Notwithstanding that no order were made in terms of the 1^st Consent Summons even after the lodging of the Joint Submissions, the parties filed a second Consent Summons dated 13 May 2024 (“2^nd Consent Summons”) in each of these actions, after the Summons had been filed, seeking an order that:

(1)  A declaration that P, by herself and/or through her tenants and/or licensees, has been in adverse possession of part of the common area and space of the Building for a continuous period exceeding, 12 year in DCCJ 3736/2022 and 20 years in DCCJ 3877/2022, immediately prior to the commencement of these proceedings;

(2)  The Summons be withdrawn with no order as to costs and the hearing scheduled for 23 May 2024 be vacated; and

(3)  There be no order as to costs of this action and no order as to costs of and occasioned by and/or incidental to the execution of the 2^nd Consent Summons.

19.When the 2^nd Consent Summons in both actions were placed before me, like the learned DDJ, I also did not make any order in terms.  The parties were notified of my observation that as Ps were seeking declaratory relief in an application for default judgment, the court will: (1) scrutinize the application for default judgment carefully; and (2) expect maximum assistance to be provided in order for the relief to be granted.  I referred parties to Hong Kong Civil Procedure 2024, Vol.1, §19/7/20 and in particular, the cases of Ho Kwai Chun v Lai Yu (Unrep) DCCJ 916/2013, 3 July 2014 and Shue Huei Yue v Tan Chung Meng (Unrep) DCCJ 2294/2013, 1 August 2014 cited therein.  Accordingly, I refused to vacate today’s hearing and further directed P to lodge skeleton submissions and hearing bundles by 4:30pm on 21 May 2024.

20.Although skeleton submissions on behalf of the Plaintiffs (“Ps”) and “Hearing Bundle of Pleadings” were lodged as directed, the all-important pleadings namely, the Writs and Amended Statements of Claim, were not included.

21.Perhaps, I may take this opportunity to remind all legal practitioners of the previous observations of the court that where declaratory relief is sought, even for uncontested applications (or even as in the present cases, consensual applications), maximum assistance should be provided to the court and the court will not act as a “rubber-stamp”.  See Ho Kwai Chun at §25 per His Honour Judge Kent Yee:

“Lastly, I should point out that I have obviously adopted a liberal approach in this matter to do fullest justice. It was submitted to this court, both orally and subsequently in writing, that the Rear Portion is not of substantial value and Ho is not of substantial financial means. Hence any further proceedings would cause Ho hardship. This submission is plainly right but I would have thought in these circumstances the right thing for Ho’s legal advisors to do is to prepare for Ho an open and shut pleaded case and to take only the appropriate and essential steps to obtain judgment on the pleading. In addition, to ensure a favourable outcome, maximum assistance should have been given to this court. A skeleton submission and a simple hearing bundle are merely basic. The latter has not even been provided to this court despite my specific direction. However straightforward this kind of applications may seem to Ho’s legal advisors, this court should not be expected to deal with the matter on a do-it-yourself basis and rubber-stamp this uncontested application without further ado.”

22.Similar sentiments have been repeated by the court in other cases: see eg Shue Huei Yue, §§24-25 and more recently, the reported case of Cheng Yuk Leung v Personal Representatives of the Estate of Cheng Ah Mang [2021] HKDC 224, §19(4).

23.Further, it must follow from the foregoing, where declaratory relief is sought in an application for default judgment, to seek such relief by way of a consent summons is wholly misconceived.  Legal representatives for the plaintiff seeking such relief cannot abdicate their duty to the court and, may I add, responsibility to their client, in the hope that a hearing of their application will be dispensed of or that submissions need not be made to the court.

24.Moreover, having failed to obtain orders by way of the 1^st Consent Summons, for the reasons correctly given by the learned DDJ, the 2^nd Consent Summons (which sought relief already covered by the 1^st Consent Summons) ought never to have been filed and should be withdrawn or dismissed.

25.Accordingly, notwithstanding the 1^st Consent Summons and the 2^nd Consent Summons filed in both actions, today’s hearing of the Summons in both actions were necessary.

Applicable principles

26.The applicable principles governing an application for default judgment under O 19, r 7 as well as a claim for adverse possession are well-settled.  As these were both helpfully summarized by Cheng J in Lee Wah Put and Anor v Li Ip Shing [2022] HKCFI 529, §§5-10, I gratefully adopt them herein:

“C.1 Applications for default judgment

5. On an application for default judgment under O 19 r 7, the court gives such judgment as the plaintiff appears entitled on the statement of claim: O 19 r 7(1). Accordingly, the court will not consider any evidence.

6. It is not the normal practice of the court to make a declaration without a trial. However, this is only a rule of practice which should not be followed when the plaintiff has a genuine need for the declaratory relief and justice would not be done if such relief were denied. The court will scrutinise the application carefully and will not hastily grant the relief sought. The declaratory relief should not be in terms wider than what the plaintiffs are entitled to and what is necessary to do justice to them. See Hong Kong Civil Procedure 2022, note 19/7/20.

C2. Adverse possession

7. Pursuant to s.38A of the Limitation Ordinance (Cap 347) (‘LO’) and s 7 of the Limitation Ordinance 1965, actions for recovery of land are statute-barred after twenty years from the date on which the right of action accrued, where the right of action accrued prior to 1 July 1991.

8. No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run: s 13 LO.

9. At the expiration of the prescribed period for any person to bring an action to recover land, the title of that person to the land shall be extinguished: s 17 LO. However, the effect of expiration of the period is only that it extinguishes the title of the dispossessed against the squatter; it does not convey the owner’s title to the squatter: Chan Tin Shi & Others v Li Tin Sung & Others (2006) 9 HKCFAR 29 at [13]; St Marylebone Property Co Ltd v Fairweather [1963] AC 510 at 535.

10. A person claiming to be in adverse possession must be shown to have both possession and the requisite intention to possess: Wong Tak Yue v Kung Kwok Wai & Another (No 2) (1997-98) 1 HKCFAR 55 at 68E.”

27.The period of adverse possession as required by section ss 7 and 17 of the Ordinance is 20 years, if the right of action accrued before 1 July 1991, and 12 years, if the right of action accrued on or after 1 July 1991.

Analysis

28.I am satisfied that in both actions, P has pleaded both factual possession and the requisite intention to possess the claimed common areas for more than the period of adverse possession as required by the Ordinance.

29.The one matter which I was initially troubled by was the fact that it is not pleaded in neither action that P is not privy to the Deed of Mutual Covenant of the Building dated 9 March 1969 (“DMC”).  The DMC was mentioned in the Summons (as defining the common area which the Areas form a part) but was not pleaded in the Amended Statement of Claim in both actions.  However, it has been pleaded that the claimed common areas are part of the common area which are owned by the incorporated owners of the Building.

30.It would appear that a claim for adverse possession against a common area or common part owned by the incorporated owners will not be defeated if the plaintiff is not privy to the DMC.  See Wong King Lim v The Incorporated Owners of Peony House, CACV 3/2012, §§34 and 43-44, applied in Chan Wing Go v The Incorporated Owners of Wing Hong Factory Building (Unrep) DCCJ 1736/2014, 9 October 2014, a case cited by Mr Lai, counsel for Ps.

31.However, given that: (1) D has never filed any Defence to the Amended Statements of Claim raising such possible defence; and (2) the Joint Submissions, signed by solicitors for D, expressly stated: “In both actions, the Plaintiffs are not bound by the DMC. There is no privity between the Plaintiffs and the Defendant.  The Defendant was not in a position to enforce a covenant against either Plaintiff…”; I am of the view that Ps are entitled to relief on the basis of what has been pleaded in their respective Amended Statement of Claim.

32.Furthermore, I am satisfied that there is a genuine need to grant the declarations sought (as amended by me) to do fullest justice to Ps.

Dispositions and Orders

33.Accordingly, I would grant:

(1)  In DCCJ 3736/2022:

(a)  a declaration that P, by herself, and/or through her tenants and/or licensees, has been in adverse possession of the part of the common area and space of Wing Lee Building, No 27-33 Kimberley Road, Tsimshatsui, Kowloon, Hong Kong coloured pink and indigo respectively in the Appendix to the Inter-Partes Summons dated 12 April 2024 (“the Common Areas”) for a period of not less than 12 years prior to the commencement of the present action, and P has thereby acquired and is entitled to the possessory title, interest and/or rights in and/or over the Common Areas;

(b)  a declaration that D’s title, interest and/or rights over the Common Areas has been absolutely extinguished by virtue of s 17 of the Limitation Ordinance, Cap  347;

(c)  an order that there be no order as to costs of this action including this application; and

(2)  In DCCJ 3877/2022:

(a)  a declaration that P, by herself, and/or through her tenants and/or licensees, has been in adverse possession of the part of the common area and space of Wing Lee Building, No 27-33 Kimberley Road, Tsimshatsui, Kowloon, Hong Kong identified as Area A, Area B, Area C, Area D, Area E and Area F and coloured pink in the Appendix to the Inter-Partes Summons dated 12 April 2024 (“the Common Areas”) for a period of not less than 20 years prior to the commencement of the present action, and P has thereby acquired and is entitled to the possessory title, interest and/or rights in and/or over the Common Areas;

(b)  a declaration that D’s title, interest and/or rights over the Common Areas has been absolutely extinguished by virtue of s 17 of the Limitation Ordinance, Cap 347; and

(c)  an order that there be no order as to costs of this action including this application.

Mr Richie Lai instructed by Jal N Karbhari & Co, for the plaintiff in DCCJ 3736 of 2022 and DCCJ 3877 of 2022

Ms Gloriane Y Y Hui instructed by Chang & Co, for the defendant in DCCJ 3736 of 2022 and DCCJ 3877 of 2022