Chan Chik Lam and Another v. Upjet Ltd

DCCJ 2464/2021

[2026] HKDC 759

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2464 OF 2021

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JUDGMENT

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A. INTRODUCTION

1.This action concerns the Plaintiffs’ claim for adverse possession to Lot Nos 119, 122, 124, 126, 127, 128, 129, 130, 131 and 133 in Demarcation District No 360, Chuen Lung, Tsuen Wan, New Territories, Hong Kong (collectively, “the Lots”).

2.The Plaintiffs’ case is that they have been in exclusive, continuous and uninterrupted possession of the Lots since about 1996, with the requisite intention to possess, such that the Defendant’s title to the Lots has been extinguished by operation of Sections 7 and 17 of the Limitation Ordinance (Cap 347) (“the LO”).

3.The Defendant denies the Plaintiffs’ claim. The Defendant relies on its status as registered owner of the Lots pursuant to an Assignment dated 26 March 2015 (“the 2015 Assignment”) and put the Plaintiffs to strict prove of their alleged adverse possession.

4.Further, the Defendant contends that the Plaintiffs’ alleged occupation and use of the Lots involve breaches of law and breach of Government Lease, such that the Plaintiffs’ claim should be refused on the grounds of illegality and/or public policy.

5.The Defendant counterclaims against the Plaintiffs for damages for trespass, including mesne profits.

B.      BACKGROUND

6.I set out below the relevant factual background which is either agreed in the Statement of Facts and pleadings or are not seriously disputed.

7.The Plaintiffs were at all material times husband and wife until they divorced in 2018.

8.The Plaintiffs operated a vehicle repair business trading as “Lam Keung Auto Motor Co (林強汽車工程)” (“the Business”) in Tsuen Wan, New Territories, Hong Kong since about the early 1990s.

9.The Defendant is a company incorporated in Hong Kong. According to its 2022 Annual Return,the Defendant is owned by one “Wong Pit Chiu” (99% shareholder) and one “Wong Wai Yat” (1% shareholder), and they are also the directors of the Defendant.

10.By the 2015 Assignment, the Defendant became the registered owner of the Lots on 26 March 2015. Prior to that, Ka Luen Enterprises Limited (“Ka Luen”) was the registered owner of the Lots from 24 April 1970 to 26 March 2015.

11.The Lots are a group of contiguous lots (separated only by a very small gap of Government land) situated in a sloping valley north of a main road, Route Twisk, in Chuen Lung Area, Tsuen Wan.

12.There is no way to retrace the original lot boundaries on the ground.

13.On 24 October 2003, the 1^st Plaintiff applied for supply of electricity for the address RTW/1C/179, Route Twisk, Mar Tong Village, Chuen Lung, Tsuen Wan, New Territories (“the Address”), being the address of the Lots.

14.Before 2012, the Plaintiffs did not use the Address as the registered addresses for the Business. From around 2012 onwards, the Plaintiffs used the Address as the registered addresses for the Business under the names of Po Shing Motor Car Engineer Co Limited (branch Mei Tat Auto Motor Company), Lam Keung Motor Car Air-Condition and Engineer Co (branch Po Shing Auto Motor Co) and Luck Sight Limited (branch Luck Sight Limited).

15.In July 2012, the 1^st Plaintiff applied for a telephone landline for the Lam Keung Motor Car Air-Condition and Engineer Co at the Address.

16.The Plaintiffs have never paid rent or fees in relation to its use of the Lots to the Defendant.

17.On 18 July 2017, the Defendant’s solicitors issued the Defendant’s first demand letter to the Plaintiffs in relation to the Lots (“the First Demand Letter”).

18.On 15 April 2020, the Defendant’s solicitors issued the Defendant’s second demand letter to the Plaintiffs in relation to the Lots.

C.      PARTIES’ RESPECTIVE CASES

C1.    Plaintiff’s case

19.The Plaintiffs’ case as pleaded and set out in their opening and closing submissions can be summarised as follows.

20.From about early 1990 to 1996, when the 1^st Plaintiff was carrying on the Business, he came to know one Mr Yeung, who resided in a hut situated on Lot Nos 129 and 130 (“the Hut”). Mr Yeung would from time to time engage the 1^st Plaintiff to repair his excavator located on the Lots. Hence, the 1^st Plaintiff visited the Lots from time to time. 

21.Mr Yeung informed the 1^st Plaintiff that he was not the landlord of the Lots, but he had been residing at the Hut and enjoying exclusive possession of the Lots without interruption and without the consent or permission of the landlord. Mr Yeung also told the 1^st Plaintiff that he could freely use the Lots for the Business without seeking the landlord’s consent or permission.

22.Acting on Mr Yeung’s representations, the Plaintiffs decided to move part of the Business and some motor vehicles to the Lots. The Plaintiffs started by expanding the access road to the Lots (“the Access Road”) in order to move some of the vehicles of the Business to the Lots. The Plaintiffs then moved part of the operation of the Business to the Lots as garage for placing motor vehicles, workplace for the maintenance and repair of motor vehicles and storage of vehicle parts and other materials.

23.Further, the Plaintiffs cleared weeds on the Lots, engaged workers to pave the roads and grounds with cement for placing large containers and repairing parts for vehicles at the Lots. The Plaintiffs also built a covered garage for storage of tools, car parts, machineries and sundry items. They also built a covered garage for storing tools, car parts, machinery and sundry items (“the Covered Garage”).

24.In about 1996, Mr Yeung passed away. From then onwards, the Plaintiffs started exclusive possession of the Lots.

25.The Plaintiff says that the Lots were and are still situated on a slope and bounded by a retaining wall on Lot 124, another retaining wall on Lot 128, with natural forestation to its north, east and west. Access to the Lots was and is still via the Access Road only.

26.The Plaintiffs rely on a series of acts said to demonstrate their exclusive possession and control thereafter:

(1)     The 1^st Plaintiff installed a 10-metre-tall electric gate at Lot 122 (“the Gate”) to block third parties from entering the Lots via the Access Road. The Gate was and is still operated by remote controls only kept by the Plaintiffs, their children and their domestic helpers;

(2)     The 1^st Plaintiff excavated the Lots to build and connect water pipes and drainage ditches. He built a hoarding of corrugated steel sheets on Lot 124 and a brick wall on Lot 128 to maintain the slope of the Lots;

(3)     The Plaintiffs continued to operate the Business on the Lots and placed vehicles, tools, vehicle parts, machineries and sundry items relating to the Business on the Lots;

(4)     Construction materials relating to the Business such as metal frames and wire mesh were placed on the part of Lot 122 outside the Gate. Containers and vehicles of the Business were placed on the part of Lot 124 outside the said hoarding from time to time;

(5)     In 1998, the 1^st Plaintiff engaged workers to demolish the Hut and build a house in its place (“the House”). He also built a new retaining wall of about 4 metres in height to replace the brick wall on Lot 128;

(6)     Since about 1998, the 2^nd Plaintiff began to cultivate on Lots 129, 130 and 133, and enclosed the farmland by chain-link fences and natural field bounds. The 2^nd Plaintiff grew various kinds of fruit trees and vegetables. In about 2009, the 2^nd Plaintiff erected a small wooden shed on the farmland on Lots 129 and 130 for storage of farming tools and materials;

(7)     Since around 2000, the 1^st Plaintiff expanded the garages at Lots 126, 127 and 128;

(8)     In around 2000, the 1^st Plaintiff erected fences at Lot 133 to prevent wild boars and cows from entering. The fences were later demolished but the ruined fence poles remained;

(9)     In around 2003, the 1^st and 2^nd Plaintiffs excavated soil and paved the ground with cement to form a track connecting the garage on Lots 126, 127 and 128 with the House by passing through Lots 129 and 130. The Plaintiffs also started to deforest and pave the Lots in order to create more open space for their possession and use;

(10)     In around October 2003, the Plaintiffs requested supply of electricity from CLP Power Hong Kong Limited. From around 2003, the Plaintiffs started clearing the weeds grown on Lot 131 and using the lot as open space and storage;

(11)     From around 2004, the Plaintiffs and their four children started to reside in the House permanently;

(12)     From around 2004 to March 2009, the Plaintiffs obtained water from a water tank situated at the north of Lot 133;

(13)     Since around June 2005, the 2^nd Plaintiff has employed domestic helpers to work and reside in the House.  The Plaintiffs also started growing banana trees on Lot 119 for self-consumption;

(14)     In around 2008, landslide occurred at Lot 124 and destroyed the hoarding of corrugated steel sheets there. The Plaintiffs built a retaining wall with cement of around 10 metres in height to prevent any further landslides from occurring. Since then, the Plaintiffs have purchased cement to consolidate slopes both on and near the Lots;

(15)     On 25 February 2009, the Plaintiffs’ application for water supply for the Lots was approved by the Water Supplies Department;

(16)     In around 2012, the Plaintiff expanded the Business and installed a 6-metre-long paint spray booth on Lot 126 for vehicle maintenance and conducting paint spraying for vehicles. A lot of vehicles were, and still are, placed on the Lots;

(17)     Since 2012, the Plaintiffs have obtained business registration certificates for the Business trading under different names at the material time including “Po Shing Motor Car Engineer Co Limited”, “Lam Keung Motor Car Air-Condition and Engineer Co” and “Luck Sight Limited” with the address at RTW/lC/179 Route Twisk, Mar Tong Village, Chuen Lung, Tsuen Wan, New Territories (ie the House). The Plaintiffs also applied for telephone landline services for the Business at the House.

27.The Plaintiffs did not at any time pay rent or licence fee to anyone, including the Defendants, for their possession and use of the Lots.

28.By reason of the matters above, since about 1996, the Plaintiffs have been in exclusive, continuous and uninterrupted possession and control of the Lots, with the requisite intention to exclude the whole world, including the paper owner Ka Luen (before 26 March 2015) and the Defendant (since 26 March 2015), from the Lots.

C2.    Defendant’s case

29.The Defendant’s case as pleaded in its Amended Defence and Counterclaim (“D&CC”) and set out in its opening and closing submissions are as follows.

30.The Defendant does not admit the Plaintiffs’ allegations that they had been in adverse possession of the Lots since 1996 and put the Plaintiffs to strict proof of their case.

31.The Defendant complains that the Plaintiffs’ alleged occupation and use of the Lots involved unlawful acts and structures: 

(1)     The Covered Garage, the House and the yellow structure identified in the annex to the D&CC, ie TS 7[1] were unauthorised building works (“UBWs”), having been built without the approval and consent of the Building Authority contrary to section 14 of the Buildings Ordinance (Cap 123) (“BO”), without obtaining any exemption under the Buildings Ordinance (Application to New Territories) Ordinance (Cap 121) (“BO(ANT)O”);

(2)     The Business, including its expanded scope, was a usage in breach of the Government Lease[2];

(3)     The Business, in particular the maintenance and repair of motor vehicles, would inevitably generate and involve disposal of chemical wastes within the meaning of “chemical waste” as defined in Section 3 of the Waste Disposal (Chemical Waste) (General) Regulation (Cap 354C) (“the Regulation”). The above operation was carried out without proper registration and constitutes a criminal offence contrary to Section 6(1) of the Regulation.

32.By reason of the above illegality, any acquisition of possessory title by the Plaintiffs should be barred/refused for being contrary to public policy.

33.The Defendant counterclaims against the Plaintiffs for damages for trespass, including mesne profits.

D.      THE ISSUES

34.The following issues arise from the parties’ dispute:

(1)     Whether the Plaintiffs can establish adverse possession of the Lots (“Issue 1”);

(2)     Whether the Plaintiffs’ claim should be refused on grounds of illegality and/or public policy? (“Issue 2”); and

(3)     If the Plaintiffs’ adverse possession claim fails, whether the Defendant is entitled to its counterclaim for trespass and/or mesne profits (“Issue 3”).

E.      THE APPLICABLE LAW

E.1    Proving adverse possession

35.The Plaintiffs’ claim is founded on Sections 7(2), 13 (1) and 17 LO.

36.Broadly speaking, where a person has been in adverse possession of land for the requisite limitation period, the paper owner’s title is extinguished by operation of law. For present purposes, the Plaintiffs must establish, on a balance of probabilities, that they were in adverse possession of the Lots for a continuous period of at least 12 years: see Section 7 (2) LO.

37.In order to succeed in a claim for adverse possession, a claimant must prove both: (a) factual possession; and (b) the requisite intention to possess (animus possidendi).

38.In Tsang Foo Keung v Jimmy Chu [2017] 3 HKC 527, the Court of Appeal emphasised at §22 (4) that there must be compelling evidence before adverse possession can be established. The paper owner does not have to plead any positive case or call any witness. He is entitled to rely on his paper title. He is entitled to test the squatter’s case and is entitled to judgment if the squatter fails to discharge the very high burden of proof: see Chan Wai Yee v Kwong Wai Piu [2020] HKCFI 1680 at §§30-31.

E.2    Factual possession

39.The classic statement of principle is that of Slade J in Powell v McFarlane (1979) 38 P & CR 452 at pp 470-471, where his Lordship said that factual possession signifies “an appropriate degree of physical control”:

“Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly. 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. In the case of open land, absolute physical control is normally impracticable, if only because it is generally impossible to secure every part of a boundary so as to prevent intrusion. “What is a sufficient degree of sole possession and user must be measured according to an objective standard, related no doubt to the nature and situation of the land involved but not subject to variation according to the resources or status of the claimants”: West Bank Estates Ltd. v. Arthur, per Lord Wilberforce. It is clearly settled that acts of possession done on parts of land to which a possessory title is sought may be evidence of possession of the whole. Whether or not acts of possession done on parts of an area establish title to the whole area must, however, be a matter of degree. It is impossible to generalise with any precision as to what acts will or will not suffice to evidence factual possession. … Everything must depend on the particular circumstances, but broadly, I think 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.” (Emphasis added)

E.3    Animus possidendi

40.The requisite intention to possess involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the process of the law will allow. The Court will consider all the circumstances in deciding whether the intention to possess can be shown in a particular case: see Wong Tak Yue v Kung Kwok Wai & Anor (No 2) (1997-98) 1 HKCFAR 55 at 68I-69A, citing Powell (supra) at 471-472.

41.Enclosure by itself prima facie indicates the requisite intention to possess: see Wong Chee Sing v Hung Wah [2025] 3 HKLRD 202 at §38.

42.Where the squatter has shown factual possession, such conduct by the squatter should be viewed as evidence of intention to possess. Such use of land will normally make clear that the squatter has the requisite intention to possess, unless the paper owner can adduce evidence to show otherwise. Where the evidence shows that the squatter has occupied the land and made full use of it in the way in which an owner would, in the normal case he will not have to adduce additional evidence to establish that he had the intention to possess: see Wong Chee Sing (supra) at §39.

43.The relevant intention is not an intention to own, but an intention to possess the land to the exclusion of the world at large, including the paper owner. A squatter does not need to show that he believed himself to be the legal owner, or that he expressly asserted legal title. The question is whether, viewed objectively, his conduct manifested an intention to exercise exclusive dominion over the land: see Wong Chee Sing (supra) at §37.  

E.4    Illegality and public policy

44.The principal authority is Monat Investment Ltd v All Person(s) in Occupation of Part of No 16 Ma Po Tsuen [2023] 2 HKLRD 1311. In Monat, the Court of Appeal accepted that the doctrine of illegality may in principle apply in an adverse possession case, and that the proper approach is that explained by the United Kingdom Supreme Court in Patel v Mirza [2017] AC 467. In Patel, Lord Toulson held at §120 that the essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system. His Lordship adopted a “range of factors approach” in the assessment, with reference to the “trio of necessary considerations” below:

(1)     Consider the underlying purpose of the prohibition which has been transgressed and whether that purpose would be enhanced by denial of the claim;

(2)     Consider conversely any other relevant public policies which may be rendered ineffective or less effective by denial of the claim. E.g. in adverse possession case, the justification of adverse possession in the use of land as a natural resource, and in discouraging the paper owner shipping of his right and allowing his land to go idle;

(3)     The possibility of overkill unless the law is applied with a due sense of proportionality.

45.As regards Section 14 BO, it was held in Monat at §62.2 that its underlying purpose is to ensure public safety by requiring plans to be submitted to and approved by the Building Authority before building works are carried out.

F.      ISSUE 1: WHETHER THE PLAINTIFFS CAN ESTABLISH ADVERSE POSSESSION OF THE LOTS?

F.1    Factual Possession

46.The nature of the Lots is relevant to the Court’s assessment of issue of factual possession.

47.As the parties’ experts agreed in the Joint Expert Statement of Wong Yiu Cho Joseph[3] and Leung Shou Chun[4] dated 5 December 2023 (“the JES”) and as shown in the aerial photos, the Lots are a group of contiguous lots separated by a very small gap of Government Land situated in a sloping valley north of a main road, Route Twisk, in Chuen Lung Area, Tsuen Wan. The remaining areas within the valley are all Government Lands. The valley is and was at all material times bounded on all sides by natural forest except the southern side which leads to Route Twisk.  The experts further agreed that the original lot boundaries can no longer be traced on the ground.

48.The experts took the view that it would not be meaningful to describe the occupation on lot basis, but the analysis should be based on the different features which could be observed from the Lots from time to time.

49.As the experts agreed, as a whole, the Lots has been developed and as a car-repairing depot since late 1990s consisting different components. The car-repairing depot started from a small area and extended to a wider coverage in the form of retaining walls, an access road, workshops, storage, residential quarters and farming areas. These components were constructed from time to time according to the topography and functional needs without paying attention to the lot boundaries at all. Hence, the occupation on lot basis would seem to be fragmentary and discontinuous.

50.I accept the opinion expressed by the experts jointly. I take the view that the analysis of factual possession in the present case should be conducted by looking at the Plaintiffs’ occupation/usage of the Lots as a whole, rather than focusing on whether each individual Lot has been fully enclosed or fully used by the Plaintiffs as contended by the Defendant. This is because the Lots is within a valley which is enclosed by natural forestation save for the southern side. The Plaintiffs were occupying the Lots “as a whole within the valley”, rather than doing so with reference the demarcation of the Lots.

51.For the following reasons, I find that the Plaintiffs have adduced compelling evidence to show that they have been in factual possession of the Lots since at least 2003.

52.First, as I have summarised above, the expert’s joint view is that if the Lots were considered as a whole, they have been developed into a car-repairing depot since late 1990s and expanded in its coverage over the years. This is consistent with the Plaintiffs’ evidence that they have carried out the Business on the Lots since late 1990s. Carrying out the Business on the Lots is an act which points to factual possession.

53.Second, as shown in the aerial photos and the survey sheets, from time to time since late 1990s, different parts of the Lots have been used for cultivation (see FA1, FA2[5]), the Gate was built, various structures were built on different parts of the Lots (see HSE1, TS1, TS4, TS5, TS6, TS7[6]), retaining walls were built (see eg Wall 1[7], which was formed from the joining of the retaining walls found in the aerial photos in 2003 and 2008 respectively), the Access Road was paved and extended. These features support the Plaintiffs’ case that they have been occupying and actively using the Lots as a whole since late 1990s: see JES §§11-12, they also serve as evidence that the Plaintiffs have possessed the Lots as a whole.  

54.Third, the JES confirms that the Gate could be observed since 1999. This is consistent with the Plaintiff’s evidence that they built the Gate in 1999.

55.While the 1^st Plaintiff admitted during cross-examination that before the Gate was built in 1999, there was just a rope/metal chain at the location of the Gate and that the rope/metal chain can be lifted by the public, it remains an objective fact that by 1999, the Gate was built, which prevented the public from entering the areas behind the Gate. I accept the Plaintiffs’ evidence, which is not seriously challenged, that the Gate can only be opened by them, their family and their domestic helpers.

56.There is a dispute between the parties as to whether there were metal plates surrounding Lot 122 before 2003. However, as confirmed by the JES §11 and the aerial photos, by 2003, a retaining wall on Lots 122 and 124 was built. Therefore, latest by 2003, the public cannot enter the area on the north of the wall nor towards the east of the Gate. Since then, the Lots have been “trapped” by the wall and the Gate. I consider that from 2003 onwards, by the Gate and the retaining wall, the Plaintiffs have exercised exclusive physical control over the Lots.

57.Insofar as the parts of Lots 122 and 124 outside the Gate and the wall, while they could still be accessed by the public, I accept the Plaintiffs’ evidence that they have occupied those areas too by putting many cars there while they were operating the Business. In any event, as the Lots were open land, absolute exclusive control is usually impossible. By reason of the matters in §§48 to 56 above, the Plaintiffs have taken sufficient steps to exercise exclusive physical control over the Lots latest since 2003.

58.Fourth, the Defendant pointed to Lot 119 and contends that as the JES says that the Lot has been covered by vegetation all along save for being once cleared in 1996 for a year, there has been no activities in this Lot for most of the time. On this basis, the Defendant contends that the Plaintiffs cannot show exclusive possession of Lot 119 for over 12 years. As I have held above, given the nature of the Lots in the present case, the Plaintiffs’ occupation activities on the Lots should be considered as a whole, rather than by Lots. Hence, it is not helpful for the Court to consider Lot 119 in isolation. By having the Gate and the retaining wall installed, the Plaintiffs have enclosed the Lots, including Lot 119, since 2003. Further, the evidence above demonstrates that the Plaintiffs have exercised exclusive possession of the Lots as a whole. As held in Powell (see above), acts of possession done on parts of the land to which a possessory title is sought may be evidence of possession of the whole and that is the case here.

59.Fifth, the Defendant’s arguments concerning Lot 133 suffer from the same defect. The Plaintiffs’ occupation of the Lots should be considered as a whole, rather than focusing on an individual lot in isolation. As I have held above, the evidence shows that the Plaintiffs have developed the Lots into a car-repairing depot since the 1990s and expanded it across the Lots. Latest by 2003, the Plaintiffs have enclosed the Lots, including Lot 133. Even looking at Lot 133 alone, as confirmed by the experts jointly in the JES §26, there were various activities on Lot 133 from time to time since 1999. These activities are sufficient to show that the Plaintiffs have exclusive possession of the entire Lot 133.

60.Sixth, I consider the evidence of the Plaintiffs to be generally credible. While some of the Plaintiffs’ oral evidence was not included in their witness statements and there were some inconsistences in their evidence regarding their factual possession, their evidence is largely consistent with the objective evidence in the aerial photos and the survey sheets as well as the experts’ evidence in the JES. I find the Plaintiffs to be honest witnesses. 

F.2    Animus possidendi

61.As I have found that the Plaintiffs have shown factual possession of the Lots since 2003, this itself is strong evidence that the Plaintiffs have the requisite intention to possess unless the Defendant can adduce evidence to show otherwise: see §42 above.

62.In addition, it is common ground that the Plaintiffs had not paid any rent or licence fees to the Defendant. There is no evidence showing that the Plaintiffs have paid any rent or licence fees to Ka Luen (the Defendant’s predecessor in title) either. 

63.There is nothing in the Defendant’s contention that the Plaintiffs did not use the Address as the address of the Business until 2012. By the factual possession of the Lots as I have found above, the Plaintiffs have clearly demonstrated to the public at large their intention to exclusively possess the Lots.

64.As to the Defendant’s allegation that the Plaintiffs had not put up any signs to keep other people out from the Lots, putting up signs is not the only way which a squatter can show intention to possess. In the present case, by having the Gate and the retaining wall installed by 2003 and enclosing the Lots, the Plaintiffs have demonstrated their intention to keep the public out from the Lots.

65.The Defendant’s submissions that the Plaintiffs did not manifest themselves as owners of the Lots as they did not respond to the contacts by the government authorities (like the Lands Department and the Buildings Department) is beside the point. As the Court of Appeal pointed out in Wong Chee Sing (supra) at §§23, 32, 37, there is a distinction between ownership and possession in adverse possession cases. What the squatter needs to show is the requite “possession” and “intention to possess”, not his intention to deal with the subject land as an owner.

66.As for the removal of the fence on Lot 133, having considered the 1^st Plaintiff’s evidence in his witness statement §18 and his oral evidence, I find that the fence was removed by the 1^st Plaintiff himself on the request of the Lands Department: Cf the Defendant’s written closing submissions §32. In any event, having considered the other evidence above showing the Plaintiffs’ clear intention to possess the Lots, the above episode of removal of the fence does not alter my finding that the Plaintiffs have been in factual possession of the Lots since 2003 with the requisite Animus possidendi.

F.3    Adverse Possession shown

67.For the reasons above, I find that the Plaintiffs have shown that they have been in adverse possession of the Lots since 2003. The Plaintiffs have been in adverse possession of the Lots for over 12 years whether before the Defendant issued the First Demand Letter in 2017, or when the Plaintiffs issued the writ in 2021.

G.      ISSUE 2: WHETHER THE PLAINTIFFS’ CLAIM SHOULD BE REFUSED ON GROUNDS OF ILLEGALITY AND/OR PUBLIC POLICY?

G.1    Section 14 BO

68.The Defendant says that the House, the Covered Garage and TS 7 were/are all UBWs, built in breach of Section 14 BO.

69.There is no dispute that the House, the Covered Garage and TS7 were built by the Plaintiffs, and that they have not obtained any approvals from the government for building them. Adopting the approach in Patel (see §44 above), I will proceed to consider whether the Plaintiffs’ breaches of Section 14 BO would bar them from obtaining the relief for adverse possession.

70.As could be gleaned from the long title of BO, its purpose is “…to provide for the planning, design and construction of buildings and associated works, to make provision for the rendering safe of dangerous buildings and land, and to make provision for matters connected therewith”. As observed in Monat (supra) at §62.2, the underlying purpose of BO is to ensure public safety by requiring plans to be submitted to and approved by the Building Authority before building works are carried out.

71.As for the law of adverse possession and the relevant provisions in the LO, their underlying purposes are to protect the interest of a squatter who has been enjoying uninterrupted peaceful possession and protect the public interest of putting idling land to good use. 

72.In the present case, there is no evidence that any building order requiring the demolition or reinstatement of any of the UBWs being registered against the Lots. The letters from the Buildings Department dated 10 October 2008 and 27 June 2009 only concern suspected unauthorised building works on Lot 122. None of the House, the Covered Garage or TS7 are situated on Lot 122.

73.Further, denial of the Plaintiffs’ possessory title to the Lots would not further the objectives of the BO of ensuring safety of building works.

74.On the other hand, the Plaintiffs have been openly operating the Business and occupying the Lots since 2003. The paper owner of the Lots ought to be aware of the situation. However, there is no suggestion that Ka Luen or the Defendant has taken step to intervene until the Defendant issued the First Demand Letter in 2017.

75.In the circumstances, it would be disproportionate for me to deny the Plaintiffs’ claim for adverse possession of the Lots on the basis that the UBWs are in breach of Section 14 BO. 

G.2    Breach of Government Lease

76.The Defendant also relies on alleged breach of the Government Lease conditions, namely the use of the Lots for building or industrial purposes without prior Government licence:

“AND FURTHER that the Lessee or any other person or persons shall not, nor will, during the continuance of this demise, use, exercise or follow, in or upon the said premises, or any part thereof, any noisy, noisome or offensive trade or business whatever, nor convert any ground hereby expressed to be demised as agricultural or garden ground into use for building purposes other than for the proper occupation of the same ground as agricultural or garden ground without the previous Licence of His and Majesty, His Heirs, Successors or Assigns, signified in writing by the Governor of the said Colony of Hongkong, or other person duly authorized in that behalf …” (Emphasis added)

77.However, as the Court of Appeal in Monat made clear at §23, there is no difference in nature between a Government Lease and a private lease. Breach of a Government Lease does not entail any criminal act, quasi-criminal act, or non-criminal act which engaged the public interest (eg conduct involving dishonesty in the context of civil disputes). In Monat, the Court found that the squatter’s residential user of the subject land in breach of the agricultural user in the government lease there does not involve any non-criminal act engaging public interest. The same analysis should apply in the present case. As I will explain below, contrary to the Defendant’s assertion, there is no evidence showing that the Business has generated any “chemical waste” which has adversely affect the natural environment. The Plaintiffs’ Business of car-repair, while in breach of the agricultural user of the Lots, does not engage any public interest.

78.The defence of illegality is therefore not engaged insofar as the Plaintiffs’ breach of the Government Lease is concerned.

G.3    Alleged breach of Waste Disposal (Chemical Waste) (General) Regulation

79.Finally, the Defendant relies on the alleged breach of the Regulation for its illegality defence. The Defendant asserts that the Business, in particular the maintenance and repair of motor vehicles, would “inevitably” generate and involve disposal of chemical wastes within the definition in Section 3 of the Regulation. As the above operation was carried out without proper registration, it constitutes a criminal offence contrary to Section 6(1) of the Regulation.

80.Section 6 (1) of the Regulation provides that “a person shall not produce or cause to be produced chemical waste unless he is registered”.

81.Section 3 of the Regulation defines “chemical waste” as follows:

“Chemical waste

(1) Subject to subsection (2), any substance or thing being—

(a) scrap material;

(b) effluent; or

(c)     an unwanted substance or by-product arising from the application of or in the course of any process or trade activity,

and which is or contains any substance or chemical specified in Schedule 1 shall be regarded as chemical waste for the purposes of this Regulation if such substance or chemical occurs in such form, quantity or concentration so as to cause pollution or constitute a danger to health or risk of pollution to the environment.

(2)     Any—

(a)     …; or

(b)     …” (Emphasis added)

82.The 1^st Plaintiff accepts in his oral evidence that the Business would involve the use of engine oil, refrigerant and paint, which are substances listed in Section B of Schedule 1 of the Regulation. However, there is no evidence showing that the above substances have occurred “in such form, quantity or concentration so as to cause pollution or constitute a danger to health or risk of pollution to the environment”. I agree with the Plaintiffs’ submissions that it is a quantum leap for the Defendant to allege that just because the above substances were used in the Business, they amount to production of “chemical waste” under Section 3 of the Regulation. The Defendant fails to show that the Plaintiffs have contravened the Regulation. Its illegality defence based on the alleged breach of the Regulation fails.

G.4    Illegality defence cannot bar the Plaintiffs’ adverse possession

83.For the reasons explained above, the answer to Issue 2 is “No”.

H.      ISSUE 3: IF THE PLAINTIFFS’ ADVERSE POSSESSION CLAIM FAILS, WHETHER THE DEFENDANT IS ENTITLED TO ITS COUNTERCLAIM FOR TRESPASS AND/OR MESNE PROFITS

84.As I have found that the Plaintiffs succeed in their adverse possession claim, the Defendant’s counterclaim for trespass and/or mesne profits fails.

85.The answer to Issue 3 is “No”.

I.      CONCLUSION

86.For the reasons above, I find in favour of the Plaintiffs’ claim.

87.I will grant the following declarations:

(1)     A declaration that the Plaintiffs have acquired possessory title to the Lots;

(2)     A declaration that the Defendant’s title to the Lots has been extinguished;

(3)     A declaration that the Defendant has lost the right to bring any action to recover the Lots.

88.Costs should follow the event. I will grant a Costs Order Nisi that Defendant shall pay to the Plaintiffs the costs of this Action (including any costs reserved), with Certificate for Counsel.

89.Unless there is an application made by summons for the variation of the above Costs Order Nisi within 14 days after the handing down of this Decision, the said Costs Order Nisi shall become absolute.

Ms Jolie Kung, instructed by Haldanes, for the 1^st and 2^nd plaintiffs

Mr Roy Lau, instructed by Fu & Cheng, for the defendant