China Overseas Grand Gain Property Development Ltd v. Mok Yuen Fun and Persons Unknown

HCMP968/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.968 OF 1999

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BETWEEN

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Before : Hon Suffiad J in Court

Dates of Hearing : 12–13 April 2005

Date of Ruling : 15 April 2005

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R U L I N G

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1.The plaintiff claims as the registered owner of Lot No. 1497 in DD 100 and Lot No. 3352 in DD 91 (“the land”) for possession as against the defendant on the basis that the defendant’s licence to hold and occupy the land has been terminated by notice from the plaintiff’s solicitors by letter dated 4 December 1998 which also require the defendant to quit and deliver up vacant possession by 31 January 1999, that the defendant has failed to do so but remains in occupation as a trespasser.

2.The defence raised is that the defendant and her family has been in continuous possession and occupation of the land since 1963, which occupation and possession is adverse to the registered owner of the land and which has exceeded the period of the limitation, by reason whereof the plaintiff’s claim is time-barred and the plaintiff’s title extinguished by such adverse possession.  The defendant counterclaims for declarations to similar effect.

3.On 19 November 2004, the Court of Appeal handed down its judgment in the case of Chan Tin Shi v. Li Tin Sung and others [2005] 1 HKC 1 in which it held, by a majority (Rogers VP and Le Pichon JA, Yuen JA dissenting), that on a proper construction, section 6 of the New Territories Leases (Extension) Ordinance, Cap. 374, (hereinafter referred to as “the Extension Ordinance”) created a new estate in the leaseholders who did not opt out of the provisions under section 5 of the Extension Ordinance.  The term conferred by the Extension Ordinance was a new estate and for the purposes of limitation of action, time would begin to run again from the date of its creation.

4.On 27 January, the Court of Appeal gave leave to the plaintiff in Chan Tin Shi to appeal to the Court of Final Appeal from the decision of the Court of Appeal in that case.  That appeal to the Court of Final Appeal is not due to be heard until October 2005.

5.In the meantime, based on the decision of the Court of Appeal in Chan Tin Shi’s case, the plaintiff issued a Summons dated 7 March 2005 to strike out the Defence and Counterclaim in the present matter on the grounds that the Defence and Counterclaim discloses no reasonable cause of defence, no reasonable cause of action, is frivolous, vexatious and an abuse of court process.

6.This ruling is given in relation to that application to strike out.

7.The application to strike out is brought by the plaintiff on the basis that, rightly or wrongly, I am bound, at least for the present, by the decision of the Court of Appeal in Chan Tin Shi, until that decision is overturned by the Court of Final Appeal.

8.For the defendant, essentially three points were submitted to oppose the striking out application :

(a)	the effect of section 6 of the Extension Ordinance was not to grant a new lease to the plaintiffs;
(b)	even if it did grant a new lease, section 7 of the Extension Ordinance preserved the rights of squatters like the defendant to run a case of adverse possession during the period of extension; and
(c)	on the facts of this case, the plaintiff, not having derived its title from the original Crown lessee ( but only in relation to Lot No. 3352 in DD 91), should not be entitled to the new lease to enable it to defeat the rights of the defendant.

9.On the third point taken by the defendant, the defendant relies on the land search register which shows that the original Crown lessee to be one Wong Tsung Man.  In 1985 there was a court order made to the effect that title to Lot No. 3352 in DD 91 became vested in Wong Sau Yee through adverse possession and that the title of Wong Tsung Man was extinguished.

10.In 1988, the administrator of Wong Sau Yee sold Lot No. 3352 to Tansonic Co. Ltd who in 1994 sold and assigned the lot to Crown River Investment Ltd.  Several days later Crown River Investment Ltd sold and assigned the lot to the plaintiff who then became the registered owner after registering the Assignment in the land registry.

Decision

11.There is here no dispute that the land is New Territories land and that the Extension Ordinance applies.

12.There is also no dispute by the defendant that the plaintiff was the registered owner of the land and holds by way of title an Assignment which has been registered in the land registry with the Memorial No. 315304.

13.Indeed as part of that Assignment, it was stated that the term of the lease has been extended by operation of law (specifically by the Extension Ordinance) until 30 June 2047.

14.Therefore the starting point in this matter must be the Court of Appeal’s decision, albeit a majority decision, in the case of Chan Tin Shi.  That is a decision which is binding upon me and which I must follow.  It follows therefrom that it is not for me to question the correctness of that decision, but that I must follow it rightly or wrongly.

15.I say so because the first point taken by the defendant in opposing the plaintiff’s striking out application suggests that the decision of the Court of Appeal in Chan Tin Shi was wrongly decided since the Court of Appeal did specifically decide the point that a new lease was created by the Extension Ordinance.

16.Once that premises is reached, it is not for me to go behind the Court of Appeal’s decision in the matter but that I must bow to what has been decided.

17.For that reason, the first point raised by the defendant must be rejected.

18.As for the second point raised by the defendant, while section 7 of the Extension Ordinance was not specifically referred to by the Court of Appeal in Chan Tin Shi, it does not follow therefrom that the decision in Chan Tin Shi can only be per incuriam.

19.Indeed the Court of Appeal, as can be seen from their judgment in Chan Tin Shi was very much alive to the fact that there had been earlier conflicting decisions on the issue.  They were fully aware of earlier cases which were decided upon the wording of the New Territories (Renewable Crown Leases) Ordinance, Cap. 152 (“the Renewable Ordinance”) and in particular the Privy Council’s decision in the Lam Island case.

20.I cannot therefore imagine that the Court of Appeal would not have been aware of section 7 of the Extension Ordinance or the similarity in wording used when looked at against section 4 of the Renewable Ordinance when giving its judgment in the Chan Tin Shi’s case.

21.In my view the greatest obstacle to the defendant in seeking to rely on the wording of section 7 of the Extension Ordinance is the fact that the Court of Appeal has not only drawn but also taken pains to highlight the distinction between the Renewable Ordinance and the Extension Ordinance and it is that distinction which leads to the difference in result between the two Ordinances.

22.The distinction is that in the case of the Extension Ordinance, the original Crown lease would have expired in June 1997 had it not been for the Extension Ordinance, whereas for the Renewable Ordinance, the option to renew for another 24 years from 1973 was contained in the original Crown lease.  Because of that difference, the exercise of the option under the Original Crown lease pursuant to the Renewable Ordinance to renew for another 24 years originates from the Original Crown lease and as such under the common law rules, it cannot and does not affect squatters rights who were in adverse possession before the renewal.

23.On the other hand, the extension under the Extension Ordinance does not originate from the original Crown lease and therefore extinguishes all squatters rights from adverse possession and the time for limitation starts to run afresh from the time of the extension since there was either a surrender and re-grant or a reversionary lease.  This was also based on the common law rules.

24.Once that distinction is kept in mind, it must follow that the wording of section 7(1)(a)(iii) of the Extension Ordinance, no matter how similar it may be to the wording of section 4(4)(c) of the Renewable Ordinance, it cannot avail the defendant since there is that basic difference in effect between the two Ordinances.

25.I cannot therefore accept that the failure to make reference to section 7(1)(a)(iii) of the Extension Ordinance in the decision of Chan Tin Shi makes that decision of the Court of Appeal a per incuriam decision.

26.In my view the second point taken by the defendant is also one which had been decided by the Court of Appeal in Chan Tin Shi and on which I am bound to follow.

27.Coming now to the third point raised by the defendant.

28.The point taken by the defendant challenges the title of the plaintiff but only in so far as Lot No. 3352 in DD 91 is concerned.

29.In so submitting, the defendant relies strongly on the decision of Muttrie DJ in the case of Wong Chi Sum and also the words of Scrutton LJ in the case of Taylor v. Twinberrow [1930] 2 KB 16 at page 22 :

“

It [the Statute of Limitation] was treated as if it gave a title, whereas its effect is merely negative to destroy the powers of the then tenant .… to claim as landlord against his subtenant in possession …. the truer view is, that the operation of the statute in giving a title is merely negative; it extinguishes the rights and title of the dispossessed owner, and leaves the occupant with a title gained by the fact of possession and resting on the infirmity of the right of others to eject him.”

30.On this basis it was submitted by the defendant that the new lease under the Extension Ordinance could not have been offered to the plaintiff (or his predecessor in title) alternatively, the plaintiff (or his predecessor) should not have been the person to benefit from the new lease against the rights of the defendant, but that it should have been offered to the original Crown lessee, Wong Tsung Man.

31.I find such a submission wholly unreal since Wong Tsung Man (or for that matter his successors) have long since disappeared since the order, if not earlier, made in 1985.  Nobody claiming under Wong Tsung Man has ever appeared to contest the title of the plaintiff or its predecessor.  In the circumstances, it is certainly not for the defendant to challenge the title of the plaintiff or its predecessor.

32.Moreover, in so submitting, the defendant has overlooked the fact that the statutory effect of section 5 of the Extension Ordinance firstly, defines a “lessee” for the purpose of that section to be “a person whose name is registered in the Land Office as the owner, leaseholder or holder”.   The further effect of section 5 is that it gives such a lessee the right to exclude from the application of the Extension Ordinance, his interest under a lease.

33.The converse must necessarily follow, that if such a lessee does not exclude the application of the Extension Ordinance to his interests under a lease, then the Extension Ordinance applies to that interests of the lessee.

34.In my view, that is yet another instance where statute (namely section 5 of the Extension Ordinance) has by its clear wording (in defining a lessee in the way it did) overridden the common law, accepting that the words of Scrutton LJ cited above, to accurately reflect the common law rule.

35.Finally, where as here, the plaintiff is able to produce a documentary title in the form of the Assignment to it of the land which is registered in the Land Office by Memorial No. 315304, the words of Lord Diplock in the case of Ocean Estates Ltd v. Pinder (P.C.) [1969] 2 AC 19 at 25 comes to mind :

"It follows that as against a defendant whose entry upon the land was made as a trespasser a plaintiff who can prove any documentary title to the land is entitled to recover possession of the land unless debarred under the Real Property Limitation Act by affluxion of the 20-year period of continuous and exclusive possession by the trespasser."

36.For all the reasons above I am not persuaded by the defendant that there is any arguable defence to the plaintiff’s claim herein.

37.Accordingly, the defence must be struck out as asked for by the plaintiff.

Mr Leo Remedios and Mr Frederick H.F. Chan, instructed by Messrs F. Zimmern & Co., for the Plaintiff

Mr Patrick Szeto, instructed by Messrs Ho, Tse, Wai & Partners, for the Defendant