Chan Tin Shi v. Li Tin Sung and Others

FACV No. 7 of 2005

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 7 OF 2005 (CIVIL)

(ON APPEAL FROM CACV NO. 71 OF 2003)

(Heard together with FACV No. 12 of 2005 and
FACV Nos 13 and 21 of 2005 (Consolidated))

_____________________

Between :

_____________________

FACV No. 12 of 2005

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 12 OF 2005 (CIVIL)

(ON APPEAL FROM HCMP NO. 968 OF 1999)

(Heard together with FACV No. 7 of 2005 and
FACV Nos 13 and 21 of 2005 (Consolidated))

_____________________

Between :

_____________________

FACV No. 13 of 2005

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 13 of 2005 (CIVIL)

(ON APPEAL FROM CACV NO. 101 OF 2004)

(Consolidated with FACV No. 21 of 2005 and heard together with
FACV No. 7 of 2005 and FACV No. 12 of 2005)

_____________________

Between :

_____________________

FACV No. 21 of 2005

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 21 of 2005 (CIVIL)

(ON APPEAL FROM CACV NO. 101 OF 2004)

(Consolidated with FACV No. 13 of 2005 and heard together with
FACV No. 7 of 2005 and FACV No. 12 of 2005)

_____________________

Between :

_____________________

Court: Mr Justice Bokhary PJ, Mr Justice Chan PJ, Mr Justice Ribeiro PJ, Mr Justice Litton NPJ and Lord Hoffmann NPJ

Dates of Hearing: 29 November and 2 December 2005

Date of Judgment: 5 January 2006

_____________________

J U D G M E N T

_____________________

Mr Justice Bokhary PJ :

1.I agree with the judgment of Lord Hoffmann NPJ.

Mr Justice Chan PJ :

2.I agree with the judgment of Lord Hoffmann NPJ.

Mr Justice Ribeiro PJ :

3.I agree with the judgment of Lord Hoffmann NPJ.

Mr Justice Litton NPJ :

4.What falls for consideration ultimately on these appeals are a few lines in a statute: Section 6 of the New Territories Leases (Extension) Ordinance, Cap. 150.  It was passed in 1988 when the Block Crown leases granted in the early years of the 20^th century had still about 9 years to run.

5.Section 6, on its face, is unambiguous.  The words “is extended” (in Chinese “續期”) imports, as counsel for the appellants suggest, the continuance of an existing state of affairs, not the creation of a new one: The legislature in 1988 simply extended the then existing leases to 30 June 2047, to give effect to Annex III of the Joint Declaration, signed in Beijing in December 1984: As simple as that.  If this interpretation of s.6 is correct, the appellants must succeed on these appeals: The title by which the registered owners claim possession in these cases is the same title which was extinguished, as against the squatters, by the operation of s.17 of the Limitation Ordinance, Cap. 347 when the 20 years of continuous adverse possession expired.

6.The fact that, as between the sovereign governments, the lease of the New Territories expired on 30 June 1997 is not relevant on these appeals.  It has not been suggested by counsel that, as a matter of Hong Kong’s domestic law, the legal consequence, as summarized above, is not possible: So the argument must necessarily focus on the meaning and effect of the words “is extended” in s.6.

7.Section 6 cannot be viewed in isolation: It must be construed having regard to the Ordinance as a whole.  Hence, counsel for the respondents say as follows: Look at s.7: It says that during the period of extension, the lease shall be subject to the same covenants, exceptions, reservations etc as appear from the instrument; if the lease during the extended period is the same lease, there is no need to make a provision like that.  This submission has some weight: But the point does not go very far.  Regard must be had also to s.7(1)(c) which provides for a reservation of government rent payable under the Government Rent (Assessment and Collection) Ordinance, Cap. 515: 3% of the rateable value, payable annually for the 50 years expiring on 30 June 2047.  Plainly, this is outside the terms of the Block Crown leases and separate provision such as this must be made to give effect to Annex III of the Joint Declaration.  Further, s.7 deals with things like mortgages and charges which are not contained in the Block Crown leases: These are covered by s.7(1)(a)(i).  Looked at overall, there is, in my view, nothing in s.7 which supports the respondents’ case.

8.There are undoubted oddities arising from the construction urged upon us by counsel for the appellants.  For example, s.5 which enables a registered lessee to opt out by lodging a memorandum before the appointed date (25 April 1988).  So a lessee who had sold his land, say a few months before, could in theory be liable to pay the annual government rent amounting to 3% of the rateable value until 30 June 2047.  But the greatest anomaly, in my view, is this: A squatter, confirmed in his possessory title by a court declaration, can greatly enhance the value of the property by improvements on the land, increasing its rateable value.  But the burden of paying the annual rent of 3% of the rateable value falls on the dispossessed registered owner, not on the squatter.  Take as an example, appeal No. FACV13/2005 which concerns Lots 6A RP, 7 RP, 8, 9 and 10 in D.D.32.  They comprise nearly 121,000 square feet of land, on the edge of Tai Po.  Although part of the land is left vacant at present, and the rest used for low-grade farming, there is nothing to prevent the appellants from fencing off the whole lot and turning it into a luxurious country residence, free of all obligation to pay government rent.

9.Rogers VP in the Court of Appeal (Appeal No. FACV 7/2005) said that one of the purposes behind the Extension Ordinance was to give effect to the Joint Declaration so as to preserve the income source of the ultimate landlord, the Hong Kong SAR Government; he thought it “unimaginable…that the legislature would have wished to grant immunity to squatters in the New Territories as against the registered owners who would be liable to pay the rent for the land”.  That, with respect, is to put the matter too high.  It is an anomaly: A troubling one.  But it does not mean that, in consequence, s.6 must necessarily be construed as if it created a new estate (either by way of a surrender and regrant as at 25 April 1988, or by way of a reversionary lease commencing on 28 June 1997), rather than to take it upon its plain meaning : That the existing leases are extended to 30 June 2047.  Full stop.

10.The starting point in statutory interpretation must always be the ordinary linguistic meaning of the words used: Were it otherwise the relationship between the two branches of government, the legislature and the judiciary, would be a very difficult one.  Great mischief could result in the courts reading words into statutes which are not there, simply to achieve a purpose which the courts claim to be desirable: Here it would be to add the words “by the grant of a new lease” after the words “is extended” in s.6.  This cannot be done.

11.I have had the advantage of reading in draft Lord Hoffmann NPJ’s judgment.  For the reasons he gives I too would allow the appeals and make the orders he proposes.

Lord Hoffmann NPJ :

12.These three appeals have been heard together because they raise a common question of construction on s.6 of the New Territories Leases (Extension) Ordinance (“the Ordinance”), Cap. 150:

“The term of a lease to which this Ordinance applies is extended, from the date on which it would, apart from this Ordinance, expire, until the expiry of 30 June 2047, without payment of any additional premium.”

13.The Ordinance, which was passed in 1988, applied to “every New Territories lease that exists at the commencement of this section and that, but for this Ordinance, would expire before 30 June 1997” (s.2) with immaterial exceptions and subject to the right of all persons interested in the lease, acting together, to opt out of the s.6 extension by registering an appropriate memorandum at the Land Office under s.5.

14.The background to the passing of the Ordinance was the 1984 Joint Declaration of the Government of the United Kingdom and the Government of the People’s Republic of China concerning the future of Hong Kong.  The Colonial government had not granted any leases of land in the New Territories for terms exceeding that of the British Government’s own lease from China, which expired on 30 June 1997.  In fact the standard form of New Territories lease had been for 75 years from 1 July 1898 with an option to renew for 24 years less three days, but the New Territories (Renewable Government Leases) Ordinance, Cap. 152, passed in 1969, had deemed the right of renewal to have been exercised and a new Government lease to have been granted on 1 July 1973 for a term of 24 years less three days.  At the time of the Joint Declaration, therefore, all leases in the New Territories were due to expire within less than 13 years.  In order to put an end to the uncertainty over what would happen next, the Chinese Government agreed, by Annex III, paras 2 and 3 of the Joint Declaration, to recognise extensions of New Territories leases until a date not later than 30 June 2047.  The Extension Ordinance was passed pursuant to this agreement.

15.These appeals all concern lots of leasehold land in the New Territories which are occupied by squatters.  In Chan Suk Yin and another v. Harvest Good Development Ltd the plaintiffs are squatters living on some agricultural land in the hills near Tai Po who claimed a declaration that the leasehold owner’s title had been barred by upwards of 20 years adverse possession, pursuant to s.7(2) of the Limitation Ordinance, Cap. 347.  The judge found that their possession had been sufficient to satisfy the Ordinance and this finding of fact was upheld by the Court of Appeal.  Likewise in Chan Tin Shi v. Li Tin Sung and others the plaintiffs claimed a declaration that the leaseholder’s title to some land in Tai Po was barred under the Limitation Ordinance.  The judge found that the plaintiffs and their predecessors had been in adverse possession since 1954.  This finding of fact was also upheld by the Court of Appeal.

16.In Chan Tin Shi, however, the claim was dismissed by the Court of Appeal on the ground that the leaseholders were not relying upon the title which had been barred by adverse possession but upon a new title created by the 1988 Ordinance, which I shall call the “Extension Ordinance”.  The reasoning was as follows.  English law, unlike systems based upon Roman law, has no theory of prescription by which title can be obtained by long possession: see R. v. Oxfordshire County Council, ex parte Sunningwell Parish Council [2000] 1 AC 335, 349.  Instead, adverse possession by a squatter for the period of limitation will bar the right which the person entitled to possession has to recover the land by action.  This principle is reflected in s.7(2) of the Limitation Ordinance:

“No action shall be brought by any…person to recover any land after the expiration of [20] years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person…” 

17.As is plain from the language of the Ordinance, adverse possession does not affect the rights of other persons having interests in the land which do not entitle them to possession.  In the case of land subject to a lease, the person entitled to possession is the lessee.  The freeholder has no right to possession until the lease comes to an end.  Adverse possession by a squatter may therefore bar the remedy of the lessee but will not affect the right of the freeholder to claim possession when the lease falls in.

18.The lessee’s right to possession derives from the lease being an estate in the land.  The leasehold estate is the lessee’s title to possession.  Conversely, if the right to possession is barred by s.7(2) of the Limitation Ordinance, then the lessee’s estate is destroyed by s.17:

“at the expiration of the period prescribed by this Ordinance for any person to bring an action to recover land . . . the title of that person to the land shall be extinguished."

19.The lessee’s “title” is his estate – the words in this context mean the same thing: see Lord Denning in Fairweather v. St. Marylebone Property Co. Ltd [1963] AC 510, 544–545.  But the title is extinguished only as against the squatter.  As against the landlord it remains in existence, so that the lessee remains liable upon the covenants of the lease.

20.It follows from these well established principles that when the period of limitation expired, the lessee of the land occupied by a squatter was barred by s.7(2) from bringing proceedings for possession and his title was, as against the squatter, extinguished by s.17.  This did not however affect the interest of the government, against which time could not commence to run while the leasehold interests subsisted.  As between the government and the lessees, the lease continued to subsist, notwithstanding the expiry of the limitation period.  It follows that if the Extension Ordinance had not been passed the government would have been able, by virtue of its superior interest, to claim possession from the squatter when the lease expired in 1997.  Or it could have granted a new lease, whether to the same or a different tenant, and thereby created a new leasehold estate giving a right to possession which would not have been affected by the Limitation Ordinance.  The decision of the House of Lords in Fairweather v. St. Marylebone Property Co. Ltd [1963] AC 510 is authority for saying that the same would have happened at an earlier date if the original lease had been surrendered.  The government could immediately have claimed possession itself or regranted the land under a new lease which would have enabled the tenant to obtain possession.  It is not necessary in these proceedings to decide whether that is correct because all the proceedings in these appeals were commenced after the old leases would have expired.

21.Apart from this last point, all that I have said so far is, I think, uncontroversial.  It is the next step in the reasoning of the Court of Appeal that has been in issue in these appeals.  The Court decided, by a majority (Rogers VP and Le Pichon, Yuen JJA dissenting) that the effect of s.6 of the Extension Ordinance was to grant the leaseholders a new lease, either in exchange for a deemed surrender of the old lease when s.6 of the Ordinance came into force on 25 April 1988, or commencing upon the expiry of the old lease on 27 June 1997.  In either case, said the majority, the title by which the leaseholders claim possession in these proceedings is not the title which was extinguished by s.17 of the Limitation Ordinance.  It is a new title by which they claim under the Government’s reversionary interest after the termination of the old leases.

22.This decision was followed by another division of the Court of Appeal in Chan Suk Yin.  It also encouraged the plaintiffs in China Overseas Grand Gain Property Development Ltd v. Mok Yuen Fun and others to apply to strike out a limitation defence in a claim to possession of land in Chiu Keng Village, Sheung Shui, occupied by squatters.  Suffiad J struck out the defence, as in the light of Chan Tin Shi he was bound to do.  Indeed, if the Court of Appeal is right, the Extension Ordinance has destroyed all squatters’ titles in the New Territories.  But Suffiad J gave leave to appeal directly to this Court.  The facts of Mok Yuen Fun have not yet been decided.  In Chan Tin Shi the findings of fact by the judge and the Court of Appeal are no longer disputed.  All that remains is the point of law.  In Chan Suk Yin the respondent owner challenges by cross-appeal the judge’s finding that the squatters had the necessary intention to possess, which it says was not open to him on the evidence.  I shall consider this cross-appeal when I have dealt with the question of law which arises on the three appeals.

23.The issue of law is whether s.6 created new leasehold estates, either by way of regrant after surrender or in reversion after expiry by effluxion of time, or whether it merely extended the term of the existing estates.  The language of s.6 is in my opinion clear.  It says that the term of the existing leases is extended from the date on which they would otherwise have expired, i.e. 27 June 1997, until 30 June 2047.  Every existing lease, instead of being for a term expiring on 27 June 1997, is by force of statute to be for a term expiring 30 June 2047.  But it continues to be the same lease.  If it were a new lease, whether from 28 April 1988 or from 28 June 1997, it could not be said that its term had been “extended”.

24.That was enough for Yuen JA and I must say at once that I find her reading of the statute entirely convincing.  But the majority were persuaded for various reasons that s.6 could not be construed in this straightforward manner.  I shall consider the arguments put forward by the Court of Appeal and some additional ones raised by counsel for the respondents.

25.First, reliance was placed upon the rule of common law that a lease is an interest in land, an item of property, originally created by consent but, once launched into the world, incapable of being modified simply by the agreement of the parties or their successors in title.  It is therefore not possible for the parties to agree to amend an existing leasehold interest to extend the term: see Jenkin R. Lewis Ltd v. Kerman [1971] Ch. 477.  If they enter into such an agreement, it will be interpreted as an agreement to surrender the old lease and for the owner to grant in return a new lease for the extended term from the date when the agreement was to take effect, or alternatively as an agreement for the owner to grant a reversionary lease commencing when the old lease expires.  In either case, the transaction is given effect by the creation of a new leasehold interest.

26.It is accepted that the legislature is not restricted by the rules which limit what the parties can do by consent.  If it passes a law which says that a lease shall be for a longer term than originally granted or shall include land which was not in the original parcels, it is within its competence to do so.  But it is said that the legislature should not, in the absence of very clear language, be assumed to have altered the common law.

27.The difficulty about this argument is that the Ordinance leaves the common law intact.  The rule is about what the parties can do by consent.  But the extension under s.6 is not by consent.  It is a plain legislative intervention to alter the character of every existing New Territories leasehold estate by extending the term.  The fact that there is a provision for opting out under s.5 does not make it a consensual transaction.

28.Mr Anthony Neoh, SC on behalf of the respondent in Chan Suk Yin and another v. Harvest Good Development Ltd, said that s.6 should be construed as if it had deemed the government and the lessee to have agreed to an extension to the lease.  Then it would have taken effect as a surrender and regrant.  In support of this submission, he referred to a statement by the Secretary for Lands and Works when the bill for the Extension Ordinance was introduced into the Legislative Council (Official Report of Proceedings of the Legislative Council, 6 May 1987).  The Minister said that the terms of New Territories leases were to be extended by statute because there were so many that it was impracticable to extend them individually.  The inference, said Mr Neoh SC, is that if there had not been so many of them, they would have been extended consensually.  That having been the government’s preferred option, the statute should therefore be construed as having deemed consensual extensions to have taken place.

29.The answer to this bold and ingenious argument is that it is not what the statute says.  It could easily have provided that the government should be deemed to have given the New Territories leaseholders options to extend their leases and that all leaseholders who did not register objections under s.5 should be deemed to have exercised the options.  The precedent of the New Territories (Renewable Government Leases) Ordinance was ready to hand.  Section 4(1) of that Ordinance said that the options to renew in the existing leases should be deemed to have been exercised and that “a new Government lease” should be deemed to have been granted.  That undoubtedly created a new leasehold interest.  Because the lease created by the option was a new estate, the Privy Council in Chung Ping Kwan v. Lam Island Development Co. Ltd [1997] AC 38 had to consider whether adverse possession under the Limitation Ordinance barred not only the existing estate of the owner but also a new estate derived from a right which existed in the old lease.  But no such question arises in this case.  Section 6 of the Extension Ordinance creates no new interest because it simply says that the existing lease shall be extended.  Rogers VP did not accept this argument.  He said that without “very clear wording” he was unable to give s.6 its literal meaning.  I suppose the draftsman might have added something like “notwithstanding any rule of common law”.  But for my part, I can detect no ambiguity.

30.Mr Leo Remedios, for the respondent in China Overseas Grand Gain Property Development Ltd v. Mok Yuen Fun and others, took a somewhat different tack.  He placed great emphasis upon the 1984 Joint Declaration, without which, as he rightly said, there could be no certainty that any legal system adopted after the 1997 would recognise the validity of leases granted by the colonial government.  He referred to para.2 of Annex III to the Declaration, which said that:

“All leases of land granted by the British Hong Kong Government not containing a right of renewal that expire before 30 June 1997…may be extended if the lessee so wishes for a period expiring not later than 30 June 2047 without payment of an additional premium.”

31.Section 6, said Mr Remedios, should be construed so as to give effect to the Declaration.  I have no difficulty with this proposition but it does not help Mr Remedios.  The Declaration does, after all, say that the leases may be extended.  It does not say that new ones may be granted in substitution.  So the language is entirely consistent with s.6.  Mr Remedios says that the Government of the People’s Republic of China and the British Government must be taken to have meant that the leases should be consensually extended and therefore, assuming that they knew of the doctrine of surrender and regrant, intended that the leases should not be extended but that new ones should be granted instead.  For my part, I find this far fetched.  The truth is that there were various ways in which, in conveyancing terms, effect could have been given to the Joint Declaration.  Consensual extensions were one possibility but the method actually adopted was entirely in accordance with the terms of the Declaration.

32.Mr Edward Chan SC, in a succinct and excellent argument for the respondent in Chan Suk Yin and another v. Harvest Good Development Ltd, made the point that an extension of the original leases would mean that, by virtue of the doctrine of privity of contract, the original lessee would become liable for the rent for another 50 years without having any opportunity to object.  He pointed out, correctly, that the right to contract out under s.5 is given only to the current lessee and not to the original lessee.  So, in the event of default in payment of rent by the tenant after 1997, the original tenant might find himself liable for rent which he never contracted to pay.  This unfair result could be avoided if s.6 were to be construed as creating a new lease rather than extending the old one.

33.Mr Chan SC may well be right; at any rate, no one offered an answer to his point.  But I think that in the case of the ground rent payable during the extension period (3% of rateable value) the possibility of the government having recourse to the original lessee is not in practice very high.  In any case, I do not think that the theoretical injustice is sufficient to overcome the very clear language of the section.

34.Mr Chan SC also offered an alternative argument.  Even if the terms of the existing leasehold estates were extended and no new estates created, nevertheless the lessee’s rights during the extension period were new rights which had not existed before 1988.  These new rights were not derived from anything in the old leases and were therefore not statute barred on the principle applied in Chung Ping Kwan v. Lam Island Development Co. Ltd [1997] AC 38.

35.The point is a subtle one but too subtle, in my opinion, to be viable.  A lease is a bundle of rights which subsist in a legal estate, a proprietary interest in land.  It is delimited in space by the parcels and in time by the term of years granted.  The existence of the estate confers the right to possession.  The Limitation Ordinance bars the right to claim possession in right of the lessee’s estate or title.  If the estate or title is still the same, it remains barred, notwithstanding any variation in the description of the estate or the rights attached to it.  In the present case, the legislature has used language which makes it clear that the lease is to continue to exist but that the term is to be extended.  It must follow that the lessee’s title remains the same and that it continues to be barred.

36.Finally I must say something about the general policy of the Extension Ordinance.  Rogers VP said that neither the sovereign parties to the Joint Declaration nor the Legislative Council when it passed the Ordinance gave much thought to the position of squatters.  That may well be true.  So one has to ask whether the ordinary meaning of the words used in s.6 would produce a result so contrary to anything which the legislature could have intended that some other meaning must be found.  Rogers VP said that it was “unimaginable” that the legislature should have wanted to give immunity to squatters against registered owners who were liable to pay the rent.

37.But that was the position before the original expiry date of the leases.  The Extension Ordinance merely prolonged it.  I think that I detect in the reasoning of Rogers VP some antipathy to the proposition that a squatter can, simply by wrongful occupation for a period which has now been reduced to 12 years, in effect, if not in legal theory, acquire a valuable property and leave the registered owner with the sole privilege of paying the rent.  There is much to be said for this point of view, which was shared by Parliament in the United Kingdom when it passed the Land Registration Act 2002.  Section 96(1) simply disapplies the Limitation Act in its application to registered land, which means in effect almost all the land in England and Wales.  Instead, a person who has been in adverse possession for more than 10 years can apply, on notice to the registered owner, to be registered in his place: see Schedule 6, para.1.  An applicant is however not entitled to be registered merely because for upwards of 10 years he has been in adverse possession.  He must also satisfy one of the conditions in para.5(2) of the Schedule. In a case like this, he would have to satisfy the first condition:

“(a) it would be unconscionable because of an equity by estoppel for the registered proprietor to seek to dispossess the applicant, and

(b) the circumstances are such that the applicant ought to be registered as the proprietor.”

38.If that were the law of Hong Kong, then it seems likely that the appellants would fail.  They would be unlikely to be able to establish an equitable estoppel in their favour.  But that is not the law.  Under the Limitation Ordinance, adverse possession is enough.  So it seems to me a perfectly respectable policy for the Joint Declaration and the Ordinance to have been intended simply to preserve the status quo both for lessees and for squatters.  That might explain why the draftsman used the language of extension in s.6 rather than the language of deemed grant which had been used in the New Territories (Renewable Government Leases) Ordinance some twenty years earlier.

39.I turn now to the cross-appeal in Chan Suk Yin and another v. Harvest Good Development Ltd.  Deputy High Court Judge Muttrie found that the appellants and their predecessors had been in possession since 1951. This finding is not challenged. The question is whether for upwards of 20 years their possession was adverse.  The registered proprietor says that it was not adverse because it was initially under a lease and subsequently by licence.  The lease is admitted.  It was granted by the then proprietor to the 2^nd appellant’s first husband Tam Sun for ten years from 1951.  After it expired in 1961, rent ceased to be demanded or paid.  In the absence of the grant of a new lease or licence, time under the Limitation Ordinance would have started to run.

40.In 1961, at about the time that the lease expired, the registered title was acquired by Lee Shau Kee, Fung King Hei and Wong Shiu Kin, who are referred to in the evidence as “the three friends”.  The proprietor’s pleaded case (para.13 of the amended Defence and Counterclaim) was that before and after their purchase of the land, the “three friends”, with their servants and agents, visited the land and “expressly or by implication” permitted Tam and the 2^nd appellant his wife to continue to occupy the land.  The visits were described with great particularity.  The previous owner Chu Shuk Han introduced the new owners, who said that they were not in a hurry to resume possession but did not want to tie themselves down to lease for a fixed term.  They would give adequate notice when they wanted the land.

41.When it came to the trial, only one of the people alleged to have been present at that meeting in 1961 gave evidence.  That was the 2^nd appellant, who denied that it had happened.  There was no evidence to the contrary from the three friends (only one of whom was still alive) or their servants or agents.  Nor was there any reference to such a meeting in contemporary documents.  The best that the respondent could do was a note made in 1993 by Mr Mok, a surveyor employed by the respondent, of a conversation with the 1^st appellant, Chan Suk Yin, who was the 2^nd appellant’s daughter by a second marriage to a Mr Chan:

“Checked the boundary with Ms Chan directly at the scene, the boundary as shown on the attached plan.  First, the opposite party indicated clearly that she would not rent out subject lots; second, she admitted the ownership of the owner in respect of the land, meaning that the opposite party would not contest with the owner on land ownership; third, the main point concerned the structures, fruit trees, fish ponds, flowers and plants, etc.  The opposite party requested for $600,000 for delivering vacant possession.  According to Ms Chan, her father had started using the subject land since 1951.  She could correctly state the names of the three owners.  She further indicated that when Lee, Fung, Wong purchased the subject land, they had inspected the subject land personally and told her family members that they could continue to use the subject land.  They had never paid any rent.”

42.Reliance was of course placed upon the last two sentences in this note.  Ms Chan denied in evidence that she had said anything of the kind and claimed that the note was a subsequent invention.  But the judge found that it was a genuine note of a real conversation and conveyed the gist of what Ms Chan had said.  Nevertheless, he said that it was inadequate, in the face of the 2^nd appellant’s denial, to prove that a licence had been granted.  In 1961 Ms Chan was not yet born and must have been saying what she had heard, or thought she had heard, or claimed she had heard, from someone else.  The judge said that he could not make a finding of fact that a licence had been granted.  So the defence failed.

43.In the Court of Appeal, Rogers VP agreed with the judge’s conclusion.  He said that the record in Mr Mok’s memorandum did not “inspire confidence” that a licence had been granted.  The other members of the court agreed.

44.In my opinion the question was one of primary fact and it was open to the judge, after hearing all the evidence, to find that the evidence was inadequate to prove that a licence had been granted.  Furthermore, this finding was concurred in by the Court of Appeal and there is no reason in the present case why this Court should depart from its normal practice of not disturbing concurrent findings of fact.  The cross-appeal must therefore be dismissed.

45.I would allow all three appeals and dismiss the cross-appeal.  The results are that in Chan Tin Shi v. Li Tin Sung the declarations of Deputy High Court Judge A Cheung (as he then was) are restored, in Chan Suk Yin and another v. Harvest Good Development Ltd the declarations of Deputy High Court Judge Muttrie are restored and in China Overseas Grand Gain Property Development Ltd v Mok Yuen Fun and others the order striking out the defence is set aside and the action remitted to proceed to trial.  In each case the respondents must pay the appellants’ costs in this Court and below.

Mr Justice Bokhary PJ :

46.All three appeals are allowed and the cross-appeal is dismissed, with the results stated in the concluding paragraph of Lord Hoffmann NPJ’s judgment.

Mr Andrew Mak (instructed by Messrs Chan & Associates) for Chan Tin Shi

Mr Patrick P Szeto (instructed by Messrs Ho, Tse, Wai & Partners and assigned by the Legal Aid Department) for Mok Yuen Fun & others

Mr Ronny KW Tong, SC and Mr Kenneth CL Chan (instructed by Messrs Haldanes) for Chan Suk Yin & another

Mr Edward Chan, SC and Ms Anita Ma (instructed by Messrs Yeung & Chan) for Li Tin Sung & 3 others

Mr Leo Remedios and Mr Frederick HF Chan (instructed by Messrs F Zimmern & Co.) for China Overseas Grand Gain Property Development Ltd

Mr Anthony Neoh, SC, Mr Ernest Koo and Ms Barbara Wong (instructed by Messrs Christine M Koo & Ip) for Harvest Good Development Ltd