Hong Kong Kam Lan Koon Ltd v. Realray Investment Ltd
Read the full judgment text of CACV 79/2008 on BabelCite. This Court of Appeal judgment was delivered on 18 February 2009.
1. The plaintiff is the occupier of Lot 1943 in Demarcation District (“DD”) 121. Its claim for possessory title over Lots 539, 540, 541, 542, 543 RP, 544 and 556 in Demarcation District 121 (“the disputed area”) against the defendant was dismissed by Lam J on 11 October 2007 after a 35-day trial.
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CACV 79/2008 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 79 OF 2008 (ON APPEAL FROM HCA NO. 15824 OF 1999) ____________ BETWEEN
AND BETWEEN
_____________ Before: Hon Tang VP, Cheung JA and Yuen JA in Court Dates of Hearing: 14 and 15 January 2009 Date of Judgment: 18 February 2009 _______________ JUDGMENT _______________
Hon Tang VP: Introduction 1.The plaintiff is the occupier of Lot 1943 in Demarcation District (“DD”) 121. Its claim for possessory title over Lots 539, 540, 541, 542, 543 RP, 544 and 556 in Demarcation District 121 (“the disputed area”) against the defendant was dismissed by Lam J on 11 October 2007 after a 35-day trial. 2.This is the plaintiff’s appeal. Background 3.Cheung Tak On Yuen (張德安園) (“CTOY”) was an estate in Tong Yan Sun Tsuen, Ping Shan, Yuen Long. By 1968 CTOY was completely fenced off, the only exit being the main gate of CTOY. The disputed area was situated within CTOY. Some of the land within CTOY was owned by Dr Cheung Kung Leung (“Dr Cheung”) or his wife, Cheung Yiu Pui Luen. Some were acquired as long ago as 1949. Others such as Lots 541 and 542 were only acquired by Mrs Cheung on 22 April 1970. Lots 539 and 545 were not owned by either of them. Within CTOY was the Cheung Family House (張家大屋), which was erected on Lot 1944. 4.Kam Lan Koon (金蘭觀) (“the Koon”) is a Taoist temple which was established in 1831 in Chiu Chow. 5.In 1964, Dr Cheung donated Lots 533 and 534A in DD 121, to the Koon, then managed by an association of persons (“the Association”). 6.Lots 533 and 534A were assigned by Dr Cheung to 7 persons to hold for the Association. The assignees were Dr Cheung, Mrs Cheung, Cheung Yuk-kwai (his employee) (“CYK”), Wong Tung Wing (“WTW”), Wong Lung (“WL”), Cheung Yiu-kui (“CYK2”) and Cheung Chi-ching (“CCC”), the last 4 were representatives of the Association. 7.Lots 533A and 543A occupied an area of 7,045 sq. They were situated within CTOY and had no independent access. Vehicular access was only possible through the main gate to CTOY which was guarded by Dr Cheung’s servants. 8.In 1972, the plaintiff was incorporated to take over the Koon. However, Lots 533 and 534A had not been assigned to the plaintiff. In a judgment given on 26 July 2005, Lam J found that the Association had become defunct shortly after the plaintiff’s incorporation, and found as a fact that the Association was dissolved by unanimous consent of all its then members shortly thereafter. There was no appeal from that decision. I will refer to the Association and the plaintiff as the Koon. 9.In 1966, Lots 533 and 543A were surrendered for the re-grant in situ of Lot 1943, upon terms that a) an “ancestral temple” (Chi Tong) might be built at Lot 1943 at a premium of $2,350 and b) the 7 co-owners might not assign or otherwise dispose of their interests in Lots 1943. 10.The Association paid the premium. 11.In 1966, a Footpath (“the old Footpath”) was built to provide pedestrian access to Lot 1943. 12.Unfortunately, the relationship between Dr Cheung and the Association turned sour and the old Footpath was blocked with concrete and brick works which prevented access to Lot 1943. On 22 September 1968, upon intervention by a local voluntary organization, Mrs Cheung, purporting to be acting for CTOY, entered into an agreement (“the 1968 Footpath Agreement”) to lend:
The Footpath was required to be separated by a wall with fencing above but a pair of gates had to be built:
13.In 1969, pursuant to the 1968 Footpath agreement, a new Footpath with a width of 4½ feet for access to Lot 1943 (“the Footpath”) was completed by the Association. On 11 November 1970, the Taoist temple at Lot 1943 was formally opened. 14.The relationship between Dr Cheung and Mrs Cheung and the Association remained an unhappy one such that, for example, on 22 January 1970, Mrs Cheung and CYK complained to the District officer, Yuen Long that without their consent:
15.In 1970, the Association had resolved to expel Dr and Mrs Cheung, and CYK from membership. 16.On 23 June 1971, Dr and Mrs Cheung assigned their 2/7 share of interest in Lot 1943 to Cheung Kung-wing (“CKW”). CKW is Dr Cheung’s brother. 17.At the same time, Dr Cheung / Mrs Cheung assigned Lots 532, 533 RP, 540, 541, 542, 543 RP, 544, 546, 556 and 1944 to CKW. These lots, together with Lots 539 and 545, made up CTOY. Lots 532, 533 RP, 540, 541, 542, 543 RP, 544, 546, 556 and 1944 have been sold and assigned by CKW to the defendant in 1992. The defendant acquired Lot 545 from its registered owner in 1992 and Lot 539 in 1995 from its registered owner. 18.In 1974, the application for modification in relation to the toilets and kitchen were approved by the government and the Koon paid the premium. The learned judge held that CKW had assisted the Koon in that process, for example, CKW signed a letter dated 6 November 1973 with the 4 Koon co-owners informing the government that he supported the construction of the kitchen and toilets in the Koon, and requested the District office to disregard the disputes between the co-owners in the past. The learned judge found that the relationship between CKW and the Koon between 1972 and 1992 was a friendly one. 19.The learned judge annexed a plan (“the Plan”) to his judgment to assist understanding. We have annexed the Plan to our judgment. On appeal, we have been supplied with a transparency which shows the lot numbers. We understand:
20.Whilst it is helpful to identify each area, it is important to remember that in relation, e.g. to the Orange Land and the Blue Land (the Outer Garden Area) an observer physically on the ground would not be able to distinguish one area from another. Nor, it seems, the green dotted area form the purple dotted area in the Inner Garden Area. 21.Lot 1943 and the disputed area were separated from the rest of CTOY by the Footpath and the northern fence at the Orange Land, but the disputed area was accessible from the rest of CTOY, in particular, by the Red Gate and the Orange Gate. 22.The learned judge held that:
and
23.After trial, Lam J dismissed the plaintiff’s case on adverse possession, save in respect of the storage annex. 24.He also declared that the plaintiff is:
25.There is no cross-appeal by the defendant. The appeal 26.In this appeal, the plaintiff seeks a declaration that the title in relation to “that part of the land identified as Red Land, the Yellow Land (including the Footpath), the Amenity Area, the Inner Garden Area and the Outer Garden Area” has been extinguished by virtue of sections 7 and 17 of the Limitation Ordinance upon adverse possession thereof by the plaintiff for a period not less than 20 years immediately preceding the issue of the writ in the action (6 October 1999). During the relevant limitation period CKW was the owner of the CTOY including the disputed area (save as to Lot 539 and 545) until 1992. In 1992 CKW assigned all his interests to the defendant. As noted above, the defendant has acquired Lots 539 and 545. Nothing turns on the fact that CKW was not the owner of Lot 539 or 545. 27.The plaintiff is represented by Mr Anthony Neoh, SC (who had not appeared below), leading Mr K M Chong (counsel below) and Mr Aidan Tam (who had not appeared below). The defendant is represented by Mr Chan Chi Hung, SC (who was counsel below), leading Ms Christine Y K Tam (who had not appeared below). The Law 28.In order to succeed, the plaintiff must show that the defendants (and CKW, its predecessor in title) who were in possession of the disputed area, had been dispossessed or discontinued its (his) possession for 20 years prior to the commencement of the action. Sections 7 and 8 of Limitation Ordinance. 29.Slade J explained in Powell v McFarlane [1979] 38 P & CR 452 at 468:
30.It was the plaintiff’s case that CKW and the defendant had either discontinued possession or been dispossessed for more than 20 years prior to the commencement of the present action on 6 October 1999. 31.On factual possession, according to Slade J’s classic statement in Powell at page 470-1:
32.As for intention to possess, Slade J said at page 472,
33.Thus, the plaintiff has to show:
CKW dispossessed? 34.At trial, Mr Chong relied on the fact that the disputed area was separated from the rest of CTOY by the wall of the Footpath, Yellow Land and the fence at the Northern end of the Orange Land. According to the plaintiff, the enclosure of the disputed area was completed in 1975/76. 35.“Enclosure is the strongest possible evidence of adverse possession …”. Per Cockburn CJ in Seddon v Smith [1877] 36 LT 168, because very often enclosure is clear evidence of the dispossession of the owner as well as the intention of the occupier to possess. 36.According to the learned judge, the aerial photographs show that there were extensive work done in 1975/76, and that the Koon’s documents show that expenses regarding the construction works essentially for a garden began to be incurred in July to August 1975. After a resolution to go ahead with the development on 23 July 1975, funds were collected for the purpose. 37.The learned judge found:
He went on to say that:
The fencing system essentially referred to the northern fence of the Orange Land and the orange gate. 38.As for the Orange and Blue areas, the learned judge found that:
1974 Licence 39.An important issue at trial was whether the extensive work in 1976/76 was done with the licence of CKW. It is common ground that in 1974, CKW had granted an oral licence to the Koon to use part of CTOY for 5 years. The dispute was over the area covered by this oral licence, and the purpose of the licence. The oral licence was “supported” by a draft tenancy agreement which was never executed. The plaintiff alleged that they were licenced to use the basketball field for parking. The basketball field lies to the south east of the Yellow Land and occupied Lot 544 (in part), Lots 545 and 546. The defence’s case was that neither the draft tenancy agreement nor the oral licence had anything to do with parking or the basketball field. 40.The learned judge said:
41.The draft tenancy agreement expressly referred to the renting of land for creation of the building of Garden and Pavilion (開闢園林花圃及建設亭閣之用). 42.The learned judge also said:
43.The learned judge went on to say:
44.He added, however,
45.This finding is the focus of Mr Neoh’s attack on the judgement. He submitted that it was never the defendant’s pleaded case that the 1974 licence covered more than the Red Land but:
46.The Defence and Counterclaim had been amended 8 times. In para. 3A(b), which was first introduced by amendment in green on 21 June 2003, the defendant relied on 3 licences. The first licence (para. 3A(b)(i)) was the Footpath agreement. The second (para. 3A(b)(ii)) was the 1974 Licence which as pleaded referred only to the Red Land and the green dotted area, both of which were on Lot 543 RP. By the purple amendment of 24 August 2004 (part of para. 3A(b)(ii)), the draft tenancy agreement was relied on as background to the second licence. The 3rd licence pleaded in para. 3A(b)(iii) was also an oral licence, allegedly granted in around 1976 or 1977, which related, I believe, inter alia, to the purpled dotted area within Lot 556 (part of the Inner Garden Area). The 3rd licence has not featured in the judgment. 47.Mr Chan asked for leave to amend the defence and counterclaim for the 8th and final time on 13 June 2007. This last amendment which was in light blue was inserted into para. 3A(b)(ii) and read as follows:
48.The aforesaid areas were the Red Area and the area dotted green, which were pleaded in the green amendment. The disputed areas were defined in sub-para. 3A(d) as the areas claimed by the plaintiff in the action. 49.Para. 3A(b)(ii) is not a model of clarity. It occupies 26 lines. The light blue amendment was inserted between lines 11 and 13. It is awkwardly placed but it is clear that the defendant had sought by this light blue amendment to allege that the 1974 licence covered all the disputed areas, which included the Inner and Outer Garden Areas. 50.So Mr Neoh’s complaint that the learned judge’s finding went outside the pleaded case of the defendant cannot be supported. 51.Mr Neoh complained that the light blue amendment is unclear and lacked particulars, and that the plaintiff should have been given an opportunity to deal with the amendment by way of evidence. But there was no objection to the light blue amendment. 52.Nor can I agree with Mr Neoh that, in any event, the evidence did not support the learned judge’s conclusion. The learned judge’s conclusion was amply supported by the evidence he had adverted to in the judgment. 53.After a thorough examination of the evidence, the learned judge came to the conclusion that:
54.Mr Neoh complained that CKW’s oral evidence was confused and confusing. But he was a sick man. He had serious heart trouble. He had also suffered a stroke. Because of his age and ill health, CKW’s evidence was taken on deposition prior to the trial. His evidence commenced on 26 May 2003 and finished on 15 December 2003. It took 11 days (on some of these days, the court was available only for a couple of hours). The learned judge was entitled to say that CKW was an old and unwell man, and that CKW’s recollection of the exact area covered by the 1974 licence was faulty. 55.CKW’s oral evidence was that he only gave permission to the Koon in 1974 to use the Red Land. However, the learned judge found:
56.Mr Neoh submitted the learned judge had failed to consider that the reference to CTOY in the draft tenancy agreement was only a reference to Lots 544, 545 and 546, namely the basketball field. But the evidence of the Koon’s witness quoted in para. 185 of the judgment to that effect, as well as the Koon’s evidence that they were not aware that the disputed area was part of CTOY had been rejected by the learned judge. 57.Mr Neoh sought to rely on a minutes of the Koon dated 20 April 1976, which referred to 停車場 as evidence that there was indeed a停車場. But that is not evidence that the subject of the draft tenancy agreement was the basketball field. 58.So the learned judge’s finding that the draft tenancy agreement was not concerned with the basketball field and that the permission that was given in 1974 did not relate to the basketball field cannot be successfully challenged. 1979-1999 59.The licence was for 5 years from 1974 and had not been renewed. So, the plaintiff relied on its “possession” of the disputed area after 1979. So I turn to consider whether the defendant had ever discontinued possession or been dispossessed. In this connection I ignore the storage annex. 60.JA Pye (Oxford) Ltd v Graham (HL(E)) [2003] 1 AC 419 provides a helpful illustration. 61.Pye entered into a written grazing agreement with Graham (“G”) in respect of 25 hectares of their land which adjoined G’s farmland. The land was fully enclosed by hedges and was only accessible, save on foot, through a gate kept padlocked by G. After the grazing agreement had ended, Pye refused to renew it and required G to vacate. G never vacated the land. From September 1984 onwards until 1999 G used the whole of the disputed area for farming as an occupying owner of the disputed area might have done. Lord Browne-Wilkinson said:
He went on to say:
62.I turn to examine the facts of the present case. 63.From the mid-1970s to at least 1990, CKW’s mother (“old Mrs Cheung”) resided in the Cheung Family House, with servants. The learned judge found that between 1974 and 1990, there were weekly visits by CKW and his children. He also accepted the evidence from the defence witnesses that the Cheung Family had the keys to the Red Gate and the Orange Gate, and that members of the Cheung Family were able to have free access to “the Red Land, the Inner Garden Area and the Outer Garden Area”. It will also be recalled that gates were built at the Footpath for access and that through those gates the Yellow Land and indeed the rest of the disputed area could also be accessed. 64.The learned judge also found on the evidence of Cheung King Fung, a son of CKW:
65.Moreover, it was the defence that for a period of several months in 1985, CKW had permitted Fong Ying Wo, a friend, to use the Orange and Blue Land for the parking of vehicles. Aerial photographs taken in 1985 (on 18 May and 2 October 1985) showed the parking of Fong’s vehicles at the Outer Garden Area. That fact having been established, the only dispute between the parties became whether “Fong obtained permission from CKW or from the Koon”. The learned judge preferred the evidence of witnesses for the defence over the witnesses for the Koon on this issue. He said:
66.Mr Neoh has taken us to the transcript of his evidence and suggested that Fong could not have seen the person who actually opened the Orange Gate. Cheung King Nam was employed by CKW and looked after CTOY for CKW from 1983 to 1992. It was his clear evidence that the key(s) to the Orange Gate was kept by old Mrs Cheung, and that he could open the Orange Gate with the key(s). It was also his evidence that he had to clear the Orange Land of grass before Fong’s vehicles could park there. I am satisfied that on the basis of Fong and Cheung King Nam’s evidence the learned judge was entitled to find that it was Cheung King Nam who opened the Orange Gate for Fong. So far from being physically excluded from the Orange Land and Blue Land, CKW permitted Fong to use the Orange Land and Blue Land for a substantial period of time. 67.I am of the view that on the facts found by the learned judge, the plaintiff was unable to prove that CKW had discontinued possession from 1974 (or 1979) to 1992 of the Red Land, the Inner Garden Area and the Outer Garden Area. Slade J said (see para. 31 above):
Here the evidence is overwhelming. Unlike the owner in Pye, the Cheung Family had the keys. Also the Cheung Family had continued to use the Outer and Inner Gardens and the Red Land freely. 68.I turn to consider the other areas. The Footpath 69.The learned judge said in para. 97 of the judgment:
70.The learned judge went on to say that the pair of gates:
71.As the learned judge pointed out, Mr Chong did not suggest that there was any adverse possession when the Footpath was occupied under the Footpath Agreement. However, he submitted that the Footpath Agreement was terminated upon the transfer of ownership to CKW. Mr Chong also relied on the fact that Lot 545 had never been owned by the Cheung Family. 72.The learned judge dealt with their submissions in paras. 99 to 134 of his judgment. He concluded:
73.With respect, I agree. The Yellow Land 74.As noted, the Footpath was part of the Yellow Land. Some time between December 1974 and December 1976, the Koon had demolished the walls on the two sides and constructed planters and some other landscape features on both sides within the Footpath within the Yellow Land. 75.The evidence was that old Mrs Cheung had the keys to the Red Gate from which one could enter the Yellow Land from the Amenity Area and that the Cheung Family could freely access the Yellow Land and the rest of the disputed area. That being the case, I do not believe the plaintiff could prove either dispossession or discontinuance of possession by CKW. Nor did the Koon have exclusive possession of the Yellow Land. 76.The learned judge also found and I agree:
The Amenity Area 77.The learned judge distinguished the Amenity Area from the storage annex. He said:
78.He found that the Koon did not have exclusive possession of the Amenity Area because it had not been fenced off from the rest of CTOY, for example, the Cheung Family could and did via the Amenity Area and through the Red Gate, freely access the Koon from the water tower. The water tower was to the Northwest of the Cheung Family House. 79.The plaintiff (Koon) called witnesses to testify that there was an iron mesh fence separating the water tower and the Amenity Area, hence the Amenity Area was enclosed. The Defence denied that, for example, Cheung King Fung said that:
80.The learned judge said he preferred the evidence of the defence witnesses. 81.He had also looked at a photograph taken in 1976 relied on by Mr Chong, in which the iron mesh fence was supposedly visible, but the learned judge did not find the photograph:
82.We were also asked to look at the photograph. I do not find the photograph helpful. 83.The learned judge concluded in para. 173 of his judgment:
84.Mr Neoh submitted that this is a case where we could interfere with the learned judge’s finding of fact because since the red gate was built to keep dogs within the Amenity Area so that they would not bother visitors to the Koon, it was inconceivable that the Amenity Area would not have been fenced off from CTOY. With respect, I cannot agree that this is sufficient to enable us to overturn the clear and careful finding of fact made by the learned judge. For all we know, the dogs kept by the Koon were familiar with the occupants of CTOY, so they were not perceived as a danger to them, whereas they might be a danger to the occasional visitors to the Koon. The learned judge had the benefit of the evidence of the various witnesses and this is not a case where I can possibly interfere with his conclusion. Implied licence 85.The learned judge also held that the Koon used the disputed area under an implied licence. Since I am of the view that CKW had not discontinued possession, nor did the Koon have exclusive possession of the disputed area, it is unnecessary to consider whether there was an implied licence. 86.I would dismiss the appeal. Hon Cheung JA: 87.I agree with the judgment of Tang VP. 88.In my view it is important to have an overview of this case. This case is different from many of the adverse possession cases of New Territories land involving an absentee owner who only shows an interest in the land when it is time for redevelopment or sale. What is unique about this case is that the disputed land is located within a piece of land that had always been used by the Cheung family as a residence. The outer boundary of this land had always been well defined by fence. In respect of the boundary of the disputed land, it encompasses both the outer boundary of this land and parts within it. However, Lam J has clearly found that even with the inner fencing the Cheung family could still gain access to the disputed land. This is a finding of fact which will require strong grounds to be overturned. 89.There is clear evidence that members of the Cheung family had been using the disputed land. The use was, of course, not something special like building a permanent structure on it. However, the use was what an owner and his family would usually do when they occupy their land, like walking on it or children playing on the ground. They might not be doing this as a matter of regular routine but only when they wanted to do so. Considering that these are common usage by an owner, they are by no means transitory or ephemeral. They are consistent with the possession by an owner of his own land. This is a case where the words of Slade J in Powell v. McFarlane (1979) 38 P & CR 452 at 472 become most appropriate :
90.I disagree with Mr Neoh’s argument that these words are not applicable in this case because the owner was no longer in possession. This begs the question whether the owner had been dispossessed at all. In my view the acts done by the owner and his family members clearly negative any suggestion of dispossession. Hon Yuen JA: 91.I have had the benefit of reading the draft judgments of Tang V-P and Cheung JA and I agree with them. Once the light blue amendment to the Defence and Counterclaim was made without objection, it was open to the Defendant to contend that the 1974 implied licence covered the entirety of the disputed area. Therefore the judge’s findings of fact were permitted on the pleadings, and it is well-established that an appellate court would be reluctant to interfere with a trial judge’s decision on fact which in this case was reached only after a detailed consideration of a large amount of evidence, both viva voce and documentary (Ting Kwok Keung v Tam Dick Yuen and others (2002) 5 HKCFAR 336). Hon Tang VP: 92.The appeal is dismissed. We make an order nisi that the defendant is to have the costs of the appeal to be taxed, if not agreed.
Mr. Anthony Neoh, SC, Mr. K. M. Chong and Mr. Aidan Tam, instructed by Messrs Peter Mo & Co., for the Plaintiff (Koon) Mr. Chan Chi Hung, SC and Ms. Christine Y. K. Tam, instructed by Messrs Kao, Lee & Yip, for the Defendant
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