Lin Jian Chun v. Lin Xiu Mei and Another

DCCJ 2491/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2491 OF 2008

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DECISION

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1.This is an application by the Defendants as per their summons dated 20^th September 2011 for leave to appeal against my judgment dated 13^th July 2011 in favour of the Plaintiff (“the Judgment”). The hearing of this leave application was slightly delayed because of the legal aid stay occasioned by the Defendants’ application for legal aid and because of accommodating the diary of the Defendants’ Counsel.

2.In this Decision, I shall adopt the same nomenclatures and abbreviations in the Judgment.

3.This case arises out of a claim by the Plaintiff as the registered owner for recovery possession of the Land in question against the 1^st Defendant (as the tenant) for termination of the tenancy on the ground of failure to pay rent.  The 2^nd Defendant, being the son of the 1^st Defendant, had no right to remain there after the termination. The Defendants pleaded adverse possession and sought the usual declaration in the defence and counterclaim.   The facts of the case have been fully set out in the Judgment and I do not intend to repeat the same here.  Suffice to say that in this application, the Defendants’ Counsel, Mr. Cheung, prepared the draft grounds of appeal and divided the grounds into 5 topics.  It seems to me that each topic contain subparagraphs and different grounds.  In gist, he advanced legal arguments different from that at trial such as “want of writing” under section 3 of the Conveyancing and Property Ordinance Cap. 219 (“CPO”).  He also challenged the findings of facts.  As such, it is more desirable for me to deal with each paragraph.

First ground of appeal: (A) the Defendants’ counterclaim (a) physical possession

4.The 1^st paragraph of the 1^st ground is that I erred in making inconsistent findings in paragraphs 44 and 46 of the Judgment.  Mr. Cheung submitted that:

“If the late Mr. Ho and the 1^st Defendant were in possession of the Land as respective tenants over the successive periods of tenancies, they would have been in exclusive and continuous possession of the Land over all these period.”

5.With respect, this is not a case of a tenant claiming against a landlord for failure to grant exclusive possession of a piece of land to the tenant.  This is a landlord’s claim for possession on failure to pay rent and the alleged squatter’s counterclaim on adverse possession.  Mr. Cheung is suggesting once there was a finding of “possession” of the Land as a tenant automatically follows that the tenant would be able to establish “exclusive possession” in the context of adverse possession.  I do not agree.  In my view, “possession” of the Land as a tenant is different from “exclusive possession” as a requirement in establishing adverse possession.  The word “possession” would have different meaning in different context.  Mr. Cheung seemed to misuse my finding on “possession as of right” (the finding of the existence of landlord and tenant relationship together with an indication to pay rent and thereby dismissed the claim of adverse possession) to contend that “possession” as a tenant is akin to “possession” as a squatter.  He mingled the concepts of “possession as of right” into “possession as of wrong”.  Once there was the finding of “possession as of right” such as the indication to pay rent and/or possession of the Land was with the landlord’s consent, the alleged squatter failed to prove the intention to possess the Land to exclude the world including the true owner.  It may be said that the finding of “possession as of right” defeatsthe plea of “possession as of wrong”.  Mr. Cheung seemed to embark on semantic argument of possession in different context than focusing of the principles of adverse possession.   The above contention is selected out of context.  To clear this up, I wish to reiterate the Court of Final Appeal’s exposition in Wong Tak Yue case:-

“A person claiming to be in adverse possession must be shown to have both possession and the requisite intention to possess: Powell v McFarlane (1979) 38 P & CR 452, R v Secretary of State for the Environment ex p Davies (1990) 61 P & CR 487, Buckinghamshire County Council v Moran [1990] 1 Ch 623. Adverse possession could be described as “possession as of wrong” and with limitation it was the intention of the squatter that was essential.”

“The defendant’s intention to pay rent if the owners had requested payment demonstrated that he was not intending to exclude the owner with the paper title but showed that he was treating himself as enjoying possession under a lawful title from the owners. His intention to possess was not “as of wrong” but was “as of right” (R v Secretary of State for the Environment ex p Davies (1990) 61 P & CR 487) followed.”

6.In the present case, there is no dispute that the Plaintiff is the paper owner and the ultimate question is whether the Defendants are able to establish possession and the requisite intention to possess.  After analysing the evidence and the application of relevant legal principles, I stated and concluded in paragraph 44 that the late Mr. Ho and his family have not been in exclusive and continuous possession of the Land for “more than 20 years before 20^th March 2008” or “12 years before 20^th March 2008”.  One of the main reasons is that I accepted the evidence of the Plaintiff’s witnesses and found that all along, the relationship between the Plaintiff or the Plaintiff’s predecessor and the Defendants and the late Mr. Ho was one of landlord and tenant, the late Mr. Ho and the Defendants possessed the Land with the landlord’s consent, they were not squatters.  In short, the Defendants failed to establish “possession as of wrong”.  Further, I also accepted the Plaintiff’s evidence on the Defendant’s indication to pay rent upon her refusal to sign any tenancy agreement.  Consequently, the indication to pay rent showed that the 1^st Defendant was treating herself as enjoying possession under a lawful title from the owners in Wong Tak Yue sense.   Therefore, in paragraph 46, I stated and concluded that the possession of Land by the late Mr. Ho and the Defendants was with the consent of the Plaintiff or his predecessors, which is “possession as of right” and as such the Defendants’ plea on adverse possession must fail.

7.In laying the 1^st ground of appeal, Mr. Cheung seemed to have overlooked the summary of legal principles as set out in paragraphs 8 to 10 of the Judgment, the evidence analysis and the findings on the Defendants’ different and alternative arguments as set out from paragraphs 28 to 43.  He also failed to include Wong Tak Yue casein his 2 boxes’ files of authorities submitted at trial. 

8.Moreover, in paragraph 2 of his 1^st ground of appeal, Mr. Cheung submitted that:-

“The learned judge overlooked the Plaintiff’s case in paras. 7 and 8 of his Defence and Counterclaim. The Plaintiff pleaded that the acts of possession of the Land by the late Mr. Ho and the Defendants (as set out in paras. 18 and 24 of the Defendants’ Counterclaim) were done by them as respective tenants under tenancies granted by Liu Kam Yiu to the late Mr. Ho in early 1970s and by PW1 to the 1^st defendant in about 1993.”

9.The correct description of the pleading should not be the “Defence to Counterclaim”, it shouldbe the Plaintiff’s “Amended Reply to Defence of the 1^st Defendant and Amended Defence of the 2^nd Defendant and Defence to Counterclaim of the 1^st Defendant and Amended Counterclaim of the 2^nd Defendant” (it may be more conveniently described as the “Amended Reply and Defence to Counterclaim”).  Be that as it may, all along, I was aware of the Plaintiff’s position that the Defendants possessed the Land as the tenants.       

10.The preamble of paragraph 3(a) and (b) of the 1^st ground of appeal reads:

“In paras. 30-33 and 37-38 of the Judgment, the learned judge wrongly insisted on the “objective evidence” of fencing off of the Land before 2004 as the only acceptable evidence for proving continuous physical possession or control of the whole Land.”

11.In my views, Counsel for the Defendants distorted the wordings and my analysis.  To begin with, he merely mentioned paragraphs 30-33 and 37-38 of the Judgment.  He seemed to have overlooked paragraphs 29, 34 to 36 of my judgment in which I gave reasons as to why the evidence submitted by the Defendant was not reliable or insufficient to establish “exclusive possession” and “intention to dispossess” in the context of “possession as of wrong”.  Secondly, the gist of my finding is that the Defendants’ allegation of “fenced off” before 2004 was a bare assertion and was lacking objective evidence such as aerial photographs or survey sheet (on site survey) that should have provided some evidentiary basis of “fenced off” before 2004. In paragraph 31 of my judgment, I stated that the aerial photographs could not depict whether the Land was fenced off before 2004. It is neither here or there. But the relevant survey sheets (document showing on site survey), though existed before and after 2004, revealed for the 1^st time in 2004 that there were fences enclosed the occupation areas as of 2004.  This led to my conclusion that had there been “fenced off” before 2004, there would have been objective evidence such as survey sheets before 2004 showing “fenced off”. Hence, in paragraph 32, I found that “the net result is that for the period before 2004 (including the year of 1989), except bare assertion of “surrounding”, there is no objective evidence of “fenced off”.

12.Regarding paragraph 3(c) of the 1^st ground of appeal, again, Defendants’ counsel should have referred to the Amended Reply and Defence to Counterclaim.  Nevertheless, the plain reading of the whole sets of pleadings reveals that the Plaintiff did not dispute that the Defendants possessed the Land as a tenant but it is misconceived to say that the Plaintiff did not dispute the Defendants’ possession in the context of “possession and the requisite intention to possess by a squatter”.

13.Regarding paragraph 4 of the 1^st ground of appeal, my judgment is the result of the weighing exercise of the parties’ testimonies and the documentary evidence, which led to the findings of facts and the application of legal principles to the factual matrix. 

First ground of appeal: the Defendants’ counterclaim (b) Intention to possess

14.Regarding paragraph 5 of the 1^st ground of appeal, although Defendants’ Counsel may have his perceived legal principles, in my judgment, I have considered the most recent judgment of Yu Kit Chiu case given by the Court of Appeal and Wong Tak Yue case given bythe Court of Final Appeal’s judgment (see paragraphs 8 to 10 of my judgment).  I do not intend to repeat the summary of the legal principles herein.    

15.It seems that Mr. Cheung relied heavily on section 3(1) of the CPO in this leave application.  Although Mr. Cheung mentioned section 3(1) of the CPO in his skeleton opening, Mr. Cheung accepted that it is not pleaded.  It is also beyond debate that the Defendants never put in issue the said section in the agreed statement of issues filed on 8^th November 2010 pursuant to Order 18, rule 22 of the Rules of the District Court.   Further, despite what is stated in his written opening, he signed on a list of issues on 1^st day of the trial (recorded in paragraph 7 of my judgment).  Likewise, he did not put in issue of section 3(1), apparently after careful thought.  It seems to me that if late application for amendment is made to plead s.3 at trial, the other side should be permitted to plead part performance and estoppel, this involves a different package of law and evidence (see Take Harvest Ltd v George H Liu [1993] AC 552 cited by Mr. Cheung).   The Defendants would then face the risk of being refused upon the application in light of the underlying objectives or even if adjournment is granted, the risk of facing liability for costs such as costs thrown away or wasted costs order. 

16.Mr. Cheung relied on Take Harvest Ltd caseto contend that even the Privy Council permitted late amendment of pleading and remitted the case to the District Court to hear “second round” evidence on s.3, part performance and estoppel.  My view is that in adopting the said course of remitting, the Privy Council expressed that it was exceptional.  It was exceptional because the court below misinterpreted and misunderstood the law and that the finding on “21 days-tenancy” was factually incorrect.  I do not think that the present case has the special features of Take Harvest Ltd.  Further, Take Harvest Ltd was decided before the UK’s Civil Procedure Reform (CPR) and Hong Kong’s Civil Justice Reform (CJR).  The said case should be viewed together with the current fundamentals of the CJR.  I do not think the CJR’s primary aim on “just resolution of disputes”, the underlying objectives of “cost-effectiveness”, “expeditious disposal”, “procedural economy”, “fairness”, “distribution of Court’s resources” would accommodate “failure to plead a substantive point”, “taking the other by surprise”, “repeated change of front”, “resuscitation of an abandoned point with hindsight” and “have a second bite of the cherry after trial”.

17.In short, I do not see how the belated and non pleaded arguments on section 3(1) of the CPO or the tenancy was void for uncertainly avail the Defendant, especially one of my findings is the indication to pay rent, which defeated the plea of “possession as of wrong”.  Nonetheless, paragraphs 5, 12 to 17, 40(6) of my judgment deal with the question of tenancy during the relevant period.  In gist, the cumulative effect and the totality of the evidence of PW1 to PW3 show that from 1970’s to 1993, the Land was leased by PW1’s brother to the late Mr. Ho.  In 1993, the 1^st Defendant signed a tenancy agreement of the Land but it was lost or mislaid.  As of 2000, the said written tenancy expired and it became an oral tenancy with a yearly rent of $600.  As a result, by the factual matrix, the said tenancy became an oral yearly tenancy renewable year by year.  Sections 4 (1) and (2)(d) of the CPO reads:

“(1) A legal estate in land may be created, extinguished or disposed of only by deed.

(2) This section does not apply to –

(d)  the grant, disposal, or surrender of a lease taking effect in possession for a term not exceeding 3 years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without a premium;”

18.Section 6(2) of the CPO reads:-

“Nothing in section 3 or 5 in subsection (1) shall affect the creation by parol of leases taking effect in possession for a term not exceeding 3 years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without a premium.”

19.By reading the combined effect of the above sections, it seems to me that the provisos in section 4 and section 6 make section 3(1) inapplicable to an oral yearly tenancy.  Alternatively, the above factual matrix resulted in a periodic tenancy renewable yearly at the rate of $600 per year (see Tam Yuk Ha v Chiu Chuk Fun [2010] 2 HKLRD 1168 Civil Appeal No. 63 of 2008).  In brief, I do not agree that s. 3 of the CPO applies in the present case, a fortiori, the oral yearly tenancy was not void for uncertainty or unenforceable for want of writing.   

20.Further, put the Defendants’ case to the highest in that assuming they made out a case on s.3(1) of the CPO, that would not alter the fact that the claim for adverse possession was rejected because of the factual finding on the Defendants’ possession of the Land as a tenant and the indication to pay rent.  The counterclaim must be dismissed.    

21.I now deal with the case cited by Mr. Cheung on the proposition of the rule against uncertain terms of tenancy: the World Food Fair Ltd v Hong Kong Island Development Ltd [2007] 1 HKLRD 498.  In that case, the Court of Final Appeal held on the facts of that case that there was no concluded tenancy agreement between the parties and the landlord was ordered to repay the deposit.  I do not see how the said case avail the Defendants.  Put the Defendants’ case to the highest, had there been no concluded tenancy agreement between the Plaintiff and the Defendants, it does not mean that the title in Land vested in the Defendants, it goes back to the question as to whether the Defendants established adverse possession or possessory title successfully, the issue of which I have decided against the Defendants.   

22.In respect of paragraph 7(a) and (b) of the 1^st ground, I reiterate the above reasons. 

Second Ground of Appeal: (B) Alleged successive tenancies from 1976 to 2005

23.The whole paragraphs 8 and 9 of the 2^nd ground seem to be a repetition of the 1^st ground.  Defendants’ Counsel put too much emphasis on the formality of a tenancy agreement, losing focus on the principles of adverse possession.  It may be due to the different perception of the principles that Lord Justice Slade acknowledged that there might be confusion.  Lord Justice Slade expounded the principles on adverse possession in J A Pye as follows:-

“In my judgment much confusion and complication would be avoided if reference to adverse possession were to be avoided so far as possible and effect given to clear words of the Acts (Limitation Acts). The question is simply whether the defendant squatter has dispossessed the paper owner by going into ordinary possession of the land for the requisite period without the consent of the owner.”

Third Ground of Appeal: (C) : Plaintiff’s action based on tenancy from 2006 to 2008

24.In respect of paragraph 10 of the 3^rd ground, Mr. Cheung seemed to have overlooked the findings of fact in my judgment that I have summarised in paragraph 17 above. 

Fourth Ground of Appeal: (D) : Credibility

25.In respect of paragraph 11 of the 4^th ground, regarding DW3, Defendants’ Counsel seems to have spoken louder than DW3’s witness statement.  Regarding the 1^st and 2^nd Defendants, as I have given reasons why I disbelieved them, among other reasons, I could not accept that had the 1^st Defendant sneaked into Hong Kong from time to time between 1989 to 1994 in purporting to establish “joint squatter” with her husband during that period, there was no reason why she was unable to give a brief description or an approximate estimate as to the means of sneaking, how frequent, how many times and how long for each stay.  In respect of the 2^nd Defendant, he was well educated.  He said during cross examination that he knew that he had no case against another landlord of the adjacent land on adverse possession because it was owned by a “tong” or “tso”.  Hence, he signed on a document giving up possession in return for compensation.  The incredible part is that when he purported to explain why he said that he was not tenant in the adjacent lot and acknowledged himself as a tenant to receive compensation, he replied that he did not notice the word “the tenant” in the relevant document until he saw it at trial (see paragraph 40(5) of the Judgment).  

Fifth Ground of Appeal: (D) : the finding that the 1^st Defendant did promise to continue to pay rent in the meeting in 2005

26.Mr. Cheung submitted that “the 1^st Defendant did promise to continue to pay rent in 2005, where such matter had not been pleaded by the Plaintiff.”  He relied on the case of Wing Hang Bank Ltd v Crystal Jet International Ltd & Others [2005] 2 HLRD 795.  

27.In that case, the plaintiff (the bank) sought to execute a legal charge against the 1^st defendant.  The 1^st defendant alleged at trial the allegations of undue influence or misrepresentation, which were not pleaded.  The 1^st defendant even expressly abandoned any defence based on undue influence at trial.  On appeal, the 1^st defendant sought to raise defences of misrepresentation and undue influence.  The Court of Appeal reiterated principles on the purpose of pleadings.  It held that “Ultimately, the court was guided by what was fair and just in the circumstances, not just to the party seeking to rely on an unpleaded case but to all parties before it.”  Further, in dismissing the appeal by the 1^st defendant, the Court of Appeal also refer to Order 18, Rule 12(1)(a) of the Rules of the High Court in which it is expressly provided that any defence based on misrepresentation and undue influence must be pleaded.   

28.The hybrid of law and facts of the present case are entirely different from Wing Hang Bank case.  In so far as the broader principle of fair and just in the circumstances, I would apply it against the Defendants.  In the present case, it is apparent from the pleadings that the Plaintiff’s case on the relationship between the Plaintiff and the Defendants was one of landlord and tenant.  It is apparent that the Defendants’ case is adverse possession, in particular, factual possession and intention to possess the Land against all including the true owner. The parties knew that “intention to possess” is one of the live issues.  Although the Plaintiff did not specifically plead the evidence of “indication to pay rent in November 2004” in the pleadings, the Plaintiff stated the said evidence in the witness statements and the Defendants dealt with the allegation well before the trial by way of witness statements (about 15 months before trial), followed by cross examination at trial.  Mr. Cheung never complained of being taken by surprise until this leave application.  Simply put, the point on “indication to pay rent on an occasion in November 2004” was mentioned as early as in the statements of PW1 and PW3 dated 26^th March 2010 and 23^rd July 2009 respectively and both were filed on 1^st April 2010.  The statements of the Defendants dated 15^th March 2010 and filed on 1^st April 2010 also dealt with the said allegation by admitting that there was such an occasion, but it should happen in early 2005.  They further admitted that PW1 accompanied by PW3 did request the 1^st Defendant to sign a tenancy agreement but the 1^st Defendant refused.  They also alleged that they never paid rent. 

29.Not only Defendants’ Counsel never complained of being taken by surprise, both counsel have exercised their right to cross examine the other on that allegation and spent much efforts on addressing me on the issue of credibility.  Secondly, the above factual dispute is simply a subsidiary question of the main issue agreeable by the parties, i.e. the intention to possess against the true owner.  One of the main issues confirmed by Mr. Cheung at trial is: “Whether Ho Lai Biu and his family have the intention to possess the Site to exclude the world at large including the true owner or Ho Lai Biu and his family have been in possession of the Site with consent of the Plaintiff or his predecessors.” The above assertions on indication to pay rent are apparently germane to the broader issue as pleaded and confirmed by the Defendants’ Counsel.  The said allegation was disclosed as early as 15 months before trial.  The Defendants have dealt with it, whether by way of witness statements or by way of cross examinations.  I do not agree with Mr. Cheung now said with hindsight in this leave appeal application that it was a pleading point, he was taken by surprise and it is difficult for the Defendants to meet the allegation. 

CONCLUSION

30.All in all, I do not find any reasonable prospect of success in this intended appeal and there are no other reason which in the interests of justice that the appeal should be heard.  I therefore apply section 63A(2) of the District Court Ordinance, Cap. 336 and refuse the Defendants’ application for leave to appeal.  The summons dated 20^th September 2011 is dismissed.

31.I also make an order nisi that the costs of the application be to the Plaintiff with certificate for counsel, which shall be made absolute 14 days after the date of the handing down of this Decision. The costs of the 1^st and 2^nd Defendants be taxed in accordance with Legal Aid Regulations.

Mr. Patrick Szeto, instructed by Messrs. Tony Kan & Co, for the Plaintiff

Mr. Wallace Cheung, instructed by Messrs. Haldanes (assigned by the Director of Legal Aid), for the 1^st and 2^nd Defendants