Tsang Foo Keung and Another v. Chu Jim Mi Jimmy and Others

HCA 7140/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 7140 OF 1995

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J U D G M E N T

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INTRODUCTION

1.There are two applications respectively by the 2^nd and 3^rd defendants by summons dated 10 September 2012 and by the 1^st defendant by summons dated 22 March 2013 for an order that the plaintiffs’ claims be struck out and dismissed for want of prosecution under the inherent jurisdiction of this Court.

BACKGROUND

2.The action is one for the recovery of possession of parts of the steps located between Ivy House (18–20 Wyndham Street) and Wong Chung Ming Commercial House (14–16 Wyndham Street) (“the Steps”).  The Steps lead from Wyndham Street up to On Hing Terrace.  Since about 1964, the Steps have consisted of two flights of steps separated by a landing (“the Landing”).

3.The plaintiffs are the registered owners of the land known as the Remaining Portion of Subsection 1 and Subsection 2 of Section H of Inland Lot No. 617 (“the Land”).  It is not in dispute that Ivy House and the Steps are both comprised within the Land.  The Steps are subject to a right of way in favour of other sections of Inland Lot No. 617 which lie in On Hing Terrace.

4.The areas that the plaintiffs seek to recover are at present occupied by fixed hawker pitches which have been set up against a parapet wall along the north side of the Steps.  Between that wall and Wong Chung Ming Commercial House is a narrow lane called Mason’s Lane.  The pitches run from the lowest complete step to nearly the top of the Steps and take up about a quarter of the width of the Steps. There are four incomplete steps between the pitches and the pavement on Wyndham Street.

5.It is common ground that when Ivy House was re-developed in 1964, the Steps were also reconfigured and rebuilt.  It is also common ground that there was a re-development of Wong Chung Ming Commercial House in around 1985, when its frontage was set back and Wyndham Road was widened.  These re-developments are significant to the exact location of the pitches over the years.

6.It appears that there were two pitches in the past, although they now appear to have merged into one continuous structure.  A couple surnamed Chu used to run a clothes mending and knitting business from the pitch higher up in the Steps.  The husband died in 1986, leaving the widow, Madam Yu Lai Ying (“Madam Yu”), to carry on.  She died in June 1995, before this action was commenced in July of the same year.  It appears that by the early 1990s Madam Yu had allowed the 2^nd and 3^rd defendants to use her pitch.  After Madam Yu died, Chu Kwok Chung, one of her sons, became responsible for the pitch.  He in turn died in March 2008.  His widow, Madam Yip Wai Yin, was granted legal aid and had the conduct of the proceedings on behalf of the 1^st defendant until 2012.  The present 1^st defendant, Chu Jim Mi Jimmy (“Jimmy Chu”), is his younger brother and is being sued as the personal representative of the estates of Madam Yu and of Chu Kwok Chung.

7.The 2^nd defendant (“Madam Lai”) and the 3^rd defendant (“Madam Wu”) are a mother and daughter aged 98 and 60 respectively as at September 2012.  Madam Lai had operated the pitch at the lower part of the Steps, selling candies and soft drinks, since around the 1950s if not before.  She started selling flowers instead in around 1981.  Her daughter, Madam Wu, has since about 1991 taken over the running of the florist business, called Orchid Florist.  The fixed pitch hawker licence granted by the Urban Council to Madam Lai was also transferred to Madam Wu.

8.In about 1991, Madam Wu began selling funeral wreaths from the stall.  The owners of the buildings in the vicinity found this objectionable and complained in writing to the shop. Madam Wu complied and stopped selling wreaths in 1992.  Two years later, by a solicitors’ letter dated 28 October 1994, the first-named plaintiff in this action and the predecessor-in-title of the second-named plaintiff wrote to Madam Lai and Madam Wu, stating that the pitch had hitherto occupied the Steps with the owners’ licence and that such licence was to terminate on 30 November 1994.  They were asked to quit and deliver up vacant possession.  By a letter dated 23 December 1994, the solicitors told them that if the florist stall was not removed, their clients would institute legal proceedings.

9.On 19 April 1995, the Urban Services Department, which had been informed of the stance of the registered owners of the Land, decided to give notice to Madam Wu under by-law 34(1) of the Hawker (Urban Council) By-laws made under the Public Health and Municipal Services Ordinance (Cap 132), requiring her hawker pitch to be re-sited.  The reason for the notice was that:

“… the owners of Ivy House … raised objection to the existence of your fixed pitch. They also notify this Department that letter has been issued to you for vacating your fixed pitch and returning to them the site you are now occupying. As your fixed pitch is within the private lot boundary of Ivy House, it is necessary to resite your present pitch in order to be fair to the owners of the building concerned.”

10.On 30 June 1995, Madam Wu sought leave to apply for judicial review of that decision.  The application for judicial review came before Keith J in 1996.  In his decision on 23 May 1996 (reported as Wu Chee-ling v Urban Council [1996] 1 HKLR 282), the learned judge held that the Steps are a public place for the purposes of the Public Health and Municipal Services Ordinance, but that the Urban Council had failed to take sufficient steps to satisfy itself that the pitch was indeed occupying land still owned by the registered owners and that Madam Lai and Madam Wu had not acquired a possessory title over it.  Accordingly he quashed the notice.  Madam Wu’s hawker licence in respect of the lower pitch has since been renewed and remains valid to date.

11.As for the upper pitch, it appears that a hawker licence for the same location was granted to Chu Kwok Chung following his successful appeal to the Municipal Services Appeal Board in October 2000.  After Chu Kwok Chung died, his widow applied for a licence by succession.  It appears that she eventually accepted a licence to operate a fixed hawker pitch at Li Yuen Street West instead.  There is therefore no extant government hawker licence for the upper pitch.

12.The registered owners of the Land issued the Writ in this action on 18 July 1995.  The defendants raised adverse possession as a defence.  Steps were taken in the action in the initial years including the filing of pleadings and their amendments but there was no real activity in the proceedings after 1998, until 2012, as I shall describe below.  This period of inaction and delay is the foundation of the defendants’ present applications.

13.When the plaintiffs sought to revive the action in 2012, the defendants did not immediately apply to strike it out but only did so after some time had passed and steps had been taken on both sides in the further conduct of the action.  Relying on this, the plaintiffs contend that the defendants’ applications are barred by waiver, acquiescence or estoppel.  I shall discuss this argument below.

THE LEGAL BASIS

14.The principles guiding the exercise of the court’s discretion to strike out actions for delay have been restated by the Court of Final Appeal in Wing Fai Construction Co Ltd v Yip Kwong Robert (2011) 14 HKCFAR 935.  I have directed myself in accordance with what the Chief Justice said there which I shall not quote at length in this judgment.

15.I also remind myself that, as Lord Scott NPJ said in Wing Fai at para 88, previous judicial decisions should not be treated as a statute replacing the rules but rather as a very important guide to the exercise of the discretion.  The power to strike out remains a discretionary one.

16.The defendants recognise that abuse of process is now the foundation of the power to strike out.  The basis on which they contend there is such abuse as to warrant the striking out of the action is that there has been inordinate and inexcusable delay which has given rise to serious prejudice to them and a real risk that a fair trial is not possible.  The defendants have not contended that the plaintiffs’ lackadaisical approach shows any contumelious conduct or “warehousing” of the action or absence of intention to proceed. 

17.I shall analyse the merits of the applications in the following sections:

(1) The plaintiffs’ delay

(2) The defendants’ conduct up to April 2012

(3) Waiver, acquiescence and estoppel

(4) Prejudice to the defendants or risk of impossibility of fair trial

(5) Three discrete points

DELAY

18.Lest there be any doubt, I say at the outset that the delay that has occurred in this case is plainly inordinate and inexcusable.

19.The action began on 18 July 1995.  The Defence of the 2^nd and 3^rd defendants was filed in September 1995.  The Defence of the 1^st defendant was filed in March 1996, after the Statement of Claim was amended to reflect the fact that Madam Yu had died and to sue Chu Kwok Chung instead as the personal representative.

20.In September 1996, the plaintiffs made a substantial amendment (in purple) to the Statement of Claim, the contents of which I shall discuss later in the context of prejudice to the defendants. 

21.On 23 December 1996, Master Jones heard the summons for directions and made orders for the filing of Replies, filing of lists of documents, inspection of documents, preparation of surveyors’ reports, photographs and plans, and exchange of witness statements.

22.The plaintiffs’ Replies and the parties’ lists of documents were filed shortly afterwards, in January 1997.  From then until November 1998, very little happened in the proceedings.

23.On 4 November 1998, the plaintiffs made an amendment (in yellow) to the Statement of Claim to substitute one of the registered owners with his successor-in-title as the second-named plaintiff.  The new co-plaintiff’s name was mis-spelt and this was corrected by a further amendment (in blue) on 23 November 1998.

24.In December 1998, there was an application for legal aid by Chu Kwok Chung.  But even after legal aid was refused, the plaintiffs took no step to proceed with the action.

25.It appears that there was in July 2002 a brief attempt to negotiate a settlement by letters and by a without prejudice meeting.  In August 2002, presumably after the negotiations failed, the plaintiffs issued a notice of intention to proceed.  But they did not proceed.

26.In December 2005, the plaintiffs issued another notice of intention to proceed but again they took no further step in the proceedings.

27.It was not until 17 November 2011 that the plaintiffs filed a further notice of intention to proceed.  In April 2012, the plaintiffs took out a case management summons.  In May 2012, they issued a summons for leave to make further amendments (in brown) to the Statement of Claim.

28.Even if one disregards the delay between January 1997 and November 1998, there was, in my view, a period of over 13 years between 1998 and April 2012 in which the plaintiffs took no steps in these proceedings.  It is said that the plaintiffs took advice from counsel in January 2002 and January 2010 and had in March 2010 engaged a surveyor as expert to prepare a report.  But these acts do not justify the inaction in the proceedings or curtail the period of delay.  It is also said that the plaintiffs had been looking for a suitable expert since 2005, but no details of any enquiries were disclosed.  I cannot believe that it could have taken anyone making a serious effort, five years to locate a qualified surveyor.  Nor do the various applications by the defendants for legal aid provide an excuse for the plaintiffs’ inaction. 

29.Other than these matters, nothing has been put forward by the plaintiffs to explain the delay. I am satisfied that the delay that has occurred is by any standard inordinate and inexcusable. 

30.Mr Yau submits that the delay here is so “gross” as to amount to abuse of process, without more. However, it is well established that mere delay is not sufficient to justify an order to strike out (see Wing Fai, at para 75(5)).    It is necessary to investigate the additional factor relied upon by the defendants, ie serious prejudice to them and real risk of impossibility of a fair trial.

DEFENDANTS’ CONDUCT UP TO APRIL 2012

31.As the Court of Final Appeal made clear in Wing Fai, at paragraph 75(8), the conduct of both parties is a relevant consideration in an application such as the present.  During the period of the plaintiffs’ delay identified above, there was, of course, matching inactivity on the part of the defendants.  Mr Albert Yau, who appears on behalf of the 2^nd and 3^rd defendants, frankly admits that the defendants had taken a “let sleeping dogs lie” approach.  While acknowledging that this attitude is no longer acceptable after the civil justice reform (“CJR”), the rules relating to which came into effect on 2 April 2009, he submits the defendants’ post-CJR delay was minor.  The bulk of the inactive period fell in the pre-CJR era.

32.It is right that in this context I should not view the defendants’ inaction prior to the CJR with 2013 spectacles.  Their conduct must be assessed in the context in which it occurred.  That is clear from paragraphs 20 and 29 of Ma CJ’s judgment in Wing Fai where he said:

“20. … the learned Vice President (with whose judgment Le Pichon JA agreed) did say (in para. 12) that ‘the matter of delay had to be considered in the context in which it occurred’ and (in para. 13) that ‘a party cannot be blamed for not observing a Rule that did not exist at the relevant time’. As to these general statements, subject to what follows later in this judgment, there is perhaps little controversy.”

“29. … The Court is to apply the law that exists today. However, this is not to say that when an evaluation is made of the conduct of a party in proceedings (in the present case to examine the delay that has taken place), the Court then somehow disregards the circumstances and the statutory structure in place at the relevant time. There is a distinction to be made between, on the one hand, the application of the law that applied pre-CJR in determining an application and, on the other, taking into account circumstances prevailing at the relevant time, when making a factual evaluation (such as whether or not delay in proceedings was excusable). There is no inconsistency between a court adopting the latter approach without applying the former. …”

See also Winpo Development Ltd v Wong Kar Fu [2011] 2 HKC 524, at para 33.

33.I shall therefore take account of the defendants’ own failure to prompt the plaintiffs to proceed with the action during the pre-CJR period having regard to the approach prevailing at that time, as well as the defendants’ conduct in not progressing the action in the post-CJR period.

34.However, it seems to me that there is a difference between not taking steps to wake up a sleeping dog, and not taking steps to equip oneself to fight the dog in case it wakes up. Even if the former attitude was prevalent before the CJR, the latter had never been considered acceptable or advisable.  In particular, in assessing whether the defendant has suffered prejudice as a result of the delay, the courts have long held it significant to see what the defendant has done by way of preparation: Hymer v Mass Transit Railway Corporation [2000] 2 HKLRD 589, 610-611; Hunter v Skingley [1997] 1 WLR 1466, 1472-1473.  This is relevant to my evaluation of prejudice to the defendants below.

35.Moreover, although Chu Kwok Chung’s widow was in charge of the proceedings on behalf of the 1^st defendant between 2008 and 2012, there is no evidence from her that she took any real steps in the action.  Instead, it appears that she took steps to obtain a transfer of the hawker licence to herself by succession and eventually secured a licence to operate a fixed hawker stall in Li Yuen Street West.

WAIVER, ACQUIESCENCE AND ESTOPPEL

36.As mentioned above, after the plaintiffs took out a case management summons in April 2012 and a summons further to amend their Statement of Claim in May 2012, what the defendants did was not immediately to apply for an order to strike out the action.  Instead, they took various steps to progress the action.

Steps taken by 2^nd and 3^rd defendants

37.I shall first set out what happened in relation to the 2^nd and 3^rd defendants. On 5 June 2012, their solicitors wrote to the plaintiffs’ solicitors with respect to the plaintiffs’ application to amend the Statement of Claim and stated as follows:

“We have given careful consideration to your clients’ application. We were at one stage puzzled as to why your clients did not raise the new averments at a much earlier stage. But in the end we have decided not to oppose your clients’ application for leave provided that (i) we have leave to file an Amended Defence within 28 days thereafter; and (ii) costs of and occasioned by your clients’ application be to the 2^nd and 3^rd defendants in any event.”

Leave was given on this basis on 7 June 2012 for the plaintiffs to amend their Statement of Claim.

38.In fact, as Mr Yau frankly told the court, at that time the 2^nd and 3^rd defendants had also mulled over whether to apply to strike out the action on the ground of delay, but decided at that stage not to do so, having considered the guidance given by the Court of Final Appeal in Wing Fai.

39.Thereafter, both the plaintiffs and the 2^nd and 3^rd defendants filed time-tabling questionnaires, an amended Statement of Claim and an amended Defence, and supplemental lists of documents.  On 6 July 2012, the Registrar heard the case management summons of 30 April 2012, gave directions for the conduct of the action and adjourned the matter to the first case management conference fixed on 12 December 2012.  Up to this point, there was no suggestion by the 2^nd and 3^rd defendants that the action should be struck out for delay.

40.It was only after seeing what the plaintiffs next produced that the 2^nd and 3^rd defendants changed their mind.  On 25 July 2012, the plaintiffs filed their expert report and on 15 August 2012, their Amended Reply to the 2^nd and 3^rd defendants’ Amended Defence.

41.The 2^nd and 3^rd defendants exchanged witness statements with the plaintiffs on 24 August 2012.  In the statement of Madam Wu, she said that the plaintiffs’ recent expert report suggested that Madam Lai had re-located her pitch up the Steps during the 1980s.  Madam Wu stated she was handicapped to respond to that allegation and her lawyers were considering the possible prejudice to the 2^nd and 3^rd defendants.  She reserved the right to apply to have the action struck out on the ground of delay.

42.On 10 September 2012, the 2^nd and 3^rd defendants issued their summons to strike out the action for want of prosecution.

Steps taken by the 1^st defendant

43.The progress of the action vis-à-vis the 1^st defendant has followed a different course because Chu Kwok Chung had died in 2008. 

44.As stated above, on 7 June 2012, the master gave leave for the plaintiffs to amend their Statement of Claim.  The 1^st defendant, who was still named as Chu Kwok Chung, did not attend the directions hearing before the Registrar on 6 July 2012.  Nor did the 1^st defendant file any consequential amendment to his defence at that stage.  Nevertheless, the plaintiffs filed an Amended Reply to the 1^st defendant on 15 August 2012.

45.Meanwhile, on 14 August 2012, Jimmy Chu filed an application under RHC Order 15 rule 7 for an order that he be substituted as the 1^st defendant.  Before any order was made, a notice of change of solicitors was filed on behalf of the 1^st defendant.  The new solicitors wrote to the plaintiffs’ solicitors on 21 August 2012, proposing, “with a view to ensur[ing] the action can be properly proceeded with”, an extension of time for a number of matters including the filing of further lists of documents, exchange of witness statements, and filing of expert reports. 

46.This was followed by a summons taken out for the 1^st defendant on 23 August 2012 for such extension of time.  On 14 September, a master granted the extension sought.  Notwithstanding that the 1^st defendant was not yet ready for exchange, the plaintiffs had served their witness statements and expert report on the 1^st defendant on 24 and 30 August respectively.

47.On 14 September, the 1^st defendant filed a list of documents.  On 24 September, Jimmy Chu applied for legal aid.  He filed a short witness statement on 3 November.

48.The first indication that the 1^st defendant had any intention to apply for an order striking out the action on the ground of delay was given in his listing questionnaire dated 5 December 2012, where it is stated that “subject to the advice of the counsel to be instructed, the 1^st Defendant may join the strike out application” (referring to the 2^nd and 3^rd defendants’ application, which had by then been issued). 

49.The first case management conference took place as scheduled on 12 December 2012 at which the Registrar gave further directions and fixed the second case management conference on 10 April 2013.

50.On 8 February 2013, the 1^st defendant obtained an extension of time for 42 days to take out interlocutory applications.

51.His solicitors’ letter of 5 February 2013 mentioned that the 1^st defendant was applying for legal aid to cover the strike out application.  Legal aid was so extended on 20 February.  A separate summons to strike out was eventually taken out on behalf of the 1^st defendant on 22 March. 

52.On 22 March 2013, the 1^st defendant also took out a summons for leave to file a Re-Amended Defence and Jimmy Chu’s supplemental witness statement, and to file an expert surveyor’s report.  The expert report for the 1^st defendant was filed on 9 April.  Leave to file these documents was given on 10 April.  The plaintiffs were also given leave to file supplemental witness statements and expert report in reply.

53.The second case management conference also took place on 10 April.  The Registrar adjourned the matter to the third case management conference on 31 July 2013 and directed the parties to file trial counsel’s certificates of time estimates two days before that conference.

54.On 8 May 2013, the plaintiffs filed a Re-Amended Reply to the 1^st defendant’s Re-Amended Defence, a supplemental witness statement and a supplemental expert report in response to the 1^st defendant’s expert report.

Legal principles

55.It can be seen that between 5 June and 24 August 2012, the 2^nd and 3^rd defendants responded to the plaintiffs’ revived pursuit of the action in a way that indicated they intended to proceed with the action to trial.  The plaintiffs no doubt incurred expense in the further conduct of the proceedings during this period, taking steps such as preparing their Amended Reply and preparing (or at least completing and finalising) an expert report.

56.Likewise, between 21 August and 5 December 2012, the 1^st defendant conducted himself in the action in such a way as to indicate that he intended to proceed to trial.  During this period however there was not much the plaintiffs were required to do, other than to serve their witness statements and expert report (which had already been prepared) on the 1^st defendant, and to attend the hearing on 14 September of the 1^st defendant’s application for extension of time.

57.In these circumstances, the plaintiffs contend that the strike-out applications fail in limine because the defendants, having so conducted themselves as to induce the plaintiffs to incur further costs in the belief that the defendants intended to proceed with the trial notwithstanding the previous delay, are estopped from seeking to strike out the action on the ground of that delay.

58.Moreover, on the basis of the admission by the 2^nd and 3^rd defendants’ counsel that they had considered but decided not to apply for striking out for want of prosecution, the plaintiffs submit there is a waiver of the right to apply for a strike-out.

59.This argument has to be considered in the light of the House of Lords’ decision in Roebuck v Mungovin [1994] 2 AC 224.  In that case, the English Court of Appeal had held that notwithstanding there was inordinate and inexcusable delay causing prejudice to the defendant, he was barred from obtaining a strike-out order because his solicitors’ letters issued after the delay in question to seek particulars from the plaintiff amounted to a representation that the defendant intended to proceed to trial, as a result of which the plaintiff had incurred some expense.  The Court of Appeal felt bound by their previous decision in County and District Properties Ltd v Lyell [1991] 1 WLR 683 to arrive at that conclusion.

60.Reversing the Court of Appeal, the House of Lords re-affirmed that the discretion whether or not to strike out a claim on the ground of delay is unfettered, rejecting any “mechanistic process” (p 236B) that would preclude the exercise of the discretion once the defendant had made a representation as to the future conduct of the action which had led the plaintiff to incur some additional expense.  Lord Browne-Wilkinson stated that “the introduction into the law of striking out of concepts of waiver, acquiescence or estoppel is merely confusing” (p 236A-B).  County and District Properties Ltd v Lyell was overruled.  His lordship further explained that

“Such conduct of the defendant is, of course, a relevant factor to be taken into account by the judge in exercising his discretion whether or not to strike out the claim, the weight to be attached to such conduct depending upon all the circumstances of the particular case” (p 236G)

and that

“it is for the judge in each case in exercising his discretion to decide what weight to attach in all the circumstances of the case to the defendant’s actions” (p 237A).

61.Roebuck v Mungovin was adopted as setting out the correct approach in Hong Kong by the Court of Appeal in Hymer v Mass Transit Railway Corporation, supra, at pp 601-603.

62.Counsel for the plaintiffs however rely on paragraphs 41 and 42 of the decision in Winpo Development Ltd v Wong Kar Fu[1], supra, which read as follows:

“41. On the other hand, the combination of (1) the 5^th defendant’s application to amend his Defence and to plead his Counterclaim first intimated in June 2008, and (2) the letter dated 3 February 2009 from Messrs Haldanes for the 4^th and 5^th defendants expressing an intention to consolidate this action and the 2007 Action do, in my opinion, entitle the plaintiff to say that the 4^th and 5^th defendants waived or acquiesced in the past delay for which the plaintiff was responsible. Principle (7) of Trill v Sacher is that a defendant cannot rely on a period of delay if at the end of the period he so conducts himself as to induce the plaintiff to incur further costs in the reasonable belief that the defendant intends to exercise his right to proceed to trial notwithstanding the plaintiff’s delay. Based on these acts of the 4^th and 5^th defendants, the plaintiff proceeded to expend costs in preparing and filing its Amended Reply and Counterclaim to the 5^th Defendant’s Counterclaim.

42. In short, the period of delay prior to June 2008 was, in my opinion, inordinate and inexcusable on the part of the plaintiff but, for the reasons I have explained, was waived or acquiesced in by the 4^th and 5^th defendants.”

63.There, the learned judge relied on the seventh principle in the summary of principles set out by Neill LJ in Trill v Sacher [1993] 1 All ER 961, 979, which reads as follows:

“A defendant cannot rely on a period of delay if at the end of the period he—

‘so conducts himself as to induce the plaintiff to incur further costs in the reasonable belief that the defendant intends to exercise his right to proceed to trial notwithstanding the plaintiff’s delay …’ (See Allen’s case [1968] 1 All ER 543 at 556, [1968] 2 QB 229 at 260.)

It has been said that this rule is based on waiver or acquiescence, but the better view appears to be that the defendant is estopped (see County and District Properties Ltd v Lyell (1977) [1991] 1 WLR 683 at 690).”

64.It is clear that the principle so stated proceeded on the basis that there was a rule, based on estoppel, precluding an application to strike out on the ground of the delay in question.  However, County and District Properties Ltd v Lyell, on which Neill LJ relied, was subsequently overruled by the House of Lords in Roebuck v Mungovin, supra.  Further, the passage in Diplock LJ’s judgment in Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229, 260, quoted by Neill LJ, was considered by Lord Browne-Wilkinson in Roebuck v Mungovin, supra, at 236B-E, who pointed out that it was not intended to be an absolute rule but merely one of the elements to be taken into account in exercising a general discretion.

65.In light of the guidance given in Roebuck and Hymer, neither of which was apparently cited to the court in Winpo, it seems to me that paragraphs 41 and 42 of Winpo should not be read as being intended to lay down any hard and fast rule that a defendant “cannot” rely on a period of delay if at the end of the period he so conducts himself as to induce the plaintiff to incur further costs in the belief that the defendant intends to proceed to trial notwithstanding that delay.

66.Counsel for the plaintiffs also rely on Godfrey JA’s judgment in Hongkong & Shanghai Banking Corporation Ltd v Kuan Tao Sheng [1998] 1 HKC 438[2], 450B, where he said:

“On the second issue, whether the plaintiff’s delay here was inordinate and inexcusable, I entirely agree with Mortimer, V-P that the plaintiff’s delay was, plainly and obviously, inordinate. I would myself have held that it was inexcusable as well. But it seems to me that the defendants have so conducted themselves as to induce the plaintiff to incur further costs in the reasonable belief that the defendants intended to exercise their right to proceed to trial notwithstanding the plaintiff's delay. I would hold that in all the circumstances of the case, identified by the judge and by Mortimer, V-P, the defendants cannot be allowed to rely on the plaintiff’s delay as inexcusable. That being so, there is no need for me to consider the matter of the prejudice allegedly suffered by the defendants by reason of that delay.”

67.Insofar as that passage was based on the seventh principle stated by Neill LJ in Trill v Sacher, supra, which was quoted earlier by Mortimer VP, at p 444D, it is in my view to be treated with caution.  It has also been superseded by the later Court of Appeal’s decision in Hymer.  In any event, it should be noted that there Godfrey JA said it was “in all the circumstances of the case” that the defendants could not be allowed to rely on the plaintiff’s delay as inexcusable.  It seems to me his lordship did not espouse a mechanistic rule which would preclude the defendants’ application in limine by reference only to the defendants’ conduct subsequent to the plaintiff’s delay.

68.Counsel for the plaintiffs also rely on a passage in Ching JA’s judgment in Computronics International (a firm) v Piff Shipping Ltd [1997] 2 HKC 53, 62D-G, but in my view it simply affirms that where the plaintiff has, after the delay in question, taken steps to which the defendant has responded, the court retains an overall discretion whether or not to strike out.

69.I therefore reject the plaintiffs’ argument that the steps taken by the defendants since 2012 constitute a bar to the applications to strike out.  Equally, the plaintiffs’ argument that the defendants have “waived” any right to apply to have the action struck out on the ground of delay is best analysed as a factor in the exercise of a general discretion, the weight to be given depending on why the defendants did what they did and the effect of their conduct on the plaintiffs.

70.There are two further points I should mention.  First, the present applications are unusual in that, because of the progress of the action since April 2012, amended pleadings, witness statements and expert reports have all been filed and the action is now almost ready to be set down for trial.  These documents have enabled me to have a fairly comprehensive picture of the shape the trial would take if the action is permitted to proceed.

71.Secondly, although there is no absolute rule giving rise to a waiver or estoppel that bars the defendants’ applications, the initial decision of the defendants to proceed with the action rather than to strike out represents, in my view, implicit acceptance by them that a fair trial of the issues as they understood them at that stage was possible despite the lapse of time.

Defendants’ argument that plaintiffs raised new case

72.I turn to consider why the defendants took steps initially in 2012 to proceed with the action and yet subsequently decided to apply to have it struck out.  The explanation, according to the 2^nd and 3^rd defendants, is that they had not appreciated the change in the plaintiffs’ case until they received and digested the plaintiffs’ expert report and the amended Replies filed in July and August 2012.  The 1^st defendant adopted the same explanation, with the additional fact that he had to apply for substitution and for legal aid.

73.Before the action went asleep for over a decade, the plaintiffs’ case was that the 1^st defendant wrongfully occupied the upper pitch and the 2^nd and 3^rd defendants the lower pitch.  The two pitches were at first marked on a plan that showed the Steps as consisting of three flights of steps separated by two landings.  That was the configuration of the Steps before Ivy House was redeveloped in 1964.  By the purple amendment made in 1996, the two pitches were shown on a substituted plan that showed the Steps as two flights separated by one landing (“the substituted plan”).  There is no serious dispute that the substituted plan broadly shows where the pitches were in 1996 and are now located.

74.As at 1998, the plaintiffs’ Replies pleaded that (i) a flower shop was operated at the lower pitch “from about 1987 up to sometime in 1991”, (ii) the 1^st defendant had not operated any hawker business at the upper pitch but had let it to one Tsui Ling Mui up to 1991 and thereafter to Madam Wu, and (iii) the defendants’ pitches only came to occupy “in about 1987” the respective relevant areas marked on the substituted plan.

75.So far as relevant for present purposes, what the plaintiffs’ expert report and amended Replies in 2012 say in essence is that, while the defendants might well have been carrying on business from hawker pitches on the Steps since the 1950s or 1960s, the pitches were only moved to their present location in 1985.  In particular, they used to be located lower down the Steps and partly on the pavement.  When Wong Chung Ming Commercial House was redeveloped in 1985, Wyndham Road was widened, the frontage of the building was set back, and both pitches had to move up the Steps.  Therefore, even if there was adverse possession of the areas now occupied by the pitches, it only dated from 1985 and did not exceed 20 years by the time the Writ was issued in 1995 (20 years being the applicable limitation period as the cause of action had accrued before 1 July 1991: see s 38A(1) of the Limitation Ordinance (Cap 347)).

76.Mr Wong Yan Lung SC argues for the plaintiffs that they had raised no new case, that they had already pleaded in the Replies as early as in 1997 that the defendants had only occupied the areas in question since 1987, that the burden of proving adverse possession lies on the defendants and that the defendants were in fact long aware the pitches had moved up the Steps. 

77.While Mr Wong’s contentions have some force, they are more relevant to the question of prejudice, and I shall analyse them in that context.  Here, I am concerned not with whether the plaintiffs’ amended Replies should indeed be characterised as raising a new case or not, but with the explanation for the defendants’ conduct as a matter of fact.

78.It is true that the Replies filed in 1997 stated the defendants came on to the specified areas in or about 1987, but nowhere did those pleadings state that the defendants’ pitches in fact stood at a lower area in the Steps before mid 1980s and were relocated up the Steps because of the redevelopment of Wong Chung Ming Commercial Building in mid 1980s.

79.Leaving aside the question whether they should have thought of and dealt with the point themselves, it seems to me clear on the evidence that the defendants only “woke up” (in Mr Yau’s words) to the plaintiffs’ contention about the movement of the pitches when they received the expert report and amended Replies from the plaintiffs.  In other words, I accept that when the defendants decided initially in 2012 to proceed rather than to apply for a strike-out, they did not have in mind that they would have to deal with an argument that, although the pitches had been on the Steps for decades, they had only moved to their present location in 1985.  This explanation is also a factor to be taken into account in the exercise of my discretion.

PREJUDICE OR IMPOSSIBILITY OF FAIR TRIAL

The principles

80.I come now to the question of prejudice and risk of impossibility of a fair trial.  The relevant legal principles are not in dispute and, so far as relevant to the present case, may be summarised as follows:

(1) The burden lies on the defendant to show prejudice or the impossibility of a fair trial.

(2) The discharge of that burden will normally require evidence specifying the particular disadvantage suffered or anticipated by the defendant, though in appropriate cases inferences may be drawn by the judge: Shtun v Zalejske [1996] 1 WLR 1270, 1283B, 1285A.

(3) The court has to look at all the circumstances when considering whether there is prejudice or whether it will not be possible to have a fair trial: Trill v Sacher, supra, at 980d.

(4) The prejudicial effect of delay on a defendant and the effect of delay on the possibility of a fair trial depend in large measure on the nature of the issues in the case, in particular whether the evidence is predominantly in documentary form or whether the crucial evidence may be largely oral: Shtun v Zalejske, supra, at 1290A.

(5) Where the prejudice relied on is the dimming of witnesses’ memories due to the lapse of time, a generalised assertion that memories must have grown fainter will generally not be sufficient: Rowe v Glenister, The Times, 7 August 1995, per Waite LJ, cited in Shtun v Zalejske, supra, at 1283E.  However, it is not essential in every case that there should be evidence of particular respects in which potential witnesses’ memories have faded.  So long as there are primary facts from which inferences can properly be drawn, there is nothing wrong with doing so: Yeung Kit Ling v Ma Kwan Ho Lawrence & Anor [2011] 3 HKC 115 at para 26, per Stock VP; A & M Manufacturing and Marketing Ltd v Iu Po Shing, CACV 15/2011, 6 September 2011, at para 48, per Fok JA.

(6) The defendant must also show that there is prejudice or inability to have a fair trial, as the case may be, caused by the delay in the action.  The defendant cannot therefore merely rely on prejudice caused by the delay of the plaintiff in issuing the writ: Trill v Sacher, supra, at 979j-980b.

(7) The court may take into account what the defendant could reasonably be expected to have done which could have avoided or mitigated the prejudice he suffers or anticipates. If, for example, the defendant relies on the dimming of witnesses’ memories through the passing of time, the court will usually want to know what steps the defendant has taken in locating and proofing the potential witnesses: Wing Fai, para 75(8); Hymer, supra, at p 610.

Prejudice relied upon by defendants

81.The prejudice alleged by the 2^nd and 3^rd defendants is that Madam Lai is now about 99 years old, and her mental ability is such that she can no longer give her lawyers any coherent answer to questions put to her, let alone a detailed account of events 30 years ago.  In other words, she will no longer be able to testify at trial or provide any information for the defence.

82.The prejudice alleged by the 1^st defendant is that (i) Madam Yu had died; (ii) Chu Kwok Chung had also died; (iii) Madam Lai is about 99 years old and is senile; (iv) Lo Ming, who assisted in operating the 2^nd and 3^rd defendants’ hawker stall, is of advanced age and unwilling to testify. 

83.Of these, (i) and (iv) can be quickly disposed of.  Madam Yu died in June 1995 before the Writ in this action was issued.  While Miss Jo Siu, appearing for the 1^st defendant, submits that Madam Yu’s evidence was “most crucial” and “essential”, any prejudice suffered by her estate as a result of not having her evidence available cannot be said to have been caused by any delay in the conduct of the action.  They must show additional prejudice brought about by post-writ delay.  It is also in my view unattractive for the defendants to complain of the plaintiffs’ delay in issuing the writ when it is precisely that delay which has given rise to the only potential defence they have, namely, limitation of action.  As regards Lo Ming, there is no concrete evidence to suggest that his mental capacity has deteriorated over the period of the delay, or that his unwillingness to testify is caused by the delay in the action.  I do not therefore think that these two heads of prejudice can carry much weight.

84.The alleged prejudice in the form of the old age and impaired mental ability of Madam Lai and the death of Chu Kwok Chung has to be examined in the light of the relevant issues in the action.  The issues that were identified in the course of argument as being likely to arise at trial in respect of which the defendants say they will be prejudiced, are these:

(1) whether the pitches had been moved up the Steps during the 20 years before 1995, in particular, in around 1985;

(2) at what time the defendants came into possession of different parts of the Steps;

(3) the exact location and area of pitches, including space between the two pitches, both before and after the move in 1985;

(4) the use by the defendants of the land (in particular the four incomplete steps at the bottom of the Steps) vacated by the lower pitch when it moved up the Steps in 1985;

(5) the use by the defendants of the land immediately adjoining the upper end of the pitches before 1985; and

(6) the conduct of 2^nd defendant as licensee during the years 1980 to 1989 as mentioned in Tsui Ling Mui’s witness statement.

I shall discuss the alleged prejudice in relation to these issues in turn.

Location and time of possession

85.As regards (1) above, it seems to me there is no longer any real issue between the parties that the pitches had moved up the Steps in around 1985.  The 1^st defendant’s Re-Amended Defence filed on 17 April 2013 pleads (at para 11(2)(k)) that:

“In or about 1985, as a result of the redevelopment of Nos. 14 and 16 Wyndham Street into the current Wong Chung Ming Commercial House, the 1^st Defendant, together with the 2^nd and/or 3^rd Defendants, moved their 1963/64 stalls and the fixed pitches therein side by side along the New Stairway upwards (‘the Upwards Movement’).”

See also paragraph 33 of Madam Wu’s affirmation filed on 10 September 2012.  Moreover, both the 1^st defendant’s expert (Henry H K Chan) and the 2^nd and 3^rd defendants’ expert (Joseph Y C Wong) agree that the pitches moved up the Steps in around 1985.

86.In fact, based on the experts’ opinions, one can now envisage three areas on the Steps that attract different legal analyses:

(1) the area occupied by the pitches before and up to 1985 which was vacated as a result of the move of the pitches up the Steps in 1985.  I shall refer to this as “the pre-1985 occupied area”;

(2) the area (if any) occupied by the pitches both before and after the move in 1985.  I shall refer to this as “the overlapping area”;

(3) the area occupied by the pitches since the move in 1985 but not before.  I shall refer to this as “the post-1985 occupied area”.

87.As to the issue in paragraph 84(2) above, the most critical period of time is the 20 years before the Writ, ie 1975 to 1995.  For this period, there are aerial photographs available (the earliest being dated 1972) showing the existence of the pitches.  There is also other objective evidence such as licence records showing that the defendants had come to be operating hawker stalls on the Steps prior to 1975. It seems to me there is unlikely to be any real issue that the defendants had set up stalls on the Steps in the 1960s.  Indeed, as I read the latest version of the Replies (see paragraphs 14-26 of the Re-Amended Reply to the 1^st defendant and paragraphs 10-17 of the Amended Reply to the 2^nd and 3^rd defendants), the plaintiffs admit that the pitches were set up on the Steps in 1964.

88.Counsel for the defendants submit that the period of the 20 years prior to 1985, ie 1965 to 1985 is also important, because if there was a continuous period of 20 years of adverse possession during that period, the plaintiff’s title in respect of the area adversely possessed would have been extinguished under s. 17 of the Limitation Ordinance.  It follows, they say, that the plaintiffs could not recover the pre-1985 occupied area even though it had been vacated by the defendants in 1985.

89.In the present context there seem to me to be two answers to that.  First, the pre-1985 occupied area seems now to be mostly, if not all, part of the pavement along Wyndham Street. Even if the plaintiffs’ title had been extinguished, the defendants could not conceivably regain possession of it and extend their pitches there.

90.Secondly, although the earliest aerial photograph was taken in 1972, in the absence of any evidence suggesting the pitches were moved between 1965 and 1972, the trial judge can readily draw an inference that the pitches were in 1965 located in the same position as they were in 1972.  The lack of oral evidence on the location of the pitches during the period 1965 to 1972 does not in my view prevent a fair trial of this issue.

91.The issue on which the defendants place most reliance in these applications is that set out in paragraph 84(3) above, ie the exact location of the pitches before and after 1985.  The defendants submit that they are seriously prejudiced by not being able to have Madam Lai’s evidence on this point.  In my view, this submission has to be examined in the light of the following:

(1) This is an unusual case of adverse possession, involving as it does structures erected on steps located in a densely built-up urban area.  The presence of various constructed features in the area provides reference points which are not often available in cases concerning rural areas.  The redevelopment of the buildings and reconfiguration of the Steps can be more accurately shown by the survey sheets and official plans than by any oral evidence.  As to the location of the pitches, there are both aerial photographs (starting from 1972) and terrestrial photographs that have enabled the experts to give fairly detailed opinions on the positions of the pitches over the years.  Indeed, the 2^nd and 3^rd defendants’ expert has opined that the overlapping area occupies approximately five square metres.  The 1^st defendant’s expert opines that the pitches had moved up about two metres.  He has produced a plan (albeit for identification only) that shows the respective positions of the pitches before and after 1985.  The plan has been incorporated by the 1^st defendant in his Re-Amended Defence. 

(2) It is true that some of the aerial photographs are blurred and the hawker stalls on a number of photographs are obscured by the shadows of the surrounding buildings.  Further, the photographs do not cover each and every relevant year.  However, all three experts have been able to give relevant evidence based on the available materials subject to the constraints that exist, and there is, as it seems to me, a large measure of agreement among them.

(3) Mr Yau stresses that given the small size of the occupied area, “every inch counts”.  But it cannot credibly be suggested that, had there been no delay in the action, Madam Lai would have been able to give evidence at trial on the positions and movements of the pitches with an accuracy in terms of inches.  It must not be forgotten that by the year 2000, Madam Lai was already 86.  There is evidence that by then, her recollection was already far from clear and precise.  Madam Wu stated in her affirmation for this application that:

“When this action was commenced, my mother has stated that she ran the stall on the Steps for over 40 years and it was difficult for her then to recall the precise circumstance in which she came to occupy the Site.”[3]

Madam Wu also stated, referring to the period before the action went dormant:

“… our solicitors had previously obtained some information from my mother in defending this action. But given her age and memory at that time, the information obtained then fell far from being adequate to help me to meet the new case.”[4]

The fact that Madam Wu’s recollection appears already to have been somewhat hazy in the mid 1990s was not caused by the plaintiffs’ delay in progressing the action.  It is necessary to focus on the prejudice caused by the post-writ delay.

(4) After the plaintiffs raised in an affirmation the argument that Madam Lai would not have been able to give helpful evidence even if there had been no delay in the action, Madam Wu claimed, in her second affirmation, that her mother’s condition was “much better” in 1995.  How much better her recollection was, however, is difficult to gauge.

(5) Madam Wu exhibited a note of a conference with counsel held in September 1995 which stated, so far as the movement of the pitch is concerned, as follows:

“[Madam Lai] was at first at the bottom of the steps, but shortly after she moved there, there was a road widening of Wyndham Street to allow cars to go up and down the street. So she moved up the steps a bit. She had been half on the pavement and half on the steps. So she moved to being completely on the steps.”

It appears that the note was referring to the move in 1985, because aerial photographs show that prior to 1985 the lower pitch was partly on the pavement and partly on the Steps.  Yet Madam Lai appears to have told counsel that the relocation took place “shortly after she moved there”, which would be in the 1950s.  Moreover, despite that such relocation was obviously important to a case of adverse possession, no further detail was given of the move.

(6) When one is concerned about the exact location and area of hawker stalls over one or two decades ago, the oral evidence of witnesses, even if in their prime, could hardly be expected to be of greater help than expert evidence that is based on plans, photographs and professional opinions formed with reference to the topography of the area in question.

(7) It appears from the respective witness statements of Jimmy Chu and Madam Wu that despite the passage of time, they will be able to give a fair amount of evidence relating to the actual condition of the pitches and the shift up the Steps in 1985.  Thus, for example, Jimmy Chu says in his supplemental statement as follows:

“21. … according to my memory, which is refreshed by my expert’s observations, my parents’ hawker stall, taking all the working, pitch and storage area as a whole, should start from part of the steps of the lower flight to somewhere of the landing of the New Stairway. I remember my parents used to store some of their properties inside a cabinet on the landing. In fact, when I was working as a collie [sic], I had also used that cabinet for storing [my accounting booklet].”

“23. … although I cannot recall the exact location of my parents’ hawker stall, I vividly recall that no part of my parents’ hawker stall rested on the pavement of the New Stairway. As to the pitch, it was lying entirely on the steps of the lower flight of the New Stairway, probably somewhere new the Landing. On the other hand, in respect of the pitch of [Madam Lai and her husband], theirs was not entirely on the pavement as alleged but it actually lied partly on the pavement and partly on the steps of the lower flight of the New Stairway, albeit I cannot recall the respective portion of it being on the pavement and the steps.”

“25. To my knowledge, … my parents’ hawker stall or at least the pitch itself, remained in the same location since or about 1964 until some time around the completion of the redevelopment of Nos. 14 and 16 Wyndham Street ie. 1985.”

“27. … I remember some time around the completion of Wong Chung Ming Commercial House, … my parents, [Madam Lai and her husband] agreed to move our hawker stalls, including the pitches therein, upwards together. …”

“29. Although I cannot recall the exact extent of the Upwards Movement, according to my limited memory, by the fact the relevant part of the New Stairway, counting from the first step of the lower flight to the end of the inter-mediate landing, is not a long one such that any upward movement along the New Stairway cannot be significant, and further based on the opinion of my expert, I verily believe that the extent of the Upwards Movement was small and the area occupied by my parents, [Madam Lai and her husband] before and after the Upwards Movement does overlap. In respect of the exact extent of the overlap, I will rely on the expert report filed by my expert on my behalf.”

“31. Insofar as I recall, the area and location of the hawker stall of my parents, [Madam Lai and her husband] had not under[gone] much change since then. In respect of this issue, I will also rely on the opinion of my expert.”

Madam Wu says in her supplemental statement as follows:

“10. … my recollection was the movement of the pitches in the 1980s involved small movement only. The position of the pitch did not move away from its original site too much. It was still very much on the original site. Maybe the new position covered part of the old site where [Madam Yu and her husband] did business.”

The fact that the defendants will be able to give fairly detailed evidence must obviously be taken into account when assessing the risk of impossibility of a fair trial.  It also raises doubt, to my mind, whether, if there had been no delay in the action, Madam Lai would have been able to say anything significantly further than what is now in the statements of Madam Wu and Jimmy Chu.  The facts of the present case are therefore quite different from those in Tang Ping Kwan v Tang Kai Tung, CACV 162/2011, 27 April 2012, where the position was that as a result of the delay, “none of the witnesses who could have given relevant evidence from their own knowledge were available any longer” (see para 10).

(8) Unfortunately one does not know exactly what evidence Madam Lai would have been able to give in, say, the year 2000.  That uncertainty has arisen because there is no detailed proof of evidence of Madam Lai.  For this, the defendants must in my view bear a large part of the responsibility.  As I have stated above, a decision to “let sleeping dogs lie” does not justify why a defendant should not equip himself to contest the litigation in case the plaintiff wakes up.  It seems to me this applies a fortiori here since (1) the burden of proving adverse possession lies on the defendants as the parties that claim adverse possession: Wong Tak Yue v Kung Kwok Wai (No 2) (1997-98) 1 HKCFAR 57, 70E; and (2) the defendants were themselves in default of Master Jones’ order dated 23 December 1996 in failing to prepare witness statements for filing and exchange (see paragraph 21 above).

(9) The defendants have tried to justify such lack of preparation by saying that it was only in 2012 that the plaintiffs raised the point that the pitches’ positions had changed in 1985.  However, as is evident from the note of conference with counsel quoted in sub-paragraph (5) above, the 2^nd and 3^rd defendants themselves were aware in 1995 of the move of the pitches up the Steps.  It was incumbent upon them to investigate the history of their occupation of the land in question, in order to establish adverse possession of specific land for the requisite period.  As it was, the defendants did not pursue that line of investigation and one is now left to guess what Madam Lai could have said.

92.As for Chu Kwok Chung, the evidence is that he helped Madam Yu at one stage in the hawker stall after his father died in 1986.  The 1^st defendant says that because of the delay in the action, Chu Kwok Chung’s evidence is now lost.  In my view, that contention has to be examined in the light of the following factors:

(1) Jimmy Chu has said that when he was working as a coolie (which he did for 18 years in the 1970s to 1980s), because the hawker stall was close to his workplace, he went back there “every now and then”.[5] On that basis, he has been able to give the evidence referred to above, though he also says that his memory is now “much dimmer” due to the long lapse of time.

(2) Jimmy Chu has stated[6] that although Chu Kwok Chung tried to run a hawker business in the upper pitch after Madam Yu died, he “did not try very long” due to poor health.

(3) There is no suggestion that evidence had been collated or a proof of his evidence taken.  In fact, Jimmy Chu says he did not know what Chu Kwok Chung had done concerning the action.  This is somewhat surprising given that as the person carrying on the litigation by order of the court as representative of the 1^st defendant, Jimmy Chu ought to have access to all the materials and documents of the 1^st defendant generated in the litigation.

93.My task is of course not to try the case, but in order to determine the present applications I have to assess the likely effect of the delay on the fairness of the trial.  Taking all these matters into account, I am not satisfied that there is a substantial risk that a fair trial of this issue will be impossible.  It seems to me that the exact location of the pitches before and after 1985 is a matter which the court will determine primarily on the basis of the expert evidence and objective documentary evidence.  I am not satisfied that had the trial of the action taken place without delay, Madam Lai and Chu Kwok Chung would have been able to give any oral evidence on this issue that adds significantly to the evidence that will be available to the court in a trial in the near future. Nor am I persuaded that there is such “dimming” of Jimmy Chu’s and Madam Wu’s memories as a result of the delay since 1998 as to create any serious prejudice to the defendants.

Use of land vacated in 1985

94.I turn to the issue identified in paragraph 84(4) above.  On the evidence, it is likely that the lowest four incomplete treads of the Steps were previously occupied by the pitches but vacated in 1985 as the pitches were moved up the Steps.  Mr Yau submits that the use by Madam Lai of those four treads since 1985 is relevant to whether there has been any abandonment of possession by the defendants.  The 2^nd and 3^rd defendants are therefore prejudiced, he says, in not being able to have Madam Lai’s evidence on this aspect.

95.In my view, there is no real prejudice here.  If the defendants prevail and establish 20 years’ adverse possession prior to 1985, the plaintiffs’ title over the pre-1985 occupied area would have been extinguished in 1985 by virtue of s 17 of the Limitation Ordinance.  On that footing, the plaintiffs can raise no superior title to that part of the Land as against Madam Wu, irrespective of whether and how Madam Lai had used the four incomplete steps between 1985 and 1991.  Further and in any event, Madam Wu can give evidence of her own use of those steps since 1991 to show there was no abandonment.  Moreover, on the defendants’ argument based on Jones v Williams (see the paragraph below), the use of those four steps was relevant even before the so-called change of case by the plaintiffs.  The defendants nevertheless made a considered decision to proceed to trial, which suggests to me that the inability to adduce evidence from Madam Lai on this issue was not regarded by the defendants themselves as really prejudicial.

Use of adjoining land at upper end of the upper pitch before 1985

96.As for the issue referred to in paragraph 84(5) above, Mr Yau submits that evidence of the use of adjoining land would be admissible to support adverse possession of the land actually occupied exclusively.  He refers to Jones v Williams (1837) 2 M & W 326.  There, the plaintiff claimed the whole of the bed of a river flowing between his land and the defendant’s, while the defendant contended that each party was entitled up to the middle thread of the stream.  The court held that evidence of acts of ownership exercised by the plaintiff on the beds and banks of the river on the defendant’s side, lower down the stream, where it flowed between the plaintiff’s land and the defendant’s immediate neighbour’s land, was admissible for the plaintiff.  Parke B stated (at p 331):

“… it is impossible, in the nature of things, to confine the evidence to the very precise spot on which the alleged trespass may have been committed: evidence may be given of acts done on other parts, provided there is such common character of locality between those parts and the spot in question as would raise a reasonable inference in the minds of the jury, that the place in dispute belonged to the plaintiff if the other parts did.”

97.I have no difficulty with the proposition as such, but I am unable to see what it adds to the argument on prejudice.  The defendants submit that they are entitled to adduce evidence of their use of the land on the issue of the exact parameters of the land exclusively occupied by them.  But such evidence is unlikely to yield greater precision on the pre-1985 location of the pitches than the aerial photographs and expert evidence. 

98.If on the other hand the defendants’ contention is that they have acquired possessory title not only over the land on which the pitches stood or stand, but also over the “penumbra” of the hawker stalls, where trading activities were carried out during the business hours, then that is a matter that was relevant even before the alleged “change of case” on the part of the plaintiffs.  Yet, as mentioned above, the defendants made an advised decision at that time not to apply to strike out, implicitly accepting there was at that stage no sufficiently serious prejudice occasioned to them by the delay.

Conduct of 2^nd defendant from 1980 to 1989

99.I turn to the issue referred to in paragraph 84(6) above.  Mr Yau submits that in the context of the plaintiffs’ illegality argument (which I discuss in paragraphs 116-120 below), an issue arises with respect to Madam Lai’s conduct as licensee of the hawker stall during the years 1980 to 1989.

100.It is not entirely clear what conduct he is referring to.  It is however to be noted that the illegality point has not been pleaded against the 2^nd and 3^rd defendants. If the 2^nd and 3^rd defendants consider that because of the delay in the action, they would be prejudiced in their response to that point, this can be raised by way of opposition to any application the plaintiffs may make for leave to amend their reply to raise that point as against the 2^nd and 3^rd defendants.

101.As the Court of Final Appeal made clear in Wing Fai (at paras 69, 73, 75(1)), striking out should be a remedy of last resort.  In para 73, Ma CJ said:

“Moreover, when delays do occur, greater use of the court’s powers can, and should in the majority of cases, be made rather than an application to strike out: see here also the remarks of Lord Woolf in Biguzzi at 1933D. Orders for striking out should only be applicable in plain and obvious cases, and where there has been abuse. It should be an application made in the last resort. The courts ought not to be faced with an ‘all or nothing’ approach whereby it is left only with the choice of either allowing the action to be continued or to strike it out. Nowadays, the court has more options than just these two extreme positions …”

102.If there is indeed any prejudice that would be occasioned to the 2^nd and 3^rd defendants in the form of having to deal with the illegality point when Madam Lai has lost the mental capacity to respond to it, the court will be able to do justice between the parties in its decision on the plaintiffs’ application for leave to amend. 

103.Likewise, the plea of illegality was only introduced against the 1^st defendant in the plaintiffs’ Re-Amended Reply filed on 8 May 2013.  Insofar as it was not a consequential amendment following the 1^st defendant’s re-amendment of his defence and the 1^st defendant claims to be prejudiced, it is open to him to apply under RHC Order 20 rule 4 to have the amendment disallowed. 

104.Given that these alternative, less draconian options exist, to strike out the action would not in my judgment be a proportionate response to any alleged prejudice on this issue.

105.Overall, therefore, I am of the view that the defendants have not demonstrated a substantial risk that a fair trial will be impossible or that they will suffer serious prejudice caused by the delay in the action in relation to the issues they have identified.  This is sufficient for the purpose of disposing of the defendants’ applications.  Out of deference to counsel’s arguments, however, and in case I am wrong in the analysis above, I set out my views on three discrete points raised by the plaintiffs.

THREE DISCRETE POINTS

106.The plaintiffs raise three additional discrete points, which they say are essentially legal arguments based on undisputed facts.  It is contended that so far as these issues are concerned, the defendants will suffer no prejudice arising from any evidential problems that may have been caused by the delay.  The plaintiffs argue it would therefore be unfair to strike the action out and deprive them of the opportunity to have these issues determined by the court.

107.Both the plaintiffs and defendants submit that for present purposes it is unnecessary for me to come to a definitive conclusion on the merits of these arguments.  It is however in my view necessary to have some regard to the strength of these points.  If, for example, the points are manifestly invalid, then I do not think I should refrain from striking out the action (if I think it otherwise appropriate to do so) merely because there are these legal arguments that do not depend on evidence. If, on the other hand, the points are manifestly valid, so that the plaintiffs would be likely to prevail in the overall outcome at trial irrespective of the evidence given, that would be a significant factor militating against a summary dismissal of the action now.

Post-1985 occupied area

108.The first point is this.  It is now quite clear that, even according to the defendants’ own experts, the post-1985 occupied area (as defined in paragraph 86 above) was only occupied by the defendants after 1985.  Even if there was adverse possession of that part of the Steps by the defendants, the limitation period of 20 years had not expired by 1995 when the writ in this action was issued. The defence of limitation is therefore bound to fail in respect of that part. There being no other defence to their claim, it seems to me the plaintiffs would be entitled to judgment in respect of that part if the action is allowed to proceed to trial.

109.In this context, Mr Yau refers to a second, more recent action (HCA 916/2012) commenced by the plaintiffs herein against Madam Wu for recovery of possession of land on the Steps, suggesting, as I understand his submissions, that the plaintiffs can recover the post-1985 occupied area in that action.  The problem with this, however, is that this recent action was only instituted last year, 27 years after 1985 and Madam Wu would no doubt raise a limitation defence there even in respect of the post-1985 occupied area.

Defendants as licensees of Government

110.The second point is that the defendants have occupied the relevant parts of the Steps as licensees of the Government.  On that footing it is the Government as licensor who is in law treated as being in possession: Sze To Chun Keung v Kung Kwok Wai David [1997] 1 WLR 1232, 1235F.  The plaintiffs contend that the Government, far from being in adverse possession against plaintiffs, has acknowledged the plaintiffs’ title.  There can therefore be no adverse possession by the defendants as a matter of law.  It follows, the plaintiffs say, the action should not be struck out.

111.The defendants argue that the hawker licence granted by the Government is an administrative licence for hawking, not a “private law” licence to occupy land.  However, it is not in dispute that under the licensing scheme the Government has power to require the hawker stall to be moved elsewhere.  The licence is therefore not merely one to operate a fixed hawker pitch but to operate it at a particular location.

112.The defendants also argue that the Government has not given any acknowledgment of the plaintiffs’ title. The documents relied upon by the plaintiffs as containing the acknowledgment are the correspondence between the Government and the plaintiffs in 2005.  On 3 November 2005, the Food and Environmental Hygiene Department wrote to the plaintiffs indicating that the 1^st defendant’s hawker stall fell within a private lot of which the plaintiffs were owners and inquiring on the result of the present action.  On 26 November 2005, the plaintiffs’ solicitors replied that the land was private property, stating that the department did not have any right or authority to issue any licence for operating hawker business there.  On 9 May 2006, the department wrote to the plaintiffs, acknowledging receipt of the plaintiffs’ letter and informing them that it had refused Chu Kwok Chung’s application for transfer of the hawker licence.  In my view, the correspondence read as a whole arguably constitutes an acknowledgment of title.

113.Thirdly, the defendants argue, relying on Sanders v Sanders (1881) 19 Ch D 373, that such an acknowledgment, given as it was after the relevant limitation period had expired and the plaintiffs’ title extinguished, does not revive their title. In the United Kingdom the effect of that decision has been put on a statutory footing by s 29(7) of the Limitation Act 1980.  Hong Kong does not have an equivalent enactment, but it seems to me at least arguable that Sanders v Sanders represents the position here.

114.Nevertheless, Mr Wong argues that even if the acknowledgment did not revive the plaintiffs’ title, it is at least evidence that the Government had never intended to possess any part of the Steps adversely as against the plaintiffs.  This may be a fair point insofar as the Government was aware of the plaintiffs’ ownership of the Steps. But there is some evidence (see the decision of the Municipal Services Appeal Board in 2000) that the Government was not aware until 1994 that the Steps were comprised within private land.

115.It is not necessary for me to go any further into the substantive arguments at this stage.  Suffice it to say that I am not satisfied that this point should tilt the balance in favour of allowing the action to go to trial if I was otherwise minded to strike it out.

Illegality

116.Thirdly, the plaintiffs argue that the occupation and conduct of the defendants were illegal.  They contend that, as a matter of public policy, the defendants should not be allowed to establish adverse possession on the basis of illegal conduct.

117.In essence, the plaintiffs allege that the defendants have breached the relevant subsidiary legislation (the then Hawker (Urban Council) By-laws, now known as the Hawker Regulation (Cap 132AI)) in that (i) the 1^st defendant parted possession of the pitch for use by the 2^nd and 3^rd defendants; (ii) flowers were sold in the 1^st defendant’s pitch when the authorised business was clothes mending and sale of dry goods; (iii) the defendants’ pitches exceeded the dimensions prescribed in the licences; and (iv) the two pitches have been joined together.

118.I have already noted above that the point is not yet pleaded against the 2^nd and 3^rd defendants.  Miss Siu also points out that there is no evidence suggesting that there were breaches of the regulation in the critical period of 1965 to 1985.  Further, the defendants submit that if there has been unlawful conduct, it is not serious and lies towards the light end of the wide spectrum of illegality: see Chung Man Yau v Sihon Co Ltd [1997] HKLRD 1221, 1227, 1228.

119.Assuming it is open on the pleadings to the plaintiffs to run it, it seems to me that there is an arguable point here.  The law is not entirely clear.  Mr Wong relies on R (Smith) v Land Registry [2009] EWHC 328 (Admin) but that case concerns a public highway and the illegality in question stemmed from the fact that it was a criminal offence under s 137 of the (UK) Highways Act 1980 for any person without lawful authority wilfully to obstruct a highway.  In other words, the criminality is in the breach of a statute the very object of which is to prevent occupation of the land to which the squatter asserts possessory title.  Further, although in that case the judge held that such illegality precluded adverse possession, the Court of Appeal did not hear argument on that point and expressed no view on it: see [2011] QB 413, paras 17 and 45.  Mr Wong also relies on Wan Hok Taoist Association v The Incorporated Owners of Nos. 88-90 Pan Hoi Street, HCA 2384/2008, 16 December 2011, but that is no more than a brief decision on an undefended claim.

120.Again, it is unnecessary for me to go more deeply into this argument.  It is not a pivotal point on the basis of which I would have dismissed the applications if I were otherwise in favour of the defendants.

CONCLUSION

121.For the reasons I have endeavoured to set out above, I am not satisfied that it is plain and obvious that by reason of their delay, the plaintiffs should be deprived of the opportunity to go to trial for the resolution of the dispute in this action. The defendants’ applications are therefore dismissed.

COSTS

122.Given that the plaintiffs were guilty of very lengthy and inexcusable delay, I would make an order nisi that, despite the dismissal of the defendants’ applications, each party is to bear their own costs.  A similar order was made at first instance in China Nonferrous Metals (Hong Kong) Finance Co Ltd (in liquidation) v South-east Asia Investment Holding Co Ltd [2012] 5 HKC 122.  The defendants’ own costs are to be taxed in accordance with the Legal Aid Regulations.

Mr Wong Yan Lung SC leading Mr James Lee, instructed by Knight & Ho, for the plaintiffs

Ms Jo Siu, instructed by Hau, Lau, Li & Yeung, assigned by the Legal Aid Department, for the 1^st defendant

Mr Albert Yau, instructed by Hon & Co, for the 2^nd and 3^rd defendants