Powerful Best Ltd v. Lam Yuk Kui and Another

DCCJ4678/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4678 OF 2013

--------------------

--------------------

--------------------------------------

REASONS FOR DECISION

--------------------------------------

1.This is the defendants’ appeal by (i) notice of appeal filed on 6 June 2014 under Order 58 of the Rules of the District Court (“RDC”) against the Registrar’s decision dated 23 May 2014 entering summary judgment against them in respect of the plaintiff’s claim herein.

2.They took out two other summonses: (ii) one filed on 6 June 2014 for adducing further evidence for purpose of this hearing; and (iii) the other one filed on 16 June 2014 for stay of execution of the summary judgment pending the appeal.

Background

3.By an assignment dated 29 April 2013, the plaintiff purchased and became the new owner of Shops A and B on the Ground Floor of Kapok Mansion, Nos 125/133 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong (“the Property”).

4.Prior to this sale, Tsun Man Land Investment Company Limited (“Tsun Man”) had been the first owner of the Property since its development in 1963 as shown in the land search records.

5.There is no dispute that the main and front entrance of Kapok Building was facing Castle Peak Road, with the back of the building facing Tsuen Wan Market Street.  There is an enclosed area within the Property at the back of the building with a door opening onto Tsuen Wan Market Street (“the Disputed Area”).  There is a transformer room within the Property access to which can only be gained through the Disputed Area.

6.There are two toilets inside the Disputed Area, the only toilets in the Property.  There is no dispute that these toilets are a part of the Property and for the use of the occupiers or tenants of the Property.

7.On 15 November 2013 the plaintiff’s contractor was obstructed and prevented by the 2^nd defendant from carrying out renovation work on the Property.  Disputes arose as a result the plaintiff issued these proceedings on 29 November 2013 for recovery of vacant possession of the Disputed Area.

8.The defendants argue that for more than 20 years since sometime in around 1990 they have been using the Disputed Area to store their personal belongings, and equipment and tools of their businesses. The 1^st defendant operates a driving school using the Disputed Area as his liaison office.  The 2^nd defendant has an electrical and plumbing works business.

9.The defendants raise a defence of adverse possession of the Disputed Area.

The legal principles

   Appeal under O58 RDC

10.An appeal against the Registrar’s decision pursuant to Order 58 of RDC is by nature of a re-hearing of the defendants’ application to set aside the summary judgment.

   O14 summary judgment

11.The underlying policy of summary judgment under Order 14 of RDC is that a plaintiff may invoke the procedure where there is no valid defence to his claim or otherwise a triable issue:-

“The underlying policy of the summary procedure is to prevent a defendant from delaying the plaintiff from obtaining judgment in a case in which the defendant clearly has no defence to the plaintiff's claim: Man Earn Ltd v Wing Ting Fong [1996] 1 HKC 225.  “Order 14 proceedings for summary judgment when there is no defence to a claim are an important feature of the legal process.  It enables plaintiffs in cases where there is no defence to obtain expeditious summary judgment to avoid unnecessary delay.  When applied for, it is for the defendant to show that there is a triable issue or an arguable defence if he is to be allowed his day in court.  To deny him his day in court, if he shows a triable issue or an arguable defence, is indeed a fearful injustice.  On the other hand, if he has no defence and he obtains leave to defence, equally, there is injustice to the plaintiff.” (per Mortimer J A in Manciple Ltd v Chan On Man [1995] 3 HKC 459 at 466).  The machinery of O 14 works on the basis that if the plaintiff's application is properly constituted, he is prima facie entitled to judgment unless the defendant shows cause to the contrary or the application is dismissed.”  (see Hong Kong Civil Procedure 2014 Vol 1 para 14/4/1 at p 253)

12.In Ng Shou Chun v Hung Chun San [1994] 1 HKC 155, Godfrey J noted it was not appropriate to embark on a mini-trial of the action on affidavit evidence.  The court should ask itself the question whether what the defendant says is credible or believable.  If so, he must have leave to defend; if not, the plaintiff is entitled to summary judgment.

13.Thus the question to ask is whether the defendants’ evidence is believable rather than whether it is to be believed. In considering the affidavit evidence, I have borne in mind the following:-

“The mere assertion in an affidavit of a given situation does not, ipso facto, provide leave to defend, since the defendant must satisfy the court that he has a fair or reasonable probability of showing a real or bona fide defence, ie that his evidence is reasonably capable of belief …… there are some cases in which the defendant’s own case, although apparently it raises issues which, if found in his favour, would provide him with a defence, are so incredible or so contradicted by contemporaneous documents or circumstances that it becomes clear that his defence is a sham” : per Mortimer J A in Manciple Ltd v Chan On Man [1995] 2 HKC 459 at 466.”

   Adducing further evidence in the appeal

14.The defendants seek to adduce for purpose of this appeal further evidence which was not adduced before or at the hearing before the Registrar.

15.Order 58 rule 1(4) RDC provides that no new evidence may be received except on “special grounds”, and this term refers to the conditions laid down in Ladd v Marshall [1954] 1 WLR 1489 as follows:-

“Leave to adduce further evidence on appeal will only be granted (1) if it is shown that the evidence could not have been obtained with reasonable diligence for use at the trial, (2) if the further evidence is such that, if given, it would probably have an important influence on the result of the case, thought it need not be decisive, and (3) if the evidence is such as is presumably to be believed.”

See also commentaries in Hong Kong Civil Procedure 2014, Vol 1 at 58/1/3 on the equivalent rule.

   Adverse possession

16.In order to be able to establish adverse possession, the defendants must prove both physical possession and the requisite intention to possess.  (Wong Tak Yue v Kung Kwok David & Anor[1998] 1 HKC 1)

17.In so far as intention is concerned, it is defined in Powell v McFarlane [1979] 38 P&CR 452 as:-

“The position...is quite different from a case where the question is whether a trespasser has acquired possession. In such a situation the courts will, in my judgment, require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world. If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the courts will treat him as not having had the requisite animus possidendi and consequently as not having dispossessed the owner.”

(emphasis added)

The legal principles and requisite ingredients in order to constitute adverse possession are explained and well summarized in the Court of Final Appeal judgment in The Incorporated Owners of San Po Kong Mansion v Shine Empire Limited (2007) 10 HKCFAR 588 (para 7), quoting the judgment of Slade J in Powell v McFarlane, approved by the House of Lords in JA Pye (Oxford) Ltd v Graham [2003]1 AC 419, and adopted by the Court of Final Appeal in Wong Tak Yue v Kung Kwok Wai. 

The defendants’ evidence

18.The defendants’ case as set out in the Defence and their affirmations is that they first used the Disputed Area for storage and for the 1^st defendant to operate his driving school business when the then ex-chairman of the incorporated owners of Kapok Mansion (“the IO”) consented and acquiesced to such a use by them.

19.To protect their belongings stored in the Disputed Area and prevent theft, they liaised with China Light & Power (“CLP”) and installed locks on the door of the Disputed Area facing Tsuen Wan Market Street.  It was agreed that CLP should have a key to the locks because it required access to the transformer room which it managed and maintained.  As a result, each of the defendants, CLP and the cleaning lady all had keys to the locks of the Disputed Area.  Neither the occupiers or tenants of the Property nor the IO had the keys or access to the Disputed Area.

20.There were different tenants and businesses occupying the Property over the years.  The Property has become vacant recently in the past one year or so.

The plaintiff’s evidence

21.The plaintiff has adduced two affirmations dated 10 March 2014 and 15 April 2014 respectively from its solicitor Ho Pak Ming (“HMP”) and Lam Yung Ching, current chairman of the IO (“Chairman Lam”) whose evidence contradicts that of the defendants as follows:-

(i)    After the disputes had arisen regarding obstruction by the defendants of the plaintiff’s renovation of the Disputed Area, HMP inspected the Property on 25 November 2013 with Chairman Lam and a caretaker.  The caretaker used a key to open the door of the Disputed Area for inspection and for HMP to take photographs;

(ii)  Chairman Lam had been a committee member of the IO since 1998, and has since 2005 become the chairman.  He confirms that the IO has been having access all these years (and since its incorporation in 1993) to the Disputed Area for purposes of managing and maintaining common facilities including underground drainage and sewage pipes in the Disputed Area;

(iii)  The plaintiff’s case is that the 2^nd defendant got the keys to the locks of the door of the Disputed Area from the IO;

(iv)  In January 2014 after the present disputes had arisen, the 2^nd defendant changed the locks on the door of the Disputed Area to prevent access by others including the plaintiff and the IO;

(v)  As shown in the assignment, the previous owner and developer Tsun Man expressly reserves the right of reasonable access over the Disputed Area to the transformer room for its maintenance and repair subject to reasonable notice to the new owner (the plaintiff) or its successor and assigns;

(vi)  The door of the Disputed Area was installed by the IO in 1995 upon the request of CLP in order to safeguard the transformer room situated inside the Property.  A copy of minutes of the owners’ meeting dated 20 September 1995 is produced which records: “… work of installation of the door as requested by CLP was completed”.  A copy invoice dated 26 January 1995 issued by the contractor for the relevant work, namely “iron door at the back lane of the building” (“大廈後巷鐵門”), is also produced;

(vii)  A copy invoice dated 20 March 1997 is produced which shows that the IO had ordered and arranged for re-painting work of the door of the Disputed Area (“後巷大鐵閘油漆”);

(viii)  Copies of a quotation dated 4 March 1999 and a receipt dated 9 April 1999 issued to the IO under the name of Hung Kee Electrical & Water Works (洪記水電工程) and signed by the 2^nd defendant are produced in support of receipt of payment of $3,500 from the IO in respect of “repair and concrete works to the drainage and ground of the toilets in Shops A and B on the Ground Floor”; and

(ix)  A copy receipt signed by the 2^nd defendant under the name of Hung Kee Electrical & Water Works dated 25 March 1999 issued to the IO is produced in support of payment from the IO of $700 in respect of “installation of three Italian locks on the door of the Disputed Area” (“A，B座後門意大利三度鎖工料費用”).

The  further evidence

22.The defendants seek to adduce further evidence by way of (i) two new affirmations of the defendants both dated 6 June 2014, (ii) two supplemental affirmations both dated 13 June 2014 correcting some minor mistakes of the 6 June 2014 affirmations; (iii) two draft Defence and Counterclaim; and (iv) some photographs taken of the Property after the hearing on 23 May 2014 before the Registrar.  The photographs show the door of the Disputed Area and the locks, and another metal door outside Shop E on the other side of Kapok Mansion opening onto an alley perpendicular to Castle Peak Road (the front entrance) and Tsuen Wan Market Street (the back entrance).

23.The draft pleadings are not “further evidence” but as defendants’ counsel Mr Ho confirm are documents sought to be filed by the defendants should their appeal succeed.  In any event, as the contents of these draft pleadings are based on the facts and matters deposed in the new affirmations, they were considered together with the affirmations in the court’s consideration of the defendants’ application to adduce further evidence.

24.The defendants rely on the further evidence to argue that:-

(i)    The installation of a metal door/iron gate and locks arranged and ordered by the IO in 1995 to 1999 as alleged by the plaintiff in fact related to the door outside Shop E which door opens onto the alley on the other side of Kapok Mansion.  This is not the door of the Disputed Area as alleged by the plaintiff;

(ii)  Only the 1^st and 2^nd defendants have the keys to the two toilets inside the Disputed Area; and

(iii)  During the past 20 or so years when they had use of the Disputed Area, the 1^st and 2^nd defendants had continuous occupation and the intention to possess it to the exclusion of the world at large.

Discussion

25.Defendants’ counsel Mr Ho accepted that the further evidence could, with reasonable diligence, have been obtained for use at the last hearing before the Registrar.  The defendants explain in their affirmations that the failure to obtain the evidence earlier was due to (i) the fact that they were not legally represented nor advised; (ii) their low education and ignorance; and (iii) their failure to locate suitable witnesses, eg neighbours to support their case. 

26.Contrary to what the defendants depose in their affirmations, clear evidence shows that their solicitors had on 22 November 2013, ie when these disputes first arose, written to the plaintiff’s solicitors stating that they had instructions to act for the defendants and asserted their claim of adverse possession.

27.The defendants’ arguments based on the further evidence of photographs that the installation of a metal door/iron gate and locks arranged and ordered by the IO in fact related to the door outside Shop E opening onto the alley on the other side of Kapok Mansion, but not the door of the Disputed Area as alleged by the plaintiff, are rejected.  It is clearly shown in the relevant receipts and records produced by the plaintiff that the installation was required by CLP, presumably for purposes relating to the transformer room, which must refer to the door at Shops A and B, ie the door of the Disputed Area. 

28.I am not satisfied that the defendants come within any of the Ladd v Marshall “special grounds” justifying granting of leave for them to adduce the further evidence.  Also the further evidence would not in my view have an influence on the result of the case, when the defendants’ arguments relating to the other door outside Shop E opening onto the alley on the other side of Kapok Mansion are incapable of belief.

29.I refuse the defendants’ application to adduce the further evidence.

30.Regarding the defence of adverse possession claimed on the Disputed Area, the defendants’ evidence contains bare allegations in their affirmations.  Their evidence regarding exclusive possession or control of the Disputed Area is contradicted by the plaintiff’s evidence that the IO and the caretaker all have the keys and access.  Even in the defendants’ evidence, CLP and the cleaning ladies also had the keys and access to the Disputed Area apart from themselves.

31.Evidence shows that the work of putting up locks on the door of the Disputed Area was done by the 2^nd defendant upon the order of the IO for which he was paid.  It would have been unreasonable for the IO to pay the 2^nd defendant had the installation of the locks was, as argued by the defendants, an act done upon their own decision or an act as they argue demonstrative of their intention to have exclusive possession of the Disputed Area.  The defendants’ argument that they had the necessary intention of possession of the Disputed Area to the exclusion of the world at large is simply not capable of belief, also taking into account the fact that the transformer room and common facilities are situated inside.

32.The evidence that only the defendants have the keys to the toilets of the Disputed Area is also not capable of belief.  The undisputed fact is that those two toilets are a part of the Property and the only toilets serving Shops A and B which were occupied and used by different tenants and businesses over the years.

33.The defendants’ case is no more than a mere assertion in their affirmations.  Their evidence is contradicted by the plaintiff’s reasonable and logical evidence supported by meeting, invoice and payment records.  One does not need to engage in a mini-trial of the affidavit evidence in order to come to a conclusion that the defendants’ claims are not capable of belief.  They have failed to establish a fair or reasonable probability of showing a real or bona fide defence.

34.Even accepting the defendants’ evidence regarding actual possession, and taking their case to the highest, it can at most be established that they were allowed in the 1990s by the ex-chairman of the IO to use the Disputed Area for storage, as opposed to being allowed to “possess” it.  Their intention in locking the door of the Disputed Area was clearly not “to demonstrate their intention to possess the Disputed Area”, let alone “to the exclusion of the world at large”.  The sole purpose as can be established from their evidence was merely to safeguard their belongings or prevent theft.  Also the possession was clearly not exclusive as other than the defendants, CLP and the cleaning lady also had the keys and access to the Disputed Area.

35.The defence of adverse possession is doomed to failure.  

Order

36.The defendants’ three summonses (i) to set aside the summary judgment; (ii) to adduce further evidence; and (iii) for stay of execution of the summary judgment are dismissed.  The order of the Registrar dated 23 May 2014 stands.

37.Costs should follow the event.  The plaintiff shall have costs of all three summonses against the defendants, to be taxed if not agreed.

Mr P M Ho, of Ho & Tam, for the plaintiff

Mr Alan Ho, instructed by Raymond CP Lo & Co, for the 1^st and 2^nd defendants