Wong Shan Shan and Another v. The Incorporated Owners of Yue Wah Mansion and Another
Read the full judgment text of HCA 1086/2013 on BabelCite. This High Court CFI judgment was delivered on 28 January 2015.
1. Urban Renewal Authority (“ URA ”) by summons dated 9 April 2014 (“ the Summons ”) applies to be joined as a defendant in the present action. Wong Shan Shan (“ Wong ”) and Ng Juen Leung (“ Ng ”), the plaintiffs and a married couple, oppose this application on the ground that URA has no locus standi in these proceedings at all and in any event it has no defence to their claim based on adverse possession and proprietary estoppel.
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HCA 1086/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1086 OF 2013 ____________
_______________ DECISION _______________ Introduction 1.Urban Renewal Authority (“URA”) by summons dated 9 April 2014 (“the Summons”) applies to be joined as a defendant in the present action. Wong Shan Shan (“Wong”) and Ng Juen Leung (“Ng”), the plaintiffs and a married couple, oppose this application on the ground that URA has no locus standi in these proceedings at all and in any event it has no defence to their claim based on adverse possession and proprietary estoppel. 2.This action was commenced by Wong and Ng against the Incorporated Owners of Yue Wah Mansion (“the IO”) only. The IO having failed to file a Notice of Intention to Defend, Wong and Ng have taken out a summons for default judgment to be against the IO. The hearing of the said summons is adjourned pending the determination of the Summons. Background Facts 3.The uncontroversial background facts leading to the present action for the purpose of this application can be summarized as follows. 4.Yue Wah Mansion (“the Mansion”) was constructed on Lot 309, Kwun Tong, Kowloon (“the Land”) in or about 1966. It has 152 units. On the Land, there is also a shop (“the Shop”) described as No.409A Kwun Tong Road, Yue Man Square, Kwun Tong. The IO was incorporated in November 1981. 5.The Land is within the boundary of the Redevelopment Scheme Project KTTC of the URA (“the Project”). Pursuant to the Project, URA started acquisition of the units of the Mansion in 2008. Now URA has become the majority owners of the undivided shares of and in the Land including the Mansion. 6.Wong became the registered owner of a unit of the Mansion, namely, Flat 4, 4/F of the Mansion on 8 February 2007. URA acquired Wong’s unit on 25 November 2009. Ng was also the owner of a unit of the Mansion. He assigned his unit to a purchaser on 28 December 2005 and the unit was subsequently acquired by URA on 12 June 2009. 7.It is not in dispute that due to the mass acquisition of the units of the Mansion, a lot of individual owners who have sold their units to URA have moved out. The IO is virtually defunct. 8.On 18 June 2013, Wong and Ng jointly filed a writ against the IO claiming a possessory title to the Shop by virtue of their occupation thereof since 1967. Alternatively, they claim that they have acquired a proprietary interest in the Shop by virtue of proprietary estoppel. 9.Their pleaded case of adverse possession is that they operated in the Shop a Chinese herbalist tea house from 1967 to 1975 and a pharmacist under the trade name of “Victory Med” from 1975 up to the present. They claim their occupation has all along been adverse to its legal title, viz, the IO (according to them). 10.Their pleaded case of promissory estoppel is that the manager of the Mansion all along knew their construction and occupation of the Shop but did not raise any objection to them. As a result, they claim that throughout the 46 years they have expended money to improve and renovate the Shop. It is hence averred that the manager must have sought the approval of the owners’ committee which by a resolution has approved their occupation of the Shop and hence the IO is now estopped from asserting title or its proprietary right to any part of the Shop. Applicable principles 11.The joinder application is made under Order 15 r6(b), Rules of the High Court (“RHC”), which provides:
12.Mr Li, senior counsel for URA, pertinently refers this court to the comprehensive summary of the applicable legal principles in respect of joinder applications given by DHCJ A Cheung (as the Chief Judge then was) in Man Whi Chung v Man Ping Nam [2003] 1 HKC 549. Mr Chong, counsel for Wong and Ng, does not disagree with such principles. 13.In Man Whi Chung, the judge reviewed a few English and local authorities concerning joinder applications and distilled from them certain guiding principles. Among such authorities, of particular relevance to the first limb under Order 15 r 6(b) is the following dictum of Lord Denning MR in Gurtner v Circuit [1968] 2 QB 587 at p.595D-F:
14.The judge also referred to Wong Chun Loong Tony v Ada Ltd [1991] 1 HKC 86 for his analysis of Order 15 r 6(b)(ii). Clough JA said this at p. 94 D-I:
15.I shall deal with the objections of Wong and Ng to the joinder application of URA in turn. Discussion No Locus Standi? 16.First, Mr Chong argues that URA has no locus standi in these proceedings. Underpinning this argument is the pleaded case of Wong and Ng that the IO was the legal owner of the common parts of the Mansion. Alternatively, it is then argued that the IO has the exclusive rights to deal with this action which involves the rights, powers and privileges and duties of the owners in relation to the common parts of the Mansion under section 16 of the Building Management Ordinance, Cap.344 (“BMO”). Lastly, Mr Chong argues that URA at best has a commercial interest in the outcome of this action and hence it is not a proper party to these proceedings. 17.I cannot accept these arguments. In my judgment, very clearly URA satisfies both limbs of Order 15 r 6 and should be joined as the 2nd defendant for the following reasons. 18.Firstly, there is no doubt that the Shop is erected on the common parts of the Mansion. As rightly pointed out by Mr Li, the Shop is erected on the part of the public right of way under the Condition of Sale of the Lot dated 27 February 1962. No undivided share is allotted to such part of the Mansion. It is also apparent in Clause 2 the Deed of Mutual Covenants to be read in conjunction with the 1st Schedule thereto. Indeed, it is accepted in the evidence of Wong and Ng that the Shop is erected on the common areas of the Mansion. It is the very basis of their case of adverse possession and indeed Mr Chong’s submission on section 16 of the BMO as well. 19.In the premises, URA being the majority owner of the Mansion (and the Land), must have a proprietary interest in the Shop. That being the clear conclusion, I fail to see why and how URA should be excluded from the present action whereby Wong and Ng seek a possessory title to a property of which URA has a legal interest. I cannot accept Mr Chong’s submission that URA has a mere commercial interest in the outcome. There must be a question and/or issue between Wong and Ng on one part and URA on the other relating to the very relief sought in the present action. 20.Secondly, on the evidence, it is as plain as pikestaff that compulsory assumption of the Land pursuant to the Project is a distinct possibility if not a certainty. Wong and Ng have been in close contact with URA relating to compensation matters. Their alleged possessory title to the Shop would no doubt entitle them to additional compensations in the event of compulsory assumption. URA of course should be given a chance to test their claim. Its intended involvement in this action is necessary to ensure that all matters in dispute may be effectually and completely determined and adjudicated upon. 21.Now I turn to section 16 of the BMO (“the Section”), on which Mr Chong heavily relies. It provides:
22.Mr Chong argues that since the IO is still in existence albeit not fully operative, by virtue of the Section, the IO is permanently vested an exclusive right of suit relating to the common parts of the property to the exclusion of all other individual owners including URA. 23.I cannot accept this argument. The short answer is that in defending this action, URA is not merely exercising and performing its rights, powers, duties and privileges of the owners relating to the common parts of the Mansion. It is defending its proprietary interest in the Shop, which Wong and Ng claim to have been extinguished by virtue of their adverse possession. As such, URA cannot be debarred by the Section from defending its own proprietary interest in the Shop. 24.I shall briefly deal with Mr Li’s other submissions on the Section. Mr Li asks me to adopt a liberal construction of the Section in that it should cease to be applicable once the IO has ceased its function. In this regard, he prays in aid section 19 of the General and Interpretation Ordinance, Cap.1. 25.I am not convinced that this liberal construction is appropriate. Whether an IO ceases its function can be a matter of degree and this liberal construction will only cause unnecessary confusion and uncertainty to the legal rights of an IO under the Section. 26.Mr Li further relies on a notice issued by Mr Lee as Chairman of the IO to all the owners of the Mansion dated 19 December 2009. He submits that by the notice the IO effectively transferred or assigned its exclusive rights under the Section by the notice. The notice is in the following terms:
27.I cannot accept this submission. The scope and extent of the duties to be transferred/assigned to URA are clearly defined in the notice itself. I do not agree that the notice can be taken as a blanket transfer/assignment of all its legal rights under the Section. No defence? 28.The bulk of Mr Chong’s submission is actually about the merit of the plaintiffs’ claim. His primary submission is that URA can have no positive case in contradiction of their claim of adverse possession. All that URA can do and has done is to pick holes in the plaintiffs’ case. It follows that it is a complete waste of time and resources in allowing URA to be joined if it can have no defence at all. 29.Whilst submitting that there is no legal requirements to show merit in a joinder application, Mr Li on the safe side makes lengthy submissions on the problems of the plaintiffs’ case. 30.I was once tempted to render my analysis of their submissions on merits in deference to counsel’s industry. Yet, on second thoughts, I do not think that it is a proper course to take as a matter of principles. 31.To start with, I agree with Mr Li that under Order 15 r 6, there is no requirement for an applicant to show merit of his case. Nor am I provided with any authorities to convince me that merit is a relevant consideration in a joinder application. 32.In my judgment, a necessary party must be allowed to be joined as a party irrespective of the strength of his case. At the very least, he should be allowed to take part in the proceedings. It is a breach of natural justice if a necessary party is denied any participation altogether. It defies fairness and justice if a legal/ beneficial owner of a property is not allowed to contest an action whereby a squatter claims that his legal title/ beneficial interest has been extinguished. Summary judgment and/ or striking out applications can be made if deemed appropriate further down the road so that a judgment can be entered against and made binding on the intervener. 33.In the premises, I refuse to deal with the merit. The action is still very much in its infancy and the parties’ respective cases can be subject to further changes and development. It is neither necessary nor appropriate for me to pass any comment on the materials presently before me other than those germane to the joinder application. Other Matters 34.On the other hand, Wong and Ng in their evidence complain that URA deploys delaying tactics by this joinder application to defer compensation to Wong and Ng for the Shop. I see no merit in this complaint. I appreciate the good judgment of Mr Chong in not making any submissions on this complaint. 35.This joinder application was made within half a year after the Writ herein was filed. It was made because of the omission, unjustified in my view, to join URA as the 2nd defendant. Procedurally there cannot be said to be any delay. So soon as compulsory resumption of the Land became in the pipeline, Wong and Ng should ascertain the position of URA on their alleged possessory title to the Shop. If URA does not accept their claim, this action should have commenced against URA without delay so as to confirm their interests in the Shop as soon as possible to support their claim for compensation. The delay now complained of is really self-induced. 36.Lastly, at the hearing, Mr Li informed this court that URA had also made an application for the appointment of an administrator to act on behalf of and in the name of the IO to defend the present action made to the Lands Tribunal. 37.By a letter dated 6 January 2015 (“the Letter”), Messrs Fairbairn Catley Low & Kong, for URA, updated this court the progress of the said application. In a nutshell, Deputy Judge Kot on 12 December 2014 refused to make the appointment for want of jurisdiction. Instead the deputy judge ordered that an administrator of the IO be appointed to convene an owners’ meeting for the appointment of another management committee. 38.I have heard nothing from the plaintiffs concerning the Letter. Suffice it for me to say that the outcome of the said application does not affect my conclusion that URA is a proper party to this action. Conclusion and Order 39.For the reasons given above, I accede to the application of URA. I make an order in terms of the Summons save that I shall specify that URA shall be added to the Re-Amended Writ of Summons as the 2nd defendant. I shall in addition grant leave to the plaintiffs to file and serve a Re-Re-Amended Statement of Claim if so advised within 14 days from the date of this order. 40.I do not find the objections raised by the plaintiffs reasonable. They should have agreed to this joinder application. I make an order that the plaintiffs do pay URA its costs of the actual hearing of the Summons before this court, to be taxed if not agreed. For all other costs of and occasioned by the Summons (including the filing of evidence), they should be costs in the cause. These costs orders are made on a nisi basis and they will become absolute absent any application to vary the same within 14 days by summons. 41.Lastly, I thank Mr Li and Mr Chong for their comprehensive submissions and helpful assistance.
Mr Patrick Chong, instructed by Messrs. Chak & Associates for the plaintiffs The Defendant was not represented and did not appear Mr C.Y. Li, SC, instructed by Messrs. Fairbairn Catley Low & Kong for the intending defendant | ||||||||||||||||||||||||||||
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