KAN YIN MING AND ANOTHER v. KING CHEER LTD

DCCJ 4344/2013 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 4344 OF 2013 BETWEEN KAN YIN MING 1st Plaintiff KAN YIN YEE 2nd Plaintiff and KING CHEER LIMITED Defendant Before: Deputy District Judge S P Yip in Court Dates of Hearing: 14, 15 & 22 October 2015 Date of Judgment: 5 August 2016 J U D G M E N T Background This case is an adverse possession claim by two sisters, the plaintiffs (Ps), against the paper owner, the defendant (D), of a piece of land known as Lot 3497 in DD No 124 in Tuen Mun (“the Disputed Land”). D counterclaims against the Ps for injunction and damages for trespass. On 16 November 1976, Ps’ mother (“Madam Lau”) became the registered owner of one half of undivided share in and of Lot No.3496 in DD No.124 Tuen Mun (“Lot 3496”), adjacent to the Disputed Land. The other half share of Lot 3496 has been owned by Yip Kan and Koo Sui Lin since 1976 (“Koo’s half share”). In or about 1976, a fence was erected inside Lot 3496 to separate Madam Lau’s half share and Koo’s half share. When Madam Lau became the registered owner of the half share of Lot 3496, there was no physical boundary separating her half share of Lot 3496 and the adjoining Disputed Land. Madam Lau was under the impression, though mistaken, that the Disputed Land formed part of her half share of Lot 3496 (the “mistaken belief”). Therefore, shortly after Madam Lau’s acquisition of the half share of Lot 3496, her husband, ie the father of the Ps, erected an additional fence along the boundary of the Disputed Land and Lot 3498. This new fence together with the existing fences on the north west and south west sides and the fence separating Koo’s half share of Lot 3496 enclosed Madam Lau’s half share of Lot 3496 and the Disputed Land as a single lot (the “Subject Land”). Throughout the years, five structures were erected in both the half share of Lot 3496 and the Disputed Land with some of them cutting across the boundary of the two lots. In 1990, Madam Lau assigned her half share of Lot 3496 to both Ps as tenants-in-common in equal shares through a Deed of Gift dated 15 October 1990. Madam Lau passed away in 2005. D has become the registered owner of Lot 3497 since 3 February 2005 when it purchased Lot 3497 from its predecessor-in-title. To succeed in the adverse possession claim, Ps have to prove: (i) factual possession; and (ii) the intention to possess (animus possidendi). Both elements depend on the circumstances. It is common ground that the relevant period of possession by Ps in issue is the 20 years from 1976 to the end of 1996. D denied both factual possession and intention to possess the Disputed Land by the Ps. In particular, it is the D’s case that Ps’ possession of the Disputed Land, if any, has ceased in 1982 when both Ps got married and moved out one by one. Issues The parties’ counsel have kindly agreed the following issues in dispute: Subject to the determination of Issue 3, have Ps been in continuous factual possession of Lot 3497 exclusively for at least 20 years since 16th November 1976 or soon thereafter (the terminus a quo) in light of all the evidence including: (a) the various structures that were erected / demolished throughout the years as identified by the experts and (b) the physical state as to how various lots have been encircled and/or enclosed? Subject to the determination of Issue 3, did Madam Lau and subsequently Ps have the requisite intention to continuously possess Lot 3497 exclusively throughout the period of 20 years from the terminus a quo? The relevance of occupation by Madam Lau of Lot 3497 (which is not admitted by D) since the terminus a quo to the question of adverse possession by the Ps themselves as alleged in their pleadings. If the Ps have not been in adverse possession of Lot 3497 by them for 20 years since the terminus a quo, is the D entitled to damages and other reliefs as claimed in its counterclaim and if so what are the proper amount of damages? Background of Factual Possession It is trite law that factual possession signifies an appropriate degree of physical control. An adverse possession claimant needs to show that he or she has been dealing with the disputed land as an occupying owner might have been expected to deal with it and that no one else has done so. The peculiar feature of the Ps’ case is the “mistaken belief” leading to the enclosure of the half share of Lot 3496 and the Disputed Land as a single lot by fences on all sides. From 1974 to 1981, at least two structures were built standing across the boundary of the Ps’ half share of Lot 3496 and the Disputed Land and those structures remained there when D’s witnesses visited the Disputed Land after 2004. It is widely accepted that enclosure is the strongest possible evidence of adverse possession, though it is not indispensible or conclusive. In light of the peculiar background, it is fair to say that factual possession has been established at the beginning at least by Ps’ parents because of the “mistaken belief” resulting in the enclosure of the Disputed Land and the half share of Lot 3496 as a single lot. In fact D has never disputed Ps’ parents were in factual possession of the Disputed Land at the beginning and the disputes mainly rest on whether Ps were in factual possession at any stage. Joint Possession That Ps and their parents (the “Kan family”) were residing at the Subject Land from the beginning in 1976 to 1982 is not challenged by D. However, D denies that Ps were in joint possession of the Subject Land with their parents from the very beginning because the Ps’ right to live at the Subject Land was subject to an implied licence from their parents and thus they did not have equal rights among themselves to the possession of the land. Ps’ counsel, Mr Lung, argued that the implied licence point has not been pleaded by D and thus it could not be relied upon, which I agree with Mr Lung. In case I was wrong to disallow D to argue this issue, my analysis of this issue is as follows. First of all, I do not think that Ps’ parents should have any interests in the Disputed Land more superior than Ps. Unlike the half share of Lot 3496, which Madam Lau had the legal title but Ps did not have any interest back in 1976, the Kan family moved in the Subject Land and took possession of the Disputed Land at the same time together as a family unit and on the same “mistaken belief” that the Disputed Land was part of Lot 3496 and was residing on such land together. Thus the Kan family had dealt with the Disputed Land as occupying owners might have been expected to deal with it and their possession of the Disputed Land was obviously exclusive at the beginning. In light of such circumstances, Ps should have the same interests as their parents in relation to the possession of the Disputed Land. Therefore, I am satisfied that Ps have successfully established a joint possession of the Disputed Land with their parents at the beginning. Plaintiffs’ Moving Out Although the law presumes that the true owner remains in possession of his land, once factual possession by the trespasser has been established, the true owner’s cause of action begins to accrue unless and until the land ceases to be in adverse possession. Apart from the denial of joint possession of Ps as discussed above, the other main dispute in respect of factual possession is the cessation of continuous possession for the requisite period of time or the failure to discharge the burden of proof of the continuous possession of the Disputed Land: Ps had left out the Disputed Land entirely for the period from 1982 to 1996. Both Ps got married in 1982 and moved out, leaving behind the Ps’ parents until the death of their father in 1996 when they paid weekly visits to their mother according to P1’s witness statement. The Disputed Land was not even occupied by the Ps’ mother since sometime from the mid 1980s until 1994. (However, D does not dispute that Madam Lau was in possession of the Disputed Land from 1997 to sometime in 2004 in light of the evidence of the tenancy.) I would first deal with the issue of Ps’ moving out from the Subject Land after getting married in 1982. It is the Ps’ case that their possession of the Disputed Land is one of joint possession with their parents. The issue is whether their joint possession would cease when they moved out after marriage. I have found that factual possession by the Kan family has already been established at the beginning. There is no dispute that the following circumstances of the factual possession did not change since Ps’ living elsewhere: enclosure of the Kan family’s half share of Lot 3496 and the Disputed Land as a single lot and some structures standing across Lot 3496 and the Disputed Land have remained unchanged. Even after Ps had moved out, there is no dispute that Ps’ parents continued to live at the Subject Land. D only argues that Madam Lau moved out sometime in the mid 1980’s. Therefore, the occupation of the Disputed Land by Ps’ parents continued (at least up to mid 1980’s according to the D) and was unaffected by the Ps’ moving out. There is no suggestion that Ps’ ties with their parents have been affected by their marriages. On the contrary, they still left some of their personal belongings behind after marriage and they went back regularly after moving out. Further, Madam Lau still gave her half share of Lot 3496 to Ps by a Deed of Gift in 1990 which was about 8 years after Ps’ marriage. All these tend to suggest that Ps’ living elsewhere after marriage should not be seen as severance from the Kan family but their close ties with the Kan family continued despite their marriages. Ps’ situation is different from the eviction of a squatter, which would bring the possession of the squatter to an end. Since the Disputed Land was still in the exclusive possession of the Kan family after Ps’ moving out and their ties with parents had not changed, I thus find that Ps did not vacate the Disputed Land after marriage as their joint possession of the Dispute Land was not affected by their moving out. Any Abandonment by Madam Lau The next question is whether such joint possession continued for 20 years till 1996. D submits that Ps’ mother has left the Subject Land in the mid 1980’s, relying mainly on the following evidence: Ps’ father had ceased the business of raising gold fish at the Subject Land in early 1980s and both parents of Ps did not work at there since then; The address of the Ps’ mother as appears on the Deed of Gift is not the Subject Land address but an address at Lung Poon Court, Diamond Hill which is a flat co-owned by P2 and her husband; The rate demand notes of the Subject Land from 1988 to 2003 were directed to P’s mother at the Lung Poon Court address; According to the joint expert report judging on aerial photos from 1984 to 1994, the structures on the Subject Land appeared to be allowed to fall into dilapidation, and there was no sign of human activities at the Subject Land for a period of about 9 to 11 years; Defence witness Mr Leung Chung Hing used to meet the Ps’ parents in the early years when Leung walked past the Subject Land but he ceased to see Ps’ parents since the 1980s. Leung did not observe any activities there and he found the Subject Land became very quiet; No utilities bills of the Subject Land before 1997 are provided by the Ps; The neighbour Madam Koo was not called to give evidence to prove the Ps’ mother was all along living at the Subject Land until death. Mr Chiu for the Defendant submits that the continuous possession of the Subject Land from 1976 to 1996 by the Madam Lau is neither credible nor compelling and not proved to the requisite standard in light of the evidence summarised in the above. After Ps’ departure from the Subject Land in 1982 and Madam Lau’s moving out in the mid 1980’s, Mr Chiu submits further that there would be nothing for Ps to hang on their joint possession of the Subject Land. I accept that such evidence may cast doubt on Ps’ evidence that their mother has never moved out the Subject Land till death. Be that as it may, does it necessarily mean discontinuance of Madam Lau’s possession if she might have been living with any one of the Ps sometimes during that period of time? The Subject Land consists of the half share of Lot 3496 and the Disputed Land. Since Madam Lau was the legal owner of the half share of Lot 3496 in the 1980’s, she was presumed to remain in possession of the half share. Discontinuance of possession occurs where the owner abandons possession of his land. However, abandonment will not be lightly presumed and mere non-user is not enough. The evidence against Madam Lau’s presence at the Subject Land since mid 1980’s is only circumstantial, not direct evidence. Taking the D’s evidence to the highest, it only tends to show non-user but still quite far from the conclusion of abandonment of her half share of Lot 3496. Mr Lung for Ps is quite right in submitting that Madam Lau and Ps could not have abandoned the Disputed Land at any stage because in their minds the Disputed Land and the half share of Lot 3496 were a single lot. Therefore, they could not have abandoned the Disputed Land without giving up their half share of Lot 3496. There is no evidence suggesting that Madam Lau, or subsequently Ps, have abandoned the half share of Lot 3496 at any stage. On the contrary, Madam Lau gave her half share of Lot 3496 to the Ps in 1990 and the Kan family built new structures in 1995 and 1996. In the circumstances, I am satisfied that Madam Lau or Ps could not have abandoned the half share of Lot 3496 at any stage during the 20 years in question. Findings of Factual Possession I am satisfied that the enclosure of the half share of Lot 3496 and the Disputed Land as a single lot together with the structures built on them is compelling evidence to signify a sufficient degree of physical control of the Disputed Land. Given that such enclosure has remained there throughout 1976 to 1996 and some structures are still standing there, and in the absence of any evidence of abandonment of the half share of Lot 3496, it logically follows that Ps and/or their parents could not have discontinued their possession of the Disputed Land during the 20 years in question. For the above reasons, the Kan family have exercised sufficient degree of control of the Subject Land as a whole continuously during the 20 years in question and I thus find that Ps have jointly possessed the Disputed Land continuously during that period of time. In case my above finding of joint possession is wrong, I am satisfied that the principle of successive squatters applies in the present case. Ps are entitled to include the time of possession of the Disputed Land by a previous squatter, ie their mother, Madam Lau, for the computation of their own time under the Limitation Ordinance. In the circumstances, the above conclusion of factual possession of the Disputed Land by Ps for the requisite period of time would be unchanged. Intention to Possess An intention to possess is an intention to exercise such custody and control in one’s own name and behalf to exclude the world at large, including the registered owner. The Defendant’s main challenges of Ps’ intention to possess the Disputed Land are as follows: P1 was aged 15 and P2 was aged 14 when they moved in with their parents in 1976. It is incredible for the Ps to be able to form the requisite animus possidendi then. Ps were living there with the permission of their parents and could not be in adverse possession against the true owner in such early years. Ps could not be in joint possession with their parents in the sense that they had equal right to the Disputed Land since their presence at the Disputed Land was subject to an implied licence from their parents. Ps lack the requisite animus possidendi since their marriages and moving out from the Disputed Land in 1982. To start with, I find that the requisite intention to possess has been sufficiently established by the “mistaken belief” of the Ps’ parents that the Disputed Land belonged to them at the beginning. The crux of the argument is whether Ps had the same intention when they were still teenagers and subsequently after their marriage. P1 stated in paragraph 6 of her witness statement that her parents began to have such “mistaken belief” when her mother bought Lot 3496 in 1976. She further stated she all along thought that the Disputed Land belonged to the lot purchased by her mother because there was no fence separating the Lot 3496 and the Disputed Land. Since then P1 and the Kan family were all along occupying both parts of the Subject Land uninterrupted until 2013 and the local villagers also knew about Kan family living there. P1 only encountered D’s intervention when she saw the removal notice posted at the gate on 19 August 2013. She engaged solicitors and surveyor after that incident and she then came to know that part of the Subject Land was in fact Lot 3497 owned by the D. P2 simply confirms and adopts P1’s witness statement. In short both Ps are sharing their parents’ same “mistaken belief” as to the ownership of the Disputed Land until the clarification by their surveyor in 2013. I am satisfied that Ps were able to share such view of the “mistaken belief” despite the fact that they were teenagers in 1976, because I do not think that a teenager would be unable to form such view in the circumstances. Although such statement of Ps is self-serving which the court should approach them with some scepticism in general, in the absence of any evidence to the contrary, I accept that both Ps have been sharing the same “mistaken belief” as their parents since 1976 when they moved in until their surveyor’s finding in 2013. I therefore find that the requisite intention to possess of Ps has been sufficiently established because such “mistaken belief” of Ps indicates their intention to possess the Disputed Land jointly with their parents to the exclusion of all other persons. As I have rejected that Ps’ moving out after their marriages be considered as vacating the Disputed Land and as such I do not find that they have ceased possession of the Disputed Land. I cannot find any change of their intention to possess after their marriages. Further, the Ps’ intention to possess has also been manifested unequivocally by the exclusive possession of the Disputed Land by the Ps and their parents by their overt act of enclosing the half share of Lot 3496 and the Disputed Land as a single lot with structures built thereon throughout the years in question. Conclusion Having considered all the circumstances and for the above reasons, I find that Ps have successfully established both elements of adverse possession of the Disputed Land for a continuous period of 20 years from 1976 to 1996. Therefore, I make the following orders. I make a declaration that the title in and of the Disputed Land of the D’s predecessor-in-title and that of D has been extinguished in favour of the Ps by virtue of sections 7 and 17 of the Limitation Ordinance. I also declare that the Ps have acquired all rights, title and interest including the ownership and right to exclusive possession and occupation of and in the Disputed Land. Therefore I dismiss D’s counterclaim and order that D shall procure the vesting of all rights, title and interest of and in the Disputed Land in favour of Ps. I make an order nisi that the costs of the action be to Ps, to be taxed if not agreed with certificate for counsel. Last but not the least, I am grateful to both counsel for their valuable assistance offered to this court. (S P Yip) Deputy District Judge Mr Vincent Lung, instructed by Wan Yeung Hau & Co, for the 1st and 2nd plaintiffs Mr Simon Chiu, instructed by Vincent TK Cheung, Yap & Co, for the defendant