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Foremost Hill Ltd v Li Hon Bank Of China (Hong Kong) Ltd

Judgment Cited authorities 1 Cited in Precedent Map Related
Vincent
Judgment Date05 April 2017
Year2017
Judgement NumberHCA2555/2013
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA2555/2013 FOREMOST HILL LTD v. LI HON BANK OF CHINA (HONG KONG) LTD

HCA 2555/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2555 OF 2013

____________

BETWEEN
FOREMOST HILL LIMITED Plaintiff
and
LI HON 1st Defendant
BANK OF CHINA (HONG KONG) LIMITED 2nd Defendant

____________

Before: Hon Chung J in Court

Dates of Hearing: 28 November and 2 December 2016

Date of Judgment: 5 April 2017

________________

J U D G M E N T

________________

INTRODUCTION

1. The plaintiff commenced this action in December 2013, claiming in effect that it has acquired title to the subject area (as defined in para 3 below). The claim is denied by the 2nd defendant (“D2”), which counterclaims against the plaintiff in trespass over the subject area.

BACKGROUND

2. The plaintiff is the registered owner of a shop (known as Shop 4) in a building located in Shamshuipo (respectively “the plaintiff’s shop” and “the subject building”). D2, which is a licensed bank, became the mortgagee bank of another shop (known as Shop 6) (“D1’s shop”) effectively since January 1981. The said two shops are next to each other. When looked at from above, their relative positions form a shape resembling the letter “L”.

3. Sometime earlier (before January 1981 according to the plaintiff), the rear portion of D1’s shop was somehow “severed”; the partition wall dividing the two shops was somehow “moved” and part of the rear of D1’s shop was physically included as part of the rear of the plaintiff’s shop (the plaintiff became its owner since January 1997 (but a Mr Lun (see para 5(1) below) and other occupiers were related to the plaintiff)). That portion will be called “the subject area” below (see also para 1 above).

MAIN ISSUES

4. The issues raised by D2 can be broadly categorized as:

(a) factual: the plaintiff has not been able to adduce cogent evidence to overcome the heavy burden placed upon it to establish continuous adverse possession of the subject area;

(b) legal: because ownership in a building is in the nature of co-ownership, the plaintiff has not been able to establish the act of ouster to ground a claim in adverse possession against D1 (and therefore against D2);

(c) in any event, the defendants are entitled to rely on the deed of mutual covenant of the subject building (“the deed of mutual covenant”) to compel the plaintiff to deliver up the vacant possession of the subject area.

5. The following witnesses testified at trial:

(1) Mr Lun, the plaintiff’s shareholder and director (“Lun”);

(2) Mr Tam, the plaintiff’s shareholder and director (“Tam”);

(3) Mr Lee, the plaintiff’s staff (“Lee”);

(4) Madam Ngai, Tam’s sister-in-law (that is, the wife of Tam’s elder brother) (“Mdm Ngai”);

(5) Mr Siu, the plaintiff’s staff (“Siu”);

(6) Mr Liu, D2’s head of the assets recovery monitoring department (“Liu”).

(a) Factual issue

6. D2’s main criticism is the plaintiff’s pleaded case is different from the testimony given:

(1) the plaintiff’s pleaded case is essentially that, from June 1990 to January 1997, the plaintiff’s predecessor-in-title granted a licence for Lun to use the plaintiff’s shop and the subject area; when the plaintiff became the owner in January 1997, a licence was granted to Lun and Tam for both to share the use of the plaintiff’s shop and the subject area for their respective business;

(2) the plaintiff’s witnesses testified differently. Lun and Tam said they began to share the subject area (together with other areas) since 1990 for business use;

(3) further, a plan referred to by the plaintiff’s witnesses shows that the subject area was connected to the plaintiff’s shop and the shop next to it (“Shop 3”) (also used by Lun and Tam);

(4) from 1990 to at least 1995, the plaintiff’s shop and the subject area were used by Lun’s business and an operator of a car business;

(5) Tam said he was the tenant of Shop 3 from May 1990 to around 1997 (part of the shop from May 1990 to 1994 and the whole shop from 1994 to around 1997).

7. Based on the above, D2 submits that:

(a) Lun never has exclusive possession of the plaintiff’s shop from April 1990 to January 1997, as pleaded;

(b) the plaintiff’s shop and Shop 3 were owned by different owners but there is no evidence the owners jointly possessed the subject area;

(c) the subject area could be used by whoever was/were occupying the plaintiff or Shop 3 without obtaining permission from the other occupier(s);

(d) hence, neither Lun nor Tam ever has exclusive possession of the subject area.

D2 invites the court to place weight and rely on the plans attached to the assignment documents of both the plaintiff’s shop and D1’s shop, contending that they were prepared by qualified professionals. The boundaries of D1’s shop were properly delineated in those documents.

8. D2 also argues that, because Lun was the vendor referred to in the assignment of the plaintiff’s shop in 1990, Lun should be taken to have represented that the attached plan was accurate. The same point is made against Lun and Tam when they signed the assignment in 1997 for the plaintiff.

9. With respect, for the reasons set out below, I disagree with D2 (especially with regard to para 7(a) above).

10. First, as the plaintiff correctly points out, its case is supported by documentary evidence:

(1) demands for rents and rates dating back to 1993 issued to Lun regarding the plaintiff’s shop and the subject area (“the said demands”);

(2) that the said demands in fact included the plaintiff’s shop and the subject area is clearly shown by a letter from the Rating and Valuation Department dated 15 December 2015. Among other things, it said: “上述物業雖然由不同業主擁有﹐但佔用人將該等地段合併為一個物業單位使用﹐而地段間並無明確分界﹐故仍為一個單一物業 ...”.

The plaintiff also relies on part of D1’s shop (its front portion) having earlier been used as a transformer room as a possible explanation for the subject area being included as part of the plaintiff’s shop. This is however too speculative for any evidential weight to be properly placed.

11. I also reject D2’s contention that the said demands were issued without knowledge of the actual physical condition at the plaintiff’s shop (including the subject area). The letter 15 December 2015 shows that this should not be the case; the issuing department was quite clear about how the plaintiff’s shop was partitioned.

12. Secondly, the differences pointed out in para 6 above are relatively trivial and must have been caused by inaccuracies or mistakes in recollection due to the long time lapse between the narrated matters and the trial. Briefly, the differences pertain to:

(a) precisely when the occupation of the subject area began;

(b) the identity of the occupants of the subject area;

(c) the precise businesses operated by the occupants;

(d) whether there was at one stage a partition between the subject area and the other areas of the occupied space (be that the plaintiff’s shop or Shop 3).

These inaccuracies or mistakes over details do not impact significantly on the plaintiff witnesses’ reliability or credibility regarding the approximate length of occupation of the subject area.

13. As regards para 7(b) to (c) above, I disagree with D2’s submission that the subject area was occupied at different times by different individuals without reference to each other, or without the permission or consent of the others. Because of the relationship of the occupants (Lun and Tam were long acquaintances, and there were similar members for the shareholding and directorship of the various corporate owners), the proper inference is that their occupation of the subject area was with the permission or consent of the other occupants. There is no basis for suggesting, for example, that other (or complete) strangers would be able to gain access to the subject area during those periods.

14. In the premises, in disagreement with para 7(d) above, I find that Lun and Tam have at various time had exclusive possession of the subject area; during different periods from at least 1990, they have done so (i) on their own, or (ii) jointly with the others, or (iii) continuously by taking over from the others. This applies a fortiori to their exclusion of the “paper” owner(s) of the subject area from the subject area, including D1.

15. It is not common Hong Kong conveyancing practice for real properties to be professionally surveyed for the purpose of sale and purchase. There is no evidence (or indeed any proper basis) for concluding...

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