FACV No. 1 of 1997
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
FINAL APPEAL NO. 1 OF 1997 (CIVIL)
(ON APPEAL FROM CACV NO. 62 OF 1996)
|WONG TAK YUE
|KUNG KWOK WAI DAVID
(the person appointed to represent Kung Wong Sau Hin, deceased (the sole executrix of the estate of Kung Yeuk Man, deceased))
|LAM CHAK MAN ESTATES LIMITED
Chief Justice Li, Mr Justice Litton, PJ, Mr Justice Ching, PJ, Mr Justice Mortimer, NPJ and Lord Cooke of Thorndon, NPJ
Date of Hearing: 18 and 19 December 1997
Date of Judgment : 13 January 1998
J U D G M E N T
Chief Justice Li :
1. The plaintiffs are the owners of portions of Lot Nos 2003, 2006 and 2007 R.P. in Demarcation District No. 124 at Hung Shui Kiu in the Yuen Long District of the New Territories ("the land"). Its area is about 1,000 square metres. The 14th defendant and his family have been in occupation for many years.
2. In this action, the plaintiffs seek to recover possession from the 14th defendant. The essential question in this appeal is whether the 14th defendant should now be allowed to pursue a limitation defence.
3. The issues that arise for consideration can only be appreciated after the history of the present proceedings and earlier proceedings for possession taken by the plaintiffs' predecessors-in-title in 1980 have been set out.
The 1980 action
4. On 31 July 1980 the plaintiffs' predecessors-in-title commenced proceedings for possession by originating summons (subsequently ordered to continue as if the proceedings had begun by writ) against the 14th defendant and others ("the 1980 action"). The 14th defendant was in fact the 11th defendant in those proceedings but for convenience will be referred to as the 14th defendant. He was legally represented.
5. The 14th defendant filed an affirmation and a defence and further and better particulars thereof in response to a request. In his defence, he admitted the title to the land of the plaintiffs in that action who are the predecessors-in-title of the present plaintiffs. His case as set out in his affirmation, his defence and further and better particulars was that he had been in possession since about 1957 under a tenancy agreement dated 9 April 1957 for a term 7 years from that date at an annual rent of $325 ("the 7 year tenancy") and the last payment of rent was made on 19 May 1963 to Hop Yick Co. The 14th defendant maintained that he was a statutory tenant protected by Part I or II or V of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7. His defence maintained an alternative defence of limitation based on 20 years' adverse possession. After October 1982, the 1980 action went to sleep.
The 1990 action
6. On 13 May 1990, the plaintiffs commenced the present action for possession by originating summons against the 14th defendant and others ("the 1990 action"). This appeal is an appeal in the 1990 action. The 1980 action had not been discontinued and the defendants therefore challenged the 1990 action on the ground of multiplicity of proceedings.
7. By his judgment on 2 November 1993, Keith J allowed the 1990 action to continue and ordered the proceedings to continue as if they had begun by writ. At the hearing before him, counsel for the plaintiffs indicated that if the 1990 proceedings were permitted to continue, the plaintiffs would give undertakings which would have the practical effect of bringing the 1980 action to an end. This was eventually achieved by a consent order made on 5 July 1994 by Master Jennings in the 1980 action whereby leave was granted to the plaintiffs to discontinue it against the 14th defendant and other defendants, such order of discontinuance to be without prejudice to the defendants' rights in the 1990 action.
8. It should be noted that although the 1980 action went to sleep after October 1982, it was still extant until its discontinuance in the above circumstances after the institution of the 1990 action. It could therefore be said that since July 1980, when the 1980 action commenced, the 14th defendant was on notice that the plaintiffs' predecessors-in-title in that action and then the plaintiffs in the 1990 action were seeking to recover possession from him and maintaining that they were entitled to do so.
9. The 14th defendant was again legally represented in the 1990 action. He took various steps which have a crucial impact on this appeal. Before referring to these steps, I must refer to the decisions at first instance and in the Court of Appeal in the case of Chung Ping Kwan and others v. Lam Island Co. Ltd. ("the Lam Island case") which must have influenced the course which the 14th defendant took in this action. For convenience I set out here the dates and citations of the Lam Island case at each level : Godfrey, JA's decision at first instance on 14 March 1994  1 HKC 613, the decision of the Court of Appeal on 26 October 1994  2 HKC 11 and the decision of the Privy Council on 8 July 1996  AC 38.
The Lam Island case at first instance and in the Court of Appeal
10. The background to this case was this. Until 1959, leases in the New Territories in Hong Kong were normally granted by the government for a term of 75 years from 1 July 1898 (which would expire on 30 June 1973), with the lessee having the right on request to a renewed lease for a further term of 24 years less three days. If the right were exercised, such further term would thus be due to expire on 27 June 1997. In 1969 the contractual option to renew the 75 year leases were superseded by the New Territories (Renewable Crown Leases) Ordinance, Cap. 152. This provided that the right of renewal should be deemed to be exercised and that a new lease for the period of 24 years less three days from 1 July 1973 should be deemed to be granted on that day and would therefore expire on 27 June 1997. The limitation period for actions to recover land was 20 years. (The law has been changed to provide for a 12 year limitation period but such change did not affect the Lam Island case and does not affect the present appeal.)
11. In the early 1990's various owners (the lessees from the government) began to litigate in the courts to recover possession from squatters. By that time, the pressure on the use and development of land in the New Territories was making such land increasingly valuable. The owners contended that the 20 year limitation period only started to run in favour of squatters from 1 July 1973, the commencement of the 24 year renewed term deemed to have been granted under the Ordinance and that the length of time the squatters had been in possession before 1 July 1973 was irrelevant. Thus, on that contention, proceedings commenced before 1 July 1993 would defeat the limitation defence.
12. In March 1994, Godfrey JA sitting at first instance ruled in favour of the owners' contention that time only started to run from 1 July 1973. His decision was upheld by the Court of Appeal in October 1994. The squatters then appealed to the Privy Council.
The steps taken by the 14th defendant in the 1990 action
13. I shall now refer to the steps taken by the 14th defendant which have an important impact on this appeal.
14. In July 1990, he filed an affirmation before Keith J's order that the proceedings be continued as if they had begun by writ. The facts deposed to in his affirmation were consistent with those he had relied on in the 1980 proceedings. He had entered into possession pursuant to the 7 year tenancy. The last payment of rent was in May 1963 when it was paid to Hop Yick Co. Since 1963 no one had requested rent.
15. In December 1990, he filed his defence relying on his possession since about 1957 pursuant to the 7 year tenancy and pleading that he was a protected tenant under Part V of the Landlord and Tenant (Consolidation) Ordinance. He maintained an alternative plea of limitation based on 20 years adverse possession.
16. As observed above, the first instance and the Court of Appeal decisions given in March and October 1994 respectively were in favour of the owners' contention that time only started to run from 1 July 1973. These decisions rendered the 14th defendant's limitation plea untenable. As time could only start to run from 1 July 1973, the plaintiffs were well within the 20 year limitation period when they commenced the present action in 1990.
17. In August 1995, not surprisingly, the plaintiffs applied to strike out the 14th defendant's defence and to enter summary judgment. Faced with this application, the 14th defendant filed in September 1995 an affirmation of his daughter Wong Mo Ching and in December 1995 applied for leave to amend his defence.
18. The daughter's affirmation repeated that after 1963 no one requested rent and added that there was no way to contact the owners and that, at all material times, the 14th defendant was ready willing and able to pay rent to the owners. Mr Erik Shum who appeared for the 14th defendant before us accepted that this affirmation together with the 14th defendant's earlier affirmation established as a matter of fact that since the expiry of the 7 year tenancy in April 1964, the 14th defendant's intention had been that he was willing to pay rent to the owners if they had requested payment and that he was ready and able to do so.
19. The 14th defendant's proposed amended defence sought to delete the plea of protected tenancy under Part V and the alternative limitation plea and sought to introduce the plea of protected tenancy under Part II.
The applications before the judge