Yu Fung Co Ltd v Olympic City Properties Ltd And Another

Court:Court of Appeal (Hong Kong)
Judgement Number:CACV165/2017
Judgment Date:05 Jun 2018
Neutral Citation:[2018] HKCA 323
CACV165/2017 YU FUNG CO LTD v. OLYMPIC CITY PROPERTIES LTD AND ANOTHER

CACV 165/2017 & CACV 166/2017

(HEARD TOGETHER)

[2018] HKCA 323

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 165 OF 2017

(ON APPEAL FROM HCMP NO 1084 OF 2008)

______________________

BETWEEN
YU FUNG COMPANY LIMITED Plaintiff
and
OLYMPIC CITY PROPERTIES LIMITED 1st Defendant
LAI MING TAK TOMMY ALEXANDER 2nd Defendant
and
CHEUNG CHUI KWAN EVENT Interested Party

______________________

AND

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 166 OF 2017

(ON APPEAL FROM HCA NO 3104 OF 2015)

______________________

BETWEEN
CHEUNG CHUI KWAN EVENT Plaintiff
and
HEBEI INVESTMENT LIMITED 1st Defendant
YU FUNG COMPANY LIMITED 2nd Defendant

______________________

(HEARD TOGETHER)

Before: Hon Poon JA and Hon Lisa Wong J
Date of Hearing: 22 March 2018
Date of Judgment: 5 June 2018

________________

J U D G M E N T

________________

Hon Lisa Wong J (giving the judgment of the Court):

Appeals before court

1. Before the court are the appeals by Yu Fung Company Limited (“Yu Fung”), the plaintiff in HCMP 1084/2008 (“1st Action”) and the 2nd defendant in HCA 3104/2015 (“2nd Action”), against the decisions made by Deputy High Court Judge Keith on 10 March 2017[1]:

(1) in the 1st Action, upon the summons issued by Madam Cheung Chui Kwan Event (“Madam Cheung”) on 6 January 2016 (“Joinder and Stay Summons”), ordering:

(a) Madam Cheung to be joined as a party to the 1st Action (“Joinder Order”);

(b) a stay of execution of the writ of possession issued in the 1st Action on 26 October 2015 (“Writ of Possession”) in respect of Flat D, 20/F, Profit Mansion, 17-29 Fei Fung Street, Kowloon (“Flat”) until Madam Cheung’s claim to possessory title to the Flat by adverse possession made in the 2nd Action has been determined or until further order (“Stay Order”);

(c) on a nisi basis that Yu Fung shall pay Madam Cheung the costs of the Joinder and Stay Summons, to be taxed if not agreed; and

(2) in the 2nd Action, dismissing Yu Fung’s summons dated 26 January 2016 (“Strikeout Summons”) to strike out Madam Cheung’s statement of claim and to dismiss the 2nd Action and ordering on a nisi basis that Yu Fung shall pay Madam Cheung the costs of the Strikeout Summons, to be taxed if not agreed.

2. In place of these orders, Yu Fung contends that:

(1) Madam Cheung’s statement of claim in the 2nd Action should be struck out and the 2nd Action should be dismissed;

(2) alternatively, the 2nd Action and all proceedings therein should be stayed except the enforcement of any costs orders subsisting upon the determination of Yu Fung’s appeal relating to the 2nd Action;

(3) pursuant to the Joinder Order, Madam Cheung should be at liberty to contest or apply to set aside the Writ of Possession in the 1st Action as between her and Yu Fung; and

(4) that Madam Cheung should pay Yu Fung’s costs of these appeals and of the applications below.

Background facts

3. Mr Lai Ming Tak (“Mr Lai”) was the owner of Flat C, 4/F, Wing Cheong Building, 27-29 Fei Fung Street, Kowloon (“Old Flat”). By and pursuant to various instruments signed by Mr Lai and one Full Country Development Limited (“Full Country”) in September and October 1992, Mr Lai gave up and moved out of the Old Flat in return for inter alia a then unspecified unit in the new building to be re-developed by Full Country on inter alia the land on which Wing Cheong Building stood. None of the instruments signed between Mr Lai and Full Country were registered at the Land Registry.

4. Then, in late 1996, Mr Lai was given the keys to the Flat by Full Country. Mr Lai moved into the Flat by the end of June 1997 after renovating the same. Mr Lai was however not assigned the Flat by Full Country.

5. In fact, unknown to Mr Lai, Full Country assigned away the Flat in June 1997. To cut a long story short, the legal title to the Flat eventually ended up in the name of Olympic City Properties Limited (“Olympic”) by an assignment dated 18 September 1997, on which date Olympic also executed a first legal charge over the Flat (“Charge”) in favour of Yu Fung (which is a licensed money lender) to secure the repayment of a loan of HK$2,900,000 (“Loan”) lent by Yu Fung to Olympic to purchase the Flat.

6. In breach of the terms of the Charge, Olympic had assigned the Flat to one Hebei Investment Limited (“HIL”)[2] on 2 January 1998 without Yu Fung’s knowledge or consent.

7. Olympic had defaulted in making repayment of the Loan to Yu Fung since 18 November 1997.

8. On 10 June 2008, Yu Fung commenced the 1st Action against Olympic[3] pursuant to Order 88 of the Rules of the High Court (Cap 4A) (“RHC”) to recover the outstanding principal and interest under the Loan and to enforce the security over the Flat contained in the Charge.

9. A copy of the originating summons in the 1st Action was posted up at the metal gate of the Flat on the same date it was issued. Upon sight of the originating summons, Mr Lai sought legal advice. Upon his ex parte application made on 7 July 2008, Mr Lai was added as the 2nd defendant to the 1st Action on 10 July 2008 on the basis of his claim that he had a prior equitable interest in the Flat to which any purchaser or mortgagee of the Flat would be subject because he had always been in actual occupation of the Flat and they had actual or at least constructive notice of his occupation and interest.

10. By a letter dated 8 April 2010 from Yu Fung’s solicitors to Mr Lai’s solicitors, Yu Fung sought particulars of Mr Lai’s claim that he had been residing at the Flat with his family by asking for the names of the persons who were in possession of the Flat and their relationships with Mr Lai. According to Yu Fung, there was no reply to this letter.

11. On 10 October 2011, Yu Fung issued a notice of appointment (“Appointment Notice”) for the hearing of the originating summons in the 1st Action. Yu Fung first made a claim against Mr Lai as a person claiming to be in possession of the Flat in the Appointment Notice without seeking leave to amend the originating summons.[4]

12. After obtaining the hearing date of 29 November 2011, on 10 October 2011, Yu Fung caused a “Notice to Occupant” addressed to all occupants of the Flat to be posted up at the metal gate of the Flat, urging any occupant of the Flat who intended to oppose or make representations in the 1st Action to apply to be joined as a defendant and to personally appear before the Master on 29 November 2011. This was done pursuant to Order 10, rules 4(2)[5] and 5(1)[6] of the RHC.

13. At the hearing before the Master on 29 November 2011, judgment was entered in favour of Yu Fung against Olympic for the amount of the principal and interest outstanding under the Loan (which stood at HK$8,642,079.74 up to and including 7 October 2011). The proceedings for vacant possession of the Flat as between Yu Fung, Olympic and Mr Lai were directed to continue as if begun by writ.

14. The trial of the claim for possession of the Flat took place before Deputy High Court Judge Simon Leung on 26 and 28 November 2013. Only Yu Fung and Mr Lai appeared and were represented. Olympic took no part.

15. The only case then ran by Mr Lai was that he had been in adverse possession of the Flat since June 1997 so that the limitation period for action for possession of the Flat against him had expired by the time Yu Fung first made a claim against him for possession of the Flat in the Appointment Notice (i.e. in October 2011).

16. Madam Cheung came into the picture as a witness for Mr Lai. For that purpose, she made a witness statement on 31 January 2013, in which she gave as her address an address in Hunghom. According to that witness statement, Madam Cheung started to be Mr Lai’s part-time assistant in his work as a fortune-teller in about 1992. Beginning from early 1997, she supervised the decoration works at, and bought furniture, electrical appliances and curtains etc for, the Flat. She assisted Mr Lai in moving into the Flat after the decoration works completed in around July or August 1997. However, when Madam Cheung testified in court, she claimed to have in fact moved in with Mr Lai at the Flat in 1997, and that she had not disclosed such fact in her witness statement because she was too embarrassed to disclose that they had lived together without being married.

17. By a judgment dated 30 July 2015, Deputy Judge Leung found that Mr Lai was in adverse possession of the Flat since June 1997 when Full Country assigned the Flat without his knowledge to Olympic’s predecessor-in-title, which means that the 12-year limitation period would have expired in June 2009. It is already mentioned above that Yu Fung first made a claim against Mr Lai for possession of the Flat in the Appointment Notice (on 10 October 2011). Notwithstanding that, Yu Fung’s claim for possession against Mr Lai was deemed to have commenced on 10 June 2008 when the originating summons in the 1st Action was issued by virtue of s 35(1)(b) of the Limitation Ordinance (Cap 347) (“LO”). That section applies to relate the relevant limitation period back to the date of commencement of the 1st Action even though Mr Lai was joined as a party subsequently. In other words, Yu Fung’s claim against Mr Lai for possession of the Flat was deemed by s 35(1)(b) to have been commenced before the expiration of the 12-year limitation period had run out. Mr Lai’s limitation defence failed. Judgment was entered in favour of Yu Fung. Mr Lai was required, among other things, to give Yu Fung vacant possession of the Flat within 60 days (“Possession Order”). There was no appeal from that judgment.

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