Adverse possession: the effect of being added as a party after expiry of the limitation period to proceedings begun within the limitation period

In Yu Fung Co Ltd v Olympic City Properties Ltd ([2015] HKEC 1523, CFI) L was party to a ‘Redevelopment Agreement’ with Full Country Development Limited (‘Full Country’). Under the terms of the agreement, and subsequent sale and purchase agreements, L assigned his flat to Full Country in return for a new flat once a redevelopment scheme had been completed. L moved into the new flat in June 1997 but title to the flat was never assigned to him. Around the same time, June 1997, Full Country assigned the title to a third party. Title ultimately came into the hands of Olympic. Olympic borrowed from Yu Fung and Yu Fung had a charge over the flat. Olympic defaulted and Yu Fung brought possession proceedings. L argued that the sale and purchase agreement gave him an equitable title to the property and he was joined as a party to the proceedings.

The claim to an equitable interest in the flat as a result of the sale and purchase agreement failed: the agreement did not specify the flat (or quantify L’s undivided share in the development) ([33] – [34] per Deputy Judge Simon Leung).

L also relied on adverse possession. Possession had originally been with Full Country’s consent and so not adverse. This changed, however, when Full Country assigned the title to the flat. There was no evidence to show that the new owners had consented to L’s possession: the limitation period, therefore, began to run around June 1997. The fact that L believed that he was entitled to be in possession under the terms of the agreement did not stop the limitation period from running if possession and intention to possess were present ([71]). Time begins to run once a purchaser goes into possession pursuant to a sale with the intention of excluding the whole world including the vendor ([72]).

The question was whether the limitation period had expired. Proceedings against Olympic were brought in June 2008. Lai was joined as a party a month later, in July 2008. The claim against Lai was first made in a Notice and affidavit in October 2011. If the relevant proceedings were brought against Lai in June / July 2008, the limitation period would not have expired. If October 2011 was the relevant date then the limitation period had expired by then (twelve years from June 1997). Deputy Judge Simon Leung pointed to section 35(1)(b) of the Limitation Ordinance: new claims (other than third party proceedings) are deemed to have been commenced on the same date as the original action. The addition of a new party is a ‘new claim’ (Limitation Ordinance, s. 35(2)(a)). Thus, the limitation defence failed and Yu Fung was entitled to possession. L should have applied to strike out the 2011 Notice and affidavit on the grounds that they were an abuse of process ([84]). This application would, it seems, rely on section 35(3) of the Limitation Ordinance which prohibits new claims after the expiry of the time limit which would affect a new action to enforce that claim.

Michael Lower

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2 Responses to “Adverse possession: the effect of being added as a party after expiry of the limitation period to proceedings begun within the limitation period”

  1. susie Says:

    So L who appears to have owned his original flat, ‘sells’ to the redevelopment company and ends up with no money and homeless 18 years later. Seems like L got well shafted, or did he get paid for consigning his original flat?

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