Haldanes Secures Landmark Adverse Possession Victory in Chan Chik Lam v Upjet Limited
Introduction
Haldanes successfully represented the Plaintiffs in their claim for adverse possession over multiple lots of land in Tsuen Wan (the “Lots”).
In Chan Chik Lam & Li Hau Lan v Upjet Limited [2026] HKDC 759 (DCCJ 2464/2021), the Plaintiffs’ case is that they have been in exclusive, continuous and uninterrupted possession of the Lots, and that the Defendant’s title to the land had been extinguished based on Sections 7 and 17 of the Limitation Ordinance (Cap 347). The Court found in favour of the Plaintiffs, granting a declaration that the Plaintiffs have acquired possessory title and a declaration that the Defendant’s title had been extinguished and that any right to bring any actions to recover the Lots had been lost.
Background Facts
The Plaintiffs operated a vehicle repair business. Since 1996, the Plaintiffs took exclusive possession of the Lots (a group of contiguous lots separated only by a very small part of Government land) and constructed structures on the Lots (including a house, a gate, covered garages and retaining walls). No rent or fees in relation to usage were ever paid by the Plaintiffs. The Defendant, a company incorporated in Hong Kong, became the paper owner of the Lots in March 2015 by way of an assignment. The Defendant defended the claim for adverse possession and counterclaimed for trespass and mesne profits.
Key Issues
The issues at hand were:
- Whether the Plaintiffs can establish adverse possession of the Lots;
- Whether the Plaintiffs’ claim should be refused on grounds of illegality and/or public policy; and
- If the Plaintiffs’ adverse possession claim fails, whether the Defendant is entitled to its counterclaim for trespass and/or mesne profits.
Applicable Principles
Issue 1: Adverse Possession
The Plaintiffs must establish that they were in adverse possession of the Lots for a continuous period of at least 12 years for the claim to succeed. They must prove both (a) factual possession; and (b) the requisite intention to possess (animus possidendi). The Court adopted the classic statement of principle laid out by Slade J in Powell v McFarlane (1979) 38 P. & C.R. 452 for factual possession, which requires “an appropriate degree of physical control”. Animus possidendi requires the intention “to exclude the world at large, including the owner with the paper title, so far as is reasonably practicable”.
The Court found factual possession by the Plaintiffs. The Lots was developed into a car-repairing depot and used for cultivation. Various structures were built on the Lots, including a gate built in 1999. The depot was expanded across neighbouring lots. Even though some parts of the Lots were unused, the Court stressed that the usage should be considered as a whole. Regarding animus possidendi, the Plaintiffs clearly demonstrated their intention to possess. The gates and retaining wall enclosed the Lots and kept the public out, and they did not pay rent or licence fees.
The claim for adverse possession of the Plaintiffs is therefore established.
Issue 2: Illegality and Public Policy
The Court of Appeal’s decision in Monat Investment Ltd v All Person(s) in Occupation of Part of No 16 Ma Po Tsuen [2023] was adopted, which referred to the UK Supreme Court’s “range of factors” approach in Patel v Mirza [2017] AC 467. The underlying rationale is that it would be contrary to public interest to enforce such a claim.
While the Defendant contended that the structures on the Lots were all unauthorized building works (“UBWs”), there was no evidence of any building order requiring demolition or reinstatement of the UBWs registered against the Lots. The Court emphasised that the law of adverse possession is to protect the interest of a squatter who had been enjoying peaceful possession and to protect the public interest of putting idle land to good use. The original landowner ought to be aware of the occupation. Additionally, there was no evidence suggesting that hazardous chemical waste was generated which affected the natural landscape. The breach of government lease is not criminal and does not engage public policy concerns, and it would be disproportionate to deny the Plaintiffs’ claim for adverse possession.
The argument to refuse the Plaintiffs’ claim on public interest grounds therefore fails.
Issue 3: Counterclaim for Trespass and/or Mesne Profits
The Defendant’s counterclaim subsequently fails as the Plaintiffs have successfully established adverse possession.
Significance of the Case
The court reaffirmed the necessary components of having exclusive possession with the intention to possess as the foundation of establishing a successful adverse possession claim. In J A Pye (Oxford) Ltd and Another v Graham and Another [2002] UKHL 30, [2003] 1 AC 419, the Court held that it was not necessary to harbor the intention of owning the land. A mere intention of possessing the land would be more than sufficient. The Court’s reasoning that the land should be judged as a whole, and not by lot, further exemplifies the necessity to adopt a holistic approach to assess land use comprehensively. Even fragmented use of the land may be collectively treated as a whole, amounting to exclusive possession of the entire land area. This approach focuses more on the substance and genuine effect of occupation rather than geographical land boundaries. Moreover, the breach of a government lease or the building of UBWs does not necessarily negate an adverse possession claim. Instead, the Court would evaluate whether public policy would be infringed if the adverse possession is allowed. Hence, there are restrictions to the scope of illegality as an argument in adverse possession proceedings.
Additionally, land-owners by title and by deed may lose their title to land through potential adverse possession claims. The 12-year limitation period starts to run when the squatter commences adverse possession. Such claims may happen without prior oversight or advance warning, and paper title alone would be insufficient if the landowner neglects, or willingly turns a blind eye to the proper maintenance of his/her/its land. Hence, there is a need for landowners to be vigilant and exercise reasonable caution to stop the limitation period from running in order to safeguard private property rights. Landowners should undertake prompt action and seek legal redress when necessary.
As of the date of this article, the Defendant made an application for leave (i.e. permission) to appeal against the Judgment given on 30 April 2026 and it has been directed by the Court to dispose of the application on papers.
Our relevant practice
Haldanes’ Civil Litigation & Dispute Resolution team excels in contentious probate matters, including the dispute over inheritance. We are recently recognised in the Benchmark Litigation Asia-Pacific Rankings 2026, and officially listed on the joint panel between the Department of Justice (DoJ) and the Hong Kong Trade Development Council (HKTDC) here for the category of “Commercial Litigation & Cross-border Dispute Resolution”.
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