Report - Adverse Possession

166 Pages·2014·3.94 MB·English

THE LAW REFORM COMMISSION OF HONG KONG
REPORT
ADVERSE POSSESSION
This report can be found on the Internet at:
<http://www.hkreform.gov.hk>
OCTOBER 2014
The Law Reform Commission of Hong Kong was established by the Executive
Council in January 1980. The Commission considers for reform such
aspects of the law as may be referred to it by the Secretary for Justice or the
Chief Justice of the Court of Final Appeal.

The members of the Commission at present are:

Chairman: The Hon Rimsky Yuen, SC, JP, Secretary for Justice

Members: The Hon Chief Justice Geoffrey Ma, GBM
The Hon Mr Justice Robert Tang Ching, PJ, SBS
Mr Paul Wan How-leung, JP, Law Draftsman
Mr John Budge, SBS, JP (till 31 August 2014)
Mr Peter Rhodes
Professor Michael Wilkinson
Mrs Eleanor Ling, SBS, JP
Ms Angela W Y Lee, BBS, JP
Mr Anderson Chow, SC (till 30 June 2014)
Mr Eugene Fung, SC
Professor Lin Feng
Ms Christine Fang, BBS, JP

The Secretariat to the Commission is at:

20/F Harcourt House
39 Gloucester Road
Wanchai
Hong Kong

Telephone: [phone]
Fax: [phone]
E-mail: [email protected]
Website: http://www.hkreform.gov.hk
THE LAW REFORM COMMISSION
OF HONG KONG

REPORT

ADVERSE POSSESSION
_________________________________

CONTENTS

Chapter Page

Preface 1

Terms of reference 1
The Sub-committee 1
Meetings 2
Overview of the problem of adverse possession in Hong Kong 2
Format of this report 5

1. The existing law on adverse possession 6

The relevant law 6
Limitation Ordinance (Cap 347) 6
Possession 8
Proving adverse possession 9
Factual possession 9
Animus possidendi (intention to possess) 12
Effect of adverse possession 12
Nature of the title acquired by a squatter by way of 13
adverse possession
Adverse possession considered in the Court of 13
Final Appeal
Adverse possession considered by the House of Lords 14
in JA Pye (Oxford) Ltd v Graham
JA Pye (Oxford) Ltd v Graham – the facts 14
The court decisions 15
Encroachment 15
Divergence between Hong Kong and English Law 16
Wong Tak Yue 16
Common Luck 16
i
Chapter Page

2. Justifications for adverse possession: adverse 20
possession and human rights principles

The nature of title to land 20
Justifications for the concept 21
First justification: To protect against stale claims 22
Second justification: To avoid land becoming 22
undeveloped and neglected
Third justification: To prevent hardship in cases of mistake 22
Counter arguments 23
Fourth justification: To facilitate conveyancing in 23
unregistered land
Judicial comment regarding justifications for adverse possession 26
Supporting comments 26
Critical comments 26
Human rights and adverse possession 27
European Court of Human Rights 28
The joint dissenting opinion 30
Adverse possession and registered title 31
Basic Law implications 33
Summary of this chapter 36

3. Relevant law in other jurisdictions 37

Australia 37
Unregistered land 37
Registered land 37
Canada 40
Unregistered land 41
Registered land 41
England and Wales 42
Unregistered land 43
Registered land 43
Leasehold matters 47
Transition 47
Baxter v Mannion 48
Parshall v Hackney 49
Criminal offence of squatting in a residential building 50
Elements of the offence – points to prove 51
Penalties 53
Relationship to other offences 53
How does the offence affect "squatters' rights"? 54
The offence of squatting and the rule on 55
adverse possession
Ireland 55
The decision in Perry v Woodfarm Homes Ltd 56
New Zealand 58
ii
Chapter Page

Unregistered land 58
Registered land 58

4. A related problem – surveying and land 61
boundaries in the New Territories

Background 61
The Land Grant under the Block Crown Lease 62
The problems of the Demarcation District Sheet 65
The problems of New Grant Plans 66
The implications on the prospective registered land 67
title system
Possible solutions to the surveying problems 68
Resurveying of the boundaries 68
Variation by Agreement 69
The right approach 70

5. Land Titles Ordinance (Cap 585) and the policy 71
on adverse possession

Introduction 71
Unregistered and registered land system 71
Land Titles Ordinance (Cap 585) 72
Progress with amendments to Land Titles Ordinance 72
Land boundary problems 73
Land Survey Ordinance (Cap 473) 74
Proposed system of determination of land 74
boundaries under LSO
Rectification and Indemnity Arrangements 75
The future of title registration 78
Policy on adverse possession 79
Summary of this chapter 82

6. Some legal issues relating to adverse possession 83

Introduction 83
Whether an Owners Incorporation can claim adverse possession 83
Whether a co-owner in a multi-storey building can dispossess 85
another co-owner
Whether co-owners in a multi-storey building can claim 86
adverse possession in respect of the common areas
Whether adverse possession can be established by successive 88
squatters
Dispositions by squatter 89
Squatter dispossessed by another squatter 89
iii
Chapter Page

Possession abandoned 90
The consequences and applicability to Hong Kong of the decision 91
in Fairweather v St Marylebone Property Co Ltd
Facts 92
House of Lords' decisions 92
Dissenting judgment 95
Comments on the "Fairweather" decision 95
How did Hong Kong courts receive the "Fairweather" 98
decision?
Liability of squatters and dispossessed owners under 99
Government leases
Liability of an original Government lessee and that of 100
subsequent Government lessees
Liability of an original lessee under the renewed or 103
extended term
Liability of a squatter 104
Anomaly 106
The impact of adverse possession on "Tso" land 106
Summary of this chapter 107

7. Proposals for reform 108

The Sub-committee's consultation paper 108
The consultation exercise 110
Should adverse possession be retained under the existing 110
unregistered title system?
Responses 110
Our views 111
The scenario in Hong Kong 112
Should adverse possession be retained under the prospective 117
registered land system?
Consultees' responses and our views 118
Proposed outline of scheme to deal with adverse possession 118
claims under the registered land system
Consultees' responses 121
Our views 126
Abolition of the "implied licence" principle 127
Consultees' views and our views 129
The decision in Chan Tin Shi & Others v Li Tin Sung & Others 130
Consultees' views 132
Our views 132
Surveying and Land Boundaries Problems 133
Consultees' views and our views 133
The Common Luck decision 135
Consultees' views and our views 136
The impact of adverse possession on "Tso" land 136
Consultees' views and our views 137
iv
Chapter Page

The Wong Tak Yue v Kung Kwok Wai David decision 138
Consideration of the UK offence of squatting in a 139
residential building
Secretary for Justice v Chau Ka Chik Tso (2011) 14 HKCFAR 889 140
The Fairweather v St Marylebone Property Co Ltd decision 145
Conclusion 146

8. Summary of recommendations 147

Appendix

Responses to Consultation Paper on Adverse Possession 151

Annex 1
Annex 2
Annex 3a
Annex 3b
Annex 4

v
Preface

__________

Terms of reference

1. In August 2006, the Secretary for Justice and the Chief Justice
made the following reference to the Law Reform Commission:

"To review the existing rule of adverse possession in Hong Kong
and to make such recommendations for reform as the
Commission considers appropriate."

The Sub-committee

2. The Sub-committee on Adverse Possession was appointed in
September 2006 to consider the above terms of reference and to make
proposals to the Commission for reform. The members of the Sub-committee
are:

Mr Edward Chan, SC Senior Counsel
(Chairman)

Ms Wendy Chow Partner
(until January 2010) Slaughter and May

Dr Patrick Hase Historian

Professor Leung Shou Chun Managing Director
Leung Shou Chun Land
Surveying Consultants Ltd

Mr Louis Loong Secretary General
The Real Estate Developers
Association of Hong Kong

Ms Dorothy Silkstone Assistant Director/Legal
(from October 2011 to PARD & NTE (Legal Advisory and
March 2013) Conveyancing Office)
Lands Department

Professor Michael Wilkinson Department of Professional
Legal Education
University of Hong Kong

1
Mr David P H Wong Partner
Wong, Hui & Co, Solicitors

Ms Teresa Wong Deputy Director/Legal
(until June 2011) Lands Department

Mr Michael Yin Barrister

Ms Polly Yip Assistant Director/Legal
(from March 2013) Lands Department

Ms Cathy Wan Senior Government Counsel
(Secretary from June 2010) Law Reform Commission

Meetings

3. The reference has been considered by the Sub-committee and
the Commission over a course of 20 meetings. Views were exchanged also
by correspondence. Former officers in charge of the project were Senior
Government Counsel, Mr Byron Leung and Mr Lee Tin Yan, and the then
Deputy Secretary of Law Reform Commission, Ms Michelle Ainsworth.

4. The consultation exercise commenced on 10 December 2012
and a press conference was held whereby the tentative recommendations
were explained to the media and the public. Over 110 organisations and
individuals had kindly provided us with their views with useful information.
We wish to thank these organisations and individuals for taking their precious
time to contribute to law reform work. A list of the organisations and
individuals who responded to the consultation is attached in the Appendix of
this report.

5. Members of the Sub-committee attended the Legislative
Council's Administration of Justice and Legal Services Panel meeting on
26 February 2013, as well as a number of media programmes and interviews.
The views and information gathered during those occasions have been useful
in the formulation of the final recommendations.

Overview of the problem of adverse possession in Hong Kong

6. Adverse possession is the process by which a person can
acquire title to someone else's land by continuously occupying it in a way
inconsistent with the right of its owner. If the person in adverse possession
(also referred to as a "squatter") continues to occupy the land, and the owner
does not exercise his right to recover it by the end of a prescribed period, the
owner's remedy as well as his title to the land are extinguished and the
squatter becomes the new owner. The squatter's new possessory title
cannot normally exceed, in extent or duration, that of the former owner.

2
7. As pointed out by the English Law Commission,1 the "ability of a
squatter to acquire title by adverse possession is a sensitive issue, and is,
from time to time, the subject of hostile public criticism."2 The public's
general impression of adverse possession is that of an aggressive squatter
whose wrongful possession is eventually validated by the passage of time.
However, adverse possession is applicable to other situations. The more
typical case in practice (at least in the United Kingdom) is the landowner who
encroaches on a neighbour's land.3 Adverse possession can be invoked
also to resolve a defect in title caused by failure to execute a formal
conveyance.4

8. The English Law Commission has stated that in England,
"adverse possession is also very common".5 It was reported during the
passage of the Land Registration Bill 2002 through Parliament that:

"Each year the Land Registry receives over 20,000 applications
for registration based in whole or in part on adverse possession.
In about three-quarters – 15,000 – of those cases, the applicant
is successful in supplanting the previous owner. Many cases
are disputed and are the subject of court proceedings or
hearings before the Solicitor to the Land Registry or one of his
deputies. Around three-quarters of Land Registry hearings
involve squatting, and in around 60 per cent of cases, the
squatter succeeds in whole or in part."6

9. Locally, an article has stated that the law on adverse possession
is difficult, full of vagaries, can be enormously profitable, and very topical.7
Cases on adverse possession have reached the Court of Final Appeal on a
number of occasions, and some of these cases will be discussed in detail in
this paper. We will also discuss how the case law on adverse possession in
Hong Kong differs from that in England, as well as the assistance found in
authorities from other jurisdictions. We will also consider problems with the
existing case law in this area.8

10. The statistics shown in the table below is a rough indication of
the volume of adverse possession disputes in Hong Kong.9

1 English Law Commission, Land Registration for the Twenty-first Century: A Consultative
Document (Sep 1998, Law Com No 254, Cm 4027).
2 Same as above, at para 2.44.
3 English Law Commission, Land Registration Bill and Commentary (2001, Law Com No 271), at
para 2.70.
4 Bridges v Mees [1957] Ch 475.
5 English Law Commission, "Land Registration Bill and Commentary" 2001, Law Com No 271, at
para 2.70.
6 Baroness Scotland of Asthal, quoted by S Jourdan, Adverse Possession (Bloomsbury, 2nd ed,
2011), at 'Preface to the first edition'. This referred to the position before the change from an
un-registered title system to a registered title system.
7 Frederick HF Chan, "Adverse Possession: Recent Twists and Turns", Hong Kong Lawyer,
Oct 2006.
8 See Chapters 5 and 6 of this paper.
9 The search was conducted in the "All Hong Kong cases" library of www.lexisnexis.com for the
relevant period. For cases which were heard by more than one level of court, for example in
the Court of First Instance and then by the Court of Appeal, these are counted as two decisions.
Decisions made in Chambers (eg. Application for summary judgment, striking out of defence,
3