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Report - Adverse Possession PDF

166 Pages·2014·3.94 MB·English
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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: 2528 0472 Fax: 2865 2902 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

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ii Chapter Page 2. Justifications for adverse possession: adverse possession and human rights principles 20 The nature of title to land 20
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