Public Consultation for Reform of the Law on Adverse Possession

135 Pages·2012·2.97 MB·English

THE LAW REFORM COMMISSION OF HONG KONG

ADVERSE POSSESSION SUB-COMMITTEE

CONSULTATION PAPER

ADVERSE POSSESSION

This consultation paper can be found on the Internet at:
<http://www.hkreform.gov.hk>

December 2012
This Consultation Paper has been prepared by the Adverse
Possession Sub-committee of the Law Reform Commission. It
does not represent the final views of either the Sub-committee or
the Law Reform Commission, and is circulated for comment and
discussion only.

The Sub-committee would be grateful for comments on this
Consultation Paper by 15 March 2013. All correspondence
should be addressed to:

The Secretary
The Adverse Possession Sub-committee
The Law Reform Commission
20th Floor, Harcourt House
39 Gloucester Road
Wanchai
Hong Kong

Telephone: [phone]

Fax: [phone]

E-mail: [email protected]

It may be helpful for the Commission and the Sub-committee,
either in discussion with others or in any subsequent report, to be
able to refer to and attribute comments submitted in response to
this Consultation Paper. Any request to treat all or part of a
response in confidence will, of course, be respected, but if no such
request is made, the Commission will assume that the response is
not intended to be confidential.

It is the Commission's usual practice to acknowledge by name in
the final report anyone who responds to a consultation paper. If
you do not wish such an acknowledgment, please say so in your
response.
THE LAW REFORM COMMISSION
OF HONG KONG

ADVERSE POSSESSION SUB-COMMITTEE

CONSULTATION PAPER

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 the Consultation paper 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 13
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
Ireland 50
The decision in Perry v Woodfarm Homes Ltd 51
New Zealand 53
Unregistered land 53
Registered land 53

ii
Chapter Page

4. A related problem – surveying and land 55
boundaries in the New Territories

Background 55
The Land Grant under the Block Crown Lease 56
The problems of the Demarcation District Sheet 59
The problems of New Grant Plans 60
The implications on the prospective registered land 61
title system
Possible solutions to the surveying problems 62
Resurveying of the boundaries 62
Variation by Agreement 63
The right approach 64

5. Land Titles Ordinance (Cap 585) and the policy 65
on adverse possession

Introduction 65
Unregistered and registered land system 65
Land Titles Ordinance (Cap 585) 66
Progress with amendments to Land Titles Ordinance 66
Land boundary problems 66
Land Survey Ordinance (Cap 473) 68
Proposed system of determination of land 68
boundaries under LSO
Rectification and Indemnity Arrangements 69
The future of title registration 72
Policy on adverse possession 73
Summary of this chapter 75

6. Some legal issues relating to adverse possession 76

Introduction 76
Whether an Owners Incorporation can claim adverse possession 76
Whether a co-owner in a multi-storey building can dispossess 78
another co-owner
Whether co-owners in a multi-storey building can claim 79
adverse possession in respect of the common areas
Whether adverse possession can be established by successive 81
squatters
Dispositions by squatter 82
Squatter dispossessed by another squatter 82
Possession abandoned 83
The consequences and applicability to Hong Kong of the decision 84
in Fairweather v St Marylebone Property Co Ltd
Facts 85
iii
Chapter Page

House of Lords' decisions 85
Dissenting judgment 88
Comments on the "Fairweather" decision 88
How did Hong Kong courts receive the "Fairweather" 91
decision?
Liability of squatters and dispossessed owners under 92
Government leases
Liability of an original Government lessee and that of 93
subsequent Government lessees
Liability of an original lessee under the renewed or 96
extended term
Liability of a squatter 97
Anomaly 99
The impact of adverse possession on "Tso" land 99
Summary of this chapter 100

7. Recommendations 101

Introduction 101
Should adverse possession be retained under the existing 102
unregistered land system?
Title to land in Hong Kong is possession based 102
The existing law on adverse possession is consistent 103
with the Basic Law and Human Rights principles
The scenario in Hong Kong 104
Should adverse possession be retained under the prospective 107
registered land system?
Proposed outline of scheme to deal with adverse possession 108
claims under the registered land system
Abolition of the "implied licence" principle 112
The decision in Chan Tin Shi & Others v Li Tin Sung & Others 114
Surveying and Land Boundaries Problems 116
The Common Luck decision 117
The impact of adverse possession on "Tso" land 118
The Fairweather v St Marylebone Property Co Ltd decision 119
Conclusion 121

8. Summary of recommendations 122

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

iv
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 Director
Leung Shou Chun Land
Surveying Consultants Ltd

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

Ms Dorothy Silkstone Assistant Director/Legal
(from October 2011) PARD & NTE (Legal Advisory and
Conveyancing Office)
Lands Department (until April 2012)

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

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

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

Mr Michael Yin Barrister

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

Meetings

3. The Sub-committee commenced the study of its reference in
October 2006 and has held a total of 15 meetings. Views were exchanged
also by correspondence. Former officers in charge of the Sub-committee
were Senior Government Counsel, Mr Byron Leung and Mr Lee Tin Yan, and
Deputy Secretary of Law Reform Commission, Ms Michelle Ainsworth.

Overview of the problem of adverse possession in Hong Kong

4. 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.

5. 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

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.
2
6. 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

7. 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

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

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 (Butterworths), at
Preface. 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,
and entering of partial judgment) are included. The column "Not applicable" includes, for
example, cases in which the paper owner was unable to prove good title and had to rely on
adverse possession to gain a possessory title. So he was both squatter and the paper owner.
Also included are cases in which no final decision on adverse possession was made; for
example, where a retrial was ordered. There was one case in 2010 which it is uncertain from
the judgment whether the land was urban or New Territories. It was assumed to be urban
land. The volume of adverse possession disputes in Hong Kong that reaches the court is not
large. This can be explained in part by the fact that multi-storey buildings are predominant in
Hong Kong, and hence it is generally more difficult for a flat owner to establish adverse
possession against another owner in the building. See also Chapter 6.
3
Urban land New Territories land
in favour in favour
in favour in favour
of the Not of the Not
of the of the
paper applicable paper applicable
squatters squatters
owners owners
2011 4 2 4 5
(15
cases)
2010 2 3 1 5 4 1
(16
cases)
2009 1 3 2 10 2
(18
cases)
2008 2 2 3 8
(15
cases)
2007 3 3 4
(10
cases)
2006 1 2 5 3
(11
cases)
2005 9
(9
cases)
2004 1 4 6
(11
cases)
2003 2 1 2 3
(8
cases)
2002 2 1 4 6
(13
cases)

9. The law on adverse possession also touches upon human rights
issues. In the English case of JA Pye (Oxford) Ltd v Graham,10 the judge
held at first instance, that a squatter had established a possessory title to
Pye's land, but the decision was reversed by the Court of Appeal. The

10 See discussion in Chapter 2.
4