CHINA FIELD LTD v. APPEAL TRIBUNAL (BUILDINGS)

CACV 299/2007 AND CACV 300/2007

CACV 299/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 299 OF 2007

(ON APPEAL FROM HCAL NO. 2 OF 2007)

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(Heard together)

 

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REASONS FOR JUDGMENT

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Hon Le Pichon JA:

1.  This is an appeal from a judgment of Saunders J dated 31 July 2007 dismissing two applications for judicial review concerning a residential area known as Wang Fung Terrace, Tai Hang.  China Field wishes to redevelop Nos. 11 & 12 and Sun Honest wishes to redevelop Nos. 4 & 4A-D.  At the conclusion of the hearing the appeal was dismissed with written reasons to be handed down which we now do.

Background

2.  “Wang Fung Terrace” is an elevated and finger-shaped promontory of land lying in a north-south direction.  Access is gained from Tai Hang Road which runs along its western side.  To reach it when travelling south along Tai Hang Road, a very sharp turn left into Wang Fung Road has to be made.  That road is steep and narrow and runs in a northerly direction, virtually doubling back along the same stretch of Tai Hang Road but at a higher elevation.  The comparatively short section of the road from the junction of Tai Hang Road up to the midpoint of the 180º hairpin bend (“the lower section”) is on Government land but over which the owners of Wang Fung Terrace have a right of way and who being successors-in-title of the original purchaser of the whole of Wang Fung Terrace have an obligation to uphold, maintain and repair the same.  From that midpoint, the road doubles back and runs in a southerly direction along the western side of the promontory until it reaches the northwestern corner of No. 11 (“the upper section”) where it terminates.

3.  The entire parcel of land on the promontory including the upper section was granted to Choa Man Cho in 1932.  Subsequently, the land was subdivided and sold off to different purchasers at different times.  Lowrise residential buildings came to be erected on the different subdivided lots and, for convenience, the entire area so developed will be referred to as “Wang Fung Terrace”.  Prior to 1998, none was more than five storeys high.

4.  It is not entirely clear from the title deeds if the upper section belongs to the owners of all the buildings on Wang Fung Terrace since they use Wang Fung Road for access purposes or to the owners of such of the buildings that have a frontage on Wang Fung Road only (as leading counsel for the appellants stated in response to the court’s query).  It would be somewhat surprising if the persons responsible for maintaining both the upper and lower sections were not the same.  Be that as it may, that is not a matter that is material in the present appeals.  The entire road (leading from No. 11 to the junction with Tai Hang Road) is described on the plans as Wang Fung Road and will be so referred to in this judgment.

5.  Save for No. 1 (part of which has a frontage on Wang Fung Road) which occupies the whole of the northern portion of Wang Fung Terrace,there is a row buildings (including Nos. 4 and 11) facing west, having a frontage on and/or abutting Wang Fung Road.  There is another row of buildings facing east behind those having a frontage on Wang Fung Road, access to which is through various access ways lying at right angles to Wang Fung Road and between buildings fronting Wang Fung Road.

6.  Nos. 2 and 4 are adjacent properties having a frontage on Wang Fung Road.  Immediately behind them and facing east also adjacent to each other are Nos. 3-3E and 4A-4D.  A lane, 18 feet wide, lying at right angles to Wang Fung Road extends from Wang Fung Road through to the eastern perimeter, serving to separate No. 2 from No. 4 and No. 3-3E from No. 4A-4D and providing the rear properties with access to and from Wang Fung Road.  Sun Honest owns one half of the lane that separates No. 4 from No. 2 and the owner of No. 2 owns the other half.  The two halves separating No. 4 from No. 2 have been referred to by the Building Authority throughout as “gridline 1” and “gridline 2” respectively and the same expressions will be used in this judgment.

7.  Sun Honest not only owns No. 4 but also No. 4A-4D which together form an L-shaped plot.  It proposes to construct a new 40 storey building on this plot.

8.  Nos. 11 and 12 are contiguous properties and together extend across the whole width (in an east-west direction) of Wang Fung Terrace at its southernmost end.  China Field, the owner, wishes to construct two new 39 storey buildings on the composite site.  Wang Fung Road terminates at the northwestern corner of No. 11.

9.  The proposed redevelopments would increase the number of flats on those two sites from 43 to 231 and would increase the number of flats on Wang Fung Terrace by 188 when, currently, it only has 214 flats.  That represents an increase of almost 88% in the number of flats.  There will also be an additional 82 car parking spaces.

10.  As noted earlier, apart from No. 6, all the buildings currently on Wang Fung Terrace are lowrise residential buildings.  In 1998, approval was obtained for the construction of the 16 storey residential building at No. 6 subject to an undertaking on the part of the developer to participate in the implementation of a future comprehensive improvement scheme to upgrade Wang Fung Road and to contribute its share (to be agreed) of the costs in improving Wang Fung Road.  That redevelopment increased the number of flats from 3 to 12, a net increase of only 9 flats bringing the total from 205 to the current number of 214 flats.

11.  In November 2001, the Building Authority disapproved the present applications on a number of grounds.  The appeals to the Appeal Tribunal (Buildings) (“the Tribunal”) were dismissed on 29 November 2006.  For present purposes, it is unnecessary to go into the reasons why it took the Tribunal five years to determine the appeals.  The appellants obtained leave to bring judicial review applications which were heard in May 2007.  The present appeals are from the orders of the judge dismissing those applications.

These appeals

12.  Three substantive issues arise from the two appeals relating to:

(1)    the Tai Hang Road access;

(2)    the duty to act consistently; and

(3)    the right of way.

The first two issues arise in both appeals.  The third issue only arises in Sun Honest’s appeal.

The Tai Hang Road access

13.  One of the grounds on which the Buildings Authority disapproved the applications was under section 16(1)(h) of the Buildings Ordinance which reads:

“16. Grounds on which approval or consent may be refused

  (1)    The Building Authority may refuse to give his approval of any plans of building works where-

…

(h)    the building works consist of, or any part thereof involves, the construction, formation or laying out of any means of access or other opening, not being a street or access road, to or from any street, and the place at or manner in which such means of access or other opening opens on to the street is, in his opinion, such as to be dangerous or likely to be dangerous or prejudicial to the safety or convenience of traffic using the street, or which may be expected to use the same;”

Section 2 of the Ordinance defined “street” as including

“the whole or any part of any …alley, lane, road …or passage whether a thoroughfare or not”

and “access road” as meaning

“a road on land held under lease, licence or otherwise from the Government or on land over which the Government has granted a right of way, providing access only to buildings used or intended to be used wholly or mainly for purposes of habitation, and which is not a street.”

14.  It is common ground that Wang Fung Road is a “street” for the purposes of the Buildings Ordinance.  Before considering the meaning of section 16(1)(h), Wang Fung Road needs to be described in greater detail.  The Tribunal found (at § 41 of its decision) Wang Fung Road to be an unsatisfactory road in that it does not comply with the requirements of the Building (Private Streets and Access Road) Regulations: it is narrow, it has no footpath for pedestrians, it has a hairpin bend (which has poor visibility) that is too narrow for cars travelling in opposite directions to navigate simultaneously, there is inadequate turning space at the top end and its junction with Tai Hang Road has numerous problems, not least because that junction is at an acute angle with Tai Hang Road so that when travelling south on Tai Hang Road, all but the smallest cars will need to do a three-point turn in order to access Wang Fung Road.

15.  The Tribunal accepted the evidence of the expert that the junction “was currently “very dangerous” to traffic”.  As recorded in § 30 of the judgment, that finding was not in issue below.  The Tribunal considered that the dangerous situation would be exacerbated by the significant increase in traffic that would use that intersection if the proposed developments were allowed.

16.  Mr McDonnell QC who appeared for the appellants submitted that on the facts of the present case, the relevant ‘street’ for the purposes of section 16(1)(h) is Wang Fung Road.  In China Field’s case, it was submitted that the immediate point of vehicular access would be at the ‘dead’ end of Wang Fung Road and there was no evidence that that point presented any danger to traffic.

17.  The same argument was adopted for Sun Honest on the basis that the vehicular access or opening would be at the point where gridline 1 meets Wang Fung Road.  In addition, Mr McDonnell made two discrete points on behalf of Sun Honest which are considered in §§ 24-26 below.

18.  Circumwealth Co Ltd v Attorney General [1993] 2 HKLR 193 is the only reported decision on the construction of section 16(1)(h).  That case concerned a proposed 32 storey residential building with 48 car parking spaces at 31-33 Kennedy Road.  The plans provided for a “run in/run out” from the proposed building onto a right of way (“the point of access”) over the northern part of the applicant’s land.  The right of way was a “street” for the purposes of section 16(1)(h).  It continued down to join Kennedy Road to the south but almost immediately after leaving the applicant’s land it narrowed considerably and was joined by another right of way coming from the east which served as the exit ramp of a large residential complex.  The main problems which arose included physical circumstances which were some distance from the point of access, namely at the junction of Kennedy Road and the right of way.

19.  Mayo J held (at 196 l.40 – 197 l.10) that the subsection requires that (1) regard to be had to the safety and convenience of traffic “using the street” and not simply in the immediate vicinity of the point of access; (2) over and above that the Building Authority had to consider how “traffic using the street or are expected to use the street” would be affected by the “place” or “ manner” of the “point of access to the street”; and (3) “traffic conditions” at the point of access to the street cannot be considered in a vacuum and required that the sort of use which is likely to be made of the “street” be borne in mind.  Mayo J held that since the concerns of the Highways and Transport Departments had been to an area “sufficiently proximate” to the “place” of “access”, they were within the scope of matters properly canvassed by section 16(1)(h).  As noted earlier, the area of concern was not only the right of way itself but also the junction of the right of way and Kennedy Road.

20.  What Circumwealth establishes is that what may legitimately be considered under section 16(1)(h) is not confined to the immediate vicinity of the point of access.  It is legitimate to consider the “safety or convenience” of traffic using or maybe expected to use the “street”.  While in the present case the “street” is of some length, it does not alter the fact that it constitutes the sole means of access for Wang Fung Terrace and its inhabitants connecting it with the public road system and hence with the outside world.  All who live on Wang Fung Terrace and their visitors may be expected to use the street.

21.  The appellants placed much emphasis on the fact that in Circumwealth the combined area from the point of access to the junction of Kennedy Road was very small, being no more than 21 m in length: the point of access up to the applicant’s boundary was 11 m while the eastern part of the right of way that all street leading to Kennedy Road was only about 10 m long.  It was emphasised that in the present case, the point at which gridline 1 meets Wang Fung Road down to the Tai Hang Road junction measures 205 m and from No. 11, approximately 300 m.  It was submitted that Mayo J used the word “proximate” in the “spatial” sense and not, as the judge had interpreted it, as having a causative effect.  Accordingly, it was submitted that there was no justification, and it was not permissible for any regard to be had to the dangers that exist at the junction with Tai Hang Road.

22.  Mr Mok who appeared for the Building Authority submitted that the subsection in question appears to be directed at preventing danger or prejudice to “the safety or convenience of traffic using ... or may be expected to use” the “street”.  As Circumwealth made clear, it is not to be confined to the immediate vicinity of the points of access to the “street”.  It was further submitted that uncontrolled points of access releasing/attracting unregulated and unacceptable additional traffic from and to the proposed redevelopments would undoubtedly exacerbate the traffic hazard that already exists at the junction of Wang Fung Road and Tai Hang Road and so long as the traffic hazard occurs at a part of the “street” sufficiently proximate to the points of access, it comes within the ambit of the subsection.

23.  The subsection plainly has to be given a purposive construction.  In my view, in any particular case, what would be “sufficiently proximate” cannot be decided in the abstract and, plainly, cannot be decided by reference to distance alone for that would be entirely arbitrary.  It must depend on the actual situation on the ground.  Since the topography and layout of sites, how they are accessed, how they are linked to the public road system and the physical characteristics of the street itself vary from case to case, generalisations can be of no assistance.  Nor in my view is there a universal test for what would qualify as “sufficiently proximate”.  Each case must be considered in the context of its own facts and regard be had to any characteristics and circumstances peculiar to it.  A common sense approach has to be adopted bearing in mind the purpose the subsection was designed to achieve.  Adopting that approach and having regard to all the circumstances, I am of the view that the judge was quite right in not interfering with the Tribunal’s holding.

24.  Apart from the submissions advanced for the appellants, Mr McDonnell made the following additional submissions on behalf of Sun Honest.  His primary position was that the immediate point of vehicular access was at what he referred to as the “run in/run out” point of the proposed redevelopment of No. 4 which, according to the plans, is situated some distance away from the point where gridline 1 meets Wang Fung Road.  It was said that the “run in/run out” point is along gridline 1 itself, that gridline 1 is a ‘street’ for the purposes of section 16(1)(h), and that there was no evidence that there was any danger there.  The fallback position was that if gridline 1 is not a ‘street’, then section 16(1)(h) would have no application at all.

25.  Mr McDonnell had initially explained that the “run-in/run out” of the redevelopment would be contained entirely within the site and along its northern boundary, that the width of the “run-in/run out” would be 18 feet, the opening would be situated at a point between No. 4 and No. 4A just beyond what is shown coloured red on the plan as gridline 1.  At the close of the hearing, the court was informed that the 18 feet was a reference to the entire width of the lane separating Nos. 2 and 4.  In other words, each of gridline 1 and gridline 2 is 9 feet wide.  In this scenario, incoming traffic would use gridline 2 that belongs to No. 2 before making a right turn into the proposed redevelopment whereas outgoing traffic emerging from the proposed redevelopment would access Wang Fung Road by using gridline 1 which will remain unenclosed but which is situated wholly within Sun Honest’s boundary.

26.  Mr McDonnell’s contention comes to this: section 16(1)(h) does not permit regard to be had to traffic conditions anywhere other than at the point of access facing the “run in/will run out” of the proposed building and in the case of Nos. 4, 4A-4D, that point of access is on the existing small access lane constituted by gridlines 1 and 2.  It was therefore wrong for the Tribunal to have had regard to Wang Fung Road, much less its junction with Tai Hang Road.  I disagree.  I do not consider that it makes any difference to the matters to which it is permissible to have regard under section 16(1)(h) whether the opening of the proposed building is on to the existing small access lane or on to Wang Fung Road itself.  Given the position of the site in question in relation to Wang Fung Road, it would be absurd to suggest that the Building Authority could invoke the subsection if the plans happened to provide for the opening of the proposed building to be directly on to Wang Fung Road but not if they happened to provide for the opening to be on to the small side lane when all the traffic from the side lane has of necessity to use Wang Fung Road for access to the outside world.  If I am right on how the subsection is to be construed, these additional points can be of no assistance to Sun Honest.

The duty to act consistently

27.  In 1998, 3 years prior to the applications leading to the present appeals, approval was given for the redevelopment of No. 6, details of which appear in § 10 above.  The condition imposing an undertaking referred to in that paragraph was given in substitution for a condition that had required the owners to carry out street works to Wang Fung Road so that it would comply with the requirements of the Building (Private Streets and Access Road) Regulations.  Because of the difficulty in fulfilling that condition, that being dependent on the co-operation of the other owners, the owner of No. 6 apparently successfully made representations to the Building Authority to alter the condition.  It was in those circumstances that the condition imposing the undertaking currently in place was allowed to be given instead.  The minutes of 23 July 1998 of the Building Authority Conference recorded that the District Land Officer should be advised so that he could act in concert with the Buildings Department for the achievement of the street improvements and that the principle established in that case should be used as a basis in dealing with similar situations where improvement of an existing access road which served a number of lots was required.

28.  In essence, the appellants’ complaint is that the Building Authority was under a duty to act consistently and impose a condition similar to the one for No. 6 but had failed to do so.  It was said that although the Building Authority had been reminded of what had been done regarding No. 6, the minutes dated 24 October 2001 of the Building Authority Conference do not record (1) any discussion of the duty to act consistently or of the intention to use the principle adopted for No. 6 as a basis for dealing with similar situations, (2) valid reasons for not applying the same principle when dealing with the applications by Sun Honest and China Field, and (3) any reference to the earlier decision on the access road point or any explanation as to why the Authority had not followed it in either of its decision letters.

29.  Any suggestion that the proposed redevelopments are in substance no different from the redevelopment of No. 6 is simply wrong.  The facts show otherwise.  The sheer magnitude and scale of the proposed redevelopments render them materially different: the proposed redevelopments would increase the number of flats on Wang Fung Terrace by 88% whereas the redevelopment of No. 6 brought about a very modest increase of only 4%.  Road usage by additional traffic that may be expected under the two scenarios just does not bear comparison.  Further, the duty to act consistently does not mean that an administrative body cannot depart from or refuse to follow an earlier decision that experience has shown to be unworkable and demonstrably wrong.

30.  The crux of the Tribunal’s decision appears in § 50 of its decision:

“… By a majority, we do not think that the desirability of the Government acting consistently extends to requiring the BA to repeat a past mistake.  Although it may have appeared, in 1998, that imposing a “future improvement” requirement on future redevelopers would ultimately lead to an improvement in WF Street, the present appeals have shown that expectation was perhaps overly optimistic – if the appeals are allowed, only 5 of the 17 buildings in WF Street will have been redeveloped over the past 40 years or more (Nos. 4, 4A-D, 11 and 12 presently being separate buildings).  Neither party suggested how many further redevelopments would be necessary before the “future improvement” condition would lead to an actual improvement in WF Street.  Obviously, the timing of any such future improvement is therefore unknown.  In the view of the majority, it would be quite unsatisfactory for there to be a substantial increase in the traffic using WF Street, in its present form, for an indefinite period.”

31.  Although the judge largely echoed that view in §§ 92-93 of his judgment, he has been criticised for taking into account of the draft Outline Zoning Plan gazetted on 23 November 2001 which occurred after the date of the applications and under which the proposed redevelopments would not be allowed.  I agree that the draft OZP should not have been taken into consideration and in that respect the judge erred.  Nevertheless it is clear that that was not an element that had been formed any part the decision of the Tribunal.  For my part, I consider the Tribunal’s reasoning unassailable.

32.  First and foremost is the acknowledgment that the earlier decision was a “mistake”.  While the Tribunal referred to a 40-year rather than a 3-year time frame for the redevelopment of 5 of the 17 buildings, it is evident that the applications in question drove home the fact that the principle established for No. 6 was entirely and undeniably ‘open-ended’, the timing of the future improvement being completely ‘at large’.  If, meanwhile, redevelopments of the remaining buildings were to be allowed, blindly following the approach adopted for No. 6, that would result in an unacceptable exacerbation of the traffic hazard at the junction.  The size and scale of the proposed redevelopments unquestionably brought about the realization that the principle established for No. 6 was misguided and an aberration.  Once the Tribunal formed the view that the previous decision was wrong, its decision not to repeat and so compound the “past mistake” could not be said to be wrong or irrational.  The judge was therefore perfectly entitled not to interfere with that decision.

33.  Mr McDonnell then drew attention to special condition 9 of the conditions of sale when Mr Choa purchased Wang Fung Terrace in 1932.  It imposed on the purchaser an obligation not only to construct the lower section of Wang Fung Road but also to uphold, maintain and repair it.  It further provided that:

“Any alteration of the Government road to which the said rights-of-way are given absorbing a portion of such pieces of ground or affecting the gradient thereof shall not give rise to any claim by the Purchaser who should carry out all consequent alterations to such roads or paths constructed by him.”

It was said that this covenant bound all his successors-in-title so that the owners of all the buildings on the Terrace are responsible for the construction, maintenance and alteration of the lower section and that that includes the junction with Tai Hang Road.  As I understand it, the submission was that on a proper analysis of the title deeds, even if the principle established for No. 6 were unsatisfactory, it was within Government’s power to require the owners of buildings on the Terrace to carry out such alterations as may be necessary to render the junction safe.

34.  Whether or not the provision has the effect contended for by the appellants does not arise for determination in these appeals.  Suffice it to say that I do not consider the construction of the provision entirely straightforward.  Be that as it may, I do not see how it can assist the appellants’ case short of there being an obligation on the part of Government to invoke the powers contained in the provision in question.  It was not the appellants’ case that there was any such obligation and I can see none.

35.  Further, as Mr Mok pointed out, under the relevant statutory provisions, the Building Authority had 60 days to respond or else the submissions would be deemed to have been approved.  The submissions did not address the traffic hazard at the junction at all.  It did not contain any proposals directed at eliminating or ameliorating the traffic hazard.  In those circumstances neither the Building Authority nor the Tribunal could be criticised for refusing to adhere to an earlier decision that is palpably wrong.

The right of way

36.  This issue arose in the following circumstances.  One of the grounds on which approval of Sun Honest’s application was refused was that its plans had exceeded the permissible plot ratio.  Whether or not the plot ratio was exceeded depended on whether the area designated as gridline 1 formed part of the site.  Under the relevant regulations, a street or service lane was to be left out of account if it was subject to a public or private right of way.  So the issue was whether gridline 1 was subject to a right of way.  The Tribunalfound, inter alia, that the residents of No. 3 had used gridlines 1 and 2 for access to and from Wang Fung Road over 20 years and had thus acquired a legal right of way under the common law doctrine known as “lost modern grant”.  Accordingly, the area designated as gridline 1 could not be included for the purposes of calculating the plot ratio.

37.  The judge following the decision of Reyes J in Kong Sau Ching v Kong Pak Yan [2004] 1 HKC 119 agreed with the Building Authority and the Tribunal that in Hong Kong a leaseholder can obtain a right of way by prescription against another leaseholder.  This court reached a similar conclusion in the recent decision of Chan Tin Yau v Tsang Kwok Hay, unreported, CACV 72 of 2007, 6 June 2008, adopting the reasoning in the earlier decision (also of this court) in Chung Yeung Hung v Law Man Nga [1997] 1 HKLRD 1022.

38.  Mr McDonnell submitted that the judge erred in reaching that conclusion and invited this court not to follow Chan Tin Yau on the basis that it is “plainly wrong”.  In summary, his submissions were as follows: (1) under English law the common law doctrine of lost modern grant is not available as between leaseholders of a common freeholder; (2) Hong Kong case law for over a hundred years prior to the decision of this court in Chung Yeung Hung was to the same effect; (3) the recent line of cases in Hong Kong to the contrary, including decisions of this court, is based on an erroneous view as to the meaning and effect of the Application of English Law Ordinance, Cap. 88 (the “AELO”) and the Supreme Court Ordinances which had preceded it.

39.  In outline, under English law there are three methods for acquiring prescriptive rights.  Under the common law it has to be shown that user had been from “time immemorial”, determined by statute to be the year 1189.  Given the difficulties of showing continuous user, a judge-made fiction evolved known as the doctrine of lost modern grant.  Under this doctrine (which is a common law doctrine), the court will presume that the user has continued since 1189 if the user as of right for 20 years or more is shown.  Finally, prescription may be acquired pursuant to statute.  For present purposes, it is the Prescription Act 1832 that is relevant.  Under sections 1 and 2, an easement enjoyed for 20 years as of right and without interruption cannot be defeated by proof that user began after 1189 and an easement enjoyed for 40 years as of right and without interruption is deemed “absolute and indefeasible” unless enjoyed by written consent.  Special rules apply for the easement of light and dealt with in section 3.  Under section 4, all periods of enjoyment under the Act are those periods ‘next before some suit or action’ in which the claim is brought into question.

The English position

40.  The position under English law is not in any doubt: prescription whether at common law or under the Prescription Act 1832 is not available to leaseholders holding under a common landlord and the same applies to the doctrine of lost modern grant although leaseholders could grant an easement binding on their respective limited interests.  See Simmons v Dobson [1991] 1 WLR 720.  The underlying rationale for this rule is somewhat obscure.  As Fox LJ acknowledged (at 724D-F)

“…it is difficult to see if one were starting from scratch that there is serious objection to leaseholders prescribing against each other for the duration of their limited interests.”

Nevertheless the rule against prescription by tenants was extended to cases of lost modern grant apparently because

“[t]hat…is the way the law has gone in England”.  (per Fox LJ at 724F)

41.  Megarry & Wade, The Law of Real Property, 7^th Edn, at § 20-040 considered the English position “irrational”.  Fundamentally, it is difficult to discern from the decided cases any reason in principle that necessarily excludes a lost modern grant by or to a leaseholder.

The Hong Kong position

42.  The position in Hong Kong will be considered in two stages: pre and post the handover on 1 July 1997.

  (1) Pre-handover

43.  The starting point is the legislation relating to the extent to which English law applies in Hong Kong.  This will be considered in conjunction with the relevant leading authorities.

44.  Ordinance No. 15 of 1844 which was promulgated on 21 August 1844 was the first ordinance to address the question of the extent to which English law applies.  Section 3 provided as follows:

“  3.    And be it further enacted and ordained, that the law of England shall be in full force in the said Colony of Hongkong, except where the same shall be inapplicable to the local circumstances of the said Colony, or of its inhabitants; Provided nevertheless, that in all matters and questions touching the right or title to any real property in the said Colony, the law of England shall prevail, …”

Ordinance No. 6 of 1845 repealed the 1844 Ordinance but re-enacted section 3 of the 1844 Ordinance as section 4 of the 1845 Ordinance save that the proviso relating to real property was omitted.  Ordinance No. 2 of 1846 then amended the 1845 Ordinance and provided by section 3 that only such of the laws of England “as existed when the said Colony obtained a local legislature”, that is to say, 5 April 1843 shall be in force.

45.  Ordinance No. 12 of 1873 repealed, inter alia, the 1845 and 1846 Ordinances but provided in section 7 that:

“  7.    Such of the laws of England as existed when the Colony obtained a local legislature, that is to say, on the 5th day of April, 1843, shall be in force within the Colony, subject to the provisions of Ordinance No. 11 of 1865 and except so far as the said laws shall be inapplicable to the local circumstances of the Colony or of its inhabitants.”

(Ordinance No. 11 of 1865 related to the application of certain criminal laws and has no relevance in the present context.)

46.  Section 7 of Ordinance No. 12 of 1873 became section 5 of the Supreme Court Ordinance 1873 and the wording was altered by replacing the reference to Ordinance No. 11 with a different formulation when a new edition of the statute laws was revised pursuant to the Statute Laws (Revised Edition) Ordinance of 1900.  Until its repeal by the AELO, section 5 read as follows:

“Such of the laws of England as existed when the Colony obtained a local legislature, that is to say, on the 5th day of April, 1843, shall be in force in the Colony, except so far as the said laws are inapplicable to the local circumstances of the Colony or of its inhabitants, and except so far as they have been modified by laws passed by the said legislature.” (emphasis added)

47.  A particularly pertinent commentary analysing the structure and meaning of this provision is to be found in Haydon, The Choice of Chinese Customary Law in Hong Kong, (1962) 11 ICLQ 231 at 249.  The commentator argued (in my view, convincingly,) that the mandatory application of English law is to be considered subject to possible inapplicability to local circumstances which exist at the time of interpretation.

48.  As will be seen, that was not the approach adopted in Belilios v Ng Li-shi (1893), the first Hong Kong case that had to consider the availability of prescription in Hong Kong in the context of section 5.  That case concerned a claim to ancient lights.  Fielding Clarke CJ held that while prescription at common law could have little application in Hong Kong because, given its history, enjoyment from time immemorial could not be shown, both the common law doctrine of lost modern grant and Prescription Act 1832 were in force in Hong Kong by virtue of section 5 of the 1873 Ordinance but he considered it “untenable” that the question of applicability had to be considered with reference to the circumstances obtaining at the time the case came to be decided: in his view, applicability had to be ascertained by reference to conditions pertaining in 1843.  By 1893, the leasehold system of landholding was already firmly in place but given his view that the circumstances had to be those obtaining in 1843, it was not a consideration that he took into account.  Instead, he considered that there was no law that defined or limited the form of Crown grant.  Accordingly, he rejected the contention that prescription was precluded by the leasehold system of land tenure that had prevailed.  Having reached the conclusion that prescription applied, he implicitly accepted that the English rule that prescription was not available between leaseholders holding from a common landlord applied.

49.  Fielding Clarke CJ’s decision (reproduced in full in a footnote in Norton-Kyshe, 1898 Edn, Vol. II, 510 (reissued in 1971) and reprinted as a Supplementary Note to In Re Tse Lai-chiu [1969] HKLR 159 at 202) on the interpretation of section 5 was criticised by Haydon op. cit. who opined that:

“[i]f the legislature intended to put into these words the meaning which Fielding Clarke C.J. extracted, then, it is submitted, the legislature would have made its intention clear by substituting the word “were” for the word “are” in the first exception…”

50.  Hogan CJ considered that point ‘cogent’.  See In re Tse Lai-chiu, deceased [1969] HKLR 159, 185, 187-8.  After an exhaustive review of the authorities, Hogan CJ came to the considered view that it was permissible and correct to consider the position prevailing at the time the court is asked to rule on the particular matter.  The other members of the court did not come to, and did not consider it necessary to come to, any concluded view on this issue.  In so far as the competing views as to the relevant point in time are concerned, for my part, the view of Hogan CJ is clearly to be preferred.

51.  It would appear that while it was technically correct that the Charter did not restrict the Crown’s power to grant freeholds, the Government Notification published on 21 August 1943 (which therefore pre-dated the promulgation on 21 August 1844 of the first of the Ordinances dealing with the application of English law in Hong Kong) stated in no uncertain terms the land tenure policy that was to be implemented in Hong Kong: the Governor was instructed by the Crown “to abstain from alienating land in perpetuity”.  See Norton-Kyshe, 1971 Re-issue, Vol. I, pp. 27-28.  Accordingly, the correctness of Belilios as an authority for the proposition that inapplicability is to be ascertained by reference to circumstances as at 5 April 1843 rather than as at the date of the court is asked to rule on the matter is very much in doubt.  It is an unsatisfactory case.

52.  The other important pre-1966 decision on prescription is that of the Full Court in Foo Kam Shing v Local Printing Press Ltd [1953] HKLR 201, 207 which was also a case concerning ancient lights.  The English position was followed, the court holding (at 207) that an easement of light could not be acquired for a term of years by prescription.

The AELO

53.  The AELO came into force in 1966 and repealed section 5 of the Supreme Court Ordinance, replacing it with sections 3 and 4 of the AELO.  Section 3 dealt with the application of common law and equity:

“3.  The common law and the rules of equity shall be in force in Hong Kong, so far as they may be applicable to the circumstances of Hong Kong or its inhabitants and subject to such modifications thereto as such circumstances may require …” (emphasis added)

Section 4 dealt with the application of English enactments:

“4 (1)   Subject to the provisions of this section and of any other Ordinance, the law of England as set out in the following Acts shall be in force in Hong Kong, that is to say -

  (a)    the Acts specified in the …Schedule …subject to such modifications thereto as the circumstances of Hong Kong may require;

…” (emphasis added)

54.  There are differences between the wording of sections 3 and 4 and the provision that was repealed.  To mention but a few, the most obvious and significant difference is the inclusion of the words shown in italics above which introduced an express statutory power to modify that had not previously existed.  There is also the omission of the 1843 date so that under the AELO there was no question of the circumstances of Hong Kong having to be considered as at 1843.

55.  In this connection, it was Mr Mok’s submission that prior to the AELO, it was a “take it or leave it” situation in that a particular provision of English law or rule of equity if “inapplicable to the local circumstances of the Colony or of its inhabitants” would not be in force in Hong Kong.  No power was conferred on the courts (as distinct from the legislature) to adapt the law or rule in question by modifying particular aspects of it.  If a particular law or rule were applicable, it would be applicable wholesale.  As I understand it, Mr McDonnell did not disagree with that analysis.  For my part, I consider it to be correct.

56.  Mr McDonnell’s central thesis is that this recent line of cases is “plainly wrong” because the AELO was not intended to confer on the court a new power to apply the common law and equity and the English statutes in force on 5 April 1843 with such modifications as the circumstances of Hong Kong or its inhabitants may require: it was simply declaratory of the position that obtained under section 5 of the Supreme Court Ordinance 1873.  He submitted that sections 3 and 4 contained an ambiguity that warranted reference to Hong Kong Hansard to see what the Attorney General had said when he moved the first reading of the Bill.

57.  I have some difficulty with that submission.  As noted above, there are significant differences between sections 3 and 4 of the AELO on the one hand and section 5 of the 1873 Ordinance on the other but I am unable to discern any ambiguity or internal inconsistency in the provisions of the AELO itself.  In those circumstances, I do not consider it either necessary or appropriate to have recourse to Hansard or consider the Attorney General’s remarks.

58.  The additional words introduced into the AELO have to be given effect.  The power to modify could not be stated in clearer terms.  I agree with Mr Mok that either it was a new power which could be exercised by the courts or, if it had always existed, the old cases exemplified by Belilios and Foo cannot be binding because the necessary exercise of reviewing whether the English position should be modified was never undertaken and on the basis that for the purposes of the review, it is the circumstances of Hong Kong or its inhabitants at the date the court is asked to rule on the matter that have to be considered and not those obtaining in 1843.  For reasons stated earlier, there are difficulties with the reasoning in Belilios.  The same applies to Foo Kam Shing.  As Mortimer JA noted in Chung Yeung Hung (at 1028 J), previously, this court has said that it does not regard itself as bound by a previous decision of the Full Court.

59.  At this point, it would be convenient to consider the decisions in Chung Yeung Hung and Chan Tin Yau together although the latter was a post-handover decision.  In Chung Yeung Hung the judge had refused to grant an interlocutory injunction on the basis that prescription was not available between leaseholders holding under a common landlord.  The basis of both decisions was that little purpose would be served by adopting the English position in the application of the common law principle of lost modern grant and the Prescription Act where only one piece of land in Hong Kong was held by way of fee simple and given the terms of the AELO (i.e. “subject to such modifications thereto as the circumstances of Hong Kong may require”) the court in Chung Yeung Hung considered it arguable that the restriction under English law did not apply to Hong Kong.  The Full Court’s decision in Foo Kam Shing was explained on the basis that the AELO was not then in force and, in any event, it was not binding on this court.  Chan Tin Yau went furtherand held that prescription applied to leasehold land in Hong Kong.

60.  While in both Chung Yeung Hung and Chan Tin Yau the court proceeded on the basis that there is only one freehold property in Hong Kong (St John’s Cathedral), there is in fact a second: a freehold property was granted to the Hong Kong University. See section 20 of Ordinance No. 10 of 1911.  However I do not consider that the inaccuracy impinges on the reasoning in those cases.

61.  It was further suggested that the expression “the English restriction” was coined by Reyes J in Kong Sau Ching and then adopted by Saunders J in the judgment below, betraying a mistaken analysis of the relevant law.  The expression was said to be misleading and unhistorical because it suggests that there is some broader legal principle which the English courts have restricted.  The criticism appears to be misplaced.  In Simmons v Dobson, at 724D, Fox LJ referred to the question before him as being

“whether the restrictive rule as to prescription by and against leaseholders applies to cases of lost modern grant.” (emphasis added)

62.  In § 41above I alluded to the absence of any reason in principle why the doctrine of lost modern grant should not be available to leaseholders.  So far as the position in other common law jurisdictions is concerned, as noted by Mortimer JA in Chung Yeung Hung (at 1028 F-H), in Ireland, prescription against limited owners is allowed.  (See Kong Sau Ching at § 111 for references to the Irish cases.)  The doctrine of lost modern grant has been held to be part of Australian law and it seems that the English position obtains in that jurisdiction although it has been questioned.  Since freehold title exists in Australia, the considerations that arise in Hong Kong are necessarily different and I do not consider that further consideration of the Australian position to be of relevance.

63.  To sum up, what is clear is that pre-handover, under the AELO the court had jurisdiction to modify the common law “as the circumstances may require”.  This court in Chung Yeung Hung had every reason to consider it arguable that in Hong Kong, doctrine of lost modern grant is available between lessees holding under a common landlord and, in my view, it is virtually inconceivable that it would not have been so held had the substantive question arisen for decision by that court.  In so far as Deputy Judge Jerome Chan in Tang Tim-fat v Chan Fok-kai [1993] 2 HKLR 373 was not convinced that it would be appropriate to modify the common law to permit the presumption of a lost grant to arise between lessees of a common landlord, I agree with Reyes J’s analysis of the difficulties with the reasoning in Tang Tim-fat and his conclusion that it should not be followed.  See Kong Sau Ching (at §§ 83-92).

(2) Post-handover

64.  On 23 February 1997 the Standing Committee of the National People’s Congress, after reciting Articles 160 and 8 of the Basic Law decided that

“1.    The laws previously in force in Hong Kong, which include the common law, rules of equity, ordinances, subordinate legislation and the customary law, except for those which are in contravention of the Basic Law, are adopted as the laws of the Hong Kong Special Administrative Region.

…”

Annex 1 set out ordinances (which included the AELO) and subordinate legislation previously in force in Hong Kong held to be in contravention of the Basic Law which were not adopted as the laws of Hong Kong on 1 July 1997.

65.  Although as a result of the AELO ceasing to be part of the laws of Hong Kong as of 1 July 1997, the new system in place as from that date left intact the common law and the rules of equity.  This is clear from Article 8 of the Basic Law:

“The laws previously in force in Hong Kong, that is, the common law, rules of equity, ordinances, subordinate Legislation and customary law shall be maintained, except for any that contravene this Law and subject to any amendment by the legislature of the Hong Kong Special Administrative Region.”

66.  The doctrine of prescription by lost modern grant was part of the common law of Hong Kong prior to 1 July 1997.  Under that doctrine, the prescriptive right accrues after 20 years’ continuous enjoyment and is not dependent on the commencement of proceedings as is the case for prescription under the Prescription Act.  Any repeal of the AELO cannot affect property rights that have accrued and certainly those that have accrued prior to 1 July 1997 as would be the case of a right of way over gridlines 1 and 2.  Such rights are recognized and preserved by Article 120 of the Basic Law and are therefore enforceable post-30 June 1997.  Whether the statutory power to modify the common law conferred by the AELO survived the handover is not a question that needs to be addressed in disposing of Sun Honest’s appeal.

67.  For all those reasons, I am wholly unpersuaded that Chan Tin Yau is “plainly wrong”: I consider that it is correctly decided and should be followed.

The respondent’s notices

68.  As a matter of record, it should be noted that at the conclusion of submissions from both sides on the three substantive issues raised by the appellants, this court intimated that it did not wish to hear the parties on the issues raised in the respondent’s notices.  In relation to those notices, it is the appellants’ case that the judge lacked jurisdiction to entertain the issues raised therein and that, correspondingly, this court also lacked jurisdiction to entertain them.  This court did not hear submissions on the jurisdictional challenge nor on the substantive issues concerning section 16(1)(g) and the right of way by common intention.  As this matter is likely to be taken further, both sides expressly reserved their respective positions so as to be able to argue the additional points which we have not dealt with in the Court of Final Appeal should the occasion arise.

Hon Cheung JA:

Common law

69.  Common law is a dynamic legal system.  Subject to the restraint imposed by the principle of precedence and the policy (which is in fact based on common sense caution) that a long enjoyment of a state of affairs may be such that the law will seek to uphold it, judges in Hong Kong may modify the application of the common law to suit the circumstances either in respect of a state of affairs or because the local situation requires adjustment of the relevant principles.

Position prior to 1 July 1997

70.  Prior to 1 July 1997 when the Hong Kong legal system was tied to that of the United Kingdom, Section 3 of the Application of English Law Ordinance (Ordinance No. 2/1966) (‘AELO’) expressly provided that :

‘3.    The common law and the rules of equity shall be in force in Hong Kong, so far as they may be applicable to the circumstances of Hong Kong or its inhabitants and subject to such modifications thereto as such circumstances may require, save to the extent that such common law or any such rule of equity may from time to time be modified or excluded by─

    (a)    any Order in Council which applies to Hong Kong;

    (b)    any Act which applies to Hong Kong, whether by express provision or by necessary implication; or

    (c)    any Ordinance.’

    (emphasis added)

Position after 1 July 1997

71.  After the reunification on 1 July 1997 the source of law of Hong Kong is found in Article 8 of the Basic Law, namely

‘The laws previously in force in Hong Kong, that is, the common law, rules of equity, ordinances, subordinate legislation and customary law shall be maintained, except for any that contravene this Law, and subject to any amendment by the legislature of the Hong Kong Special Administrative Region.’

72.  Implicit in Article 8 on the maintenance of the pre-reunification common law and rules of equity must be the continuous jurisdiction by judges to modify the common law and rules of equity according to the circumstances.  In my view this is irrespective of the power conferred by AELO.  It is inconceivable that the common law and rules of equity were those fossilized on 1 July 1997 with no power by the Court to adapt them to circumstances after that date.  Further after 1 July 1997, Hong Kong Courts are no longer confined to relying on English common law but also draw their strength from jurisprudence developed by other common law jurisdictions including those of Australia, New Zealand and Canada.  This being the case the power to modify the common law to suit local circumstances must be available to the Courts.

Juridical basis of Chan Tin Yau v. Tsang Kwok Kay

73.  In my view the juridical basis for Reyes J in Kong Sau Ching v. Kong Pak Yan & Ors [2004] 1 HKC 119 and this Court (Tang VP, Yuen JA and Andrew Cheung J) in Chan Tin Yau v. Tsang Kwok Kay (CACV 72/2007) to extend the common law principle of ‘lost modern grant’ to the leasehold situations in Hong Kong were based on the jurisdiction conferred upon the Courts by Article 8 of the Basic Law.  This clearly removes all possible arguments on the restriction of the power of the Courts to extend the concept of ‘lost modern grant’ to leasehold in Hong Kong prior to 1 July 1997.  Unless it can be demonstrated that the Court was plainly wrong in Chan Tin Yau then precedence requires this Court to follow it.

Prescriptive right over another person’s land

74.  Rules of prescription perform the important function of preventing ‘the disturbance of long-established de facto enjoyment’ (R v. Oxfordshire C C ex p Sunningwell P C [2000] 1 AC 335 at 349 per Lord Hoffmann.  The law may presume, on proof of the fact of long enjoyment, that there once was an actual grant of the right, even though it is impossible to produce any direct evidence of such a grant (see Gardner v. Hodgson’s Kingston Brewery Co. Ltd [1903] A C 228 at 239). 

75.  When a claimant acquires a right of way by prescription over another person’s land, it may arise in one of three ways :

1)    Common Law prescription.  This is based on a presumed grant where the appropriate user had continued from time immemorial which was fixed as the year 1189 by an English mediaeval statute: see a summary of the law by Fox LJ in Simmons v. Dobson [1991] 1 WLR 720.

2)    Lost modern grant.  As it is usually impossible to prove user since 1189, the Court held that if user ‘as of right’ for 20 years or more was established, continued user since 1189 would be presumed.  This is a legal fiction but is one that has been long recognized by the English Courts and ultimately approved by the House of Lords in Dalton v. Angus & Co (1881) 6 App Cas 740 at page 811, see also Simmons.

3)    Prescription Act 1832.  Without going into details, under this Act an easement enjoyed for 20 years as of right and without interruption cannot be defeated by proof that the user only begun after 1189 (section 1) and an easement enjoyed on such basis for 40 years is deemed ‘absolute and in defeasible’ unless enjoyed by written consent’ (section 2).  The Act requires an action to be brought in order to acquire the right by the user.  It is an inchoate right until the action is brought : see Megarry and Wade, Law of Real Property (7^th Ed) paras 28-051 to 28-072.

English prescription restricted to freehold

76.  In the United Kingdom, the right acquired by prescription in respect of all three methods mentioned above only applies to freehold properties and not leaseholds : see judgment of Fox LJ in Simmons relying on a series of long established cases, such as Dalton, Wheaton v. Maple & Co. [1893] 3 Ch. 48, Kilgour v. Gaddes [1904] 1 KB 457, Derry v. Sanders [1919] 1 KB 223 and Cory v. Davies [1923] 2 Ch. 95.

Prescriptive rights after 1 July 1997

77.  After 1 July 1997, the AELO no longer applies to Hong Kong.  For all practical purposes, the only relevant applicable principle is that of lost modern grant.  This principle is relied upon by the Building Authority in support of its case in this appeal.

78.  It is then necessary to examine whether it is wrong in principle to extend the lost modern grant principle to leasehold properties in Hong Kong.  Apart from land held by St. John’s Cathedral and the Hong Kong University respectively (see Foo Kam Shing and Others v. The Local Printing Press Ltd (1952) HKLR 192 at 199, Church of England Ordinance (Cap. 277), and The University of Hong Kong Ordinance (Cap. 319)) all the other land holdings in Hong Kong granted by the Hong Kong Government have always been leaseholds.

Answer to the objection

79.  In the United Kingdom the user who acquired a prescriptive right must be by or on behalf of a fee simple owner against a fee simple owner.  Megarry and Wade explained at para 28─041 that,

‘       (b) User by lessee.  Where it is the dominant tenement that is let, a tenant cannot make a claim by prescription to an easement as annexed to his limited estate; if he claims an easement on the strength of his own user, he must necessarily claim it for his landlord as well as for himself.  If follows that a tenant cannot prescribe for an easement over his landlord’s adjacent land, for the landlord can have no right against himself.  For the same reason, if A leases two plots of his land to two tenants, one tenant cannot prescribe for an easement against the other, for otherwise the result would be that A would acquire an easement over his own land.’ 

80.  This explanation of course proceeds on the basis that prescription only applies to freeholds.  But as shown in Simmons the only answer to the criticism that restricting prescriptive rights on right of way to freeholds and not leaseholds which may be as long as 999 years is irrational is simply that ‘That, however, is the way the law has gone in England’, per Fox LJ at page 724.

Position in Ireland

81.  When this Court in Chan Tin Yau chose to extend lost modern grant to leasehold properties in Hong Kong it was aware that Ireland had also for a long time extended the same principle to leaseholds.  As stated earlier by this Court (Mortimer, Godfrey JJA and Keith J) in Chung Yeung Hung & Others v. Law Man Nga & Another [1997] HKLRD 1022, Ireland has not thrown the law into disarray as a result of its decision.  The difficulty referred to by Fox LJ, namely, to introduce such a rule retrospectively now could affect what were hitherto bought and sold as clear titles must have arisen in Ireland as well when the principle was first introduced.  But this did not stop Ireland from choosing a different approach.

Nature of the right

82.  This Court in Chung Yeung Hung described the extension as beneficial in order to fulfill a void in the law, namely, to give leasehold rights which arguably ought to arise from long user.

83.  This view is supported by Regina (Beresford) v. Sunderland City Council [2004] 1 AC 889 when the House of Lords (per Lord Bingham of Cornhill at page 893) held that

‘       3.    In this context it is plain that “as of right” does not require that the inhabitants should have a legal right since in this, as in other cases of prescription, the question is whether a party who lacks a legal right has acquired one by user for a stipulated period.  It is also plain that “as of right” does not require that the inhabitants should believe themselves to have a legal right.’

......

‘“As of right” means “not by force, nor stealth, nor the licence of the owner”’

84.  Further as Lord Rodger of Earlsferry at page 908 observed,

‘The grant of such a licence to those using the ground must have comprised a positive act by the owners, as opposed to their mere acquiescence in the use being made of the land.  Prudent landowners will often indicate expressly, by a notice in appropriate terms or in some other way, when they are licensing or permitting the public to use their land during their pleasure only.  But I see no reason in principle why, in an appropriate case, the implied grant of such a revocable licence or permission could not be established by inference from the relevant circumstances.’

85.  These concepts apply equally to leaseholds.  The point is that in Hong Kong we are not concerned with an isolated situation of a freehold owner who had leased two pieces of his land to two different lessees and found himself burden with a right of way on his own land.  But rather to the contrary, except for two pieces of land held by St. John’s Cathedral and the Hong Kong University, all the rest of Hong Kong are leaseholds.  In such a situation the extension of lost modern grant to leasehold cannot be faulted.

Position in Australia

86.  Mr. McDonnell Q.C. who appeared together with Mr. Patrick Fung S.C. and Mr. Liu Man Kin for the applicants briefly referred to the Australian position, Halsbury’s Law of Australia Vol 22 at para [355-12210] stated that,

‘Rights acquired by prescription must be acquired against the fee simple owner of the servient tenement, not against the holder of a limited interest in that land, for example a lessee.’

87.  However, the footnote to this paragraph also stated that,

‘This position has been questioned in Rodwell v GR Evans & Co Pty Ltd [1978] 1 NSWLR 448: [1979] ANZ ConvR 8, CA(NSW).  See also Connellan Nominees Pty Ltd v Camerer [1988] 2 Qd R 248, at 255-7 per Master Weld, SC(QLD).’

88.  These cases were not cited to us in argument.

89.  The Court of Appeal of New South Wales in Williams v. State Transit Authority of New South Wales [2004] 60 NSWLR 286 refused to extend lost modern grant to the Torrens system of land holding in that State.  Mason P. held at page 300 that

‘In my opinion, it is to pile fiction upon fiction to extend the doctrine of lost modern grant into the Torrens system, because (assuming no relevant exception to s 42 or its equivalents) that system contemplates title at law as arising only upon registration. To transpose the fiction of lost modern grant into a Torrens context one has to presume considerably more than the loss of an executed (and delivered) deed. At the very least, one would have to presume the execution and delivery of a registrable instrument. But logic suggests that one has to go further and presume delivery accompanied by certificate of title, since that is the normal way in which the person entitled to have an interest registered goes about perfecting such title so far as lies in the grantor’s power. Indeed, the title is only perfected through the act of a third party (the Registrar-General), and there is no basis for inferring that officer’s acquiescence in the user giving rise to the common law doctrine.’

Hong Kong position

90.  Hong Kong has not yet introduced the law on registered title and Mason P’s view, persuasive as it may be, has no application to the current position in Hong Kong.

91.  Under the present registration system established by the Land Registration Ordinance (Cap. 128) it is one of registration of deeds rather than of title.  Thus registration does not produce or effect title, rather it simply gives priority to those claims which have been duly registered; and acts as a record of transactions with land; however it is often treated as being equivalent to a registration of title system at least in one regard, namely that of the security given by registration: see Sihombing & Wilkinson, Hong Kong Conveyancing Vol 1(B) para [121]. 

92.  Further, as pointed out by the authors that under this system, a person claiming an interest in land under a transaction which has not been reduced to writing cannot register the claim in the Land Registry because only written claims to land may be registered : Vol I, para [96].  Hence the right of way that may arise by prescription will not in any event be registrable.  Thus the arguments on title being affected by unregistered incumbrances may not be as strong as they may sound.

My view on Chan Tin Yau

93.  Chan Tin Yau is binding on this Court.  Far from being persuaded that it was plainly wrong, I would adopt the same approach in that case as well.

Pre 1997 position

94.  In my view that is sufficient to deal with the issue on right of way.  Out of respect to counsel who had addressed us on the pre 1997 position, I will briefly deal with the issue.

95.  Lost modern grant was only first extended to leasehold by Reyes J of the Court of First Instance who comprehensively reviewed the law on this topic in Kong Sau Ching.  This Court in Chan Tin Yau adopted Reyes J’s approach.  These two decisions were post 1997 decisions.

Section 5 of the Supreme Court Ordinance 1873

96.  In two cases concerning right to light, the Hong Kong Courts in Belilos v. Ng Li Shi (Decision dated 26/1/1893 and reported as a Supplementary Note to In Re Tse Lai-chiu deceased in[1969] HKLR 202) and Foo Kam Shing refused to extend the prescription right to leaseholds in Hong Kong.  The relevant legislation at the time of the decisions was Section 5 of the Supreme Court Ordinance (‘SCO’) of 1873 which provides that

‘Such of the laws of England as existed when the Colony obtained a local legislature, that is to say, on the 5th day of April 1843, shall be in force in the Colony, except so far as the said laws are inapplicable to the local circumstances of the Colony or of its inhabitants, and except so far as they have been modified by laws passed by the said legislature.’  (emphasis added)

Application of English Law Ordinance

97.  Section 5 of SCO of 1873 was repealed by section 7 of AELO in 1966.  I have already referred to section 3 of AELO.  Section 4 further provides

‘       4.    (1)   Subject to the provisions of this section and of any other Ordinance, the law of England as set out in the following Acts shall be in force in Hong Kong, that is to say─

(a)    the Acts specified in the second and third columns of the Schedule to the extent specified in the fourth column thereof subject to such modifications thereto as the circumstances of Hong Kong may require; 

(b)    any other Act which applies to Hong Kong by virtue of─

(i) any Order in Council;

(ii)  any express provision in the enactment, or by necessary implication; or

(iii)  any Ordinance.’

(emphasis added)

98.  Unlike section 5 of the SCO, the two relevant sections of AELO expressly stated that the common law and equity and the applicable English statutes set out in the Schedule are subject ‘to such modifications thereto as such circumstances may require’.

99.  After the introduction of AELO Deputy High Court Judge Jerome Chan in Tang Tim-fat and Another v. Chan Fok-kei and others [1993] 2 HKLR 373 refused to extend prescription rights to leaseholds. 

100.  This Court in Chung Yeung Hung following the approach of Godfrey J (as he then was) in Pang Kwan-lung v. Ma Choi-hop [1989] HKEC 66 held that whether prescription rights extend to leaseholds were arguable.  Both cases were interlocutory applications for injunction.  The issue before the Court was whether there was an arguable case for the purpose of granting an interlocutory injunction.  While the Courts held the point was indeed arguable, they did not conclusively or finally decide the matter.

Purpose of AELO

101.  Mr. McDonnell Q.C. has by referring to the legislative history of AELO mounted a very powerful argument that the purpose of AELO was merely to identify those English statutes which were then applicable to Hong Kong and was not intended to allow the Hong Kong Courts to modify the application of the common law, equity or English statutes to the extent as envisaged in Chung Yeung Hung.  Mr. McDonnell argued that the power of modification was confined to those well recognized matters which would create injustice to or oppression of the local population.  The non application of the English law was confined to those familiar areas such as marriage, inheritance and land governed by traditional Chinese law and custom.

102.  The Hong Kong Hansard clearly showed that when the AELO was introduced in 1995, its ‘Objects and Reasons’ were :

‘       2.    There terms of section 5 of the Supreme Court Ordinance give rise to considerable difficulties.  As time passes, more and more research is necessary to discover what English law was in 1843.  And further problems arise when local law is examined to see how far English 1843 law has been modified thereby.

3. It is, therefore, considered desirable that these uncertainties and difficulties should be resolved by declaring, in a Schedule annexed to this Bill, precisely which pre-1843 English laws are in force in Hong Kong and to what extent.’

103.  The Attorney General when introducing the first reading of the bill stated that,

‘       The object of this Bill is to remove the need, in future, for such prolonged research by providing a list of those pre-1843 English Acts which are henceforth to be in force in the Colony.  The list consists only of 70 statutes, although nearly 1800 Acts had to be examined to see if they were in force in 1843 and, assuming that they were, to decide whether or not they served any useful purpose in our law.

    As before, common law and equity will continue to apply, so far as applicable to local circumstances and unless modified or excluded by Order in Council, Act of Parliament or local Ordinance.’

Purpose of the words on modification

104.  These materials of course support Mr. McDonnell’s argument on the purpose of the AELO.  But at the same time, one cannot ignore the words newly introduced by the AELO on modification.  They go beyond the direction that the English law would be enforced ‘so far as they may be applicable to the circumstances of Hong Kong or its inhabitants’.  At the end, I am persuaded by the argument of Mr. Mok who appeared together with Mr. Stock for the Building Authority that these words enabled the pre 1997 Courts to modify the prescriptive rights to leaseholds.  This was indeed the view held by Mortimer JA in Chung Yeung Hung.

105.  But as I have said earlier, irrespective of the pre 1997 position, Hong Kong Courts after the reunification clearly possess the jurisdiction to extend lost modern grant to leaseholds.  This will dispose of the ‘right of way’ issue.

Le Pichon JA’s reasons

106.  I further agree with the reasons of Le Pichon JA on this issue and also the ‘Tai Hang Road Access’ and ‘The Duty to Act Consistently’ issues.

Hon Hartmann J:

107.  I agree with the judgment of Le Pichon JA and that of Cheung JA.  I have nothing to add.