CHOY KUEN CHI v. TAT FUNG ENTERPRISES CO LTD

HCA 915/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO. 915 OF 2011

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JUDGMENT
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1.  The plaintiff (“Choy”) claims to have been in adverse possession of the land in question, as a result of which the title of the defendant (“Tat Fung”) as the paper owner is said to have been extinguished.

BACKGROUND

2.  The land is the Remaining Portion of Lot No 1193 in DD 453 in Lo Wai Village, Tsuen Wan, New Territories (“the Lot”).  Tat Fung has been the registered owner of the Lot since 6 February 1971.

3.  Choy’s case is that on or about 17 January 1965, the Lot was purportedly sold by a person known as 賴源 (“Lai”) to 陳日槐 (“Chan”).  The relevant homemade Chinese sale and purchase agreement of the same date suggests that Lai had been occupying or using the Lot and was responsible for the erection of various structures and boundary fences in the Lot.  The exact duration of such occupation or use by Lai is unknown.

4.  It is said that the sale by Lai to Chan was without the knowledge or consent of the true owner, the predecessor in title of Tat Fung.

5.  At the time of the purchase, Chan was the person in charge of 2 nearby temples, namely 珠岡禪院 and 紫竹林 (collectively “the Temples”).  Choy’s case is that Chan demolished the pre-existing houses and erected the 4 existing stone houses, which were used as dormitory and have since formed the ancillary part of the Temples.  The complex珠岡别墅 was named after the one of the Temples.  In its full bloom period, there were about 10 persons living in the complex, assisting to serve the Temples.  Among them, Choy was a junior disciple of Chan.

6.  On 27 June 1977, Chan made a gift of 6/7^th shares of 2 lots of land to his 6 disciples.  They were Lot 710 in Section A in DD 453, where 珠岡禪院 was and still is situated, and Lot 726 in DD 453.

7.  On 29 August 1980, Chan passed away.

8.  In about 1983, upon the invitation of the other disciples of Chan, Choy took over the administration of the Temples and the Lot.  On 10 June 1985, 4 of the 6 disciples mentioned above made a deed of gift in respect of their respective landed interest in favour of Choy.  The other 2 disciples had died and become untraceable respectively by then.

9.  In 1986, the Temples were registered with the Chinese Temples Committee pursuant to section 5 of the then Chinese Temples Ordinance Cap 153.  In 1989, Choy, in place of Chan, was granted the Government Land Licence in respect of the land in DD 447 where 紫竹林is situated.

10.  Choy says that at all material times, the aforesaid occupation of the Lot until the present action has not met with any interruption of Tat Fung or any other party.

THE CLAIM AND DEFENCE

11.  Choy claims that Tat Fung has been dispossessed of the Lot at least since 1983 when he has been continuously and still is in exclusive possession of the same.  This is manifested by these facts:

(1) Since 1983, Choy has been paying the utility charges, rates and Government rent in respect of the Lot.  Since 1992, he has become the registered payer with the Rating and Valuation Department in respect of the Lot and the structures thereon.

(2) Since 1983, Choy has spent substantial amount of money on maintenance and repair of the fences and the structures in the Lot.

12.  Section 7(2) of the applicable Limitation Ordinance Cap 347 (“LO”) provides that:

“No action shall be brought by any other person to recover any land after the expiration of 20 years[1] from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person.”

Section 17 provides that:

“Subject to the provisions of section 10, at expiration of the period prescribed by this Ordinance for any person to bring an action to recover land (including a redemption action), the title of that person to the land shall be extinguished.”

13.  Choy claims to have been in adverse possession of the Lot in excess of 20 years since 1983[2] prior to the commencement of this action.  As such, the paper title of Tat Fung has been extinguished.

14.  By pleading, Tat Fung puts Choy to proof of the fact of exclusive possession of the Lot and the requisite intention to do so (animus possidendi) for the purpose of the alleged adverse possession.  It counterclaims to evict Choy for being a trespasser and to recover possession of the Lot clear of the structures erected thereon.

15.  Tat Fung contends that in any event, the relief sought by Choy should be refused by the court on the ground that the existing use of the Lot, including the structures or erections thereon has contravened the prescribed use of the Lot under the Government Lease and/or the Buildings Ordinance, Cap 123 and/or such other current laws and legislations.  But Choy contends that such breach, even if true, is irrelevant.

THE DISPUTE NARROWED DOWN

16.  When the trial began, Mr Lam appearing for Tat Fung confirmed that its witness will not be called, and the evidence of Choy’s witnesses will be admitted as evidence without challenge.  On this basis, the above factual background becomes undisputed.

17.  The difference between the parties’ respective surveyors in respect of the fence at the Lot is also a narrow one.  Mr Lam accepts that the difference will not impact on the evidence adduced on behalf of Choy that he was in exclusive control of the Lot at all material times.  Hence the admission of the joint statement of the surveyors without calling them.

18.  As a result of the sensible approach of Mr Lam, Tat Fung takes only one point: whether the claim of adverse possession should be dismissed on the ground of illegality for breach of the Government Lease or the Buildings Ordinance.

PROOF OF ILLEGALITY

19.  In connection with the single issue now before the court, Mr Lam accepts that it is his client’s burden to first prove that the existing structures were erected by Chan in the absence of approval or compliance with the Buildings Ordinance Cap 123 (“BO”) and the Government Lease.

The Block Crown Lease

20.  Tat Fung’s case is built on the basis of the Block Crown Lease dated 24 January 1905 (“the Lease”).  The Lease provided that the lessee and other persons bound by the lease should not convert any ground demised into use for building purpose other than for the proper occupation of the same as agricultural or garden ground; and should not erect or construct any building or structure of any description on the land without prior approval.

21.  The assignment between Tat Fung and its predecessor in title in 1971 referred in its schedule to, among other lots of land, the Lot under the Lease.  However, the schedule to the Lease, which set out the various lots of land within Tsuen Wan DD 453, ended at Lot No 1119.  The schedule to the Lease, according to the certificate of the Land Officer dated 27 June 1906(7), contains the proper entries relating to the land therein described.  The Lot is nowhere to be found in the schedule.

22.  The confusion was not resolved during the trial.  5 months after the trial, the parties jointly submitted post-trial correspondence with the District Lands Office in April 2014, which confirmed that the Lot was held under New Grant No 2719 and not under the Lease.

23.  There is no pleaded case or submission for proceeding on the basis of the terms of the New Grant.  Whilst according to the District Lands Office, the Lot is an agricultural land, and any erection of structure was said to require prior approval from the Office, the terms of the General and Special Conditions of the New Grant are unknown, as the Office does not have a copy of such conditions.

The BO

24.  It is necessary to point out how the parties actually argue this issue.

Focus

25.  Tat Fung’s pleaded case is that the declaratory relief sought by Choy should be refused by the court if the existing use of the Lot, including the structures or erections thereon, contravened the prescribed use of the Lot under the Buildings Ordinance Cap 123 (“BO”)[3]. The pleaded focus is the existing use of the Lot and the structures erected thereon being contrary to the prescribed use.

26.  The contention in respect of contravention of the BO was added by way of amendment subsequent to Choy’s answers to Tat Fung’s request for further and better particulars of the claim.  One of the further and better particulars requested was whether the houses (currently Nos 160 and 161) were constructed pursuant to approval of the Building Authority (“BA”) under the BO.  Details and documents of the approval, if any, were requested.  Alternatively, Choy was asked to confirm if the houses were unauthorised building works.

27.  The answer given was that Choy has no personal knowledge or information in this respect, but would deal with these issues after discovery and, if necessary, by way of witness statement.  In any event, he considers the same to be irrelevant.  Eventually, in his witness statement, all Choy says is that Chan demolished the pre-existing structures on the Lot and erected the current stone houses.

28.  This paves the way for the parties to argue the issue of illegality on the basis that the structures, including the houses, were allegedly erected in the absence of approval of the BA under the BO.  In other words, the focus is not, or at least not limited to, whether the existing use of Lot and the structures contravenes the prescribed use under the BO.  Counsel argue the issue with such focus.  It will be artificial to take any pleading point in this respect.

29.  What needs to be clarified does not end here.

Applicability of section 14 of the BO

30.  Section 14 of the then BO provided that no person shall commence or carry out any building works without the prior approval and consent of the Building Authority.  Contravention of the section was an offence under section 40 punishable by fine and imprisonment.

31.  At the time when the structures were erected by Chan, the operation of the then BO had been extended to the New Territories by virtue of section 3 of the Buildings Ordinance (Application to the New Territories) Ordinance Cap 322[4].  However section 4(1) of Cap 322 empowered the Governor in Council to provide by regulation that the specific provisions of the BO shall not apply to building works for the erection, alteration or demolition of, or which are otherwise connected with, such buildings, situated or to be situated in the New Territories.

32.  Section 2 of the Buildings Ordinance (Application to the New Territories) Regulations provided that the provisions of, among others, section 14 of the BO shall not apply to building works for the erection, alteration or demolition of any of the following buildings situated or to be situated in the New Territories:

“(1) any dwelling house which –

(a) has, or, when erected or altered, will have, a roofed over area not exceeding 700 square feet; and

(b) is not, or, when erected or altered, will not be –

(i) more than 15 feet in height, or

(ii) where no structural reinforced concrete was or will be used in its construction, more than 25 feet in height,

measured, where such dwelling house has, or, when erected or altered, will have, a pitched roof, to the level of the apex or, where such dwelling house has, or, when erected or altered, will have, a flat roof, to the level of the main roof;

……

[Subsections (2) and (3) are admittedly inapplicable]”

33.  Mr Lam complains that reliance on the statutory exception has not been raised by Choy’s pleading.  This is true.  However it is equally true that the reference to Cap 322 as the basis on which the BO became applicable to the Lot at the material time was not to be found in Tat Fung’s pleading in the first place until Mr Lam revealed in his opening submission.  To be fair, Mr Pun’s reference to the statutory exception only during the trial may be said to be consequential.  How the argument in this respect came about does give rise to real concern though.

34.  First there is argument as to whether the houses erected were dwelling houses for the purpose of the statutory exception.  Mr Lam refers to the discussion of the meaning of “dwelling house” in Pandix Ltd v Hui Kam Kwei & Ors, LDCS 4000/2009 (14 October 2010).  In connection with that, he refers to Rolls v Miller (1884) 27 Ch D 71 and submits that the use of the houses by the disciples and followers of Chan was tantamount to a business other than dwelling.

35.  Pandix Ltd was a case on the construction of the meaning of “dwelling house” in a completely different context from the present one.  The argument advanced in support of a wide meaning of the term for the purpose of that case also does not exist in the present case.  The same can be said about the consideration of whether the activity of the charitable institution was a business for the purpose of the relevant covenant in the lease in Rolls.  I refrain from borrowing assistance from these cases for the purpose in the present context.

36.  Second, neither party has actually prepared the evidence for the purpose of the criteria under section 2(1) of the Regulation under Cap 322 above.  The joint expert report gave the area of the Lot in square metres.  Any attempt to estimate the dimension and size of each of the houses erected by reference to the sketch plan and the available photographs will be nothing but guesswork.

37.  Putting aside the concern about pleading, there are in any event insufficient materials before the court for concluding that the prima facie application of section 14 of the BO was so excepted by virtue of section 2(1) of Cap 322.

Whether there was breach of section 14 of the BO

38.  Choy admitted that he has no idea whether the existing structures were erected by Chan in compliance with the Buildings Ordinance and the Government Lease.  There is indeed no evidence of such approval or compliance.  But Mr Pun submits that there is no evidence suggesting that approval had not been granted either.

39.  Mr Pun refers to section 15 of the BO, which provided that where an application is made in the prescribed form for the BA to approve plans or to consent to the commencement of building works, he shall be deemed to have given his approval or consent in the absence of notice of his refusal.  On this basis, Mr Pun argues that one cannot conclude that the structures were erected by Chan on the Lot without such approval or consent.  In any event, he argues, Tat Fung could have sought confirmation of one way or the other from the BA, but no evidence of that sort was adduced.

40.  Mr Lam disagrees, referring to section 21 of the BO, which required the issuance of an occupation permit in the prescribed form before any new building should be occupied.  Section 21(6) set out the situations where an occupation permit would not be issued, which included contravention of the BO.  The existence or not of the occupation permits in respect of these structures erected by Chan, Mr Lam argues, is indicative of whether the BO had been complied with.  He argues that the court is entitled to infer that either the structures were erected without approval or consent, or in any event occupied without occupation permit.

41.  So the argument takes the course from the contravention of section 14 further to that of section 21.  They would have constituted distinct offences under section 40 and thus different bases for illegality.  Even without taking into account section 21, I take the view that the issue of whether the structures were erected by Chan with approval or consent of the BA has indeed been raised.  On this basis, evidence in this respect, if existent, would have been produced. Tat Fung has the burden to prove but only on the balance of probabilities.  The circumstances are such that an inference that the structures were erected without compliance with the then BO may indeed be drawn.

ILLEGALITY AND ADVERSE POSSESSION

42.  Mr Pun submits that, as a matter of principle, even if the means of possession of the land is illegal, that does not prevent the possession from running adversely.  Mr Lam submits that the law is not as simple and clear.  It is therefore necessary to consider what the courts have said about the relevance of illegality to the claim for a right over land.

43.  The starting point is what Lord Browne Wilkinson said (at §41) in J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419, which approved what Slade J said in Powell v McFarlane [1977] 38 P&CR 452 (at 470-471):

“Factual possession signifies an appropriate degree of physical control. It must be a single and [exclusive] possession, though there can be a single possession exercised by or on behalf of several persons jointly. Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed……Everything must depend on the particular circumstances but broadly, I think, what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no one else had done so.”

44.  As to the intention to possess, Slade J’s formulation of the requirement was also accepted as correct, namely:

“intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as it reasonably practicable and so far as the processes of the law will allow.”

45.  By referring to whether the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with the land and so far as the processes of the law will allow, the relevance of legality is hinted.  But whether acts in breach of legal prohibitions may be taken into account in considering whether a squatter has taken and retained possession of land for the purpose of the limitation provisions is actually unclear.

46.  In the Scottish case of Lord Advocate v Lord Lovat (1880) 5 App Case 273, one of the argument raised against Lord Lovat was that his mode of fishing was illegal, which allegedly deprived him of his claim to possession of the river, to which he had no title.  The House of Lords held that the illegality of the fishing mode did not make such act the less an important element in showing what the possession was.  Practically the result was that such acts, whether legal or not, was possession of the river.

47.  In Collins v Amphlett (1917) 67 Sol Jo 37, the defendant had enclosed part of a common land.  It was held that he could not succeed in showing adverse possession of the enclosed part of the common and claiming the benefit of the Real Property Limitation Acts 1833 and 1874 because the possession was contrary to section 36 of the Commons Act 1876, which prohibited inclosure of common without sanction of the Parliament.

48.  The above 2 early cases as a starter demonstrate one distinguishing feature.  The act relied on in Lord Advocate was the manner in which an act of possession was carried out whereas that in Collins was the very act of possession itself.  It would seem that the distinction accounted for the different conclusions of the court.  Or did it?

49.  In Glamorgan County Council v Carter [1963] 1 WLR 1, a temporary planning permission was granted to the owner to use the land as a caravan site for not more than 8 caravans for 2 years.  The owner continued such use after the expiry of the term of the permission.  The county council served an enforcement notice requiring the removal of the caravans, but the owner refused, claiming the right to continue without planning permission to use the (unoccupied) land as it had been last used under section 12(5)(c) of the Town and Country Planning Act 1947.  It was held that the statutory right to use the land, as a matter of construction, meant lawful use, and in principle, it was impossible to acquire a legal right by committing a criminal or quasi-criminal offence.

50.  In Bakewell Management Limited v Brandwood [2004] 2 AC 519, the claimant acquired common land by purchase and sought declaration that the owners of the adjoining properties were not permitted to access those properties over tracks across the common land.  The owners of the adjoining properties defended that they had acquired easement over the common land by prescription or lost modern grant. Section 193(4) of the Law of Property Act 1925 made it an offence to use common land for purposes such as those of the owners without obtaining the consent of the owner.  The House of Lords took the view that it would have been lawful for the land owner to make such a grant, and such a grant would have removed the criminality of the user by the owners.

51.  Glamorgan County Council and Bakewell Management Limited were decided in their respective specific context rather than adverse possession.  R (Smith) v Land Registry [2009] EWHC 328 (Admin) was a case on adverse possession, in which both Glamorgan County Council and Bakewell Management Limited were considered.

52.  In R(Smith), the claimant claimed adverse possession of part of a public highway, and sought to have his title so allegedly acquired registered.  The Land Registry refused, and hence the judicial review proceedings.  Under section 137 of the relevant Highways Act 1980, it was a criminal offence to wilfully obstruct the public highway without lawful authority.  In issue was whether the claimant could claim such right on part of the public highway by way of adverse possession, when the act of possession constituted a criminal offence.

53.  HHJ Pelling QC considered that in Bakewell Management Limited (above), illegality was not an issue because, as mentioned, it would have been lawful for the land owner to make the grant claimed and thus lost modern grant could be assumed.  But the case before the learned judge was different, because it was illegal for anyone to wilfully obstruct the highway, and it was simply not open to the highway authority to license the obstruction so as to remove the potential illegality.  Therefore it was the principle in Glamorgan County Council instead of Bakewell Management Limited that was applicable to the circumstances of R(Smith).

54.  In line with what was said in J A Pye (Oxford) Ltd (above), HHJ Pelling QC said (at §14):

“…… To succeed, the Claimant must establish that he has dealt with the land in question as an occupying owner might have been expected to deal with it and that no one else had done so. The Interested Party could not lawfully have used the public highway as the Claimant used it, for such user would have been illegal obstruction……it is a legal impossibility for the claimant to claim adverse possession to part of a highway by reference to the illegal obstruction of it for a period of 12 years prior to the making of the claim contrary to the terms of the primary legislation which makes such obstruction criminally and not merely tortuously unlawful.”

55.  The case went on appeal.  The appellate court did not hear argument on the issue of whether a squatter could rely on acts which constitute an offence in support of an adverse possession claim.  The appeal was dismissed on the ground that obstruction of the highway for however long did not extinguish the public’s right to pass over it, and that this was highway maintainable by public expenses.

56.  In Wan Hok Taoist Association v The Incorporated Owners of Nos 88-90 Pan Hoi Street & Anor, HCA 2384/2008 (16 December 2011), the plaintiff had built on the roof spaces various illegal structures decades prior to the commencement of action.  On this basis, the plaintiff claimed to have dispossessed the defendant incorporated owners of the roof spaces.  DHCJ Carlson considered the question of whether it would be right to allow an adverse possessor who has taken possession by means of the building of illegal structures to take advantage of it.  The question was referred to the Secretary for Justice, who decided not to intervene.

57.  The learned judge had this to say:

“6. …… Mr Lee, who appears for the plaintiff……has drawn my attention to authorities that not only support his case but also authorities that may be said to be against him, but I think the law can be stated very shortly, and I am not going to go into any great detail because the matter is undefended. All I am looking to ensure is that the plaintiff on this undefended basis has made out its case.

7. The point is that if the means of possession of a piece of land or an area – a roof space in this case – is illegal, that will not prevent the possession running adversely, and provided it runs for the requisite period, that would be sufficient to extinguish the legal owner’s title, but on the other hand, where the act of possession itself is illegal, then the policy of the law is to say that the possession and time cannot run against the legal owner.

8. I am satisfied in this case that the former situation applies, which is that although the means of possession may have been illegal because these structures were all illegal, the act of possession itself was not illegal and …… there is no impediment in terms of public policy given the nature of the possession which would prevent me from saying that the plaintiff is entitled to the orders that it seeks……”

58.  The situation in the above case appears to be similar to the one before this court. However, Mr Lam asks me to exercise caution in considering the authoritative value of that case, which was undefended.  He borrows support from Tsang Foo Keung & Anor v Chi Jim Mi Jimmy & Ors, HCA 7140/1995 (12 July 2013).

59.  The decision in Tsang Foo Keung that Mr Lam refers to was that of an application for striking out for delay and abuse of process.  The defendants asserted adverse possession of pitches originally and partly covered by hawkers’ licences issued to them pursuant to the Hawker Regulation Cap 132AI. In seeking to recover possession, the plaintiff contended (albeit yet to be pleaded at that stage) that the defendants had been in breach of the terms of the licences and thus the regulation.  The plaintiff referred to R(Smith) and Wan Hok Taoist Association (above).

60.  G Lam J observed (at §§119-120) that R(Smith) involved the criminality of the very possession which was against the statute, but the illegality issue, as mentioned, was not further argued on appeal.  As to Wan Hok Taoist Association, it was a brief decision on an undefended claim.  G Lam J considered that the point was simply arguable, assuming it was pleaded.  Upon such observation, amendment of the pleading was subsequently sought and allowed[5].

61.  Tsang Foo Keung eventually came on for trial before Chow J, and judgment was just handed down on 30 June 2015.  I have not invited the parties herein to make further submissions upon that, because the issue of illegality was actually not determined during the trial.  In the judgment, reference was made to the authorities mentioned above, but the parties’ argument in this respect was said to be brief.  In view of the conclusions on the other issues already reached, Chow J considered that that was not the right occasion for the court to conduct a detailed examination of this difficult area of law[6].

62.  What are we left with? As to the relevant law so far developed in the UK, R(Smith) remains the leading authority in the context of adverse possession.  As mentioned, HHJ Pelling QC’s reason for his decision was not argued on appeal, and the appeal was decided on some other grounds.  Yet the learned judge’s approach has indeed been a subject of scrutiny.  Jourdan, Adverse Possession (2^nd ed) expresses doubt about the approach of the learned judge[7].  In particular, the learned authors point out the fundamental difference between a claim to a right of way based on the doctrine of lost modern grant and that based on adverse possession.  The basis for the distinction made by the learned judge between acts which can be taken into account, even though they constitute criminal offences[8], and acts which cannot[9] is said to be not obvious.

63.  What was said in the above commentary, I believe, was noted by the Deputy Adjudicator to the UK Land Registry in Walton v Hedleyhope Parish Council (25 June 2012).  In that case, the claimant sought registration of his title to land, which was village green, acquired by adverse possession in addition to the land to which he had paper title.  The Parish Council objected.  Specifically the Council argued that it was an offence under section 12 of the Inclosure Act 1857 to injure the land, which was a village green, or to interrupt the use or enjoyment of the land as a place for exercise or recreation.   Further section 29 of the Commons Act 1876 also stipulated the criminal offence of public nuisance by, among others, encroachment on or enclosure of a green; and erection on a green or disturbance with or occupation of the soil thereof, which was made otherwise than with a view to the better enjoyment of the green.  The Council argued that the claimant’s fencing on the green infringed both sections, and therefore could not assert adverse possession of the fenced land.

64.  The Deputy Adjudicator noted that the issue of illegality in the context of the alleged adverse possession of the statutorily governed green had not been judicially determined before.  He observed that there was nothing express in the Limitation Act 1980 to prevent a squatter who had committed a criminal offence in, or in the course of, taking possession of land from relying on the provision.  Considering the abovementioned cases of Collins; Lambeth London Borough Council; and Lord Advocate, the Deputy Adjudicator (at §§27-28) took the view that possession is possession, irrespective of whether acts done to secure or retain possession are contrary to the criminal law.

65.  However, the Deputy Adjudicator approached the relevance of the illegal means of possession from another perspective.  He said (at §28):

“…… The next question is whether there is a rule of procedural law to prevent Mr Walton from relying on acts done by him on part of the village green that are contrary to the criminal law. There is a general principle that a person should not be granted a remedy where he has to rely directly on unlawful conduct to succeed, a principle referred to by reference to the maxim ex turpi causa non oritur actio. This principle is concisely stated by Lord Scott in Moore Stephens (a firm) v Stone Rolls Limited (in liquidation) [2009] UKHL 39 at paragraph 120:

“The ex turpi causa rule is a procedural rule based on public policy.  The perpetrators of illegality, a fortiori dishonest illegality, ought not to be allowed to benefit from their reprehensible conduct.”

66.  Using this alternative approach, the Deputy Adjudicator proceeded to consider again the cases of Glamorgan County Council; Bakewell Management Ltd; and R(Smith) (above).  Noting that His Lordships in Bakewell Management Ltd considered that there is no principle of law that acts in breach of public law prohibitions could never lead to acquisition of legal rights, The Deputy Adjudicator had this to say:

“31. Both Lord Scott and Lord Walker (with whom Lords Bingham and Hope and Lady Hale agreed) both considered that the issue was one of public policy. Lord Walker said that the maxim ex turpi causa non oritur actio must be applied as an instrument of public policy and not in circumstances where it does not serve the public interest (see paragraph 60). Lord Scott considered that there was no reason of public policy to bar the acquisition of an easement by prescription or by the fiction of lost modern grant where the use relied on was illegal in the criminal sense if the easement could be lawfully granted by the landowner (see paragraph 47).

32. In the light of the general guidance from Lords Scott and Walker in Bakewell Management Ltd v Brandwood, I should then consider whether there is any requirement of public policy to bar the acquisition of a title under the Limitation Act 1980 to part of a village green where the squatter relies on acts by him on the village green which are illegal under Section 12 of the Inclosure Act 1857 and Section 29 of the Commons Act 1876.  It is to be noted that the claim by Mr Walton, if successful, will not bar the rights of the public over the part of the village green to which he claims title.  Mr Walton would be registered under the Land Registration Act 2002 with a title to part of the village green but that land would remain village green and the public would continue to be entitled to make use of that part for lawful sports and pastimes.  Further, it would seem to be the case that an action could still be brought against Mr Walton for the removal of the fence as a public nuisance.  However, the purpose of the sections in creating the criminal offences would appear to me to be to protect the practical ability of the public to enjoy the green without interruption.  It is a criminal offence to do any act which injures the green or interrupts the use and enjoyment of the green for exercise and recreation and enclosing the green or part of it will interrupt that use and enjoyment while the fence is in place.  The objective of enabling the public to enjoy the village green without interruption is better achieved, in my judgment, if squatters are not permitted to acquire title by relying on illegal fencing or other acts which are made illegal by the sections referred to.  If squatters were to be permitted to rely on fencing a village green, there would be an incentive for them to do so and an increase in the risk of the public’s rights to enjoy the green being interrupted.  In the absence of authority to the contrary, I would therefore hold that Mr Walton cannot rely on illegal acts in seeking to show title by adverse possession to part of the village green.”

67.  Whilst the court in Tsang Foo Keung did not have to resolve the illegality issue, Chow J observed (at §77) that a number of possible approaches could be taken, citing §7-140 of Jourdan, Adverse Possession (above).  I reproduce the original text of that paragraph as follows:

“There is a general principle that a person should not be granted a remedy where he has to rely directly on unlawful conduct to succeed. However, the law of adverse possession is concerned with rendering lawful conduct which initially constitutes the tort of trespass. Given that, it is not obvious that the principle should apply to prevent the passage of time from barring a claim to possession by the owner of land, simply because the squatter’s conduct is contrary to a statutory prohibition as well as the constituting a trespass. An alternative approach would be to consider whether the policy behind the statutory prohibition in question would be infringed if a squatter was allowed to rely on acts committed in breach of the prohibition in support of a claim to title by adverse possession. Where the prohibition is enacted to protect public rights, and the acquisition of title by adverse possession will have no effect on those rights, it may be that the prohibition should not prevent the squatter’s claim from succeeding.”

68.  If the bar to making title by adverse possession is based on public policy considerations, the nature and seriousness of the unlawful conduct in question would be relevant: see Chung Man Yau v Sihon Co Ltd [1997] HKLRD 1221 at 1226-1228 per Mortimer VP, 1228-1229 per Godfrey JA and 1229-1230 per V Bokhary J (in the context of whether award for loss of earnings from unlicensed hawking should be made), a case cited by Mr Lam[10].

69.  Considering the abovementioned authorities, I venture to suggest the following propositions:

(1) There is no general principle of law that acts in breach of public law prohibitions could never lead to acquisition of rights.  In the context of adverse possession, there is nothing in the LO to prevent a squatter who had committed a criminal offence in or in the course of taking possession of land from relying on the limitation provisions.  Possession is possession.

(2) However, to suggest that the illegality of the means of possession is irrelevant will be an over-simplification of how the law operates in this context. There is the general principle under the maxim ex turpi causa non oritur action.

(3) The general principle that a person should not be granted remedy if he has to rely directly on illegal conduct to succeed, if without more, could not be mechanically applied to the context of adverse possession.  It is applied as an instrument of public policy, but not in circumstances where it does not serve the public interest.

(4) The requirement of public policy has to be ascertained by identifying the objective behind the legal prohibition and criminal sanction.  Equally important is the context in which the legal prohibition, and thus breach, comes to be considered.

(5) A legal prohibition may make the very act of possession illegal, such as what happened in the cases of R(Smith) and Collins (above).  In such cases, the public policy behind the legal prohibition could well be to bar the acquisition of any right over the land by such acts.  This may justify the denial of remedy to the squatter, notwithstanding actual possession with intent for the requisite period that would have entitled him to take advantage of the limitation provisions.

(6) A legal prohibition may have nothing to do with possession of the land but the act by which one comes to possess the land.  Take the example of the act of breaking into the council flat in Lambeth London Borough Council (above).  As mentioned, it was not argued in that case that the act of criminal damage of the padlock would have prevented time from accruing in favour of the squatter. The authors of Jourdan, Adverse Possession (above) believed that such argument would have failed[11]. However, had the prohibited act in question not been confined to criminal damage but the intended illegal entry as well, I would have thought that the subsequent possession would be tainted as part and parcel of the illegal entry.  I would be surprised if the public policy behind the criminality of the act would not require the interest of the public to be guarded against such act of illegal entry and occupation by way of breaking-in.  The nature and seriousness of such unlawful conduct would afford a good reason for denying the squatter the right to acquire right over the property as a matter of public policy.

(7) The very act of occupying the land may not be illegal, but there are legal restrictions in respect of how the land may be used or what may be done on it.  The requirement of public policy behind such kind of restrictions would be case specific.  In Glamorgan County Council, there was the town planning concern behind the prohibition against use of unoccupied land without permission.  In Walton, there was the concern about protection of the practical ability of the public to enjoy the green without interruption.

70.  As mentioned, the courts have expressed reservation about the authoritative value of Wan Hoi Taoist Association (above).  However DHCJ Carlson was acutely conscious of the relevance of illegality to the claim for adverse possession in that case.  He reckoned that where the act of possession itself is illegal, then the policy of the law is that possession and time cannot run against the legal owner.  One may say the learned judge’s formulation lacked detailed explanation (which, as the learned judge explained, was not called for in that case).  Nevertheless, this is not to say that such conclusion on the requirements of public policy behind the criminality of the very act of possession is not likely.  More importantly, the learned judge did consider the pertinent question, namely whether there was any impediment in terms of public policy, given the nature of possession, which would prevent the court from saying that the plaintiff there is entitled to the orders sought.  If I may say so with respect, the learned judge and I are on the same page in terms of approach.

71.  On the basis of the above propositions, I now turn to the circumstances of the present case.

72.  Mr Lam refers to the justifications for the concept of adverse possession.  One of them, he says, is to avoid land becoming undeveloped and neglected, and it is in the interest of the public to encourage the proper maintenance, improvement and development of land which might otherwise be left under-utilised for a long time.  He borrows that from the Consultation Paper by the Law Reform Commission of Hong Kong Adverse Possession Sub-committee in December 2012[12].

73.  It should be noted what Mr Lam refers to is but one of the justifications put forward, and both arguments and counter-arguments in respect of such justifications were encompassed in the paper.  They were so set out precisely for the purpose of public consultation.  Against this background, I would take care before referring to them other than in terms and for purpose so set out.

74.  Moreover, the real question is not the public policy behind the LO but that behind the prohibition under section 14.  As to that, Mr Lam submits that the primary concern is safety of the persons who may be affected by the building works, including those who may use structures so built.  That I agree.  However I do not agree with his submission that it is injurious to public good to “reward” a squatter, who relies on an act in breach of section 14 of the BO, with the benefits of the LO.

75.  Not only does section 14 of the BO not regulate the very possession of the land, it also does not regulate the nature of the possession.  It regulates and monitors the commencement and carrying out of building works.  Such acts are being relied on in establishing the requisite possession with intent in defeating the paper title of the owner of the land, which, unlike Walton, is not the public.

76.  That the squatter is able to defeat the paper title of the owner of the land will not be held against the Government, which, through the BA, retains the authority to demand the demolition of any illegal structures at any time.  The public policy of protecting the safety of the persons being affected by the illegal structures could still be served by the necessary building order issued pursuant to section 24 of the BO, whoever the rightful owner is.  Whilst the situation of compliance with the terms of the New Grant, as mentioned, is uncertain, Choy in defeating the rights of the paper owner of the Lot would still be subject to the rights of the Government, including possible re-entry, under the New Grant.  The grant of remedy to Choy is not an obvious affront to the requirement of public policy behind the restrictions.

77.  The fact is that there is no evidence of any enforcement action by the BA or the Government in connection with the structures erected by Chan and occupied by Choy throughout the decades.  That enforcement action may still be taken does not reinforce a requirement of public policy behind the legal prohibition to deny remedy to the squatter.

78.  The contest is one between the paper owner of the Lot and Choy.  Choy was not the person responsible for erecting the structures in question on the Lot.  Choy may well have endorsed the consequence of the illegal act of Chan by continuing to maintain and to use these structure, I am not satisfied that the requirement of public policy behind section 14 of the BO (or the New Grant) calls for the denial of remedy to Choy.

79.  In his submission, Mr Pun also argues with reference to, among other provisions, the Basic Law.  This lacks proper pleading basis.  In view of the above conclusion, I need to enter into the details of such argument in any event.

CONCLUSION

80.  Choy has established his entitlement to the declaration that the title of Tat Fung to the Lot[13] was extinguished by virtue of section 17 of the LO by the time of commencement of the present action.

81.  The declarations that Choy is the owner in possession or vested with all the rights and interests in the Lot on top of the possessory title will not be granted, and Mr Pun does not insist otherwise.  The claim order for registration of Choy as the owner of the Lot, for the same reason, is refused.  The claim for declaration of the right to occupy and to possess the Lot is superfluous.

ORDER

82.  Declaration is made in terms as set out in paragraph 80 above.   The counterclaim is dismissed.

83.  Following this event, I make a nisi order that Tat Fung shall pay Choy’s costs of this action, including any costs reserved.  Costs shall be taxed, if not agreed.  In the absence of application within 14 days to vary, the costs order shall become absolute.