LAM ISLAND DEVELOPMENT CO. LTD. v. LAM BOR

1993, No. MP1566-68, 70-71/93

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This is the reserved judgment of the court in five actions, all of which concern land at Sheung Shui in the New Territories. In each of the actions, the plaintiff is Lam Island Development Company Limited, which has never been in possession of any of the land, but which claims to be entitled, by virtue of Section 4(2) of the New Territories (Renewable Crown Leases) Ordinance, Cap. 152 ("Cap. 152"), to a Crown Lease of the land. The defendants in the various actions have all been in possession of various parts of the land, adverse to the person for the time being entitled to a paper title to the land, for over 20 years before the date on which the various actions were commenced, that is to say, 10th June 1993. In these circumstances, the defendants claim that the plaintiff's proceedings are statute-barred. They rely on Section 7(2) of the Limitation Ordinance, Cap. 347 ("Cap. 347"), which provides (so far as is material) as follows:

"7(2) No action shall be brought by any other person to recover any land after the expiration of 20 years 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 ...".

2. The question then is: On what date did the plaintiff's right of action on which it sues first accrue to the plaintiff, or to a predecessor in title of the plaintiff?

3. The plaintiff says that the right of action on which it sues accrued to it, not on-the date on which the various defendants first took possession, but on 1st July 1973, less than 20 years before the date on which it commenced these actions, i.e. 10th June 1993. If that is right, the plaintiff is entitled to judgment for possession against all the defendants. In support of its case, it points to the following matters.

4. By a Crown Lease of this and other land dated 27th March 1905, the Crown granted, to the persons therein mentioned, a term of years limited to expire on 30th June 1973, with a right to a renewed lease of 24 years less 3 days thereafter. On 19th March 1973 the legal estate in that term, so far as the land the subject of these actions was concerned, was assigned on sale to the plaintiff. On 30th June 1973 the term expired; but the plaintiff, in whom it was then vested, acquired on that date a new Crown Lease of the land by virtue of the provisions in that behalf contained in Cap. 152.

Section 4(2) of Cap 152 reads as follows:

"4(2) In the case of an existing Crown lease of a lot which has not been divided into sections before the 1st day of July 1973, the right of renewal contained in the lease shall be deemed to have been exercised by the person entitled to that right and on that date there shall be deemed to be granted to such persons separate new Crown leases of the land respectively held by them immediately before that date under the existing Crown lease".

(I should also mention Section 4(4), which provides (so far as is material) as follows:

"4(4) Every new Crown lease and the land thereby deemed to be demised shall be deemed to be subject to such of the following encumbrances and interests as the land and the existing Crown lease relating thereto were subject to immediately before the 1st day of July 1973 -

(a) ....

(b) ....

(c) any other rights, easements, tenancies or other burdens or encumbrances of whatsoever kind or nature, except such as were created by an instrument and were not thereby expressed to continue after the 30th day of June 1973.")

5. The plaintiff says that the right of action on which it sues first accrued to it on 1st July 1973, because that was the date on which it became entitled to a new Crown Lease of the land of which the defendants were then in possession. Since the plaintiff commenced its proceedings against the defendants before 30th June 1993, its proceedings were bought within the 20-year period mentioned in Section 7(2) of Cap. 347 and are accordingly not statute-barred. The fact that the plaintiff had, or might once have had, rights of action against the defendants before 30th June 1973 is, says the plaintiff, immaterial; for the term created by the original Crown Lease expired on that date. It is not its title to that term on which the plaintiff bases its cause of action. It bases its cause of action on the new term, which commenced on 1 st July 1973, and which was vested in it by virtue of Section 4(2) of Cap. 152. The section created a fresh demise and a fresh term with fresh covenants, just as the exercise of the option to renew would have done: see Rider v Ford [1923] Ch. 541, per Russell J at 547.

6. In answer to this, the defendants say that, although Section 4(2) of Cap. 152 refers to the grant of "a new Crown Lease", the reality is that the "new lease" is not a totally new lease separate and distinct from the original lease; it comes into existence solely because of the right to renew contained in the original lease. The legislature intended, say the defendants, in these cases to do no more than create a later date for the expiration of the term created by the original lease than that for which that lease originally provided. But if that was the object of the legislature, in my judgment it failed to achieve it. The words it chose to use in Section 4(1) are, in my judgment, clear and unambiguous and operated to create a new Crown Lease commencing on 1st July 1973.

7. The defendants further say that the possessory titles which they had acquired, or were in the course of acquiring, by 30th June 1993 are to be treated as "rights" for the purposes of Section 4(4) of Cap. 152. I do not think this is a legitimate construction of the words used by the legislature in that subsection. In my judgment, the legislature was concerned, in Section 4(4), to preserve rights which qualified existing titles, not rights which, if established, would operate to defeat those titles altogether.

8. In the result, I am driven to the conclusion that the defendants are unable to offer any defence to the plaintiff's case. The plaintiff's title stems from the new Crown Lease deemed to have been granted to it on 1st July 1973 (the earlier history of the matter being immaterial); and it commenced its proceedings to recover possession of the land in question on 10th June 1993, before the expiration of the period of 20 years commencing on 1st July 1973.

9. I have reached this conclusion unaided by authority; but as was pointed out in the course of the argument there are a number of decisions of this court (including two of my own) consistent with the conclusion to which I have come. I do not think it necessary for me to review those decisions in this judgment.

10. I would only add this. It appears that there are many so-called "squatters" living on plots of land in the New Territories whose expectations, built up over a period of 20 years or more, that their possession would not be disturbed by persons claiming to have a paper title to the land, have turned out to be false. The social consequences may well be severe and undesirable. If that is so, it would clearly be desirable for these matters to be submitted for the consideration of the Court of Appeal and (possibly) the Privy Council. For that purpose I express the hope that Legal Aid will be made available to these defendants, whose long-standing possession will otherwise be defeated. So far as this court is concerned, it has no option but to grant the plaintiff the relief sought in these actions, namely an order for possession against each of the various defendants; but I will order a stay of execution, for 28 days from today, so as to give the defendants (and their advisers and the Legal Aid authorities) time to consider whether or not to appeal. If the defendants give notice of appeal within 28 days from today I will order that the stay be extended until after judgment on the appeal. But it will be a term of any such extension that the appellant requesting it gives an undertaking to prosecute his appeal with due diligence. The defendants cannot be permitted to treat the appeal merely as an excuse for keeping the plaintiff out of possession. The plaintiff is as much entitled to justice as the defendants.

11. I will make orders nisi that the costs of the plaintiff of each of these several actions be taxed (if not agreed) and paid by the defendants in each such action to the plaintiff.