SO LUEN FAI v. LAW MAN NGA AND ANOTHER

IN THE COURT OF APPEAL

1997, Nos. 29, 30, 31 & 32
(Civil)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. On 17 January 1997, H.H. Judge Wesley Wong, sitting as a deputy judge of the High Court, refused the plaintiffs certain interlocutory injunctions for which they had asked, that is to say, injunctions restraining the defendants from interfering with the plaintiffs' use of an access road serving those parts of Lot No. 2030A in Demarcation District No. 95, Ku Tung in the New Territories, occupied by the plaintiffs. This access road, running across a part of that Lot occupied by the defendants, affords the plaintiffs their only means of access to a public road. The judge refused the plaintiffs the relief for which they had asked, because he was not satisfied that the plaintiffs had made out an arguable case to be entitled to the use of the access road. The plaintiffs now appeal.

The background

2. The plaintiffs have been in occupation of those parts of Lot 2030A to which I have referred for well over 20 years. They claim to have acquired a possessory title, adverse to the title of the Crown lessee of Lot 2030A and anyone claiming through or under that Crown lessee, to the parts of the Lot they respectively occupy. The defendants claim to be tenants, claiming under the same Crown lessee, of the land across which the access road runs. The plaintiffs claim to have used the access road for over 20 years. They claim to have acquired by prescription a legal right to use the access road. They also claim an equitable right to use the access road, based on their expenditure, with the acquiescence of the Crown lessee, of significant sums of money on the maintenance and improvement of the access road.

The issues

3. The defendants say (1) that, whatever rights the plaintiffs may have over the land which they occupy, the plaintiffs cannot and do not claim to be entitled to an estate in fee simple in that land; that an easement can be acquired by prescription only for the benefit of land held by the claimant for an estate in fee simple; and that therefore the claim of the plaintiffs to a prescriptive right to the use of the access road here must fail. And they say (2) that, even if it is possible in Hong Kong (it would not be possible in England and Wales) for a limited owner to prescribe for an easement against another limited owner, that can be so only if the claimant's own title is of lawful origin; that the plaintiffs here are squatters, whose title is not of lawful origin; and that on this ground too the plaintiffs' claim must fail. Finally, they say (3) that the evidence filed by the plaintiffs on their interlocutory application was insufficient to establish even an arguable case for the equitable right which the plaintiffs had claimed to use the access road.

The first issue : Is it arguable that a limited owner can prescribe for an easement against another limited owner?

4. It is not possible, in England and Wales, for a limited owner to prescribe for an easement against another limited owner. The user relevant to establish a prescriptive right to an easement must be user by or on behalf of a fee simple owner against another fee simple owner. It is, however, possible in Ireland for a limited owner to prescribe for an easement against another limited owner. The rule in Ireland is more rational; there is no good reason why prescription should be allowed against land occupied by an owner in fee simple but not against land occupied by a limited owner (such as a tenant under a lease). The Irish Court, mindful of the different conditions affecting land tenure between England and Wales on the one hand, and Ireland on the other hand, has found it appropriate to allow prescription by one tenant against another tenant of the same landlord : see Flynn v. Harte [1913] 2 IR 323. And in Hong Kong, as in Ireland, the conditions affecting land tenure are materially different from those in England and Wales. All land in private ownership in Hong Kong is held by Crown lessees or those claiming through or under them. Apart from the site of St. John's Cathedral, no land is held by anyone for an estate in fee simple. The concept of prescription in Hong Kong, if limited to prescription by and against the owners in fee simple, would be, to all intents and purposes, completely meaningless. Yet the Application of English Law Ordinance, Cap. 88, enacted in 1966, provides that the law of England as set out in (inter alia) the Prescription Act 1832, shall be enforced in Hong Kong "subject to such modification thereto as the circumstances of Hong Kong may require" : see section 4(1)(a) of the Ordinance and item 60 in the Schedule thereto. In these circumstances, say the plaintiffs, the proposition that in Hong Kong there may be prescription by one tenant against another tenant of the same landlord must be at least arguable. For my part, I agree. I know that in Foo Kam Shing v. The Local Printing Press Limited [1952] HKLR 192, the Full Court was of a different opinion. But the Application of English Law Ordinance was not then in force. I know, too, that in Tang Tim Fat v. Chan Fok Kei[1993] 2 HKLR 373, H.H. Judge Jerome Chan (as he then was), sitting as a deputy judge of the High Court, was also of a different opinion. But that case is of course not binding on this court. I would, accordingly, hold that the plaintiffs' case here is arguable, contrary to the view expressed by the judge below.

The second issue : Can an owner whose title is not of lawful origin prescribe for an easement at all?

5. As the defendants correctly submitted, an owner whose title is not of lawful origin cannot claim to have acquired an easement by way of an implied grant, since he cannot claim the benefit of any grant to support the implication : see Wilkes v. Greenway(1890) 6 TLR 449. But it does not at all follow that an owner whose title is not of lawful origin cannot claim to have acquired an easement by prescription. A title to an interest in land is usually acquired by conveyance; but it may be acquired by adverse possession, and after the appropriate period (in Hong Kong, 20 years) a title to such an interest acquired by adverse possession cannot be defeated by action brought by the person who would, before the expiration of that period, have been entitled to recover possession of the land. Since one who had acquired such a title would clearly be entitled to the benefit of an express grant of an easement made to him over land other than that to which his title extended, notwithstanding that his title was not of lawful origin, it must be at least arguable that he, like any other owner, can claim the benefit of a presumed grant. It must of course be possible, for this purpose, for the presumed grant to have been of lawful origin but the necessity for a presumed lawful origin of the grant has nothing to do with the origin, lawful or otherwise, of the title to the dominant tenement. I would decide this issue, too, in favour of the plaintiffs.

The third issue : Is the plaintiffs' evidence sufficient to prove an arguable case for an equitable right to use the access road?

6. The judge below was not satisfied that the plaintiffs had proved such an arguable case. If it were necessary to decide the point, I might well have agreed with him. But it is not necessary to decide the point and I prefer not to do so. It is sufficient for present purposes that, on this appeal, the plaintiffs have succeeded on issues (1) and (2).

The result

7. The plaintiffs having established at this stage an arguable case for a prescriptive right to use the access road, the action will have to go to trial. The plaintiffs are entitled to interlocutory relief, if no appropriate undertakings from the defendants are forthcoming, until after judgment in the action or until further order in the meantime. I would propose that, after the members of this court have given judgment, we should hear counsel as to the terms of the order we should make and as to what provision we should make as to the costs, here and below, of the plaintiffs' application.

Keith J. :

8. I agree that these appeals should be allowed. I cannot improve on what Godfrey J.A. has said in his judgment, and I shall not attempt to do so. It is sufficient for me to say that my reasons are the same as his.

9. The only thing I want to add is that, for my part, I do not think that the allowing of these appeals implies any criticism of the judge below. The first issue which the judge had to address was whether it was arguable that the rule in England that a right of way can only exist between owners of the fee simple should be modified in its application to Hong Kong to reflect the fact that all land in Hong Kong (with the exception of St. John's Cathedral) is held on leasehold from the Crown. I do not read the judge as having reached a conclusion on whether that proposition was arguable. That is entirely understandable because of another issue which he decided in favour of the Defendant, and which was sufficient to dispose of the applications before him.

10. That second issue was whether it was arguable that a person who acquires a statutory title to one plot of land by reason of adverse possession can enjoy a right of way over an adjoining plot of land held by the registered owner of the first plot of land. The judge decided that it was not arguable that he could. Although I have reached a different conclusion from that of the judge, the primary argument which he had to consider was whether a right of way could be impliedly granted to a person in adverse possession in these circumstances. That was because the right of way which the Plaintiffs claim in this case was characterised before him as an easement of necessity, and an easement of necessity can only be acquired by implication. On that argument, the authorities are all one way. However, the argument which has persuaded me to take a different view from that of the judge, namely that it is arguable that a right of way can be presumed to have been granted to a person in adverse possession in these circumstances, was an argument which was only touched on in passing in the hearing before the judge.

Mortimer J.A. :

11. These appeals raise the same important question. This is whether it is arguable that a person who has acquired a title to land by adverse possession can also acquire by prescription or lost modern grant a right of way over adjoining land leased by the person dispossessed.

12. Save for St John's Cathedral in Hong Kong no land is held in fee simple. It is held under Crown leases. Three issues arise for our consideration:

1. Whether an easement of way can be acquired in Hong Kong by lost modern grant or under the Prescription Act 1832 other than by a user in fee simple?

2. If so, whether an easement of way can be acquired by a squatter over land of the person dispossessed?

3. Whether it is arguable that the plaintiffs have acquired a right of way by proprietary estoppel?

Background

13. The adverse possession began in about 1951. The plaintiffs' access to the public highway is along a road which runs over the defendant's land held under a Crown Lease. Since the plaintiffs occupied their land, they have used the access road and they now claim a right of way for their land.

14. By the Crown Lease the whole of the land was let to the defendants on 1 August 1996 for one year but without vacant possession of the parts occupied by the plaintiffs.

15. The defendants interferedinter alia with the use of the access road by the plaintiffs and so they began an action for a declaration to establish the right of way together with injunctions and damages.

16. The plaintiffs applied for interlocutory injunctions and the deputy judge granted one to abate the nuisance alleged but refused any relief for the alleged interference with the right of way on the basis that there was no serious issue to be tried.

17. The judge followed both the English Common Law, English authority and Hong Kong authority. His decision is admirably reasoned and supported by that authority but Mr Robert Tang QC, who appears for the plaintiffs with Mr Louis Chan, submits that the judge is wrong as the Prescription Act 1932 and the English Common Law only apply in Hong Kong with modification.

First issue

18. I now turn to the first issue and consider whether it is arguable that the English Common Law on the acquisition of an easement of way by lost modern grant applies to Hong Kong and whether the Prescription Act 1832 applies with modifications.

19. Mr Tang concedes at the outset that if English Common Law applies to the creation of the easement by lost modern grant or prescription, he cannot succeed. Put shortly, his submission is that the circumstances in Hong Kong are so different that modification to the English law and the Prescription Act is necessary.

20. In his clear and helpful submissions, we have been taken back to first principles. It is useful to review some of them. Of course, there must be a dominant and a servient tenement and the easement must be of benefit to the land and appurtenant to it. A person cannot therefore have an easement over his own land. If a man owns and occupies both tenements, an easement cannot exist. But, on the other hand, if there are two tenements - not occupied by the owner of both - a tenant may be granted an easement by his landlord over land occupied by that landlord. This easement will run with the land and for the duration of the tenancy and for its benefit.

21. However, easements which arise by lost modern grant or prescription are different. They may only arise for the user in fee simple and over a fee simple. There are based on fictional grants to which I will return.

22. In Hong Kong, the application of English Law Ordinance ss 3 and 4 make the Common Law and the Prescription Act 1932 applicable to Hong Kong but subject to such modifications as the circumstances in Hong Kong may require. This applies to both the Common Law principles and the Prescription Act. But as an easement may only be created under the Common Law or the Prescription Act over the fee simple, and for the benefit of the fee simple, it can have no practical effect in Hong Kong without modification.

23. As certain sections of the Prescription Act were specifically applied to Hong Kong, can the Ordinance have intended in this respect to be devoid of practical effect?

24. Mr Tang says no. It must have been intended to apply to leaseholds. The circumstances in Hong Kong make modification necessary to give this part of the law effect.

25. Mr Kwok submits to the contrary - that well-established authority applies beyond argument.

26. Subject to an examination of that authority, I find Mr Tang's submission on this persuasive. Indeed, in an earlier case Godfrey JA - then sitting at first instance - thought it not unarguable that the Common Law principles and the Prescription Act applied between Crown lessees.

27. For my part, I would be reluctant to find this arguable if there is a risk demonstrated that the law - presently well established and certain - would become uncertain or thrown into disarray or would have unforeseen adverse consequences without corresponding benefits. It seems to me that the benefit here would be possibly to fill a lacuna in the law. In other words to give leaseholders rights which arguably ought to arise from long user.

28. As was pointed out by Mr Tang, the authors Megarry and Wade in the Law of Real Property, 5th edition think that the situation in England is irrational. They say at p873:

"It will be seen, accordingly, that the theory of prescription does not deal properly with cases where the servient land is in the hands of a limited owner. It seems irrational to allow prescription against land if occupied by an owner in fee simple but not if occupied under a 999-year lease, for example. The law in Ireland, where prescription against limited owners is allowed, seems more satisfactory."

Here they advert to what I regard as an important point in the argument. The Common Law in Ireland has parted from that in England long ago. There one tenant may acquire a right of way over the land of another tenant held by the same landlord. See Flynn v. Harte [1913] 2 I.R. 322.

29. By 1937 the law there had developed in this regard to such an extent, that even a weekly tenant could acquire such right. See Tallon v. Ennis [1937] IR 549. As is clear from the above cases and supported by Megarry and Wade, this approach to the law in Ireland has not thrown the law into disarray and arguably is more sensible and more practical than that in England. After all, the policy of the law is that a long enjoyment of a state of affairs may be such that the law will seek to uphold it.

30. As a tenant may acquire a right of way over other land of his landlord by express grant and such will run with the land, Mr Tang points out the only thing which stands in the way of such an easement being acquired by prescription is the English rule that it can only be acquired for the freehold and over the freehold.

31. For my part, therefore, I am satisfied that it is arguable that the Common Law and the Prescription Act 1832 have been modified so that in Hong Kong a leaseholder may acquire a right of way under the Prescription Act or by way of lost modern grant over another leaseholder's land.

32. It follows that I doubt whether Tang Tim-fat and another v. Chan Fok Kei and others [1993] 2 HKLR 373 is rightly decided on this point. Similarly, where relevant, Foo Kam Shing and others v. The Local Printing Press Limited [1952] HKLR 192. The application of English Law Ordinance was not then in force. This was a decision of the full court. I note in passing that previously, this Court has said that it does not regard itself as bound by a previous decision of the full court.

Second issue

33. Mr Kwok, who appears with Mr C.Y. Li for the respondents, reserves his main attack upon this second question. Whether a right of way can be acquired by a squatter over other land of the dispossessed person? I regard this as a much more difficult question.

34. He places much reliance upon the well-known case Wilkes v. Greenway (1890) 6 TLR 449. He submits that the plaintiffs here claim a right of way of necessity and that the law refuses to imply such a right of way for a squatter.

35. In many respects, this authority is unsatisfactory but the defendant had acquired a possessory title over gardens by 12 years occupation. The owner's land surrounded the gardens and the only access was over the owner's road. There was no prescriptive right of way as the land had only been used for 12 years and not 20. Lord Esher MR said at p449:

"The doctrine of a way of necessity is only applied to a title by grant, personal or Parliamentary. Upon the hypotheses we are obliged to assume the title to the right of way can only be maintained if the statute gives it, which statute, however, does not apply to a right of way. It is not contended that the statutory enactment as to easement applies."

36. A right of way of necessity arises not by prescription but at once by implication in the grant or reservation. There is no grant or reservation to a possessory title so of course no right of way of necessity can be implied.

37. Mr Kwok submits a fortiori that no right of way can be acquired by a squatter by prescription. In such cases he submits that plaintiffs ask for a grant to be presumed whereas Mr Kwok submits this is impossible because:

(a) the squatter obviously has no grant, and

(b) the suggestion that a dispossessed landowner would make a grant to exclude himself is ridiculous and not supported by authority.

38. Also he submits that even if the law is modified for leaseholders a squatter cannot take advantage of a prescriptive right as he is a tort feasor. What is more, he says, there is no dominant and servient tenement during the prescriptive period as both are in the same ownership.

39. On the face of it, those are powerful submissions. Is there an answer to them?

40. The first answer - it seems to me - is that we are concerned here not with his right to the land but particularly with his right of way. Mr Tang submits that the plaintiffs do not claim a right of way of necessity by implication but a right by prescription. There is an important difference. For a right to be implied, there must be a grant or reservation.

41. Where a right of way is acquired by prescription, however, the grant is presumed. It is a fiction but even if it is demonstrated that there was no grant or there could have been no grant, the grant is conclusively proved unless that is it is impossible in law. See Tehidy Minerals Ltd and another v. Norman and others [1971] 2 QB 528 (CA) at 552.

42. So, here it is arguable that long user by a squatter may be a circumstance in which a grant is presumed - even if it can be shown to be unrealistic or never made. The only question is whether such grant was impossible in law. For my part, I think it arguable that such a grant is possible in law.

43. Nor do I think that the plaintiffs' tortuous occupation is conclusive against him. He acquires some rights on the very first day of taking possession against all save those who have prior rights. His rights of course are precarious until his position is secured by the Limitation Ordinance. Similarly Mr Tang submits that he may at the same time acquire a right by prescription to a right of way which is also precarious until the 20 year period is complete. But then by s17 of the Limitation Ordinance the owner's rights are extinguished and the occupier has acquired both a possessory title to the land and by user he has secured a right of way over the servient tenement.

44. For my part, I find that arguable. But in any event here there has been 20 years user since the limitation period expired. This was a point raised by my brother Keith J in the course of submissions. I have little difficulty in finding that once a squatter has established a possessory title against the landowner, he can acquire a right of way over the dispossessed owners his land by prescription.

Third issue

45. For my part, I find it sufficient to say that I entirely agree with the judge that the evidence put before him was simply not sufficient to make out a case on proprietary estoppel. Whether this can be established at trial remains to be seen.

Conclusion

46. For these reasons, I would find that there is a serious issue to be tried whether the plaintiffs have acquired a right of way over the access road. I would also allow the appeal and hear counsel as to any supplementary orders we may wish to make.

47. The appeal is allowed.