TANG LAI v. DIRECTOR OF LANDS AND ANOTHER

HCAL 2085/2020

[2021] HKCFI 1529

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 2085 OF 2020

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J U D G M E N T

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INTRODUCTION

1.  The is the rolled-up hearing of the Applicant’s application for judicial review of:

(1)  the failure of the Director of Lands (“the Director”) to disclose material evidence at the hearing of the Applicant’s appeal before the Home Purchase Allowance Appeals Committee (“the Appeals Committee”) against the decision of the Director dated 30 March 2020 (“the Director’s Decision”) rejecting her claim for Home Purchase Allowance (“HPA”) or Supplemental Allowance (“SA”); and

(2)  the decision of the Appeals Committee dated 28 July 2020 (“the Appeal Decision”) upholding the Director’s Decision.

2.  As will be seen below, the principal issue which arises for determination in the present case is whether the Applicant, who had acquired a possessory title to a property prior to its resumption by the Government, should be regarded as the “owner”, or “owner-occupier”, of the property for the purpose of eligibility for HPA under the relevant compensation policy of the Government.

THE GOVERNMENT’S POLICY ON PAYMENT OF HPA/SA UPON RESUMPTION OF LAND

3.  To assist understanding of the Applicant’s complaints in this application, I shall first describe the Government’s policy on payment of HPA/SA upon resumption of land under the Lands Resumption Ordinance, Cap 124 (“the LRO”).

4.  When private land is resumed by the Government under the LRO, the former owners and persons having an estate or interest in the land will be entitled to be paid statutory compensation in accordance with ss 10, 11 and 12 thereof, which contain detailed provisions relating to the determination by the Lands Tribunal of compensation payable by the Government, and the principles and rules for assessment of the compensation.

5.  In addition to statutory compensation under the LRO, the Government has formulated, and revised from time to time, administrative policies for the payment of different types of ex gratia compensation or allowances (including HPA/SA) upon resumption of land under the LRO.

6.  The policy of the Government relating to the payment of HPA/SA relevant for the purpose of this case can be found in the “Land Resumption and Compensation - Guidelines for Owners, Occupiers and Surveyors” published by the Lands Department in July 2013 (Revised Version) (“the Compensation Policy”).  The following provisions of the Compensation Policy are relevant for the purpose of the present discussion:

“2. Land Resumption

The Government may acquire private land by resumption for the implementation of public projects such as a road scheme, a public housing development, an urban renewal project, an open space, a drainage improvement project, a new market, a school or any item in the Public Works Programme. According to the purpose of public projects, resumption proceedings may be instituted mainly under the provisions of:-

(a) the Lands Resumption Ordinance, Chapter 124;

…

(f) the Urban Renewal Authority Ordinance, Chapter 563;

The Director of Lands is given the authority to implement resumption and compensation provisions of these Ordinances.

3. Notice of Resumption

When a resumption is ordered, a Government Notice will be published in the Gazette and a freezing survey¹will be conducted. A copy of the Government notice will be affixed on or near the properties affected, and sent to the registered owners thereof, where possible…

1 For railway projects, the Lands Department or for urban renewal projects, the Urban Renewal Authority (URA) will carry out a survey when the project is announced which may be more than a year before the resumption is gazetted. Such survey will be adopted by the Lands Department as the freezing survey.

4. Offer of Compensation

When the private land is resumed or otherwise adversely affected by the actions of the Government, the Ordinance under which the legal interest is extinguished or affected provides for the payment of compensation. The former owner or persons having an interest in the land such as the tenant, will be entitled to statutory compensation for the value of the land and building (if any) or other land interests resumed in accordance with the provisions of the Ordinance.

(a) For land resumed under the Lands Resumption Ordinance (Chapter 124), the Government will make an offer of compensation in respect of the resumption to the former owner and to any person having an estate or interest in the land immediately before reversion under an instrument registered in the Land Registry or invite claims for compensation from them within 28 days from the date of reversion…

(c) The amount of compensation will be assessed on the basis prescribed in the respective Ordinances. Upon acceptance of the amount of compensation offered and the proof of title to the satisfaction of the Government, the claimant is required to sign necessary documents…

6. Statutory and Ex-Gratia Compensation to Different Parties

The type of compensation to a party affected by a land resumption scheme may vary according to the type of property in question and the legal interest held by the party in the property. The details are set out in the following paragraphs.

6.1 Domestic Property

6.1.1 Statutory Compensation

(a) Owners’ Property interest

Legal owners are entitled to the open market value of the resumed properties assessed on a vacant possession basis or subject to tenancy basis as appropriate as at the date of reversion…

6.1.2 Home Purchase Allowance and Supplementary Allowance

(a) Owner-occupiers

(i) In addition to the statutory compensation, owner-occupiers may also receive an ex-gratia allowance, namely the Home Purchase Allowance (HPA).

(ii) The HPA is payable to owner-occupiers to enable them to purchase a relatively new replacement flat of a similar size in the locality of the resumed flat. The amount of HPA payable to individual owners is the difference between the value of a notional replacement flat (based on a seven year old flat of a size similar to the resumed flat and in the same locality) and the open market value of the resumed flat. The eligibility for receiving the HPA will be subject to screening in accordance with the prevailing Government policy. The HPA will not be offered if the owner-occupier has already accepted rehousing by the Government.

(iii) The full HPA will be paid to an owner who is occupying the entire flat or if he can prove that the entire flat is occupied by his immediate family members, including children, parents and dependent brothers and sisters, grandparents, grandchildren, step-parents, spouse’s parents and spouse’s step-parents.

(b) Owners of tenanated flats or tenanted areas

(i) In addition to the statutory compensation, owners of tenanted flats or tenanted areas are eligible for the Supplementary Allowance (SA) which is a supplement to the open market value of the resumed flat subject to tenancy.

…

(iv) The SA will be paid at 50% of the full HPA for a first wholly-tenanted flat and at 25% of the full HPA for a second wholly-tenanted flat. No SA will be paid for a third wholly-tenanted flat.

(c) How is the HPA assessed

For all resumed flats in old buildings within a resumption project, the Director of Lands will assess the unit rate (i.e. $ per square meter) of a notional replacement flat of 7 years old. The notional replacement flat is assumed to be in a comparable quality building, situated in a similar locality in terms of characteristics and accessibility. The notional replacement flat will be situated at the middle floor of a notional building with average orientation, i.e. not facing south or west, and without sea view. Normally, comparables aged around 7 years and transacted around the date of reversion will be selected. Based on these comparables, appropriate adjustments for time, age, orientation, floor, quality, size, accessibility, environment etc will be made so as to arrive at the unit rate of a notional replacement flat for a resumption project. A single notional replacement flat unit rate will be used throughout a resumption project.

The HPA for a resumed flat is the difference between the value of a notional replacement flat (the area of the resumed flat multiplied by the notional replacement flat unit rate) and the open market value of the resumed flat.

(d) General issues in relation to the HPA/SA

(i) An owner of a vacant flat is eligible for the same amount of SA as an owner of a tenanted flat.

(ii) The HPA/SA will be payable for a maximum of three flats per owner per resumption exercise.

(ix) For railway projects, Government’s survey or for urban renewal projects, the URA’s survey (both surveys carried out at the time of announcement of the project) will normally be adopted for the purpose of determining the eligibility for HPA/SA. Government’s update survey (carried out at the time of gazetting of the Resumption Notice) will be used to counter check if the owner is still entitled to HPA/SA or the same amount of HPA/SA. No additional HPA/SA entitlement or increased amount of HPA/SA will be allowed as a result of the update survey in normal circumstances.

(e) Appeal mechanism

(i) An owner, who considers himself aggrieved by the decision of the Director of Lands in respect of the payment of the HPA/SA (on contentious issues regarding the eligibility for the HPA/SA, the calculation of floor area for payment of the HPA/SA and other related matters) could, within 60 days of such decision, submit an appeal in writing to an Appeals Committee. The Appeals Committee, after hearing and investigation, would then make a determination on the decision of the Director of Lands, if necessary…

12.2 Proof of Title

Before compensation for the resumption of land is released to the claimant, he is required to prove that he has a good title to the land being resumed. The claimant is requested to submit all the title deeds and documents listed in the schedule attached to the offer letter to the District Legal Advisory and Conveyancing Office…”

7.  In short, under the Compensation Policy, an owner of a flat which is subject to resumption by the Government under the LRO is entitled to be paid statutory compensation based on its open market value plus an ex gratia allowance, namely, HPA or SA, depending on whether the flat is occupied (in whole or in part) by the owner and/or his immediate family members, tenanated or vacant (up to a maximum of three flats per owner per resumption exercise).  Where the resumed flat was solely occupied by the owner and/or his immediate family members, the owner is entitled to be paid the full HPA, which is assessed based on the difference between the value of a notional replacement flat (of 7 years old in a comparable quality building, situated in a similar locality in terms of characteristics and accessibility, and at the middle floor of the notional building with average orientation) and the open market value of the resumed flat.  The purpose of this policy is to enable an owner-occupier to purchase a relatively new replacement flat of a similar size in the locality of the resumed flat.

8.  The expression “owner-occupier” used in the Compensation Policy has a time-reference, namely, at the time of the freezing survey which is adopted for the purpose of determining eligibility for HPA/SA (see §6.2.1(d)(ix) of the Compensation Policy).  As mentioned in the Affirmation of Luk Hung Yin, Senior Estate Surveyor of the Lands Department (“LandsD”), at §11:

“The Freezing Survey is normally done without any prior notice on the commencement day of a development project, that is, the date on which the project is gazetted under section 23(2) of the Urban Renewal Authority Ordinance. As set out in paragraphs 31 and 32 of the URA Strategy, Freezing Survey is conducted to determine eligibility for HPA/SA. The survey should be completed on the same day or at most within a couple of days, because it is important that a comprehensive and accurate survey on a without notice basis [is carried out to] prevent and deter ‘imposters’ from taking up residence in the project area after the project announcement date and abusing the ex-gratia compensation for rehousing purposes. This could also deter unfair eviction of tenants and … fake self-occupation by owners.”

9.  In relation to redevelopment projects implemented by the Urban Renewal Authority (“URA”), although it may request for resumption of the land required for redevelopment under s 29(1) of the Urban Renewal Authority Ordinance, Cap 563 (“the URAO”), URA would normally seek to acquire the land by agreement before making an application to the Secretary for Development requesting him to recommend to the Chief Executive in Council to invoke the power of resumption under the LRO.  The policy adopted by URA in property acquisition largely mirrors the Government’s Compensation Policy.  In this regard, Mr Earl Deng (for the Applicant) has referred the court to the prevailing policy of URA contained in a pamphlet titled “Principles Adopted by the Urban Renewal Authority in Property Acquisition (Other than Industrial Properties) (October 2020)” (“the 2020 URA Acquisition Principles”).  The following provisions in the 2020 URA Acquisition Principles are of note:

“This pamphlet briefly outlines the principles adopted by the Urban Renewal Authority (‘URA’) in the acquisition of properties (other than industrial properties) affected by URA’s urban renewal projects (‘URA Projects’).

Domestic Properties

1. URA will offer an owner-occupier of domestic property within a URA Project the market value (assessed on vacant possession basis) of the affected property plus an ex-gratia allowance, namely Home Purchase Allowance (‘HPA’), for purchase of the affected property. The amount of HPA payable to individual owners is the difference between the value of a notional replacement flat and the market value of the property being acquired. The notional replacement flat is based on a seven-year-old flat of a size similar to the affected property and in the same locality. The notional replacement flat is assumed to be in a comparable quality building, situated in a similar locality in terms of characteristics and accessibility. The notional replacement flat will be situated at the middle floor of a notional building with average orientation, i.e. not facing south or west, and without sea view.

2. ‘Owner-occupier’ here means an owner who occupies the affected property as his/her sole residence. If an owner does not reside in the affected property as his/her sole residence, the occupancy status of the affected property will be treated as ‘Vacant’ and the owner will be offered Supplementary Allowance (‘SA’) instead of HPA. SA is a percentage of HPA. The criteria for determining whether an owner occupies the affected property as his/her ‘sole residence’ will be determined by URA according to URA’s prevailing policy.

3. An owner-occupier will be offered HPA for no more than three properties in a redevelopment project…

5. An owner who leaves the affected property vacant will be offered the market value (assessed on vacant possession basis) of the affected property plus SA…

6. An owner who lets the affected property out will be offered the market value (assessed on vacant possession basis) of the affected property plus SA.

7. An owner of tenanted or vacant properties will be offered SA for no more than two properties in a URA Project…

Other General Rules

32.     URA will consider acquiring property from a holder of a valid adverse possessory order granted by the Court in favour of him/her. Depending on the circumstances of individual cases, URA may impose appropriate additional requirements to safeguard the interest of URA when acquiring properties with adverse possessory title.”

10.  Mr Deng relies in particular on §32 of the 2020 URA Acquisition Principles to show that possessory titles are recognized by URA. Ms Jess Chan (for the Director) has raised the issue of whether §32 of the 2020 URA Acquisition Principles represented the practice of URA at the material times in this case (between 2011 and 2014).  Whatever maybe the position, the 2020 URA Acquisition Principles (or its previous version(s)) are not directly relevant to the present application, because the complaint in this case is not that URA failed to make any offer of HPA/SA to the Applicant.  In any event, the 2020 URA Acquisition Principles are silent on whether, in addition to the open market value of a possessory title to the property, URA would offer any HPA/SA to the adverse possessor.

THE BASIC FACTS OF THE APPLICANT’S CASE

11.  Teng Shee Kim and Tang Yee Shee, deceased (“Mr Teng” and “Madam Tang” respectively, and “the Registered Owners” collectively) were formerly the registered owners and joint tenants of the property (“the Property”) known as All That 1/7^th undivided part or share of and in Section F of Kowloon Inland Lot No 4285 together with the right to the exclusive use occupation and enjoyment of 3/F, No 68 Kowloon City Road, Kowloon (“the Building”) pursuant to an assignment dated 1 April 1958.

12.  According to the Applicant:

(1)  Mr Teng and Madam Tang were husband and wife and, at all material times, were residing in Phoenix, USA.

(2)  The Applicant was the grand-niece of the Registered Owners (she being the granddaughter of Mr Teng’s younger brother).

(3)  The Applicant (with her parents) came to Hong Kong from Mainland China in or around 1980 and began to reside in the Property together with a few other relatives of the Registered Owners.

(4)  Mr Teng and Madam Tang passed away in 1986 and 1993 respectively in America.

(5)  By 1998, the Applicant became the sole occupier of the Property, the other occupants having either passed away or left the Property.

(6)  Between 1998 and the resumption of the Property by the Government (more particularly described below), the Applicant was in exclusive and uninterrupted possession of the Property with the intention of excluding the whole world including the personal representatives of the Registered Owners.

13.  On 25 November 2011, URA published in the Gazette a notice (GN 7667) pursuant to s 23(1) of the URAO that it would commence the implementation of a development project known as KC-007 Kowloon City Road/Sheung Heung Road (“the Project”) by way of a development project under s 26 of the URAO.  The Project occupied an area of about 1,622 m² abutting Kowloon City Road to the west and Sheung Heung Road to the north in Ma Tau Kok and covered 16 street numbers with buildings that were built in 1950s.  The Building was one of the buildings within the boundary of the Project.

14.  Also on 25 November 2011, URA conducted a freezing survey (“the Freezing Survey”) of the properties (including the Property) affected by the Project.  There were two visits to the Property on that day, one in the morning and the other in the afternoon, but no one answered the door on either occasion.  As a standard practice, URA posted notices outside the door of the Property informing the occupants to contact URA for conducting the Freezing Survey.

15.  By a letter which was received by URA on 9 February 2012 (“the Feb 2012 Letter”), the Applicant informed URA that she was the occupier of the Property, explained that she failed to register her claim in the Freezing Survey in November 2011 due to work, and requested that she be permitted to register her claim again.  URA acknowledged receipt of the Feb 2012 Letter by a letter also dated 9 February 2012.

16.  In August 2012, Kowloon City Road Redevelopment Concern Group (“the Concern Group”) sent a letter (“the Aug 2012 Letter”) on behalf of the Applicant to URA.  In that letter, the Concern Group informed URA, inter alia, that (i) the Applicant had been residing in the Property for over 32 years, and (ii) the Applicant was not at home at the time of the Freezing Survey, and asked whether, in view of the fact that URA had confirmed the implementation of the Project on 6 July 2012, the Applicant should submit any document or form to preserve or protect her position as an affected resident (以確保其受重建影響的街坊資格).

17.  By a letter in reply to the Applicant dated 28 August 2012, URA requested the Applicant to provide the death certificates of the Registered Owners, information relating to the successors (or personal representations) of the Registered Owners, and their means of contact in order to enable URA to follow up with the matter.  The Applicant did not respond to URA’s request because, according to the Applicant, she “did not in fact wish to contact relatives about the issue as she was concerned that the Paper Owners would seek to evict her”[1].

18.  On 25 April 2014, a resumption notice (GN 2424) was published in the Gazette under the LRO, giving notice to, inter alia, the owners of various lots of land, including Section F of Kowloon Inland Lot No 4285 (No 68 Kowloon City Road), that the Chief Executive in Council had decided that those lots were required for a public purpose and the Chief Executive had decided that they were to be resumed and revert to the Government of the HKSAR on the expiration of 3 months from the date of the affixing of the notice to the relevant land.

19.  Also on 25 April 2014, URA conducted an updated survey (“the Updated Survey”) of the properties (including the Property) affected by the Project.  The Applicant was present at the Property on this occasion, and claimed that she had occupied the Property since December 1980. The Applicant also mentioned that she had engaged solicitors to commence proceedings regarding her claim for adverse possession of the Property.

20.  At midnight on 25 July 2014, the Property reverted to the Government.

21.  On 14 August 2014, LandsD issued a letter to the Applicant in her capacity as an occupier of the Property, offering an ex gratia payment of HK$75,713 plus interest as removal allowance.  This offer was not accepted by the Applicant.

22.  In a separate letter dated 14 August 2014 addressed to the Registered Owners, LandsD offered the sum of HK$2,853,000 as statutory compensation under s 6(1)(a) of the LRO.  This letter was returned undelivered.

23.  On or about 29 December 2014, the Applicant commenced proceedings in the District Court (DCCJ 5042/2014) seeking declaratory relief in respect of her possessory title to the Property (“the DC Action”).

24.  The Applicant moved out of the Property on 30 April 2015.

25.  On 20 July 2015, the Applicant, through her solicitors, submitted to LandsD a claim for HK$8 million as “compensation and costs or remuneration” in relation to the resumption of the Property pursuant to s 8 of the LRO.  LandsD did not accept the Applicant’s claim.

26.  On 13 June 2017, the Applicant obtained a default judgment against the Personal Representatives of the Estate of Tang Yee Shee, Deceased, in the DC Action.  The sealed judgment (“the Judgment”) stated as follows:

“[1] The Defendant’s title to the property known as 3^rd floor, No. 68 Kowloon City Road, Kowloon (‘Property’) had immediately prior to resumption by the HKSAR Government at midnight on 25 July 2014 pursuant to Government Notice G.N. 2424 dated 26 March 2014 and published in the Government Gazette under the Lands Resumption Ordinance (Cap.124) (‘LRO’) on 25 April 2014 and by operation of section 5 of LRO (‘the Resumption’), been extinguished pursuant to s.17 of the Limitation Ordinance (Cap.347).

[2]  The Plaintiff had established possessory title to the Property immediately prior to the Resumption.”

27.  On 7 July 2017, the Applicant’s solicitors sent to LandsD a copy of the Judgment and requested for an offer of compensation with reference to the updated market value of the Property for the Applicant’s consideration.

28.  By a further letter dated 8 July 2017, the Applicant submitted to LandsD a revised claim for HK$9.75 million (excluding interest and costs) as compensation for the resumption of the Property.

29.  On 20 September 2019, LandsD, in recognition of the Applicant’s possessory title to the Property, made a revised offer of HK$2,411,000 (plus interest thereon) as compensation in full and final settlement of all or any claims, costs and demands which the Applicant might have against the Government arising out of the provisions of the LRO or otherwise arising out of the resumption of the Property and her interest therein.  According to Mr Luk Hung Yin, this revised amount of statutory compensation reflected the open market value of the Property subject to possessory title which was lower than the previous one made to the Registered Owners mentioned in §22 above[2].

30.  On 13 November 2019, the Applicant, through her surveyors, rejected LandsD’s revised offer of HK$2,411,000, and made a further revised claim in the sum of HK$7,543,800 (plus interest etc) on the basis that she was entitled to receive, in addition to statutory compensation, HPA.

31.  The Applicant’s further revised claim was rejected by the Director in a letter from LandsD dated 30 March 2020.  In that letter, the following was stated:

“Please be advised that according to the prevailing Government policy, freezing survey will be adopted for the purpose of determining the eligibility for HPA/SA. As no contact was recorded in the freezing surveys conducted in 2011 and given the fact that an adverse possessory title holder is not equivalent to that of an owner, this Department has decided to maintain that no HPA/SA should be payable.”

32.  In adopting the position that an adverse possessory title holder is not equivalent to an owner, the Director takes the view that the statutory meaning of “owner” in the LRO should suitably be adopted for the purpose of considering a person’s eligibility for HPA/SA under the Compensation Policy[3]. In s 2 of the LRO, the word “owner (業主)” is defined to mean -

“the person registered or entitled to be registered in the Land Registry in respect of any land sought to be resumed, or, if such person is absent from Hong Kong, or cannot be found, or is bankrupt or dead, his agent or representative in Hong Kong”.

33.  On 27 May 2020, the Applicant lodged an appeal (“the Appeal”) to the Appeals Committee against the Director’s Decision.  The Appeals Committee heard the Appeal on 17 July 2020, and dismissed the Appeal on 28 July 2020.  The Decision, so far as material, stated as follows:

“According to paragraph 6.1.2(d)(ix) of the Land Resumption and Compensation in the Urban Area - Guidelines for Owners, Occupiers and Surveyors (the Guidelines), ‘For railway projects, Government’s survey or for urban renewal projects, the URA (i.e. Urban Renewal Authority)’s survey (both surveys carried out at the time of announcement of the project) will normally be adopted for the purpose of determining the eligibility for HPA/SA. Government’s update survey (carried out at the time of gazetting of the Resumption Notice) will be used to counter check if the owner is still entitled to HPA/SA or the same amount of HPA/SA. No additional HPA/SA entitlement or increased amount of HPA/SA will be allowed as a result of the update survey in normal circumstances.’

The appellant did not answer the door during the URA’s Freezing Survey (FS) conducted on 25 Nov 2011. URA then posted a notice outside the door of the subject property informing the occupier(s) to contact URA for conducting the FS. The photo record provided by the respondent showed that the notice was posted noticeably right next to the door of the subject property. A blank URA’s notice was submitted by the respondent with a copy to the appellant for reference.

The document provided by the appellant showed that her first contact with URA, via a social worker, was August 2012. Taking into account the background of the appellant, including her education level and job at the time, the appellant could not provide a satisfactory explanation to the Appeals Committee on the delayed contact with URA for more than 8 months. The appellant could not provide any substantial document to prove her residence at the subject property at the time of FS as well.

The Appellant obtained the possessory title to the subject property immediately prior to the resumption of the subject property by the HKSAR government at midnight on 25 July 2014 according to a court judgment dated 13 June 2017 (DCCJ 5042/2014). The respondent recognised the court decision and subsequently offered a statutory compensation to the appellant. The Appeals Committee agreed that the compensation already served the interest of the appellant regarding her possessory title to the subject property.

Upon consideration of all available documents and arguments, the Appeals Committee decided to uphold the respondent’s decision that the appellant would not be eligible to any HPA/SA for the resumption of the subject property.”

34.  Pausing here, I should explain the Appeals Committee’s finding that the Applicant’s first contact with URA, via a social worker, was in “August 2012”.  As mentioned in §15 above, the Applicant in fact wrote to URA in February 2012.  The Appeals Committee’s mistake arose because, in the “Reply of the Appellant” signed by the Applicant’s solicitors dated 8 July 2020, the following submission was made on behalf of the Applicant to the Appeals Committee:

“[10] The Director also alleges in its response that no one had contacted URA despite [posting] a notice outside the Property and publishing notices in the newspapers after the Freezing Survey. Instead, not only did one Ki Ki (淇淇) of the Kowloon City Road Redevelopment Concerns Group (九龍城道重建關注組) assist the Appellant to follow up her case with the URA, the URA had made communication with the Appellant over phone and by letter dated 28.08.2012 in the interim. A copy of the relevant excerpts from emails and the URA’s reply is now annexed and marked ‘H’.

[11]  Further, between 2012 and 2014, various contacts were made to the Appellant from time to time by the URA’s officers including … to negotiate for offers.  However, an URA offer made in about 14 August 2014 were considered inappropriate and not accepted by the Appellant …”

The exhibit marked “H” referred to in the Reply included a draft of the Aug 2012 letter and URA’s reply dated 28 August 2012 referred to in §§16-17 above.

35.  The Applicant did not refer the Appeals Committee to the correspondence between her and URA in February 2012 mentioned in §15 above.  The Applicant’s explanation for this omission is that she had forgotten about them until September 2020 when she unpacked her belongings after moving apartments in July 2020 and found “a few more documents such as my tax returns and also the single letter from the URA dated 9 February 2012”.  In her Affirmation filed on 28 October 2020, the Applicant said:

“[43] … It was only upon reading that letter that I recalled that I had written to the URA in early February 2012 to establish that I was living there for domestic purposes and to obtain compensation.

[44]     I had forgotten this February 2012 letter entirely as it was such a long time ago, and because I only found the email of Ki Ki regarding the resumption, it was always impregnated into my mind and memory that the URA only wrote back to me in August 2012 to contact my relatives after I spoke to Ki Ki.”

APPLICATION FOR JUDICIAL REVIEW

36.  On 19 October 2020, the Applicant made the present application for leave to apply for judicial review.  As summarized in the Skeleton Submissions of Mr Deng, the following grounds of judicial review are advanced:

(1)  Grounds 1A and B: breach of the right to a fair hearing under Article 10 of the Hong Kong Bill of Rights or common law, in that the Appeals Committee did not have the correct and/or relevant material before it, namely, evidence that the Applicant had contacted URA as early as 9 February 2012 instead of August 2012;

(2)  Ground 2: breach of the right to due process before the Appeals Committee, in that neither the Applicant nor her legal advisors were drawn to the principal and controversial issue, namely, whether she was resident at the subject property at the time of the Freezing Survey but was misled into focusing on evidence and submissions on whether she was a property owner recognized under the HPA/SA Scheme;

(3)  Grounds 3A and 3B: error of law by misinterpretation and/or misapplication of the HPA/SA Scheme for eligibility for ex gratia compensation -

(A)  on a true and proper construction of the Freezing Survey Policy, it was not intended to operate as a conclusive presumption of non-domestic use of premises, nor was it intended to impose a validity period for notification to URA that started running against the Applicant as a pre-condition for eligibility for ex gratia compensation; and

(B)  on a true and proper construction of the HPA/SA Scheme, the references to “owner” or “owners of domestic premises” include persons who have acquired a possessory title by virtue of s 17 of the Limitation Ordinance, Cap 247.

GROUND 3B: WHETHER THE APPLICANT SHOULD BE REGARDED AS THE OWNER OR OWNER-OCCUPIER OF THE PROPERTY FOR THE PURPOSE OF ELIGIBILITYT FOR HPA UNDER THE COMPENSATION POLICY

37.  I shall first deal with Ground 3B, which it is common ground is the critical issue in the present case[4].  On behalf of the Applicant, Mr Deng argues that the expressions “owner” and “owner of domestic premises” in the Compensation Policy should and must include a “possessory owner” like the Applicant, for the following 3 reasons:

(1)  The purpose of payment of HPA/SA was never a recognition of any legal title of the property owner.  Instead, it was to “enable affected owners to purchase a replacement flat of a similar size in the neighbourhood of the resumed flat.  The amount of HPA is the difference between the cost of the replacement flat and the amount of statutory compensation”.  If the HPA/SA Scheme excludes an owner such as the Applicant, she would in effect be deprived of the ability to acquire a flat of similar size in the neighbourhood, and this result would run counter to the social context and purpose of the HPA/SA Scheme in the first place.[5]

(2)  Under Hong Kong’s unregistered land title system, the person best entitled to land or property is the person with the best right to possession of it.  The Director’s reliance on the definition of “owner” in s 2 of the LRO to suggest that only the paper owner is entitled to HPA or SA is contradicted by his own position that the possessory owner is entitled to compensation under the LRO.[6]

(3)  If the Director is correct to suggest on the one hand the possessory owner is entitled to compensation under the LRO but on the other hand the paper owner is entitled to receive compensation under the HPA/SA Scheme, this would lead to irrational and absurd results.  This is because the paper owner’s title would have been defeated by the possessory owner through adverse possession and would become worthless as it is completely extinguished as a matter of law.  Nonetheless, the Director would be reviving the value of the paper owner’s title through a policy of conferring valuable consideration to the paper title under the HPA/SA Scheme even though the paper owner has never lived in the property for at least 12 years or asserted any property right or benefit for 12 years.  Such an approach is clearly contrary to public policy and a complete waste of taxpayer resources.[7]

38.  The question of whether the Applicant can qualify as the “owner” or “owner-occupier” of the Property for the purpose of eligibility for HPA under the Compensation Policy depends on the true meaning and effect of that policy.

39.  The principles for the proper construction of an administrative policy are well settled.  In Deluxe Ascent Limited v Director of Lands [2021] HKCFI 811, I summarized them at §24, as follows:

(1)  the true meaning and effect of a policy is a matter of law for the court to determine;

(2)  the court’s task is to ascertain the intention as expressed in the language of the policy objectively; and

(3)  when interpreting the policy, the court should adopt a purposive approach, having regard to the document’s context and purpose.

40.  For the purpose of the present case, it is important to emphasise the importance of avoiding a technical construction to an administrative policy expressed in ordinary language[8].  In Hong Kong Television Network Ltd v Chief Executive in Council [2016] 2 HKLRD 1005, Cheung CJHC (as he then was) said at §49: “It is essential that statements of administrative policy ‘should not be construed as though settled by parliamentary counsel but should be given effect to for what they are, viz administrative announcements setting out in layman’s language and in broad terms the polices which are to be followed’”, borrowing the words of Lord Browne-Wilkinson in R v Secretary of State for the Home Department, ex p Pierson [1998] AC 539, 576G/H to 577A.  See also Data Key Ltd v Director of Lands [2018] 2 HKLRD 158, at §25 per Au J (as he then was).

41.  In my view, upon the true and proper construction of the Compensation Policy, a person who has acquired title to a property by adverse possession does not qualify as the owner of the property for the purpose of eligibility for HPA, for the following reasons.

42.  First, as a matter of language and ordinary usage, I do not believe that a person who has acquired title to a property by adverse possession would be regarded by the general public in Hong Kong as the owner of the property.  It seems to me that the word “owner” of a property as ordinarily and generally understood would mean the person who has acquired paper title to the relevant property in a conventional way (eg through sale and purchase, gift, succession, etc).

43.  Second, whatever may be the strict legal rights associated with a possessory title, in practice there are real and substantial differences between it and a paper title, eg in terms of marketability and open market value, and the ability to utilize the property as security for a loan by way of legal charge or mortgage.  The absence of title deeds also means, by definition, that the owner of a possessory title cannot create an equitable mortgage by way of deposit of title deeds of the property in question.

44.  Third, in the Compensation Policy, §6.1.1 refers to “legal owners”, “legal tenants” and “legal domestic occupiers (including owner-occupiers and tenants)” as being entitled to receive “Statutory Compensation”, while §6.1.2 refers “owner-occupiers”, “owners of tenanted flats” and “owner of a vacant flat” as being entitled to receive HPA/SA.  It seems to me that the various references to “owner”/“owners” should be read consistently as a reference to the paper owner/owners.

45.  Fourth, §12.2 of the Compensation Policy provides that before compensation is released to the claimant, he is required to prove that he has a good title to the land being resumed and submit “all the title deeds and documents” listed in the schedule attached to the offer letter. This supports the view that the word “owner” as used in the Compensation Policy is not intended to refer to a person who has only a possessory title to the relevant property.

46.  Fifth, I consider there is force in Ms Chan’s argument that the Director’s construction of the Compensation Policy (viz a person who has acquired title to a property by adverse possession does not qualify as the “owner” or “owner-occupier” of the property for the purpose of eligibility for HPA) would promote certainty and consistency in the application the Compensation Policy.  In her skeleton submission (at §36), she puts it thus:

“More fundamentally, the Policy as properly construed by [the Director] can be practically applied with certainty and consistency for achieving the purpose of the Policy and facilitating relocation of home owners within the limited project time… Conversely, the Applicant’s interpretation if adopted will lead to uncertainty as to the identity of the recipient of the ex-gratia payment and the timing of making the payment when there are competing interests in a resumed property … It would also lead to absurdity in that significant ex-gratia payment would need to be made to a squatter who has not even commenced any adverse possession claim against the paper title owner (even if the claim has been commenced, it remains uncertain whether it will eventually succeed).”

47.  I shall now briefly deal with the three points raised by Mr Deng referred to in §37 above in support of the argument that a person who has acquired possessory title to a property qualifies as the “owner” or “owner of domestic property” for the purpose of eligibility for HPA under the Compensation Policy.

(1)  In respect of §37(1), whether recognising a person with possessory title to a property as the “owner” of the property for the purpose of eligibility for HPA under the Compensation Policy would advance the aim of HPA (namely, to enable an “owner-occupier” to purchase a relatively new replacement flat of a similar size in the locality of the resumed flat) begs the question of whether it is intended by the Government that the benefit of HPA should be extended and be available to possessory owners.  The question of eligibility for any ex gratia allowance involves considerations going to the use or allocation of public funds which, at heart, is a policy matter for the Government, not the court, to decide.  The court in an application for judicial review has no power to re-write, or amend, the Government’s Compensation Policy, and is duty-bound to give effect to what it regards as being the true meaning and effect of the policy.

(2)  In respect of §37(2), the fact that under Hong Kong law, the person best entitled to land or property is the person with the best right to possession of it[9] does not answer the question of whether a person with possessory title to a property should be regarded as the “owner” of the property for the purpose of eligibility for HPA under the Compensation Policy.  The answer to that question depends, as earlier mentioned, on the true construction of the Compensation Policy.  There is, so far as I can see, no inconsistency between the Director’s position that a person with possessory title to a resumed property does not qualify as the “owner” of the property for the purpose of eligibility for HPA under the Compensation Policy, and his acceptance that a possessory owner has an interest in the resumed property which would entitle him/her to receive statutory compensation under s 8 of the LRO.  In passing, I should mention that Mr Luk Hung Yin has, in his affirmation, drawn the court’s attention to a previous case where two brothers claimed that they had obtained possessory title to a property in Lai Chi Kok which fell within the boundary of a URA project.  The property was resumed in 2008 under the LRO, and the two brothers sought, inter alia, a court declaration that they had jointly acquired legal title to the property by adverse possession.  Deputy High Court Judge Leung upheld the brothers’ claim of adverse possession but refused to grant the declaration sought.  At §56 of his judgment in Lam Chi Keung and Lam Kin Sun Bee v The Personal Representatives of Choi Chung Fun, Deceased, HCMP 1202/2011 (unreported, 15 July 2013), the learned judge said: “The plaintiffs also claim for a declaration that by adverse possession, they have jointly acquired legal title to the Property.  In my judgment, the claim on the basis of adverse possession does not go as far as conferring on the plaintiffs the legal title.  I refuse the claim for such relief.”  Eventually, the brothers’ claim for HPA was rejected but they were offered statutory compensation for their interest in the relevant property under s 8 of the LRO[10].  It is not necessary in this case to decide whether the learned judge was correct to refuse to grant the declaration sought.  Nor is it necessary to discuss whether, in the abstract, a possessory title should be equated with a “legal title”.  There is no doubt, however, that a possessory title is not the same as a paper title, whether as a matter of law (including the well-established principle that the paper owner’s title is extinguished vis-à-vis the squatter only, but remains a title vis-à-vis his landlord such that upon surrender of the lease by the paper owner (tenant), the squatter’s title would also be extinguished vis-à-vis the landlord[11]), or as a matter of fact.  I refer to the discussion in §43 above.

(3)  In respect of §37(3), I do not see that a paper owner whose title has been extinguished by adverse possession would be eligible for HPA or SA, since the paper owner would not be an occupier of the property, and the property would not be tenanted (with the paper owner as landlord) or vacant.  Whether the paper owner is entitled to statutory compensation under the LRO is a matter of law and, in case of dispute, will have to be determined by the Lands Tribunal in the ordinary way.

48.  The above conclusion is sufficient to dispose of the present application for judicial review.  If (as I find it to be the case) the Applicant does not qualify as the “owner” or “owner-occupier” of the Property for the purpose of eligibility for HPA under the Compensation Policy, the Appeal would stand to be dismissed whatever may be said about the issues raised under Grounds 1A, 1B and 2 of judicial review.  There would also be no purpose in remitting the Appeal to the Appeals Committee for fresh consideration even if those grounds (or some of them) are upheld by the court. No relief should be granted in the court’s exercise of discretion in an application for judicial review where the outcome is inevitable.

49.  For the above reasons, it is not necessary, and I do not propose, to deal with the remaining grounds of judicial review, save to point out that I am far from being satisfied about the merits of Grounds 1A and 1B.  They were originally put forward in the Form 86[12] as being based on “material non-disclosure” on the part of the Director, but were “reframed” as grounds based on an “error of fact” or a “failure to take into account a material fact” by the Appeals Committee[13]. Regardless of how the grounds are framed, I do not accept their validity, for the following reasons:

(1)  As stated in the Appeal Decision, the Appeals Committee’s finding that the Applicant’s “first contact with URA, via a social worker, was [in] August 2012” was based on document(s) provided by the Applicant herself.

(2)  The fact that the Applicant had sent a letter to URA as early as February 2012 in response to the Freezing Survey to register her claim for compensation was a matter well within the Applicant’s knowledge. While the fact that the Applicant had forgotten about the letter may explain her failure to bring that letter to the attention of the Appeals Committee, she cannot lay the blame for the non-production of the letter before the Appeals Committee at the door of the Director.

(3)  The Feb 2012 Letter was sent to URA, not the Director.  It is the un-contradicted evidence of the Director that he (and the Lands Department) did not have knowledge of that letter at the time of the hearing before the Appeals Committee.  URA was not the agent of the Director. There is no basis to impute the knowledge of URA to the Director.

50.  In these circumstances, I do not accept that the Director was guilty of any material non-disclosure.  Any error of fact or failure to take into account a material fact on the part of the Appeals Committee was the result of, or induced by, the Applicant’s own conduct.  It would be unfair for this matter to be turned into a ground of judicial review in the Applicant’s favour.

DISPOSITION

51.  The court grants leave to the Applicant to apply for judicial review, on the basis that Ground 3(B) is reasonably arguable and has a realistic prospect of success, but dismisses the substantive application for judicial review upon a full consideration of the merits of the application.  The court further orders the Applicant to pay the costs of the Director, including all reserved costs (if any), to be taxed if not agreed. There shall be no order as to costs as between the Applicant and the Home Purchase Allowance Appeals Committee.