Leung Shui Fun v. Secretary for Justice

HCA 551/2021

[2026] HKCFI 629

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2021

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BETWEEN

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DECISION

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INTRODUCTION

1.In this action, the plaintiff claims for possessory title against the defendant in respect of certain pieces of land in the New Territories (“the Lands”).  The Lands comprise:

(1)  what was formerly Remaining Portion of Lot No. 376 of Demarcation District No. 131, New Territories (“Former Lot 376RP”);

(2)  parts of the former Section C of Lot 376 (“Lot 376C”); and

(3)  parts of the former Remaining Portion of Lot 388 (“Lot 388RP”).

2.The plaintiff alleges that her grandfather (“the Grandfather”), father (“the Father”)  and she have been in successive exclusive possession of the Lands since early 1920s.  The plaintiff therefore claims that the HKSAR Government is barred from bringing any action to recover the Lands.  The plaintiff also claims a right of way over a pedestrian footpath leading to the Lands (“the Footpath”)  insofar as it is found by the Court that the Lands do not encompass the Footpath or any part or parts thereof.

3.The defendant denies the plaintiff’s claims.  It is alleged, among other things, that the plaintiff could not have accrued sufficient length of time to make out her claim for adverse possession.  The defendant therefore counterclaims for, inter alia, an order that the plaintiff do deliver vacant possession of the Lands to the defendant.

4.By summons filed on 11 June 2025 (“the Summons”), the defendant applies for summary judgment on his counterclaim, and an order that the Writ of Summons with the Statement of Claim herein be struck out on the grounds that that it discloses no reasonable cause of action and/or it is an abuse of the process of the court.  There is no dispute that these two applications would stand or fall together.

LEGAL PRINCIPLES

5.The legal principles applicable to striking out applications and summary judgment applications are trite. 

6.As far as the present case is concerned, I only need to emphasise that:

(1)  A striking out application would only be acceded to if the court is satisfied that the plaintiff’s claim is obviously unsustainable.  Even if the court takes the view that the claim is weak and unlikely to succeed, it should still not be struck out. 

(2)  There is nothing in the Rules of the High Court (Cap.4A, Laws of Hong Kong)  which stipulates that the court should not decide questions of law in a striking out or summary judgment application.  If the court is satisfied that an argument on law is indeed unarguable, the court would determine the relevant question of law.

THE ISSUE

7.It is undisputed that:

(1)  Former Lot 376RP had been held first under a Block Crown Lease in 1905 and subsequently by various successive registered owners.  As unauthorised structures had been erected on Former Lot 376RP in breach of the relevant Block Crown Lease, the HKSAR Government exercised its right to re-enter upon the said piece of land by virtue of an Instrument of Re-Entry dated 14 January 2019 (“the Re-Entry”);

(2)  Lot 376C and Lot 388RP had been surrendered by their then registered owners to the HKSAR Government on 21 September 1982 and 10 September 1976 respectively (“the Surrenders”), and thereupon these pieces of lands have become unleased government land.

8.Given how the respective cases have been argued, the present applications would be dealt with on the basis of the following factual matters which are presumed to be true:

(1)  Since in or around the early 1920s, the Grandfather had exclusive possession of the Lands with the intention of excluding the world at large, including the registered owner(s)  thereof;

(2)  Since then, the Grandfather had erected unauthorised structures on the Lands in breach of the relevant Block Crown Lease.

9.It is the plaintiff’s case that time started to run against the Crown in the early 1920s when unauthorised structures had first been erected on the Lands by the Grandfather.  As a result, by the time when this action was commenced, the defendant has already lost its right to recover the Lands.

10.On the other hand, the defendant submitted that time only began to run:

(1)  on 10 September 1976 in relation to Lot 388RP when it was surrendered;

(2)  on 21 September 1982 in relation to Lot 376C when it was surrendered;

(3)  on 14 January 2019 in relation to Lot 376RP upon the Re-Entry.

11.Hence, the issue is whether, as advocated by the defendant’s counsel, it is unarguable that the defendant’s right of action had been accrued back in the 1920s.

DISCUSSION

12.As far as the present applications are concerned, the relevant parts of the Limitation Ordinance (Cap.347, Laws of Hong Kong)  are as follows:

Section 7(1)

No action shall be brought by the Crown to recover any land after the expiration of 60 years from the date on which the right of action accrued to the Crown or, if it first accrued to some person through whom the Crown claims, to that person.

Section 9

(1)  Subject as hereafter provided in this section the right of action to recover any land shall, in a case where the estate or interest claimed was an estate or interest in reversion or remainder or any other future estate or interest and no person has taken possession of the land by virtue of the estate or interest claimed, be deemed to have accrued on the date on which the estate or interest fell into possession by the determination of the preceding estate or interest.

(2)  If the person entitled to the preceding estate or interest, not being a term of years absolute, was not in possession of the land on the date of the determination thereof, no action shall be brought by the person entitled to the succeeding estate or interest after the expiration of 12 years from the date on which the right of action accrued to the person entitled to the preceding estate or interest, or 6 years from the date on which the right of action accrued to the person entitled to the succeeding estate or interest, whichever period last expires:

Provided that, where the Crown is entitled to the succeeding estate or interest, the foregoing provisions of this subsection shall have effect with the substitution for the reference to 12 years of a reference to 60 years, and for the reference to 6 years of a reference to 12 years.

(3)  – (4)  […]

Section 11

A right of action to recover land by virtue of a forfeiture or breach of condition shall be deemed to have accrued on the date on which the forfeiture was incurred or the condition broken:

Provided that, if such a right has accrued to a person entitled to an estate or interest in reversion or remainder and the land was not recovered by virtue thereof, the right of action to recover the land shall not be deemed to have accrued to that person until his estate or interest fell into possession, as if no such forfeiture or breach of condition had occurred.

Section 17

Subject to the provisions of section 10, at the 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.

(emphasis added)

13.The defendant’s argument is simple: Before the Re-Entry and the Surrenders, the defendant’s right of action had not yet been accrued, and therefore time did not start to run against the defendant. 

14.This straight forward argument is well supported by case authorities.

15.In Chan Tin Shi & Others v Li Tin Sung & Others (2006)  9 HKCFAR 29, Lord Hoffmann NPJ explained that:

“17. As is plain from the language of the Ordinance, adverse possession does not affect the rights of other persons having interests in the land which do not entitle them to possession. In the case of land subject to a lease, the person entitled to possession is the lessee. The freeholder has no right to possession until the lease comes to an end. Adverse possession by a squatter may therefore bar the remedy of the lessee but will not affect the right of the freeholder to claim possession when the lease falls in.

18. The lessee’s right to possession derives from the lease being an estate in the land. The leasehold estate is the lessee’s title to possession. Conversely, if the right to possession is barred by s.7(2)  of the Limitation Ordinance, then the lessee’s estate is destroyed by s.17:

‘at the expiration of the period prescribed by this Ordinance for any person to bring an action to recover land . . . the title of that person to the land shall be extinguished.’

19. The lessee’s ‘title’ is his estate – the words in this context mean the same thing: see Lord Denning in Fairweather v. St. Marylebone Property Co. Ltd[1963] AC 510, 544–545. But the title is extinguished only as against the squatter. As against the landlord it remains in existence, so that the lessee remains liable upon the covenants of the lease.

20.  It follows from these well established principles that when the period of limitation expired, the lessee of the land occupied by a squatter was barred by s.7(2)  from bringing proceedings for possession and his title was, as against the squatter, extinguished by s.17.  This did not however affect the interest of the government, against which time could not commence to run while the leasehold interests subsisted.  As between the government and the lessees, the lease continued to subsist, notwithstanding the expiry of the limitation period.  It follows that if the Extension Ordinance had not been passed the government would have been able, by virtue of its superior interest, to claim possession from the squatter when the lease expired in 1997. Or it could have granted a new lease, whether to the same or a different tenant, and thereby created a new leasehold estate giving a right to possession which would not have been affected by the Limitation Ordinance.  The decision of the House of Lords in Fairweather v. St. Marylebone Property Co. Ltd[1963] AC 510 is authority for saying that the same would have happened at an earlier date if the original lease had been surrendered.  The government could immediately have claimed possession itself or regranted the land under a new lease which would have enabled the tenant to obtain possession.  It is not necessary in these proceedings to decide whether that is correct because all the proceedings in these appeals were commenced after the old leases would have expired.”

(Emphasis added)

16.The plaintiff’s counsel submitted that the highlighted part of [20] in which it was clearly stated that time against the Government could not commence to run while leasehold interests subsisted is only obiter and therefore not binding on this Court.  With respect, I disagree.  In my view, those well established principles serve as a fundamental part of the reasoning.  In any event, even if I am not bound by them (which I disagree), I do not agree that it is arguable that they are wrong.

17.Mr Yau for the plaintiff accepted that if the above highlighted part of the Judgment in Chan Tin Shi is part of the ratio decidendi therein, then that would be the end of the plaintiff’s case.  Be that as it may, I will proceed to set out other reasons to support this Court’s finding that the plaintiff’s case is indeed unsustainable.

18.The first authority which should be referred to in support is Chung Ping Kwan & Others v Lam Island Development Co. Ltd. [1997] AC 38, in which the Privy Council, while dealing with 2 appeals from the Court of Appeal of Hong Kong, had to examine sections 9(1)  and 17 of the Limitation Ordinance.  In his Judgment, Lord Nicholls held that:

“From these provisions several conclusions emerge. Time begins to run against a lessee when he is dispossessed by a trespasser. In the present case time ran against the plaintiff’s predecessor Mak Yung from the date when the defendants took possession and thereby dispossessed him: section 8(1). If continued for the prescribed period of 20 years, this adverse possession would have barred the right of Mak Yung to recover possession. It would similarly have barred those claiming under him.

However, dispossession of a lessee by a squatter does not set time running against the lessee’s landlord. The landlord’s right to recover possession from the squatter on the determination of the lease is not barred by a squatter’s adverse possession against the lessee, however long this continues. In the ordinary course the landlord’s right of action accrues when, but only when, the lease ends and the landlord’s reversionary interest falls into possession: section 9(1). Only then does time start running against the landlord.

The rationale of this provision is that so long as the legal estate created by the lease remains in existence, the landlord has no right to obtain possession of the land from a squatter. The squatter dispossessed the lessee, not his landlord. If the lessee seeks to recover possession it will be sufficient for him to prove he was in possession and that the squatter dispossessed him. But if the landlord, not having been dispossessed by the squatter, comes along and seeks to eject the squatter he must set up and rely upon his title. He has to show a better title to possession than the squatter. Herein will be his difficulty. So long as the lease is extant, his title to present possession of the land is deficient. This is so even if the title of the lessee, as between himself and the squatter, has been extinguished by section 17. These established principles are conveniently displayed in Megarry & Wade, The Law of Real Property, 5^th ed. (1984), pp. 103-109, 1037.

On the determination of the lease, therefore, the landlord is entitled to oust the squatter however long he may have been on the land. Those claiming through the landlord are similarly entitled: their right to possession is no better, and no worse, than the right of the landlord from whom they derive their title. So if the landlord grants a new lease, the lessee of the new lease may eject the squatter.”[1]

(Emphasis added)

19.Further, in Fairweather v. St. Marylebone Property Co. Ltd. [1963] A.C. 510, Lord Denning had discussed the effect of surrender of a lease on the possessory title of a squatter as follows:

“[…] a trespasser comes in by wrong and not by grant of the lessee. If the lessee surrenders his term, the freeholder is at once entitled to evict the trespasser for the simple reason that, on the surrender, the lease is determined, and there is no bar whatever to the freeholder recovering possession: see Ecclesiastical Commissioners of England and Wales v. Rowe.And I see no reason why the same reasoning should not apply even though, at the date of the surrender, the trespasser is a squatter who has been there more than 12 years. For, as against the freeholder, he is still a trespasser. The freeholder’s right to possession does not arise until the lease is determined by the surrender. It then comes into being and time begins to run against him under section 6 (1)  of the Limitation Act, 1939.

The only reason, it seems to me, which can be urged against this conclusion is that it means that a squatter’s title can be destroyed by the leaseholder and freeholder putting their heads together. It is said that they can by a surrender—or by a surrender and regrant—destroy the squatter’s title completely and get rid of him. So be it. There is no way of preventing it. But I would point out that, if we were to deny the two of them this right, they could achieve the same result in another way. They could easily do it by the leaseholder submitting to a forfeiture. If the leaseholder chooses not to pay the rent, the freeholder can determine the lease under the proviso for re-entry. The squatter cannot stop him. He cannot pay the rent without the authority of the leaseholder. He cannot apply for relief against forfeiture. The squatter’s title can thus be defeated by a forfeiture—or by forfeiture and regrant—just as it can by a surrender—or by a 1962 surrender and regrant […]”

20.The above principle as explained in Fairweather had been cited in both Chan Tin Shi (supra)  and Chung Bing Kwan (supra).  However, no view had been expressed in either of the Judgments as it was considered on both occasions that it was unnecessary for the court to do so.  Having said that, insofar as there is any doubt as to whether the above represents good law in Hong Kong, such a doubt has been removed by the Judgment in Wong King Lim v The Incorporated Owners of Peony House (CACV 3/2012, unreported, 29 May 2013), in which Lam JA (as Lam PJ then was)  explained at [37] that:

“Under common law, a squatter does not succeed to nor take over the title of the paper owner whom he has dispossessed, see Fairweather v St Marylebone Property [1963] AC 510. As observed by Keith J in Chung Ping-kwan v Lam Island Development [1995] 2 HKLRD 228 at p.235, ‘the squatter’s possessory title was an independent title …’ The title of the squatter stems from his possession of the land and it was defeasible by the paper owner’s title until the right of the paper owner against him has been extinguished under the Limitation Ordinance by dispossession for the requisite period of time. In Fairweather, the majority of the House of Lords held that the paper owner’s title was only extinguished vis-à-vis the squatter. It remains as a title as between the paper owner and his lessor and it could be surrendered, and upon such surrender the lessor’s right of possession started to accrue and basing on that right the lessor could recover the land from the squatter. This outcome vividly demonstrates the proposition that a squatter does not acquire the title of the paper owner and the Limitation Ordinance does not operate as a statutory conveyance of that title to the squatter.”

(Emphasis added)

21.Sections 9 and 11 of the Limitation Ordinance also supports the defendant’s arguments:

(1)  Pursuant to section 9(1)  of the Limitation Ordinance, in a case where the estate or interest claimed was an estate or interest in reversion or remainder or any other future estate or interest, the right of action to recover any land shall be deemed to have accrued on the date on which the estate or interest fell into possession by the determination of the preceding estate or interest;

(2)  By virtue of section 11 of the Limitation Ordinance, in a case of forfeiture or breach of condition of the Crown/Government Lease, the right of action to recover the land shall not be deemed to have accrued until the land was recovered.

22.To counter the defendant’s submissions, Mr Yau for the plaintiff has made a number of arguments.

23.Firstly, he submitted that the title of the Crown/HKSAR Government of New Territories lands was/is not reversionary in nature but rather a “radical title”.  In support, he has relied heavily on 2 Australian authorities Mabo v Queensland (No 2) (1992)  175 CLR 1 and Wik Peoples v Queensland(1996)  187 CLR 1.

24.With greatest respect, the plaintiff’s argument in this regard is misconceived.

25.As explained by Chow J (as Chow JA then was)  in Kwok Cheuk Kin & Another v Director of Lands & Others [2020] 1 HKLRD 988, [2019] HKCFI 867, soon after the British took over the New Territories in April 1899, the Government had taken a number of steps to manage the administration of the lands.  More importantly, three New Territories (Land Court)  Ordinances (Nos.4 , 8 and 18 of 1900)  were enacted to facilitate the hearing, determination and settlement of land claims in the New Territories.  The New Territories were divided into Demarcation Districts, which were then divided into Blocks, with a Block Crown Lease being issued for each Block.  His Lordship then concluded:

“The net effect of all these was that the previous perpetual interests of the land owners in the New Territories held upon common or customary tenure were abolished and replaced by a fundamentally different system of land ownership under which land was regarded as being held upon a lease from the Crown for a limited term subject to various covenants the nature and effect of which were governed by common law as modified by locally enacted Ordinances. As stated by Lord Diplock in Winfat Enterprise, at p 745A-C:

‘When the New Territories were ceded, the land became on 1 July 1898 the property of the British Crown for the 99-year period of the cession. It was declared to be so by the Land Court (New Territories)  Ordinance 1900 (No. 8 of 1900). For the common or customary Chinese tenure under which the inhabitants had previously occupied their land there was substituted by that Ordinance a leasehold interest of 99 years less three days which, for reasons which do not appear in the evidence, took the form of an initial term of 75 years from 1 July 1898 which was automatically renewable for a further term of 24 years less three days. The leasehold interest in particular parcels of land in the New Territories was granted by incorporating them in the schedules of individual Block Crown Leases which identified their location and area and described the use to which they were put in July 1898. This was generally agricultural or garden ground - and such was the case with all the parcels with which this appeal is concerned. Land so described and scheduled to a Block Crown Lease was subject to an express covenant by the leaseholder not to use the land for building purposes other than for the proper occupation of the land as agricultural or garden ground and no building or structure of any kind could be erected on the land without the approval of the Crown Surveyor.’ ”

26.The above conclusion had been endorsed by the Court of Appeal in Kwok Cheuk Kin & Another v Director of Lands & Others [2021] 1 HKLRD 737, [2021] HKCA 54 at [47]. 

27.It can therefore be seen that the system of land ownership in Hong Kong must be considered by reference to the above.  It is futile to refer to the land systems of other countries, including Commonwealth countries.

28.Mr Yau submitted that his arguments on “radical title” is not a point which is suitable to be decided at the summary judgment hearing.  He has particularly pointed out that this point (and the Australian authorities which he cited in support)  have never been considered by the Hong Kong court. 

29.As to the determination of the point of law which he has used his best effort to raise, I am of the view that if the legal position is so plain and obvious that it can be decided right away, there is no reason why further time and costs should be spent on the matter.

30.In relation to his observation that the Australian authorities which support his argument have never been considered by the Hong Kong court, with respect, the reason for this is obvious.  It is simply because it has always been considered that they are totally irrelevant to the situation in Hong Kong.

31.Indeed, as aforesaid, in Chan Tin Shi (supra), Lord Hoffmann NPJ has clearly referred to the principles (which he described as “well established” and “uncontroversial”)  that the extinguishment of title of the lessee of the land vis-à-vis the squatter would not affect the interest of the government, against which time could not commence to run while the leasehold interests subsisted: [20].  His Lordship further explained in the same paragraph that, but for the Extension Ordinance, the government would have been able to claim possession from the squatter when the lease expired in 1997.  

32.This is contradictory to what the plaintiff is advocating in the present case. 

33.If that is not enough, reference may be made to [21] of the same Judgment, in which his Lordship clearly referred to the Government’s interest in the land as “reversionary interest”.

34.Secondly, Mr Yau submitted that section 9(1)  of the Limitation Ordinance is based on the concept of future estate/ interest which is applicable only to freehold or leasehold ownership, and that it thus has no application to the Crown / HKSAR Government’s title to New Territories land which is in the nature of a “radical title”.

35.This submission collapses upon the ruling above.

36.Furthermore, in my view, section 9 of the Limitation Ordinance clearly supports the defendant’s case.  For the sake of convenience, I quote the relevant part thereof again:

Section 9

(1)  Subject as hereafter provided in this section the right of action to recover any land shall, in a case where the estate or interest claimed was an estate or interest in reversion or remainder or any other future estate or interest and no person has taken possession of the land by virtue of the estate or interest claimed, be deemed to have accrued on the date on which the estate or interest fell into possession by the determination of the preceding estate or interest.

(2)  If the person entitled to the preceding estate or interest, not being a term of years absolute, was not in possession of the land on the date of the determination thereof, no action shall be brought by the person entitled to the succeeding estate or interest after the expiration of 12 years from the date on which the right of action accrued to the person entitled to the preceding estate or interest, or 6 years from the date on which the right of action accrued to the person entitled to the succeeding estate or interest, whichever period last expires:

Provided that, where the Crown is entitled to the succeeding estate or interest, the foregoing provisions of this subsection shall have effect with the substitution for the reference to 12 years of a reference to 60 years, and for the reference to 6 years of a reference to 12 years.

(3)  – (4)  […]

(Emphasis added)

37.If the Government’s interest is not reversionary in nature, or if the Government has always had the right to sue squatters found in New Territories land despite the subsistence of a lease (as opposed to the land being unleased land), then the Limitation Ordinance would not have included the proviso under section 9(2).  In fact, when this Court raised this question with Mr Yau, he could not provide any satisfactory answer at all.  He even accepted that the “simple example” which he gave in paragraph 45(2)  of his written submission cannot be right.  In that paragraph, he argued:

“[…] the proviso in [the Limitation Ordinance]s9(2)does refer to the Crown as capable of having an ‘estate or interest’ succeeding to some other estate or interest.However, this does not detract from P’s submissions above:-

(1)  For the section to apply, it is a prerequisite that the ‘preceding interest’ is not a term of years absolute.It is for that reason alone not applicable to the relationship between the Crown and the Crown lessee under a Crown lease.

(2)  It follows that the section must be referring to something else.A simple example where the Crown may have an ‘estate or interest’ in land (despite its radical title)  falling under [the Limitation Ordinance]s 9(2)  would be where the Crown became a sub-lessee of a Crown lessee and in turn granted a licence to a third party. In that case, it would be right to speak of the Crown as having an‘estate’or ‘interest’ in land as a sub-lessee whose leasehold estate was derivative.”

38.As he rightly accepted, there is no reason why the 12-year limitation period should not apply to the “simple example” which he gave.  As to what other situation would lead to the applicability of the 60-year limitation period, he could not give any answer at all.

39.The conclusion is that it is unarguable that the defendant’s right of action had been accrued back in the 1920s.  Rather, it is plain and obvious that the defendant’s right of action to recover the Lands shall be deemed to have accrued:

(1)  In respect of Lot 388RP, upon the surrender on 10 September 1976;

(2)  In respect of Lot 376C, upon the surrender on 21 September 1982; and

(3)  In respect of Former Lot 376RP, upon the Re-Entry on 14 January 2019.

40.It follows that the defendant’s action for recovery of the Lands is not time-barred. 

41.Hence, summary judgment should be granted in relation to the defendant’s counterclaim. 

42.As accepted by the plaintiff, it follows from the above conclusion that the plaintiff’s claims should be struck out.

ORDER

43.Mr Yau for the plaintiff does not dispute that this Court should make the orders as prayed in the Summons in the event the defendant’s arguments on merits are accepted.

44.I therefore make the following orders:

(1)  A declaration that the Claimed Areas (as defined in the Statement of Claim)  are unleased Government land.

(2)  A declaration that the plaintiff is not entitled to enter, possess, use and/or occupy the Claimed Areas.

(3)  An injunction restraining the plaintiff whether by herself, her servants or agents or otherwise howsoever from entering, possessing, using and/or occupying the Claimed Areas;

(4)  An injunction requiring the plaintiff to demolish the structure(s)  on the Claimed Areas at her own costs;

(5)  An order that the plaintiff do deliver to the defendant vacant possession of the Claimed Areas;

(6)  Damages for trespass and/or mesne profits to be assessed;

(7)  Interest on damages for trespass and/or mesne profits to be assessed.

COSTS

45.I make a costs order nisi that the plaintiff shall bear the defendant’s costs of the action (including the costs of the Summons and all costs reserved).

46.The defendant’s costs shall be summarily assessed in lieu of taxation.  Unless any application for variation of the costs order nisi is made within time, the defendant shall lodge and serve his statement of costs within 7 days after the expiry of the 14-day period below.  The plaintiff shall lodge and serve her statement of objection within 7 days thereafter.  Summary assessment of the defendant’s costs will be conducted on paper (no matter whether any statement of objection is lodged by the plaintiff within time)  thereafter.  The costs assessed shall be paid by the plaintiff within 14 days after assessment.

47.The above order nisi shall become absolute in the absence of application to vary (which, if any, will be disposed of on paper)  within 14 days hereof.

Mr Jeff Yau, instructed by Eric Yu & Co, for the plaintiff

Mr Tony HH Chow, instructed by Department of Justice, for the defendant