China Overseas Grand Gain Property Development Ltd v. Wong Chi Sum and Persons Unknown and Another

HCMP000969/1999

HCMP969/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.969 OF 1999

---------------------------

---------------------------

Coram: Deputy High Court Judge Muttrie in Court

Dates of Hearing: 19, 20 & 22 May 2003 and 11 July 2003

Date of Judgment: 18 July 2003

------------------------

J U D G M E N T

------------------------

1.The plaintiff, which is the registered owner of the suit land, namely part of Lot No.3352 in DD No.91 at Sheung Shui claims against the defendants for vacant possession and damages, on the ground that they are licensees at will and their licence has been terminated. The defendants claim to have been in adverse possession of the suit land since 1959 and counterclaim for a declaration that the plaintiff's title, interests and/or rights over the land are extinguished under the provisions of the Limitation Ordinance, Cap 347, and for other declaratory and possessory reliefs.

2.There is no serious dispute that the 2nd defendant and her son the 1st defendant have been in continuous, uninterrupted possession of the suit land since about 1959 or 1960. Since time began to run before the amendment of 1991 which reduced the limitation period to 12 years, the period for the purposes of section 7 of the Limitation Ordinance in this case is 20 years. There are two issues, one factual and one legal.

3.The factual issue is whether the defendants were licensees or trespassers. If they were licensees their licence was automatically terminated, even though the licensees had no notice of it, by the death of the licensor on 25 August 1979. See Ho Hang Wan v. Ma Ting Cheung [1990] 1 HKLR 649. The limitation period is, in this case, 20 years and had not expired before these proceedings were instituted. Therefore, they have no case and must give up vacant possession.

4.If however they were trespassers, and can prove adverse possession, then a legal issue may arise as to whether their possessory title survives the New Territories (Leases) Extension Ordinance. If, as the plaintiff contends, the extension of Crown leases beyond 30 June 1997 provided for by section 6 of that Ordinance operates as a new grant, then time for the purposes of the Limitation Ordinance, time runs afresh from the commencement of the new grant and the defendants and the limitation period has yet to run out. If, as the defendant contends, there is no new grant, or there is a new grant but it takes effect subject to accrued rights, then the possessory title flowing from adverse possession continues, and the defendants cannot be moved.

5.Wong Chung Man as Crown lessee acquired, inter alia, the suit land from the Crown under New Grant No.5165, dated 19 July 1929. In 1943, the land is said to have come into the possession of Wong Sau Yee, who died in England on 25 August 1979. On 6 February 1985, his beneficiary and executor Hok Ming Wong, alias Wong Fook Yu applied to the High Court, by Originating Summons, for an order vesting (inter alia) the suit land in the estate on Wong Sau Yee by virtue of his continuous adverse possession of the land by the deceased since 1943, extinguishing the title of Wong Chung Man and his successors (if any). Jones J granted the order ex parte on 6 March 1985. The order was registered in the Land Registry on 25 March 1985. The title was assigned to Tansonic Company Ltd on 7 June and the assignment was registered on 27 June 1988. It was then assigned to Crown River Investment Ltd and ultimately to the plaintiff whose title was registered on 20 June 1994. The plaintiff through its solicitors gave the defendants notice to quit the land in December 1998, and the Originating Summons in these proceedings was issued in on 12 February 1999.

6.In support of its allegation that the defendants are licensees the plaintiff relies on affirmations filed in court in the 1985 proceedings. These were made by villagers of Chiu Kang Village (now Lin Tong Mei Tsoi Yuen) who claimed to have known Wong Sau Yee and Wong Chung Man.

7.Wong Yuen Chau, who then gave his age as 60 years, affirmed that he knew that Wong Sau Yee had bought land at Chiu Kang Village from Wong Chung Man and Wong Kai Man in 1943 but no proper assignment had been done. This land consisted of Lot no.3352 in DD 91 and Lots Nos.1532, 1537 and 1540 in DD 100 which had been bought from Wong Chung Man, and Lot No.1523 in DD 100 which had been bought from Wong Kai Man. Wong Sau Yee had occupied the land since then until he left for England in 1976, when he had appointed the deponent as his attorney to manage his property for him. With reference to the suit land, Wong Yuen Chau affirmed :

"As to the said Lot No.3352, about 2,000 square feet was let to Mok Yuen Fan for residential purposes since 1970 at the original rent of $50.00 per annum and then at the increased rent of $100.00 per annum since 1982; another portion of about 2,000 square feet has been occupied by Yu Mei King as a licensee at will for residential and agricultural purposes since 1960; whereas the remaining portion has been occupied by Chow Lung for agricultural purposes since 1978 as a licensee at will."

8.Among the documents exhibited to the affirmation of Wong Yuen Chau there is a copy of an "A" rent roll for Lot No.3352 in the name of Wong Chung Man, which he says the latter gave to Wong Sau Yee as proof of purchase in 1943. There are also Crown rent receipts but it is difficult to glean anything from them as they do not refer to specific lot numbers.

9.The other affirmation comes from two brothers, Wong Nam and Wong Shun Yet, who affirm that they came to live in the village in 1937 and knew that Wong Sau Yee had bought the various parcels of land from Wong Chung Man and Wong Kai Man in 1943, and had since then farmed there. During the 2nd World War, Wong Chung Man and Wong Kai Man had been on a ship bound for Canton. On the way, the ship was destroyed by a bomb and it was reported that there were no survivors. The villagers had therefore believed that Wong Chung Man and Wong Kai Man had died and had always treated Wong Sau Yee as the owner of the land.

10.This is the only evidence on the plaintiff's side to prove a licence. There is no live evidence.

11.The 2nd defendant, Madam Yu, said that she did not understand the meaning of the affirmation. She was told that it meant she must tell the truth. She adopted two statements as evidence-in-chief. In the first statement she said that in about 1959 she, her husband, and their eldest daughter came to Chiu Kang Village in Sheung Shui to find a place to settle down. On the direction given by Wong Sau Yee, who was a relative of theirs, they occupied the suit land which is on a hillside. They did not check who was the owner, or apply to anyone for authorisation, or pay any key money or licence fee to anyone. They put up two or three huts and later a wire fence to keep other people out. The 1st defendant was born there in 1960, and then another daughter and another son. The whole family lived there since then. The father died and the children, other than the 1st defendant moved out on their respective marriages. Now the 1st defendant and his own family as well as the 2nd defendant occupy the land. The defendants have been in continuous possession since they occupied the land, and have never paid anything to anyone for it, nor have they entered into any agreements in relation to it.

12.In her second statement Madam Yu says that she and her husband came to the vicinity of Chiu Kang Village and there met Wong Sau Yee. Since he had the same surname as her husband, and came from the same native place, they thought he was a distant relative. As directed by him they took the bare land which they now occupy. Wong Sau Yee told them that it was abandoned and unused land. He did not say that he was the owner, or that he had any interest in it. He did not say that he permitted them to use it. They did not ask Wong whether the land belonged to anyone. If he had asked them for any rent or licence fee they would have refused it.

13.In cross-examination Madam Yu said that she had met Wong Sau Yee before she went to the village. He was her relative. He told her and her husband where they could set up home. In fact, when they went there they went to see him, for the purpose of asking him where they could go, and which land was suitable for them to set up home. She could not exactly remember when this was, but thought that it was after the 1st defendant had been born. The land where she now lives used to be called "Sau Yee Farm" but she did not know the significance of that.

14.The only evidence for the plaintiff on this issue is hearsay. Counsel for the 2nd defendant (the 1st defendant acting in person), having sought but failed to have the evidence which appears in the 1985 affirmations excluded, argues that it should be given little weight. The whole basis of the 1985 order was wrong, because if Wong Sau Yee had bought the land, he could not have had adverse possession of it. Further, the fact that the defendants' family had fenced the land showed that they had taken on exclusive possession of it, which would be adverse to the grant of the licence.

15.Counsel for the plaintiff argues that the 2nd defendant would not have asked Wong Sau Yee where she could set up home, if she had not believed him to be the owner. She and her husband had gone specifically to look for them and it is unlikely that he would have given her permission to occupy land if he had not believed that he owned it. Counsel further says that fencing, while indicative of an intention to keep others out, would not necessarily indicate an intention to keep the licensor out. He also points to the fact that the place was known as Sau Yee Farm as indicating that it must have belonged to Wong Sau Yee.

16.It is further argued that if Wong Sau Yee was himself in adverse possession of the suit land, which is the basis on which the court made the order in 1985, there is no evidence that by 1960 he had completed any period of adverse possession. If he had an equitable title arising from his purchase, then he could not be a trespasser, so the 1985 proceedings, including what was said on oath in them were on a wrong footing.

17.It may be that Wong Sau Yee bought the suit land along with other plots in 1943. That is what Wong Nam and Wong Shun Yet say in their affirmations. Wong Yuen Chau, the attorney, was in possession of the copy "A" rent rolls. There is nothing to contradict this evidence. If Wong Sau Yee was a purchaser, he could not have been a trespasser. But presumably the court in 1985 accepted that he was a trespasser, for otherwise it could not have made the order which it did. The situation is not clear.

18.The issue boils down to what Wong Sau Yee said when he directed the 2nd defendant and her family to the suit land. If he told them that this was his land, and he gave them permission to live there, that would clearly constitute a licence. If he did not tell them that it was his land, but as the 2nd defendant says, that it was abandoned land, there would be no basis for any licence. He might have been the equitable owner or he might have been a trespasser himself but unless he made some claim he would not be giving permission. If he made no claim then as far as the 2nd defendant and her husband knew, it was not his land but that of someone unknown; they would have been squatting on the land of an unknown person.

19.Though this action commenced before the 1999 amendments to the Evidence Ordinance, Cap.8, became law, section 49 thereof, which was then added, simply codified existing common law principles as to the matters to which the court should have regard in estimating the weight to be accorded to hearsay evidence. It is well to reproduce those matters here, as they appear in the section :

"(a) whether it would have been reasonable and practicable for the party by whom the evidence was adduced to have produced the maker of the original statement as a witness;

(b) whether the original statement was made contemporaneously with the occurrence or existence of the matters stated;

(c) whether the evidence involves multiple hearsay;

(d) whether any person involved had any motive to conceal or misrepresent matters;

(e) whether the original statement was an edited account, or was made in collaboration with another or for a particular purpose;

(f) whether the circumstances in which the evidence is adduced as hearsay are such as to suggest an attempt to prevent proper evaluation of its weight;

(g) whether or not the evidence adduced by the party is consistent with any evidence previously adduced by the party."

20.Whether it would have been reasonable or practical for the plaintiff to produce any of the 1985 deponents is not clear. It appears from an affirmation filed before pleadings were ordered that an attempt was made to find Wong Nam in Kowloon but only by going to his last known address and asking the neighbours. There is no indication as to whether any inquiries were made for them at the village. However Wong Yuen Chau was 60 in 1985 and should now be 78. The others are probably also old. They or any of them may well by now be dead.

21.The 1985 affirmation of Wong Yuen Chau, which is the only one which says anything about a licence, was not made contemporaneously with such licence, and it involves multiple hearsay, because he could only have heard it from Wong Sau Yee. It may be said that the executor, at any rate, had a motive to hide the fact of the defendants' adverse possession if it existed. The affirmation was made for the purpose of allowing the executor to obtain a vesting order based on possession by the deceased Wong Sau Yee, adverse to the title of the personal representatives of Wong Chung Man. It was necessary to explain the presence of other occupants, not paying rent, on part of the lands. A bare licence or a tenancy would not be inconsistent with equitable ownership or adverse possession. So there would be a reason to make that statement, or have someone make it, for that particular purpose.

22.Perhaps more important is that Wong Yuen Chau makes a bare allegation that the 2nd defendant is a licensee at will. He does not say how the licence came to be granted. He cannot say what Wong Sau Yee told the 2nd defendant. In the absence of such detail, to say that the 2nd defendant occupied the suit land as a licensee at will is more evidence of opinion than of fact. The only evidence as to what she was told comes from the 2nd defendant herself. She says that Wong Sau Yee told her that the land was unused and abandoned.

23.What the 2nd defendant says is not unbelievable. From the copy sketch plan in the bundle it appears that Wong Sau Yee's other plots were to the south and east of the village and the suit land to the north, on a hillside as the 2nd defendant says. While it now sounds most unlikely that anyone would abandon a plot of land in the New Territories, the position was not the same in 1960 when land there did not have the value it subsequently acquired. Whatever Wong Sau Yee might have told others later (and I take into account here that some land, whether the suit land or the whole of Lot 3352 or what is not clear, became known as "Sau Yee Farm") there is no evidence that in 1960 he occupied the suit land, or knew that it was part of what others later said had been sold to him in 1943, or indeed anything of his intentions in respect of it. The only live evidence is that of the 2nd defendant.

24.It seems to me that the 2nd defendant's must be preferred to what appears in the 1985 hearsay affirmations of Wong Yuen Chau. I accept that Wong Sau Yee told the 2nd defendant and her husband that the land was unused and abandoned, and did not tell them that it was his or make any claim to it. It follows that Wong Sau Yee did not give the defendants a licence to occupy the suit land, because that would have required a statement on his part that the land was his, and they could use it.

25.There is no serious dispute that the defendants have been in continuous, uninterrupted possession of the suit land since about 1959 or 1960. They clearly had the animus possidendi, i.e. "an intention for the time being to possess the land to the exclusion of all other persons, including the owner with the paper title"; per Slade LJ in Buckinghamshire County Council v. Moran [1990] Ch 623 at 643.

26.The relevant provisions of the Limitation Ordinance are as follows:

"Section 7(2)

No action shall be brought by any other person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person.

Section 8(1)

Where the person bringing an action to recover land, or some person through whom he claims, has been in possession thereof, and has while entitled thereto been dispossessed or discontinued his possession, the right of action shall be deemed to have accrued on the date of the dispossession or discontinuance.

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.

Section 13

(1) No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run (hereafter in this section referred to as adverse possession) and where under the foregoing provisions of this Ordinance any such right of action is deemed to accrue on a certain date and no person is in adverse possession on that date, the right of action shall not be deemed to accrue unless and until adverse possession is taken of the land.

(2) Where a right of action to recover land has accrued and thereafter, before the right is barred, the land ceases to be in adverse possession, the right of action shall no longer be deemed to have accrued and no fresh right of action shall be deemed to accrue unless and until the land is again taken in adverse possession.

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."

27.The period for the purposes of the Limitation Ordinance in this case is 20 years, though it was changed to 12 years in 1991. The figure 20 should be substituted where appropriate in the above excerpts.

It follows that on the 20th anniversary of when the defendants took possession of the suit land in 1960, i.e. a date in 1980, the lessee of the Crown lease or successors, if he was dead, lost his or their right of action against the defendants. His or their title was extinguished under section 17, at the same time.

28.The parties have been proceeding on the basis that the adverse possession if proved would bar the right of action of the plaintiff who, as registered owner is presumed to have possession. However, before continuing it is necessary to consider the basis of the plaintiff's title. This was not specifically canvassed before me at the trial, but I asked Counsel to come back later to address me on the point.

29.The title which the plaintiff ultimately bought was that conferred on the administrator of Wong Sau Yee's estate by the 1985 order. The court ordered that the various named pieces and parcels of ground, registered in the District Land Office North :

"do vest in the name of the said Wong Sau Yee..., deceased and form part of his estate by virtue of the continuous adverse possession of the said Lots by the said Wong Sau Yee ...since about 1943 thereby extinguishing the title and claim of Wong Chung (or Tsung) Man ....and Wong Kai Man..."

30.On the face of it this order was based on adverse possession and the extinction of the title of Wong Chung Man and his successors (if any). When a trespasser establishes adverse possession against the holder of an estate in land he does not thereby acquire the same title. In Taylor v. Twinberrow [1930] 2 KB 16, Scrutton LJ stated the law at page 22 :

"It [the Statute of Limitation] was treated as if it gave a title, whereas its effect is merely negative to destroy the powers of the then tenant ... to claim as landlord against his subtenant in possession ... the truer view is, that the operation of the statute in giving a title is merely negative; it extinguishes the rights and title of the dispossessed owner, and leaves the occupant with a title gained by the fact of possession and resting on the infirmity of the right of others to eject him".

31.In Chung Ping Kwan v. Lam Island Co. Ltd [1996] AC 38 the Privy Council held (inter alia) that Taylor v. Twinberrow [1930] 2 KB 16 was correctly decided.

32.While the possessory title may be and is treated as being as good as the leasehold title of the Crown lessee, which it obviously is, because it has extinguished his title and bars him from ousting the possessor, to my understanding it does not become the leasehold. So what bears to have been vested in the executor, and ultimately assigned to the plaintiff, was not the leasehold granted by the Crown. It was only a possessory title.

33.When I raised this matter with counsel at the later hearing, Mr. Remedios argued that the effect of the 1985 order must have been to vest in Wong Sau Yee deceased the legal and beneficial title because the order was made on the basis of evidence that Wong Sau Yee had purchased the land. A purchaser cannot claim adverse possession because he has an equitable title. See Hyde v Pearce [1982] 1 All ER 1029. The order is ambiguous and must be construed on the basis of the evidence on which it was made.

34.Mr. Szeto argued that by the terms of the order, what was vested was not the title, but the land; and that on the basis of adverse possession. Further, adverse possession was the basis of the Originating Summons on which the order was made.

35.The order was made and perfected many years ago. On the face of it, it vests certain plots of land in a deceased person's estate on the basis of adverse possession. It vests a possessory title. An order may only be altered or varied after it has been drawn up in so far as necessary to correct errors in expressing the intention of the court; see Hong Kong Civil Procedure, paragraph 20/11/6 and the cases there cited. It is true that the order recites that all the affirmations were read and those affirmations contain hearsay evidence that the deceased had bought the land in 1943 but I do not know what was in the judge's mind when he made the order, and I do not see that I can now take it on myself by implication to alter his order, or treat it as altered, on the basis that he must really have meant to vest the legal and beneficial ownership. The order is clear on its face and I do not see that I can go behind it. `

36.If, as I have found, the defendants had by a date in 1980 established a possessory title to the suit land, and extinguished the title of Wong Chung Man and his successors if any, the 1985 order vesting possessory title in the executor could not have been effective as against the suit land. The title to the suit land was already extinguished by the adverse possession of the defendants. It would follow that the executor never had and the plaintiff never bought any title to the suit land. The plaintiff's claim would therefore necessarily fail.

37.If, however I am wrong in the view I take of the 1985 order and the what was vested was the legal and beneficial title it is necessary to consider the legal issue as to whether the adverse possession survives the New Territories (Leases) Extension Ordinance ("the Extension Ordinance"). If the leasehold was never assigned to the plaintiff this will be academic. But since it was argued on the assumption that the plaintiff is, in effect, the holder of the extended lease, and in case that is so, it must be resolved.

38.I am much obliged to counsel for the plaintiff for their very full written submissions. I will try to state the background law as briefly as possible, and hope that I do not omit anything major. As I understand it the plaintiff's position is this.

39.It is common ground that the lease granted to Wong Chung Man was for a term of 75 years from 1 July 1898 with an option to renew for a further term of 24 years less three days. Pursuant to the New Territories (Renewable Government Leases) Ordinance (Cap.152) ("the Renewal Ordinance"), the option was deemed to have been exercised and a new Government lease granted immediately upon the expiration of the Block Crown lease on 30 June 1973, for a new term of 24 years less three days, expiring on 27 June 1997: sections 3 and 4 of the Renewal Ordinance.

40.At common law, adverse possession is only effective to extinguish the title of the estate to which it is adverse. In this case, the plaintiff's title is leasehold as the ultimate assignee of the original Crown lease, which has been renewed under the Renewal Ordinance and extended by the Extension Ordinance. Adverse possession against a lessee is not effective to extinguish the title of the lessor. The latter cannot sue for possession until the leasehold estate falls into reversion at the end of the term. But once it does, time will start to run afresh against the lessor and those deriving title from him.

41.The parties to a lease for a term of years cannot extend the term. If they agree to extend it during its currency, there is implied by law a surrender and re-grant. If they agree to extend it at the end of the term, there is implied a new lease of the reversion. Either way, the lessee obtains a new estate. If adverse possession was established against his original estate, because he takes a new estate from the lessor, against whom time did not run, time begins to run afresh against him, as it would have done against the lessor if the leasehold had simply fallen into reversion without any new grant being made.

42.In Chung Ping Kwan the Privy Council held that the 1973 renewal, though it gave rise to a new lease, did not give the lessee a fresh cause of action because he took the new lease by exercise of the option given to him by the original lease. Per Lord Nicholls of Liverpool :

"In their Lordships' view, where a new lease is granted pursuant to a lessee's option in the original lease the right to bring an action to recover the land from a trespasser within the meaning of section 7(2) accrues to the lessee on the date of the dispossession. Section 8(1) is applicable in such a case, and as against the trespasser section 17 operates to extinguish his title to the new lease as much as the original lease. Conversely, in such a case section 9(1) is inapplicable and does not operate to set a new limitation period running in favour of the lessee. The lessee's claim in right of the new lease is not a claim to an estate or interest in reversion within the meaning of section 9(1), because the lessee's right to the new lease, subject to satisfying any prescribed conditions, was a right he already had as lessee."

43.But the position under the Extension Ordinance is different. It provides for the extension of a lease which has no further option to renew or extend it, that having already been exercised. The relevant sections read :

"Section 2:

This Ordinance applies to every New Territories lease that exists at the commencement of this section and that, but for this Ordinance, would expire before 30 June 1997, not being-

(a) a short term tenancy;

(b) a lease for special purposes; or

(c) a lease in respect of which the lessee registers a memorandum under section 5.

Section 5:

(1) A lessee may exclude from the application of this Ordinance his interest under a lease, other than an undivided share in the land to which the lease relates, by registering in the Land Office register, before the appointed day, a memorandum in a form specified by the Land Officer.

(2) In this section 'lessee'-

(a) means a person whose name is registered in the Land Office as owner, leaseholder or holder; and

(b) where more than one person is so registered in respect of the same interest or, in addition to any person so registered, any other person has an interest under-

(i) an agreement for sale; or

(ii) a mortgage,

registered in the Land Office, means all of them acting jointly.

Section 6:

The term of a lease to which this Ordinance applies is extended, from the date on which it would, apart from this Ordinance, expire, until the expiry of 30 June 2047, without payment of any additional premium."

44.Section 6 purports to extend the term of the lease, which can only be read, at common law, as producing either a surrender and re-grant in 1988 or a reversionary lease in 1997. Either way the Government lessee takes a new lease, free of the burden of the possessory title of the squatter. Time begins to run afresh against him, but within that time he can oust the squatter.

45.In Unijet Ltd v. Yiu Kwai Hoi, HCA13637/1998 (21 June 2002), Sakhrani J came to this conclusion. He did not find it necessary to decide whether there was a surrender and re-grant in 1988 or a reversionary lease in 1997.

46.However, in Mutual Luck Investment Ltd v. Yeung Chi Kuen, HCMP6047/1998 (25 November 2002), Lam DJ came to the opposite conclusion. He held that the "extension" took place in April 1988, because section 6 of the Extension Ordinance in both English and Chinese refers to a present extension. In his view the material question according to the Privy Council's decision in Chung Ping Kwan was whether there was a specifically enforceable right in the lessee to call for the new legal estate by reason of his interest under the old lease when he was already lawfully in possession. If he had such a right, Section 9(1) would operate in favour of the lessor and conversely, if such a lessee had slept on his rights, the fact that he acquired a new legal estate could not assist him. Since the right to an "extension" had its origin in the lessee's status as a Government lessee in lawful possession under the original Government lease (as renewed by the Renewal Ordinance), he did not derive his new title under the re-granted lease in 1988 from the Government's reversionary interest under the original lease (as renewed), but rather pursuant to his statutory right in section 6 of the Extension Ordinance by virtue of his status as a Government lessee under a Government lease that had been renewed pursuant to the Renewal Ordinance.

47.In Chan Tin Shi & others v. Li Ting Sung, HCMP No.4191 of 1998, unreported, 14 January 2003, Cheung DJ considered the two authorities and preferred that of Lam DJ. He also added some comments of his own. He took the view that if the extension was achieved by a surrender and re-grant in 1988, so that a fresh cause of action then accrued to the lessee, this would mean that a squatter with a good possessory title was deprived of it by a side-wind for the rest of the term, i.e. nine years. The Ordinance should not be construed as having such a draconian effect on an accrued interest in land. This would not happen, if the extension by way of a reversionary lease in 1997; but he, like Lam DJ, inclined to the view that section 6 provided for an extension on 25 April 1988 and not later. He also took the view that the legislature could force upon the parties a statutory option to extend, in this case a "negative" option provided by section 5. There was no material distinction between a lessee who was given this option by section 5 and a lessee who had an option to renew the Government lease for another term of 24 years less three days prior to the expiration of his lease on 30 June 1973. Either way the reversionary interest of the Government to the land was (made) subject to those rights.

48.Cheung DJ also considered whether the Extension Ordinance should be construed in accordance with the common law, which Sakhrani J had said it should. He took the view that the Extension Ordinance should not be construed as meaning that possessory title acquired by the time it was enacted should be fatally disturbed. Rather it should be construed in the light of the provisions of the Joint Declaration for maintaining the status quo. If necessary it should be construed free from the common law restrictions, and as meaning simply what it says, i.e. that the renewed term of the Government lease pursuant to the Renewal Ordinance is extended for 50 years and three days.

49.Messrs Remedios and Chan argue that the approach Sakhrani J is to be preferred, for the very full reasons given in their written argument. Basically, the Extension Ordinance is to be construed strictly in accordance with common law principles and must be taken as giving rise to a new lease, with a new cause of action in the lessee.

50.Mr Szeto for the defendants says that the Extension Ordinance as it stands is clear and unambiguous. It extends the term; it does not create any new lease. The legislature knows what the common law is, and if it had intended a new lease, with all that that entails it would have said so. Alternatively, if a new lease is created, the effect of section 7 upholds the accrued rights of an adverse possessor, in the same way as section 4(4)(c) of the Renewal Ordinance was held to do by Lord Nicholls in Chung Ping Kwan. In fact as I understand it, this was a fall-back position; Lord Nicholls considered that the accrued rights would be upheld with or without that provision.

51.The relevant part of section 7 provides :

"(1) During the period of the extension of a lease under section 6, the lease and any interest therein created by or under an instrument registered in the Land Registry shall, unless the contrary intention appears from the instrument, be subject to -

(a) the same encumbrances and interests as applied immediately before the period of extension, including-

(i) any mortgage or charge, whether legal or equitable;

(ii) any public rights;

(iii) any mutual covenants, rights, easements, tenancies or other burdens of whatsoever kind or nature;"

52.This is compared with the section 4(4) of the Renewal Ordinance which reads :

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

(a) any mortgage, whether legal or equitable, and whether registered in a District Land Registry or not;

(b) any public rights; and

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

53.I have set out my understanding of the recent conflicting authorities, and trust my brevity has not done too much injustice to them. I understand that the judgment of Sakhrani J has been appealed, as has one of the other judgments. The appeals are pending. Obviously an appellate decision is necessary. I can see little point in my embarking on a close and detailed consideration of the law in this field. That has already been done by all three judges, at length and with great erudition. I do not think there is anything that I can usefully add save to say that, with respect, I tend to prefer the views of the two deputy judges.

54.I will also say that it seems to me that the Extension Ordinance shows, like the Renewal Ordinance, to use the words of Lord Nicholls in Chung Ping Kwan, "a broad intention that there should be a seamless transition from the old to the new". To my understanding the object of the Joint Declaration is broadly to provide for no change to the law in the 50 years following the resumption of sovereignty. To that end Article 120 provides :

"All leases of land granted, decided upon or renewed before the establishment of the Hong Kong Special Administrative Region which extend beyond 30 June 1997, and all rights in relation to such leases, shall continue to be recognized and protected under the law of the Region."

55.It is difficult to see that the legislature should have intended that squatters' rights in relation to such leases should be disturbed. The provisions of section 7 seem to me to support this view.

56.It would follow that the defendants' possessory title survives the Extension Ordinance.

57.I now return to the point raised earlier. On my findings, what the executor of Wong Sau Yee got, and what the plaintiff ultimately bought, was not the leasehold but a possessory title. The title was and is registered but as I understand it, registration does not make it a leasehold title. What registration does is to establish that the holder has a valid title, but not necessarily the basis of that title. While by section 5 of the Extension Ordinance, "lessee" is defined as the person whose name is registered in the Land Office as owner, leaseholder or holder that only holds good for the purposes of that section, so as to give such a person the right to opt out of the extension provision. At the resumed hearing, I heard argument on this point, but it seems to me quite clear that section 5 cannot operate to give a leasehold title by the back door to one who does not already hold it.

58.If I am right in this, the plaintiff now has no better form of title than do the defendants. Whether or not the plaintiff's possessory title survives the Extension Ordinance as against the leasehold does not matter, because the plaintiff's title is not leasehold. The defendants established their possessory title first. The 1985 order was made on the basis of wrong information about a licence and cannot be taken as overriding the defendants' title.

59.Accordingly the plaintiff's claims are dismissed with costs to the defendants to be taxed if not agreed. There will be judgment in favour of the defendants on the counterclaim with costs to the defendants to be taxed if not agreed. The 1st defendant's own costs are to be taxed in accordance with the Legal Aid Regulations. The costs orders are nisi.

Representation:

Mr L. Remedios and Mr F. Chan, instructed by Messrs F. Zimmern & Co., for the Plaintiff

The 1st Defendant, acting in person, present

Mr P. Szeto, instructed by Messrs Ho, Tse, Wai & Partners, for the 2nd defendant