Chau Ka Chik Tso and Others v. Secretary for Justice

HCA 10670/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10670 OF 2000

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BETWEEN

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Before: Deputy High Court Judge L. Chan in Court

Dates of Hearing: 8–10, 13–14 July, 21–23 September 2009

Date of Judgment: 30 December 2009

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J U D G M E N T

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1.The plaintiffs’ claim is for some 6.67 acres of land situated in DD 115, Yuen Long, the New Territories. The plaintiffs are the registered owners of certain parts of lot 1212 in Demarcation District 115 (“the Lot”). The areas being claimed lie immediately to the north to north-west of the Lot. There are several alternative bases of claim.

BASES OF CLAIM

2.The first and primary basis is that the grant plan of the Lot was incorrectly drawn so that the boundary only enclosed 18 acres and mistakenly left out 6.67 acres at the north. They refer to the 6.67 acres as the discrepant areas (“the DAs”). The grant plan for the Lot has been lost but the parties agree that the boundary of the Lot shown therein should be the same as that in the DD Control Sheet.

3.The plaintiffs’ first alternative basis of claim is that the DAs had been annexed to the Government Lease for the Lot by the encroachment of their predecessor in title Wing Wa Tong with trustee Lam Wun Chi which encroachment was for the benefit of the Government qua landlord. The plaintiffs are therefore entitled to possession of the same until the expiry of the Government Lease for the Lot which has been extended to 30 June 2047.

4.The next alternative basis is that the DAs had been encroached by Wing Wa Tong for its own benefit and not for the benefit of the landlord. That is the same as adverse possession which defeated the Government’s title to the DAs by virtue of the Limitation Ordinance.

5.The 3rd alternative basis is that the plaintiffs and their predecessors had been in adverse possession of the DAs for over 60 years at the latest by November 1984. The Government’s title to the DAs had thus been extinguished by the Limitation Ordinance.

6.The 4th alternative basis of claim is proprietary estoppel.

BACKGROUND

7.The Lot was granted to Wing Wa Tong by a public auction held on 6 July 1916. Some documents from the Public Records Office show that the auction was preceded by an application of Wing Wa Tong to the Government for auction of the Lot. The first file note from the District Officer to the Land Officer dated 1 April 1916 said that there was an application for marshy land at Shan Pui near Yuen Long and notices had been posted under the Foreshore and Seabed Ordinance. The notices did not result in any objection. There was then a recommendation by the Assistant Land Officer to the Land Officer for the sale of the Lot by auction.

8.Notice was duly published in the Government Gazette for the auction of the Lot. The notice stated that the locality of the Lot was in Shan Pui. It had an area of 18 acres. The upset price was $785 with annual Government rent at $18. The term was for 75 years from 1 July 1898 plus the right of renewal for a further term of 24 years less the last three days. A plan of the Lot (“the grant plan”) was deposited in the District Office of Tai Po which showed the boundary measurements.

9.Wing Wa Tong through its trustee Lam Wun Chi purchased the Lot at the auction on 6 July 1916 at the base premium of $785 and annual Government rent of $18. The Lot was then granted to the Tong under the Foreshore and Seabed Ordinance as shown in a memorandum of agreement by the purchaser dated 6 July 1916.

10.Sometime in May 1924, Lam Wun Chi as the trustee of Wing Wa Tong gave notice to the District Office of the Tong’s intention to sell the Lot. The District Officer duly posted a notice to the public about such intention. There was no objection. The Lot was then divided into five sections and sold on 21 May 1924. The sections were numbered A to E with section A at the western edge and section E at the eastern edge.

11.Sections A and E were sold to Mr Chau Ka Chik at $1,720. The 1st plaintiff is a Tso set up according to the Chinese customary practice to honour Mr Chau after his death. Sections A and E were then held in the name of the 1st plaintiff.

12.Sections B and C were sold to four Lams including the trustee Lam Wun Chi who took part in the purchase in the name of Lam King Tung. The consideration for these two sections was also $1,720. The four Lams were the predecessors in title of the 2nd to 5th plaintiffs. The 2nd to 5th plaintiffs still own parts of section B with the rest of this section disposed of previously. The four Lams were also the predecessors in title of the 6th to 10th plaintiffs. They now own parts of section C with the rest of this section disposed of previously.

13.Section D was sold to Chau Sui Fan who was the predecessor in title of the 11th to 15th plaintiffs. They now own parts of section D with the rest of the section disposed of previously. The price of section D was $860.

14.The DAs lie immediately to the north to north-west of the Lot. There is undisputed evidence that the DAs had been occupied by the predecessors of the plaintiffs who used the same as fishponds for fish farming prior to 15 November 1924. They were shown as such in an aerial photo taken on that date (“the First Photo”).

THE PLEADINGS

The Plaintiffs’ Claim

15.It is the plaintiffs’ primary case that the Lot includes the DAs. Their case is that when the Tong sold the purchasers the five sections of the Lot in May 1924, the DAs were also sold as integral parts of the sections to the purchasers. Each section of the DAs laid at the north to north-west and being an integral part of the corresponding section.

16.Each section of the DAs had also been dug up and used as part of the fishpond in its corresponding section of the Lot as shown in the First Photo. Therefore, the 1st plaintiffs’ claim is in respect of the parts of the DAs sitting adjacent to sections A and E of the Lot. The claim of the 2nd to 5th plaintiffs is in respect of the part of the DAs adjacent to section B. The claim of the 6th to 10th plaintiffs is in respect of the part of the DAs adjacent to section C. The claim of the 11th to 15th plaintiffs is in respect of the part of the DAs adjacent to section D.

17.A copy of the plan showing sections A to E of the Lot as extracted from the Lot Index Plan published by the Government together with their respective parts of the DAs and the area of the DAs is in Appendix I. I will explain what is a Lot Index Plan below.

18.The parties accept the southern part of the boundary of the Lot as accurate. This part of the boundary is drawn against a number of old schedule lots originally drawn on the DD Sheet. There is also no dispute regarding the western and eastern parts of the boundary as they are bounded by the Shan Pui River on the west and the Kam Tin River on the east respectively.

19.The parties however dispute the accuracy of the northern part of the boundary. The plaintiffs say that the correct boundary should include the DAs so that the Lot should be some 6.67 acres larger than the registered area of 18 acres. The Government however contends that the correct boundary is the one shown in the lost grant plan.

20.The Lot was drawn on the DD Control Sheet after the grant. Both sides accept that the boundary shown in the DD Control Sheet is an accurate reflection of the boundary in the lost grant plan. However, the plaintiffs do not accept this is the correct boundary. They say that this boundary as drawn on the lost grant plan and the DD Control Sheet is incorrectly drawn and does not reflect the true boundary.

21.The boundary of the Lot appearing in Appendix I is extracted from the Lot Index Plan and is the result of correlations of the boundary in the DD Control Sheet with physical occupations. It follows more or less the boundary in the DD Control Sheet. In fact, the part of the boundary between section D and the section of the DAs next to it as shown in Appendix I is not in line with the rest of the boundary on the northern side. The reason being that this part of the boundary has not been correlated and is the same as in the DD Control Sheet.

22.Immediately to the north of the DAs are lot 1347 also known as Lai Tau Tsui and a smaller area to the left of lot 1347 called Tong Tsai. But the DD Control Sheet in fact positioned lot 1347 and Tong Tsai rightly adjacent to the Lot. The DAs are not shown on it. In other words, lot 1347 and Tong Tsai have been moved to the south from its correct position in the DD Control Sheet. The area where the DAs should be is now covered by Lai Tau Tsui and Tong Tsai.

23.The plaintiffs say that the correct boundary of the Lot should include the DAs. It should be extended further to the north to enclose the DAs and drawn right next to lot 1347 and Tong Tsai. The correct presentation of the Lot in the DD Control Sheet should thus have a larger area and with lot 1347 and Tong Tsai rightly adjacent to it. I think it is the plaintiffs’ case that the presentation of the Lot on the DD Control Sheet is wrong in that the area is too small. But they say that the DD Control Sheet has correctly shown the relative locations of the Lot on the one hand and lot 1347 and Tong Tsai on the other which are adjacent to one another. This presentation of the Lot in relation to lot 1347 and Tong Tsai is also shown in various other plans published by the Government for public use.

24.The defendant says that the Lot does not include the DAs. It says that the DAs should be positioned between the Lot on one side and lot 1347 and Tong Tsai on the other side.

25.If the original grant of the Lot did not include the DAs, the plaintiffs’ claim in the alternative is that they and their predecessors in title had already been in occupation of the DAs continuously for over 60 years in or before 1984. They did so by enclosing the DAs with bunds and used them together with their corresponding sections of the Lot as fishponds. The DAs have therefore been annexed to the Government Lease for the Lot. It was by encroachment for the lessor’s benefit for over 60 years at the latest by November 1984.

26.On the same factual basis, they also argue alternatively that the encroachment was not for the lessor’s benefit. Hence, the title of the Government to the DAs had been extinguished by virtue of the Limitation Ordinance.

27.On the same facts, they further argue an alternative that they and their predecessors had been in adverse possession of the DAs for over 60 years at the latest by November 1984. The Government’s title to the DAs had thus been extinguished by the Limitation Ordinance.

28.The final alternative argument is proprietary estoppel. They rely on the continuous occupation of the DAs in conjunction with the Lot. They further say that they and their predecessors had expended labour and money in the development, upkeep and maintenance of the DAs since the grant of the Lot or since sometime between the date of the grant and 15 November 1924. They also say that the Government knew or ought to have known that they were occupying the DAs and they were developing, up keeping and maintaining the same.

29.To prove such knowledge, they refer to a few special conditions contained in the grant of the Lot. They say that the Government in order to satisfy itself of the compliance by the plaintiffs and their predecessors of these conditions must have visited the Lot and therefore became aware of their development, upkeep and maintenance of the DAs.

30.They also refer to the sale of the Lot by Wing Wa Tong in May 1924. Notice of intention to sell had been given to the District Officer and the Government had also posted public notice of this intention at the Lot. They say that the Government would thereby acquire knowledge of their works.

31.The Government also surveyed lot 1347 in 1950 before leasing it as a new grant. The plaintiffs say that the Government would have noticed the state of the Lot in the course of that survey.

32.The plaintiffs also rely on the grant and renewal of a Government permit for Tong Tsai in 1961 which was at the north of the DAs corresponding to section C of the Lot and next to lot 1347. They say that in the course of the grant or renewal, the Government should have noticed the state of the Lot.

33.They also rely on a survey map dated 1967 and say that the configuration and shape of the Lot as depicted therein appear to include the DAs. But this map is a topographical survey map. It only shows the physical features like fishponds and rivers. It does not indicate any lot or lot boundary.

34.Finally, they rely on the large areas of fishponds with parts of which reclaimed in the early 1990s. They say that the Government could not have failed to notice the state of the Lot in the course of land administration.

35.For the same reasons, they further say that the Government knew or ought to have known that they and their predecessors were under a mistaken belief that the DAs were part of the Lot. To give further support to this assertion, they also refer to the plan annexed to the memorial of sale by Wing Wa Tong in May 1924 and registered by memorial no. 59365. They say that the northern boundary of the Lot as shown in this plan clearly include the DAs as part of it. Since this plan was annexed to the memorial that had been stamped and registered at the District Office of Tai Po, the Government therefore knew or ought to have known that they and their predecessors were under a mistaken belief that the DAs was part of the Lot.

36.They then pleaded that they and their predecessors were under such mistaken belief that they had undergone the development, upkeep and maintenance of the DAs and the Government stood by and did not take any action to eject them from the DAs despite knowledge of their mistake and the work they did on the DAs under such mistake.

The Defence

37.For the plaintiffs’ primary claim, the defendant denies that the boundary of the Lot as now shown in the DD Control Sheet is wrongly drawn. The defendant also denies that the Lot has an area of about 24.67 acres as alleged by the plaintiffs. The defendant admits that at a time unknown to it, bunds were constructed to enclose the land within the Lot and also the DAs. The total area enclosed by the bunds amounted to more than 24 acres. Bunds were also built inside the encircled area and eventually divided this area into five ponds. The defendant also pleads that the boundary of the Lot in the division plans registered by the plaintiffs’ predecessors with the Land Registry was consistent with the boundary of the Lot shown in the DD Control Sheet. Furthermore, the total area of the Lot as shown in the division plans and memorials of division registered by the plaintiffs’ predecessors was consistently at about 18 acres and not 24.67 acres.

38.The defendant also denies the alternative grounds of claims. It pleads that even if the former British Hong Kong Government had been dispossessed of the DAs by the plaintiffs and their predecessors, the interests of the present Government in the DAs have not been dispossessed. Furthermore, any adverse occupation of the DAs by the plaintiffs and their predecessors in law is deemed encroachment of the DAs and its annexation to the Government Lease. The plaintiffs therefore had to give up any interest in the DAs so acquired to the British Hong Kong Government on 30 June 1973 when the Government Lease expired.

39.If the plaintiffs and their predecessors should have been in adverse possession of the DAs from 1 July 1973 or thereafter, then the period of adverse possession was insufficient to extinguish the title of the British Hong Kong Government or the HKSAR Government to the DAs.

40.The defendant further pleads that the plaintiffs and their predecessors did not have the necessary intention to adversely possess the DAs or alternatively had abandoned the possession of it. In support of this contention, the defendant relies on the lack of objection by the plaintiffs and their predecessors to the defendant’s grant of approval to the grantee of lot 1347RP to construct an access road. The access road was constructed over parts of the DAs that corresponded to sections A, B, C and D of the Lot for access to lot 1347RP from the public road system.

41.On encroachment, the defendant denies that the plaintiff or their predecessors had made the same for their own benefit.

42.The Government says that any encroachment must have been annexed to the Government Lease of the Lot. Counsel for the defendant also submitted that any interest obtained by the plaintiffs by way of encroachment did not survive the change of sovereignty on 1 July 1997.

43.The defendant also denies the claim of proprietary estoppel.

44.Alternatively, by reason of the lack of objection to the grant of approval by the Government to the grantee of lot 1347RP to construct and use the access road above-mentioned, the Government pleads that any title of the plaintiffs over the DAs, whether it was by original grant of the Lot in the proper boundary or by adverse possession, encroachment or proprietary estoppel as claimed, would be subject to the said grant as if the said grant had been authorised by the plaintiffs irrevocably.

The Reply

45.The plaintiffs in their Amended Reply pleaded that if the DAs had been annexed to the Government Lease of the Lot, the plaintiffs and their predecessors did not have to give up the DAs on 30 June 1973 when the Government Lease expired, because the lease had been extended for 24 years less three days from 1 July 1973 by the NT Leases (Extension) Ordinance, Cap. 150 (“the Extension Ordinance”).

THE PLAINTIFF’S EVIDENCE

46.The plaintiffs have called a number of witnesses and filed several statutory declarations by their predecessors.

47.The plaintiffs’ evidence shows that the Lot and the DAs have been occupied by the plaintiffs’ predecessors before 15 November 1924 when the First Photo was taken. The occupation was by large fishponds. The ponds extended into the DAs and were surrounded by large bunds. Immediately to the north of the northern bund were Lai Tau Tsui, which became lot 1347 in 1950, and Tong Tsai to its west.

48.The evidence of the witnesses together with the aerial photos taken from time to time show that the fishponds and their surrounding bunds were in the same locations since the First Photo taken in November 1924 until the 1980s. The witnesses also said that the fishponds were being actively used for breeding of fishes all the time until the late 1980s when they fell into disuse. They were then laid to waste because of cheaper supply from the Mainland.

49.Some of the witnesses also referred to a rough plan of the Lot showing internal divisions of the Lot into five sections and the identities of the proposed purchasers of the sections. There were widths and lengths stated on the plan for each section. This plan is called the Villagers’ Plan. It was produced by Chau Fuk Sze in a statutory declaration he made in April 2002 before his death. He was the son of Chau Ka Chik who purchased sections A and E of the Lot from Wing Wa Tong in May 1924. He said Chau Ka Chik told him that Chau Ka Chik himself drew the Villagers’ Plan and sub-divided the Lot into five sections for sale to the purchasers. The choice of section was by drawing of lots and Chau Ka Chik was allotted sections A and E. The Villagers’ Plan was given by Chau Ka Chik to his wife who passed it to Chau Fuk Sze. It was kept together with the original title deeds of the Lot.

50.Chow Kee Wing, the son of Chau Fuk Sze who died before the commencement of the trial, also said in his witness statement that the Villagers’ Plan was drawn by his grandfather Chau Ka Chik before the sale of the Lot in sections. He further said that the dimensions on the plan purported to show the proportion and measurements of each section of the Lot. It outlined the physical occupation and the positions of the bunds and gutters in the Lot and provided an invaluable historical record of the original features of the Lot.

51.The evidence as summarised above is undisputed. In fact, the disuse of the fishponds since the late 1980s came out in cross-examination.

52.The adjacent lot 1347RP was later sold to one HKSM Yuen Long Driving School Limited. It then built a driving school on it and the above-mentioned access road on the DAs. After the access road was built in 1995, sections A, B, C and D were given access to the public road system. These sections were then used for storage and parking of vehicles.

53.Evidence was also called by the plaintiffs on how the fishponds were constructed. In the old days and before the 1960s, fishponds were constructed manually. It required intensive labour and was time consuming. The land chosen should be close to a river for the supply of water. The process began with the removal of plants and vegetation. Rudimentary embankment would then be built which would be strengthened and improved gradually to form the foundation of the bunds. The land would then be drained and aired. After about a month, excavation work would start. Such work would normally be done between the 8th and 3rd moons of the lunar year when the weather was less humid and not as harsh. Work would be undertaken for 4 to 5 hours in the morning between two high tides. Workers were divided into teams to carry out different tasks. The tasks included removal of water and obstacles on the site, excavation of soil and turning them into blocks and piling of the blocks at the embankment. To construct a fishpond as large as section A of the Lot would have required 60 workers working for 18 months.

54.The evidence of construction of ponds shows that the construction of the ponds in the Lot must have commenced many months before November 1924 as it can be seen from the First Photo taken in that month that the ponds had all been built and sections B and C were occupied together by one large pond.

THE DEFENDANT’S EVIDENCE

55.The defendant adduced evidence by an estate surveyor who said that the plaintiffs and their predecessors had not objected to the construction of the access road.

56.A small portion of lot 1347 was resumed by the Government in October 1961. The Lot after the resumption was designated lot 1347RP. In 1992, lot 1347RP was owned by HKSM Yuen Long Driving School Limited. It applied to the District Land Officer, Yuen Long for a short-term wavier to use lot 1347RP for a driving school instead of a fishpond as originally prescribed in the new grant. It also applied to the defendant for permission to build an access road leading from the public road system to this lot and for a right of way along the access road. The access road was to be built on the parts of the DAs adjacent to sections A to D of the Lot. The owner’s surveyor advised the defendant that the road would run entirely along Government land and it had received verbal confirmation from adjoining owners that they had no objection to the building of the road. The agent further advised the defendant that the:

“owner of part of the pond that is to be affected by it being partially filled in (Mr Chau Fuk Sze) has no objection to the access road or the filling in of the portion of the pond that he does not own as he does not use the pond for any purpose.”

57.The District Land Officer then posted a Chinese notice at Chung Hau Village at Shan Pui notifying the villagers of the application to build a driving school on lot 1347RP. There was also a plan accompanying the notice which showed the locations of the proposed driving school and the access road. The defendant further produced an internal memorandum of the owner which stated:

“I had verbally discussed over the phone on 1.7.93 with the Manager Mr Chau Fuk Sze of lot no. 1212A in DD 115 about the construction of our Yuen Long Centre in lot 1347RP and of our access road adjacent to his lot.  Mr Chau was reluctant to give us a written letter but he did not object our construction of the above if adequate drainage facilities had been provided to avoid flooding over the adjacent areas.  I had also invited him to inform me in future if he find any troubles or problems due to our construction works.”

58.The owner also had a meeting with the representatives of the Yuen Long District Board and of the villages including Shan Pui Village and none of them showed disapproval to the proposed driving school. The short-term waiver was then granted to the owner and the access road built in late 1995.

EXPERT EVIDENCE

59.Both sides have called expert evidence on whether the DAs were within the boundary of the Lot when sold by the Government in 1916. The plaintiffs’ called Mr Wootten, a surveyor, who opined that the DAs were within the boundary. The Government’s expert Mr Sin King Kau, an Acting Chief Land Surveyor of the Lands Department, took the contrary view. He opined that the DAs are Government land.

The defendant’s evidence on the making of maps

60.Since some of the arguments between the experts focused on the positioning of the Lot, lot 1347 and Tong Tsai on the maps published by the Government, it is useful to briefly recap Mr Sin’s evidence on the development of the drawing of maps of the New Territories. The original survey of the New Territories was done between 1899 and 1904. The New Territories were divided into a number of Demarcation Districts and each district was mapped on a separate Demarcation District Sheet (“DD Sheet”). Replicates of the original DD Sheets are called DD Control Sheets.

61.The lots of land as identified in the survey were then granted by the Government by way of Block Crown Leases to lessees with particulars of the lots stated in a schedule to the Block Crown Lease. These lots are called old schedule lots. All land not granted to lessees by Block Crown Leases was Government Land. New lots were then delineated and granted by the Government after 1904. These new lots were called new grant lots (“NG lots”).

62.The boundary of an NG lot was drawn on a grant plan that was deposited in the relevant District Office. The grant plan was an extract from the relevant DD Control Sheet. The boundary of the new grant lot was then added onto the extract for it to serve as the new grant plan. In fixing the position of the NG lot on the new grant plan, existing lots appearing on the extract which were nearby or abut on the NG lot would be used as the geographical reference.

63.The NG lot was also added onto the DD Control Sheet. Sub-divisions, surrender and re-entry of lots were likewise added in the DD Control Sheet by additions and deletions. If the updating has made the DD Control Sheet dilapidated or overcrowded with information, a re-trace of the Control Sheet would be made where additions will be retained but surrenders discarded.

64.On the fixing of boundary for an NG lot, if the NG lot was on a portion of wasteland with boundary already fixed in the DD Survey, then its boundary would be fixed by measuring from existing boundary. For an NG lot that was not wholly bounded by existing lots, its boundary was usually in a regular shape or delineated by straight lines projecting from existing lot boundaries. In contrast, an NG lot with irregular boundary should have been based on a field survey made to identifiable features.

65.The dimension and shape of NG lots were normally found compatible with the descriptions in the grant documents. However, if the positioning of an NG lot on the DD Control Sheet should be based on erroneously chosen reference on the DD Control Sheet, the accuracy of the positioning would be adversely affected. There were instances of erroneous positioning of NG lots on DD Control Sheets which could be described as “roughly sketched”. If an NG lot could be anchored to adjacent lot(s), its positioning could be more accurate.

66.Copies of the DD Control Sheets with all the updating from time to time were available for purchase by the public. The information on the copy purchased would be that shown on the DD Control Sheet on about the date of purchase.

67.Prior to 1968, there was an aerial survey followed by the preparation of new maps in the larger scale of 1:12,000. There was then a correlation exercise by the Survey and Map Office in about 1968 to 1976. The new maps were used to correlate the positions of lots on an enlarged DD Control Sheet. Land Assistants also carried out field inspections to verify and clarify the doubts which arose in the course of the correlation. Whilst the usual updating of DD Control Sheets was by addition of NGs and divisions of lots and deletion of surrender and resumption of lots, correlation involves the correction of erroneous boundaries. It was a cadastral exercise to verify and record the lot boundaries, subdivision lines and related details by correlation, field inspection and further correlation on an enlarged DD Control Sheet.

68.The exercise in 1968 to 1976 was intended to produce maps to replace the DD Control Sheets. However, it was not pursued to completion, but was abandoned. The enlarged DD Control Sheets with some correlations and corrections made in the course of this exercise were never used officially and not made available to the public. These unfinished “drafts” were just kept in some drawers. The corrections made on them were not copied to DD Control Sheets.

69.There was then a second correlation exercise commenced in 1976. It resulted in a set of new plans called the “blue key” with a larger scale of 1:1000. The blue key for Yuen Long was available in about 1982. The corrections made in the 1st correlation exercise in 1968 to 1976 were included in the blue key but were still not copied to the DD Control Sheets. The blue key was only available to professionals and the DD Control Sheets without such corrections were still available to the general public. This second correlation exercise was also not pursued to completion.

70.A 3rd correlation exercise commenced in about 1983. It was also based on enlarged DD Control Sheets. It was completed and resulted in a set of Lot Index Plans (“LIPs”). They have also been digitised. They are being updated from time to time to incorporate NGs, divisions, surrenders and resumption of lots. There are also continuous correlation of boundary of the lots drawn on it. With the availability of the LIPs, the updating of the DD Control Sheets was stopped.

The plaintiffs’ expert evidence

71.Mr Wootten said that the grant plan of lot, which has gone missing, was in any event unlikely to accurately show the boundary of the Lot. He came to this view by relying on a technical instruction no. 4/87 of the Survey and Mapping Office dated 18 September 1987. It was issued by the Acting Land Surveyor Mr S C Leung for giving instructions on how to correlate the DD Control Sheet with the detail survey sheet and the use of the correlated plan. Mr Leung said in paragraph 7 of the circular in respect of NG lots:

“The New Grant Lots

7.  Immediately following the DD Survey, all lands not claimed were declared as Crown Land and disposed of, in parcels known as New Grant (NG) Lots.  These NG Lots once granted were pointed out to the new owners and roughly sketched on separate plans by staff without any survey training.  These called new grant plans were invariably at an extremely small scale with few, if any, details or reliable map references.  These lots were also recorded on the DD Sheets but in an equally fictitious manner. …”

72.Mr Wootten then referred to a plan called the Double Lot Sheet which depicted lot 1347 right next to the Lot at its northern boundary. The DAs between the two lots were not shown. Mr Sin said that the Double Lot Sheet was a field survey map produced in the DD Survey of 1899 to 1904. Mr Sin believed that the Lot and lot 1347 were copied onto the Double Lot Sheet from a DD Control Sheet after 1950 because lot 1347 was only granted in 1950.

73.In fact, the Lot and lot 1347 were drawn in the same manner in the DD Control Sheet as appearing in the Double Lot Sheet. Mr Wootten then considered the First Photo taken in November 1924 which showed the Lot occupied by four fishponds with one large pond occupying both sections B and C. The whole area was like a shell encircled by a strip of open land. The four ponds were also segregated by similar strips of land.

74.Mr Wootten opined that these trips were bunds created to encircle and divide the Lot into gei wais which were precursors of fishponds. They represented the extent of physical occupation of the Lot. He said the extent of physical occupation as shown by these bunds should be regarded as the limits of the grant of the Lot or the boundary of the Lot as granted. This occupation included the DAs at the north. Fishponds corresponding to the five sections of the Lot can be seen in aerial photos taken between 1945 and 1963.

75.The sections were also illustrated in a plan annexed to the memorial of the sale in May 1924 and the Villagers’ Plan. Mr Wootten said that the shape of the northern boundary of the Lot in the Villagers’ Plan reflects the extent of area that was occupied. He also referred to special condition 2 of the sale of the Lot as published in the Gazette No. S118 which provided:

“The Purchaser shall, within three years from the date on which the Lot is sold, convert the land into agricultural land to the entire satisfaction of the Land Officer.”

76.He then opined that the Land Officer would have been satisfied with the conversion if an only if the land within the boundary of the grant had been converted and no more.

77.He also referred to the addition of NGs to the DD Control Sheet and repeated the view of Mr S C Leung that such process was liable to error as it was done by trained and untrained demarcators without the benefit of survey.

78.He then referred to a War Office Plan showing ground features in about 1935 to 1937 and a 1967 topographic survey plan. These plans do not show any lot boundary. They do show fishponds, rivers and other ground features. The boundary of the fishponds shown in these two later plans are more or less the same as that shown in the First Photo. The 1967 plan further shows a fishpond on lot 1347 and another pond in Tong Tsai.

79.Mr Wootten said that it was unlikely that the grantees would have dug up the pond and constructed the bunds and sluice gates outside the Lot boundary as such work was very costly. Hence, the grantees should have constructed the bunds and sluice gates at the lawful boundary. This so-called lawful boundary enclosed the DAs. But the defendant also refers to the evidence showing that a pond had been constructed in Lai Tau Tsui long before it was made the NG of lot 1347. Hence, a lot of capital had been incurred before the acquisition of the right to occupy that area.

80.Mr Wootten then referred to a permit issued by the defendant in 1961 to one Mr Lam Tat Wing allowing him to occupy and use Tong Tsai right next to and to the west of lot 1347. In the plan annexed to the permit, lot 1347 and Tong Tsai were positioned right next and to the north of the Lot without the DAs in between. This was consistent with the positioning in the Double Lot Sheet and the DD Control Sheet. The northern part of the fishpond on section C which was in the DAs was later cut off from this pond and merged with and enlarged the fishpond in Tong Tsai. This can be seen in the aerial photos taken in 1979 and thereafter until 1993.

81.Mr Lam Tat Wing passed away in 1986 and the permit given by the defendant for him to occupy Tong Tsai was cancelled. His brother Lam Kai Fong then applied for and was granted a licence in 1986 to occupy and use Tong Tsai. The plan accompanying the licence showed that the licence only covered Tong Tsai as it was before the enlargement by merger with part of the DAs. The part of the enlarged pond in the DAs was not included in the licence. Mr Wootten opined that if the DAs were Government land, there was no reason for the Government not to include this part of the pond in the licence. Hence, he said the Government at that time must have taken the view that the DAs were part of the Lot and the Government had no right to license it to another person for use and occupation.

82.Mr Wootten also challenged the reliability of the registered area of 18 acres or that one can establish the shape of a lot from the registered area. But I must point out here that it is not Mr Sin’s evidence that the shape of the Lot could or should be established from the registered area.

83.On the unreliability of the registered area, Mr Wootten again referred to part of the technical instruction no. 4/87 of Mr. S.C. Leung titled ‘The Registered Area and Its Reliability’. The conclusion of this document said:

‘Conclusion

In short, to determine the DD lot areas, the highest reliability should be given to the original ground occupation.  Following this, the graphical data on the DD Sheet should be accepted, subject to intelligent interpretation.  The registered area is less certain and the converted area which may include manufactured components is the least reliable.  This grading of reliability must be observed in dealing with DD lot boundaries, including usage in the correlation exercise.”

84.Mr Wootten said that the original ground occupation of the Lot since 1924 at the latest consisted of bunds and fishponds and occupied an area of 24.67 acres including the DAs but not just 18 acres. If the DAs should be excluded from the Lot, then the DAs would be a piece of no-man’s land between the Lot and lot 1347. The DAs would be the northern parts of the ponds in the Lot. That would be inconsistent with the physical occupation in November 1924 as shown in the First Photo or even earlier.

85.After the exchange of expert reports, there was a meeting of experts. After the meeting, Mr Wootten prepared a supplemental expert report. He basically reiterated in this report the importance of ground occupation since November 1924 or earlier and that lot 1347 was drawn next to the Lot in the Government plans prior to 1980.

86.In his oral evidence, Mr Wootten clearly accepted the boundary of the Lot drawn in the DD Sheet was the same as it was drawn in the missing grant plan, but he maintained that the grant plan was inaccurate and hence all derivatives from it were likewise inaccurate. He reiterated that the evidence of occupation should indicate the true boundary of the grant. He also said that when the grant was made, there was some pointing out of the boundary by some Government Officer to the grantee. He asserted that the features of the boundary would be the banks of Shan Pui River and Kam Tin River.

87.He also agreed that there was probably a survey of the Lot by Government staff during low tide and that survey was the basis on which the grant plan was drawn. Nevertheless, he still questioned its reliability. He would accept the reliability of a grant plan if it was supported by actual occupation. He however agreed that the shape and size of the Lots in some grant plans are reliable. For the grant plan of the Lot, he only questioned the northern part of the boundary. He accepted that the dimension and shape of the eastern, southern and western parts of the boundary were correctly drawn.

88.He also carried out an exercise to compare the Lot as drawn in the Villagers’ Plan with the Lot in the LIP and the area as surrounded by the bunds. However, the comparisons were not useful as most of them were done by using the roughly drawn lengths of the divisions on the Villagers’ Plan rather than the lengths of the bunds as written therein.

The defendant’s expert evidence

89.Mr Sin said that the boundary of the Lot as depicted in the original grant plan should have been based on a ground survey prior to the auction in 1916. Mr Wootten agreed with this. Mr Sin also said that the survey should have been made to identifiable features such as exposed shoreline, crude bunds or footways. He referred to the curvilinear boundary as shown in the DD Control Sheet and he said that clearly reflected the intended area for the grant in 1916. Otherwise, the northern boundary would have covered the whole delta (not leaving the triangle for the future lot 1347 and Tong Tsai) or alternatively would have been delineated by a straight line.

90.Mr Sin said the bunds as erected on site extended beyond the boundary in the DD Control Sheet at the north. He opined that the extent of the DAs could not be explained as having stemmed from errors in the original boundary survey. The area as surveyed was said to be 18 acres, but the DAs were at 6.67 acres.

91.Mr Sin also relied on the Villagers’ Plan. When the dimensions of the widths of the sections as stated on this plan were converted into metres at the agreed conversion factor of 0.32, the widths of the sections and the overall width agreed more or less with the actual dimensions on the ground and the boundary as shown on the DD Control Sheet.

92.All the sub-division plans registered by the plaintiffs and their predecessors subsequent to the grant in 1916 depicted the Lot boundary as was done in the DD Control Sheet regardless of their scales.

93.Mr Sin also referred to the auction notice which specified the area at 18 acres with the upset price at $785 and annual rent at $18. The Lot was indeed purchased at the auction at the upset price. The details were then entered into in the Government rent book for rent collection. He said Government rents of NGs were calculated according to the area. The boundary of the NGs had therefore to be fixed before they were sold. He also said that the upset price of the Lot at $785 was also a round up figure calculated at the rate of 1/10 cent per square foot for 784,084 sq. feet or 18 acres.

94.The sale was also subject to several general and special conditions. General condition 4 governed the placing of boundary stones. General condition 14 governed the readjustment of premium and Government rent upon lease survey. Special condition 2 governed reassessment of Government rent at the end of the first five years after the sale of the Lot. These conditions read:

“General Conditions

4.  The purchaser of each Lot shall also have Boundary Stones of a size and pattern to be approved by the Assistant Land Officer, marked with the Registry Number, placed at each angle of the Lot within one month of the date of sale.

14.  The exact area boundaries and measurements of each Lot shall be determined before the issue of the Crown Lease and the premium and Crown Rent shall be then adjusted in accordance with the area and the amounts of Premium and Crown Rent at which the Lot was sold.

Special Conditions

2.  The Crown Rent mentioned in the Particulars of Sales is subject to assessment at the end of the first five years from the date on which the lot is sold and thereafter such rent shall be paid as shall be fairly and impartially fixed by the Surveyor to His Majesty the King …”

Despite these conditions, there was no re-assessment of Government rent, lease survey or boundary stone placement.  Mr Sin thus opined that the boundary as in the grant plan (and in the DD Control Sheet) should still be the legal boundary of the Lot.

95.He also said that unlike the doubtful positioning of NG lots on the DD Control Sheet, the dimensions and shapes of NG lots were normally compatible with the descriptions in the grant documents. For the Lot which has an irregular shape, if its shape and dimension should have been erroneously drawn on the grant document and the DD Control Sheet, then it was likely that its shape would have been distorted. But there is no dispute on the correctness of the boundary save for the northern side.

96.Regarding Mr Wootten’s approach of determining the boundary by reference to physical occupation, Mr Sin opined that such approach is only applicable if and only if the occupation as demarcated by solid and stable features was in existence before the land grant. This did not apply to the Lot which was not an Old Schedule with solid occupational features in existence when it was granted. If the present day occupation should be adopted for boundary determination, it must be substantiated to be original or having been reconstructed in-situ. He suggested that the bunds for the Lot as shown in the First Photo should not have been there in 1916.

97.Mr Sin also pointed out that the areas of the sections of the Lot had been recorded in the Government rent book for rent collection. The sectional areas as recorded tallied with the sectional areas shown on the sub-division plan which was registered and used in the sale of sections of the Lot in 1924. He also said that this sub-division plan did not tally with the First Photo as the photo showed a wide bund to the north of the northern boundary in the sub-division plan.

98.The appearance and positions of the bunds dividing the sections also matched the division lines in the sub-division plan save for slight survey drawing errors though the bund between sections B and C was not built by then and only appeared in an aerial photo taken in December 1956.

99.He also referred to the lengths of the sectional division lines as written in the Villagers’ Plan. After conversion at the agreed factor of 0.32, the lengths of these division lines agreed more with the division lines in the sub-division plan than the dividing bunds shown in the First Photo. He opined that the lengths as stated in the Villagers’ Plan should have been based on certain measurement made on some old bunds or boundary feature rather than the bunds in the First Photo. The lengths of the division lines and the bunds are in the table below:

Sections divided by bunds or division lines	Lengths of division lines stated in Chinese check in the Villagers' Plan	Lengths of division lines stated in the Villagers' Plan converted from Chinese check to metre at the agreed factor of 0.32 check to one metre	Lengths of division lines in the DD Control Sheet in metre	Lengths of dividing bunds shown in the November 1924 aerial photo
A – B	725	232	270	297
B – C	854	273	283	346
C – D	854	273	271	344
D – E	747	239	196	291

100.Mr Sin also referred to the sub-division plans used by the plaintiffs’ predecessors for sub-dividing the sections. The plans used and registered in 1972 and 1981 had the boundary of the Lot consistent with that in the DD Control Sheet. The sub-division plans used by the plaintiffs and their predecessors in the 1990s were prepared by Authorised Land Surveyors who had surveyed the sections. The legal boundary of the Lot as depicted in these plans always excluded the DAs.

101.Regarding the relative positions of the Lot and lot 1347, they were drawn contiguous to each other in the DD Control Sheet with lot 1347 at the north. However, in the large scale land record plans prepared by the Government in the 1980s, there was a piece of Government land between them.

102.Mr Sin considered the history of the grant of lot 1347. The aerial photo taken in November 1945 already showed a fishpond surrounded by bunds in Lai Tau Tsui. This was an illegal occupation. Mr Sin regarded the NG of lot 1347 in 1950 was to regularize this illegal occupation. There should have been a field survey of this lot before it was auctioned in 1950. The southern part of the boundary must have been fixed by reference to known features in the DD Control Sheet which was the northern bund of the Lot. But the officer who did the survey did not notice that this bund of the Lot had in fact shifted northwards by an average of some 60 metres. Hence when lot 1347 was drawn right next to the Lot in the DD Control Sheet, it was erroneously positioned to the south and covered the DAs. When the Government prepared the large scale survey maps in the 1980s and transferred the lot boundaries from the DD Control Sheets to these maps, the position of lot 1347 was rectified under the control of matching boundary features. This rectification of position of lot 1347 to the north uncovered the DAs as Government land between lot 1347 and the Lot. The mismatch between the boundary of the Lot and the position of the extended northern bund of the Lot was never noticed by the Government until the preparation of the large scale maps in the 1980s.

103.Mr Sin also presented a supplemental report. He disagreed with the assertion of Mr S C Leung as adopted by Mr Wootten that the plan scales for NG lots were usually very small ranging from 1/10,000 or smaller. Mr Sin instead said that grant plans of NG lots were drawn in the scale of the prevailing DD Sheet which commensurate with the respective scale of 1:3960 or 1:1980. He in fact produced a sample grant plan of a scale of 16":1 mile or 1:3960.

104.Mr Sin disagreed with Mr Wootten’s assertion that the grant plan was wrongly drawn due to mistakes in the survey that resulted in the mismatch between the northern boundary on the plan and the northern bunds in the First Photo. He said large mistakes in measurement would usually occur in a random manner, but it would be rare if the whole set of measurements taken to fix the irregular boundary of the Lot were consistently made erroneously. I think this view accords with common sense. He then reiterated and refined some other matters referred to in his main report.

105.In his oral evidence, he maintained what he said in his reports. He also clarified that the survey of NGs before grants were not done by surveyors but by Land Bailiffs who were assisted by Chinese staff.

106.He was referred to special condition 2 of the auction which has been referred to above. It provided that the lessee should convert the land into agricultural land to the entire satisfaction of the Land Officer within three years from the date of sale. He confirmed that the Land Bailiff would have gone to the Lot in about 1919 to check if this special condition had been carried out by the grantee.

107.He also confirmed that the drawing office of the Survey and Map Office in the first correlation exercise in 1968 to 1976 should have discovered that there was the DAs between lot 1347 and the Lot. However, this discovery just existed in certain unfinished correlation draft plan which was then kept in certain drawer and not used. The DAs should have entered into the blue key which was produced in the 2nd correlation exercise.

108.He also referred to the LIP which shows the Lot in five sections but the northern boundary for section D protruded out and did not form part of the smooth boundary as constituted by the northern boundaries of sections A, B, C and E (see Appendix 1). He explained that the boundaries for sections A, B, C and E had been correlated by Authorised Land Surveyors, but section D has not been surveyed in the last few decades and its northern boundary is still at the position as in the DD Control Sheet.

THE PLAINTIFFS’ LOCUS STANDI

109.The first point taken by the defendant is that the plaintiffs are no longer owners of the original sections A, B, C and D as these sections had been sub-divided and some sub-divided parts were sold to non-plaintiffs without reserving to the plaintiffs any part of the corresponding DAs. The plaintiffs now only own some parts of these four sections.

110.It is for the plaintiffs to show that each group of them is entitled to that part of the DAs that corresponds to the section acquired by their predecessor(s) in the May 1924 sale. The plaintiffs produced some notes to trace the history of the conveyance of the sub-divisions of sections A, B, C and D. The notes assumed that the parts of the DAs that correspond to the sections were sold to the purchasers in May 1924.

111.The defendant argued that if the parts of the DAs were not included in the division of the Lot into sections A to E, then no part of the DAs had been sold together with the five sections and no plaintiff would own any interest in any part of the DAs. Alternatively, if the DAs should have been divided and sold with their corresponding sections in May 1924, then the subsequent sub-divisions of the sections and assignments of parts of them would have also sub-divided the relevant parts of the DAs so that no group of plaintiff would now own any section of the DAs which was sold as an integral part in May 1924. However I do not think this is the correct way to consider the ownership of lots. I think ownership is dictated by the contents of the conveyancing documents. A study of the conveyancing documents as assisted by the plaintiffs’ conveyancing notes shows that the plaintiffs can certainly argue that they have sufficient locus standi to make the claims.

112.All the plaintiffs contended that the parts of the DAs corresponding to the sections of the Lot designated A to E were assigned to the purchasers together with their corresponding sections in the May 1924. This argument depends on whether the DAs were originally part of the Lot. For this discussion, I assume that they were and that the area of the Lot should be 24.67 acres rather than 18 acres.

113.For section A, the first sub-division took place on 3 September 1996 when sub-sections A1 and ARP were created. Sub-section A1 had a specific area of 4,645.1 m² whilst sub-section ARP had an area of 11,666.8 m². The areas were defined by survey coordinates. They clearly did not include any part of the DAs. The part of the DAs corresponding to section A was therefore not included in this sub-division. All conveyances subsequent to this sub-division only involved sub-sections A1 and ARP and not any part of the DAs. Hence, it is open to the 1st plaintiff to argue that if the DAs should be part of the Lot, that part of the DAs corresponding to section A is still owned by him.

114.Regarding section B, the first sub-division after the May 1924 sale was on 17 March 1990 when sub-sections B1 and BRP were created. Sub-section B1 had an area of 522 m² and sub-section BRP had 13,966 m². The sub-division plan was surveyed by an authorised land surveyor. From the given measurements and the survey plan annexed to the sub-division memorial, the sub-division did not include the part of the DAs that corresponded to section B. All subsequent conveyances only involved sub-sections B1 and BRP. Hence, it is open to the 2nd to 5th plaintiffs to argue that if the DAs should form part of the Lot, they still own the part that corresponds to section B.

115.Regarding Section C, the first sub-division took place on 7 November 1947 whereby sub-sections C1 and C2 were carved out of section C. Sub-sections C1 and C2 were occupied by two houses and had 80.92 m² and 121.38 m² respectively. They were specific sub-sections that did not include any part of the DAs. There was a further sub-division of section C into sub-sections CRP and C3 on 2 December 1972. Sub-section CRP had a house on it and had 161.84 m². Sub-section C3 was the remainder of section C. Sub-section C3 was further sub-divided into sub-sections C3A, C3B and C3RP on 13 March 1990. The plan for this sub-division was again prepared by an authorized land surveyor. C3A had 363 m², C3B had 185 m² and C3RP had 13,616 m². The DAs did not appear to have been included in this sub-division. All conveyances thereafter only involved sub-sections C3A, C3B and C3RP. Hence, the 6th to 10th plaintiffs can argue that if the DAs should have been part of the Lot, they still own the part that corresponds to section C.

116.Regarding section D, it was sub-divided on 25 November 1981 into D1, D2, D3, D4, D5 and DRP. The whole of that part of the DAs that corresponded with section D was included in sub-section DRP which is now owned by the 11th to 15th plaintiffs.

117.For Section E, there was no sub-division since the May 1924 sale. If part of the DAs should be included in it, that part is still owned by the 1st plaintiff.

118.The plaintiffs have therefore shown the necessary locus standi to make claims to the parts of the DAs that correspond to the sections purchased by their predecessors.

119.Though the above discussion is on the basis that the DAs was originally part of the Lot as granted by the defendant, the plaintiffs can also prove their locus if the DAs should have been acquired by them and their predecessors by way of any of the basis upon which the alternative claims are made. These alternative claims were all based on possession of the DAs by them and their predecessors.

WERE THE DAS PART OF THE GRANT OF LOT 1212?

No plea for rectification of grant or plan

120.The plaintiffs’ primary claim is that the DAs are part of the Lot as leased by the new grant. They therefore seek declarations that the proper boundary of the Lot should include the DAs and the boundary of their sections should likewise include the corresponding parts of the DAs.

121.It is the common ground of the parties that the starting point to ascertain the true contractual boundary is by construing the grant documents. The grant documents for the Lot say that the Lot contains an area of 18 acres. The upset price for the auction was $785 and annual government rent was $18. The boundary measurements were as per the grant plan deposited it in the District Office, Tai Po. Though the grant plan has gone missing, Mr Wootten agreed with Mr Sin that the details of the boundary of the Lot on the lost grant plan were probably the same as those shown on the DD Control Sheet. Mr Wootten also agreed that the boundary of the Lot was in irregular shape and it had been based on field survey made to identifiable features. The area as scaled from the Lot drawn on the DD Control Sheet is about 18 acres and is compatible with that in the other grant documents.

122.The defendant thus submitted that the boundary of the Lot as construed from the grant documents and the DD Control Sheet is certain. There is therefore no basis for the plaintiffs’ claims for the said declarations. Furthermore, the basis of the plaintiffs’ claim is that the boundary as shown on the DD Control Sheet is wrong and it should include the DAs. But they are not claiming rectification of the boundary or the contents of the grant documents. The defendant therefore submitted that this claim for declarations must fail.

123.The plaintiffs relied on Neilson v Poole (1969) 20 P&CR 909 at 915 where Megarry J said:

“… in the construction of the parcels clause of a conveyance and the ascertainment of a boundary the court is under strong pressure to produce a decisive result.  The prime function of a conveyance is to convey.  As to any particular parcel of land, either the conveyance conveys it, or it does not; the boundary between what is conveyed and what is not conveyed must therefore be proclaimed.  The court cannot simply say that the boundaries are uncertain, and leave the plot conveyed fuzzy at the edges, as it were.  Yet modern conveyances are all too often indefinite or contradictory in their parcels.”

However, Mergarry J was referring to the need to admit extrinsic evidence when there was uncertainty in the boundary upon construing the conveyancing documents.  If there is no uncertainty, there is no basis to refer to extrinsic evidence unless there is a claim for rectification of the grant documents.  I agree with the defendant’s submission that the plaintiffs’ claim for declarations on the so-called proper boundary must fail as the boundary is certain and there is no claim for its rectification.  However, in case I were wrong, I would also consider the merits of the plaintiffs’ claim by ignoring this pleading issue.

Were the DAs part of the grant of Lot 1212?

124.The plaintiffs mainly relied on the evidence of occupation as shown in the First Photo. The defendant however relied on many other matters in its submissions. It is more convenient to discuss the matters relied on by the defendant.

125.The defendant submitted that in 1916, the Lot together with Lai Tau Tsui and Tong Tsai were probably covered by water at high tide. The auction notice described the Lot as “marshy land” and “a piece of Foreshore and Seabed and Crown Land covered with water”. The Lot was part of a delta bounded by Shan Pui River and Kam Tin River. One of the plaintiffs’ witnesses also said that the Lot was marshy land before it was converted into sections of fishponds. The presence of sluice gates at the southern edge of the Lot also suggests that the high tide would have come in to the south of the Lot. Mr Sin of the defendant was of the view that despite the high tide, field survey of the Lot could still have been done during low tide or dry season. The survey could have been done to identifiable features like exposed shoreline, crude bunds or footways. The curvilinear boundary of the Lot reflected clearly the intention of the grant in 1916. Otherwise, the northern boundary of the Lot should have included the whole delta or been in a straight-line.

126.Mr Wootten accepted that there should have been a field survey before the Lot was auctioned. He also accepted that there was no practical difficulty in positioning the southern part of the Lot to its true position because it was adjacent to some old schedule lots which had been surveyed previously. He also accepted that the field survey and plotting of the Lot on the DD Control Sheet had been done correctly to the eastern, southern and western parts of the boundary of the Lot which coincided almost perfectly with actual occupation. The defendant therefore submitted that it was more likely than not that the field survey and plotting of the northern part of the boundary had also been done correctly. The curvilinear shape of the northern part of the Lot should also be regarded as reliable. The defendant thus submitted that Wootten’s argument of a survey mistake at the north of the Lot which erroneously excluded the large DAs because of survey difficulty is just a speculation and contrary to evidence.

127.The defendant reiterated that the extent of the DAs was by 48 to 100 metres to the north which was unlikely to have been excluded from the boundary of the Lot by survey and plotting errors. It submitted that the occupation of the DAs was likely to have been the result of encroachment by the lessees into unleased land at the north.

128.Based on the above, the defendant further submitted that the field survey and plotting of the Lot on the DD Control Sheet had correctly positioned the legal boundary, the grant plan and the DD Control Sheet show the same boundary for the Lot, and the true legal or contractual boundary is that shown in the LIP.

129.Mr Wootten also agreed that the area of the Lot as scaled from the DD Control Sheet is within ±10% of the registered area of 18 acres. This scaled area is thus consistent with the auction upset price of $785 and the government rent of $18 p.a.

130.The defendant also referred to the plans which were registered by the lessees for dividing the Lot into sections and sub-sections. There were five such plans prepared by authorised surveyors and registered in 1990 to 1998. Mr Wootten agreed that such plans were prepared with the benefit of field surveys, checking with the registered records and plans, taking instructions from the owners, checking the LIP and by the surveyor expressing a professional opinion on where the legal boundary should be. These plans consistently excluded the DAs or parts thereof from the legal boundary of the Lot.

131.The divisions and sub-divisions were also consistently done on the basis that the Lot had an area of 18 acres and the sections had the areas allotted to them. These plans thus reflected the expert opinions of the surveyors who prepared them.

132.The plaintiffs answered these submissions by referring to Mr Sin’s confirmation that the field survey was not done by professional surveyors and the problems of accuracy of plotting on the DD Control Sheet mentioned by Mr S C Leung in his circulars. Mr Wootten also said that the Lot was covered by water and it was difficult to survey it. However, I do not think these are adequate answers to the defendant’s submissions. Even though the field survey was not done by professional surveyors, it does not mean necessarily that it was inaccurate. The accuracy of the boundary at the east, south and west is evidence of the quality and standard of the field survey. The possibility of higher degree of difficulty in surveying the marshy northern side is on a balance of probability not enough to establish an error of the magnitude of the DAs. There is also no concrete evidence to show how difficult it was in surveying the marshy northern side save some suggestions that it was marshy with vegetation protruding.

133.Regarding the criticism of the plotting of the Lot on the DD Control Sheet and the general comments of Mr S C Leung, I do not think such criticism and comments are sufficient to cast doubts on the accuracy of the plotting of the Lot on the DD Control Sheet bearing in mind that it has been properly positioned on the east, south and west and its scaled area conformed with the registered area. The curvilinear shape in the north was also obtained by surveying to identifiable features. I am of the view that the plaintiffs have not been able to argue against the defendant’s submissions.

134.The defendant also referred to the sale of the Lot in five sections in May 1924. The average price of each section was at $860. With the areas of sections A and E averaged out, the areas of the sections only ranged between 3.50 acres to 3.67 acres. The difference is less than 5%. The total area was 17.91 acres. These areas were indeed scaled from the sections drawn on the Lot as extracted from the DD Control Sheet. But there was the clear intention that each of the sections should be of approximately the same area and be sold at the same price.

135.It is indeed the evidence of Chau Fuk Sze that the sections were sold to the purchasers by drawing of lots. As a result, sections A and E were sold to Chau Ka Chik, sections B and C were sold to the four Lams and section D sold to Chau Sui Fan. However, if each of the sections should include its corresponding portion of the DAs, then the areas of the sections would become:

A : 20,239 m²

B : 17,719 m²

C : 20,002 m²

D : 19,473 m2

E : 22,103 m²

The average area of sections A and E is 21,171 m² and the average area of sections B and C is 18,860 m². The difference is 2,310 m² which is more than 10%. The defendant therefore submitted that the Lot boundary on the DD Control Sheet, which is without the DAs, is more likely to be the boundary of the Lot accepted by the original lessee and the purchasers in the May 1924 sale rather than a boundary that included the DAs. That means this boundary was accepted by the original lessee as the correct one.

136.The defendant also referred to the Villagers’ Plan which purportedly contained the lengths and widths of each section. It was said to have been made by Chau Ka Chik for drawing lots for the sale. This plan does not resemble closely the shape of the Lot with or without the DAs. The defendant submitted that it should have come into existence after the original lessee had decided to sell the Lot in sections. It further submitted that the focus of the plan was on the stated dimensions of lengths and widths which were probably measured to some markings on the ground. Hence, the shape was only for the purpose of illustration and not drawn to the correct proportion.

137.The experts agreed that the stated widths and positions of the dividing lines of the sections in the Villagers’ Plan matched well with those in the DD Control Sheet. The defendant therefore inferred that the division lines on the division plan used for the May 1924 sale were guided by the widths specified in the Villagers’ Plan and the concept of equity of the sections and the dividing lines in the Villagers’ Plan had been accepted by the original lessee and the purchasers before the May 1924 sale was put through.

138.The stated lengths on the Villagers’ Plan, however, do not match exactly with the lengths of the dividing lines in the 1924 division plan. The defendant inferred that the parties must have accepted the dimensions in the division plan as that was the plan registered by them and the dividing bunds were constructed according to these dividing lines on the plan. The lengths of the dividing lines in the Villagers’ Plan were also closer to those in this division plan than the northern bunds as built and shown in the First Photo. Reading these two plans together and considering the magnitude of the DAs, the defendant submitted that the owners were aware that they were encroaching on other land at the north.

139.The defendant further submitted that the widths in the Villagers’ Plan are so remarkably proportional to those in the DD Control Sheets, therefore the stated lengths of the dividing lines on the Villagers’ Plan should also be credible. Furthermore, these stated lengths were not the lengths of the bunds in the First Photo. This means that the Villagers’ Plan was drawn according to another set of bunds or probably gei waislocated differently from the northern bunds in the First Photo. The defendant supported this submission by referring to the evidence of the plaintiffs’ witnesses who said that fish farming in the sections of the Lot only started in the early 1920s. Therefore, the defendant guessed that there were only gei wais initially which were for catching of shrimps and fishes but were not strong enough for fish farming. They were the reference dividing lines as drawn in the Villagers’ Plan. The bunds for fishing farming were only built subsequently.

140.However, Mr Wootten made the economic argument that it was not worthwhile in money terms to build one set of bunds or gei wais at one location and then build another set of bunds at the location as shown in the First Photo later on. The defendant attempted to argue against this argument by citing the encroachment of Lai Tau Tsui and Tong Tsai by some of the Lams in 1945 and 1954 respectively. These encroachments were only regularised years later by new grant and permit to occupy. The defendant thus submitted that the legal boundary was as depicted in the DD Control Sheets and the division plans as registered. I will deal with the economic argument later.

141.The plaintiffs dealt with the sale and the division plan registered in May 1924 and the Villagers’ Plan together. They referred to Ali v Lane [2007] 1 P&CR 26, a decision of the English Court of Appeal. They argued that these plans were not the deeds of the original grantor and grantee of the Lot and hence should not be considered. Ali v Lane was a case of a disputed boundary. The boundary was set in a conveyance made in 1947. The trial judge relied on extrinsic evidence obtained from a series of transactions in 1947 relating to the disputed land in arriving at his conclusion. The judge took the view that such evidence was consistent with the 1947 conveyance. The defendant’s contentions relied on extrinsic evidence that was largely separate from and subsequent to the 1947 conveyance. The judge did not prefer such evidence. The defendant’s appeal was dismissed. Carnwath LJ said at paragraphs 36 to 38:

“36.  … In the context of a conveyance of land, where the information contained in the conveyance is unclear or ambiguous, it is permissible to have regard to extraneous evidence, including evidence of subsequent conduct, subject always to that evidence being of probative value in determining what the parties intended.

37.  The qualification is crucial.  When one speaks of ‘probative value’ it is important to be clear what needs to be proved.  In this case the issue concerns the line of a boundary which was fixed not later than 1947.  Evidence of physical features which were in existence in the 1970s is of no relevance to that unless there is some reason to think that they were in existence in 1947, or they are replacements of, or otherwise related, to physical features which were in existence in 1947. …

38.  I would add that in principle reference to the intentions of the parties means the parties to the original conveyance. … In none of the cases reviewed above was account taken of the conduct of subsequent owners. …”

142.The plaintiffs thus submitted that the Villagers’ Plan had little probative value for ascertaining the intention of the parties to the original conveyance on the true size of the Lot. They said that it was conduct of subsequent owners. It was for showing the allocation of ponds constructed or to be constructed. They further said that the evidence on how the Villagers’ Plan had come into being was sketchy and based on hearsay.

143.They further said that it is unclear whether the boundaries in the Villagers’ Plan were actually drawn at that time or were added subsequently. They opined that the dividing line between sections B and C and some Chinese Characters were added subsequent to the May 1924 sale. It was also not drawn by a professional surveyor. The purported boundary of the Villagers’ Plan does not conform with the boundary on the DD Control Sheet. Mr Sin also admitted to the possibility that the Villagers’ Plan could have been made before the grant in 1916 and used as a representation of what the parties set out to do.

144.Regarding the sale in May 1924, the plaintiffs repeated the point that such was the conduct of subsequent owners. Hence, they said it should not be considered by the court.

145.Regarding the division plan used in the May 1924 sale, they also said that it was the act of subsequent owners and should not be considered. They further said that the boundary of the Lot shown on the plan was very likely to have been traced from the lost grant plan or the DD Control Sheet and made in about May 1924. Since the bunds captured in the First Photo were in existence in November 1924 and they would have taken more than a year to build, the bunds drawn as dividing lines in the plan in about May 1924 should have represented the bunds in the First Photo which are the present bunds. In other words, if the boundary of the Lot on the grant plan or the DD Control Sheet was inaccurate, then this division plan would inherit the same inaccuracy. This was so despite the intention of the parties to show on the plan the bunds as later captured in the First Photo. It was therefore the inaccuracy of the boundary which caused the dividing lines to be inaccurate.

146.The defendant in answer to these points likewise submitted that the bunds shown in the First Photo were also the works of subsequent owners. Hence, it said that I should not accept the plaintiffs’ suggestion to consider these bunds.

147.The defendant further relied on Lam Pak Kau v Yu Yuet Fai, CACV 205/1999 and submitted that it was possible that these bunds were built many years after the grant in 1916. They could simply be representations of what the person who built the bunds thought was the boundary. I would add that they could also be the limit of the extent of encroachment that the person(s) wanted to make.

148.To refute the plaintiffs’ argument that the Villagers’ Plan and the 1924 division plan were the conduct of subsequent owners, the defendant submitted that these plans involved the Government lessee as the vendor and the trustee of the lessee Mr Lam Wun Chi as one of the purchasers of sections B and C. These plans are therefore probative and should be admitted in evidence to show the understanding of the parties on the legal boundary at the north which was much further to the south than a boundary that would include the DAs.

149.The defendant also reiterated the acceptance of the boundary in the DD Control Sheet by the owners in the May 1924 sale and subsequent divisions up to the 1990s. The Villagers’ Plan and these division plans should be regarded as statements against their own interests.

150.Having considered these arguments, I agree that I should admit and consider the Villagers’ Plan and the division plans. They can obviously be taken as statements by the owners against their own interests. The May 1924 sale and the division plan used for the sale also involved the trustee of the initial grantee as a buyer and seller. He should know where the boundary was. There was no reason why he should take part in buying two sections of the Lot but with the northern boundary shifted substantially to the south. The dimensions of the Villagers’ Plan are also credible. Though the plaintiffs do not accept that the same conversion factor would apply to the stated widths and the stated lengths, I find that they were based on the same system of measurement units and the same conversion factor should apply. I do not see any reason why the drafter of the plan should have used different measuring systems to record the lengths and the widths respectively.

151.The dimensions in the Villagers’ Plan were obviously written thereon as a matter of record of what they had measured and agreed. The plan was prepared for the drawing of lots. I do not think the line dividing sections B and C was added after the sale. Before the drawing the Lots, nobody could tell that the four Lams would get sections “B and C” and not “B and D” or “C and D”. Though some Chinese characters were added to the Villagers’ Plan after the sale, I do not think the dimensions for the widths of sections and lengths of dividing lines or any of the dividing lines were added after the sale. All these were required for the sale by drawing lots. If they were added afterwards, then the plan would have served no purpose.

152.I also do not think the inaccuracy on the size and shape of the Lot on this plan would matter. I do not suppose that the purpose of the Villagers’ Plan was to show the size and shape of the Lot accurately. It was only to show the dimensions as stated.

153.I also note the Plaintiffs’ criticism about the sketchy evidence on the making of the Villagers’ Plan. However, there is clear evidence that this plan has been carefully kept with the title documents. It has no doubt been treated by the Chau family as an important document in relation to their title to sections B and C.

154.I also find that the lengths of the dividing lines in the Villagers’ Plan are much closer to those on the DD Control Sheet than the dividing bunds in the First Photo.

155.Regarding the 1924 division plan, I do not think the boundary at the north would have necessarily reflected the position of the bunds at the north as shown in the First Photo. The division plan represented the bargain of the parties. It created rights and liabilities. The bunds at the north in the First Photo might have been the limit of encroachment of the person(s) building these bunds. The reasons for not including encroachments in a sale are obvious. The vendor might not have the right and title to sell them at all.

156.Since the defendant’s case is that the northern bunds in the First Photo were probably not the first set of bunds that were built, the plaintiffs therefore made an elaborate discussion on the economic argument. This argument was first adumbrated by Wootten. He said in his supplemental report that the economics of building a bund and then removing it 60 metres or so to the north would obviously preclude this from happening. The defendant countered this argument by referring to the occupation by construction of fishponds in Lai Tau Tsui and Tong Tsai years before the occupation was legalised by the NG of lot 1347 and a permit to occupy Tong Tsai. The plaintiffs however submitted that the defendant’s argument was unsound and untenable as it could not rely on the intention behind the encroachment of other persons over other pieces of land which took place decades later.

157.The plaintiffs further submitted that there was no reason for Lam Wun Chi, the trustee of the initial grantee, to encroach on Government land. The plaintiffs referred to the monetary aspects. The upset price for the auction was $785 for 18 acres. The annual rent was $18. The lessee was obliged to spend no less than $1,000 for construction on the 18 acres. For the additional 6 acres in the DAs, it would only have required extra sums of $261.70 for the auction upset price, $6 for annual rent and $333.33 for construction. As against the saving of these sums by encroachment, there would be the costs for building and demolition within a few years of the initial gei waibunds. The plaintiffs said that this was not what a person of sound mind would do. There was also the risks of land control action that would require the demolition of the fishponds on the encroached land and hence the waste of costs for their construction. There were also be the risks of being sued by the purchasers for having been sold land part of which was not owned by the vendor. The vendor would then suffer loss of reputation too.

158.I agree that I should not consider the subsequent encroachment of Lai Tau Tsui and Tong Tsai for reasons advanced by the plaintiffs. However, I also do not accept the plaintiffs’ monetary arguments. There is no evidence of the value of money between 1916 and 1924. The fact that 18 acres of land only costs $785 could mean that the marshy land at Shan Pui was cheap or that $785 had a huge buying power in the social and economic conditions prevailing between 1916 and 1924. The same applied to the $1,000 to be incurred in building the fishponds on 18 acres of land. If that sum was fixed by the Government as a genuine estimate of the construction costs, that means $1,000 was enough to employ hundreds of people for some 18 months to build fishponds in the five sections of the Lot. There is also no evidence on the price of fishes and profitability of fish farming between 1916 and 1924. The other unknowns are wages for workers, costs of building bunds and the extent of risks of Government’s enforcement against encroachment at that time.

159.Regarding the wastage of building the gei wais and demolishing it within a few years. I think when the gei wais were first built, the grantee might not have thought of encroaching on the land to the north. He might have demolished the gei wais and encroached to the north when the then prevailing economic realities provided enough incentives for him to do so.

160.All the above are matters not canvassed at the trial. It would be wrong for me to guess the economics of demolishing and building bunds along the lines suggested by the plaintiffs. I do not think this so-called economic argument can assist either side. I therefore ignore it.

161.I would also note that the 1924 division plan did not appear to include the DAs. The purchasers therefore could not rely on this plan to say that part of the section sold to him/them by the purchaser was just encroachment. I also do not think they can make such claim by relying on the Villagers’ Plan.

162.The plaintiffs have several other points. On long occupation, they rely on another passage in paragraph 38 of Ali v Lane where Carnwath LJ said:

“Where the evidence of the intentions of the original parties is unclear, long and unchallenged usage may, as he [Megarry J in St Edmundsbury & Ipswich Board of Finance v Clark (No. 2) [1973] WLR 1572] said … be ‘… good reason for tending to construe the (original) conveyance as having done what the parties appear to have treated it as having done …’ I do not read that as necessarily confined to long usage by the original parties.  …  It would only apply if there were evidence of a long period of acceptance of a specific boundary by a succession of parties on both sides of the boundary.  That is not this case.  The unilateral actions of the owner of one side … could not be relied on as binding on the owner of the other.”

163.However, as the defendant rightly observed, the reliance of long occupation depends on a long period of acceptance of the specific boundary by parties on both sides, not on the unilateral action of the owner(s) on one side only. The plaintiffs have not adduced any evidence that the Government has indeed accepted the northern bunds in the First Photo as the correct boundary. Regarding the plaintiffs’ arguments that the Government should have known about the occupation of the DAs by the plaintiffs and their predecessors for various reasons, I will deal with them below when I refer to my site visit.

164.The plaintiffs also suggested what they call a complete answer to why the original grantee had occupied the DAs. They said that the Lot was granted under the Foreshore and Seabed Ordinance so that the foreshore or seabed was included in the lease so far as necessary for fish farming. In order to carry out fish farming, it was necessary to demise to the lessee beyond the legal limit to the north of the Lot. They said that that was why there was General Condition 14 in the grant. The reason being that at the date of the grant, it was not possible to determine the exact boundary until the ponds were built. After the ponds were built and the exact boundary fixed, the premium and annual rent could then be adjusted. General Condition 14 provided:

“The exact area boundaries and measurements of each Lot shall be determined before the issue of the Crown Lease and the Premium and Crown Rent shall then be adjusted in accordance with the area and the amounts of Premium and Crown Rent at which the Lot was sold.”

165.The plaintiffs further said that if not because of this, there was no reason why the Government land control staff did not detect the substantial encroachment of 33% of the registered area since 1916 and the Government did not detect the encroachment in compliance inspection. The plaintiffs also said that but for this reason, the purchasers in the May 1924 sale would not have paid for the parts of the DAs as they were encroachments.

166.I do not accept this proposition. I do not think the Government in granting the Lot would have left the boundary at the north to be fixed by the grantee. I cannot imagine that the Government would have allowed the grantee the free rein to determine the size of the Lot so that the grantee could choose to have an area that was one third larger than the registered area. I take the view that General Condition 14 is only for minor adjustments of boundary after a lot has been built upon and occupied. Furthermore, there is no evidence of any reassessment of the upset price, annual rent or construction money.

167.Having had the benefit of a site visit to the Lot, I am also not surprised if the land control staff did not discover the encroachment as the Lot of 18 acres was already very large. Unless one were really minded to detect encroachment and to do so with the aid of survey equipment, it is difficult to tell if there was encroachment simply by looking at the ponds.

168.The plaintiffs also submitted that the defendant must have knowledge of the occupation of the DAs by their predecessors back in 1924 or before. They argued that the officers of the Lands Department must have inspected the Lot sometime after the sale of the Lot in 1916 to ensure that Special Conditions of Sale Nos. 2 and 3 must have been fulfilled. But the inspection was supposed to have taken place within three to five years after the sale. The First Photo was taken in November, 1924 which was more than eight years after the sale. There is no evidence to show if the DAs were already occupied at the time(s) of the inspection(s). The same also applies to the plaintiffs’ suggestion about inspection by Government Surveyors to determine the amount of Crown Rent. Again, any such inspection should have taken place within three to five years after the sale.

169.The plaintiffs also referred to the maps showing the Lot being drawn rightly next to lot 1347 and Tong Tsai. But in these maps, the scaled area of the Lot was only 18 acres. The maps for lot 1347 and Tong Tsai as annexed to their grant and permit documents were also prepared without a survey of the Lot. The positioning of lot 1347 and Tong Tsai right next to the Lot does not support the plaintiffs’ argument that the defendant was aware of the occupation of the DAs. In fact, the DAs did not appear in the maps of the defendant until the 1980s.

170.I find that the defendant was not aware of the occupation of the DAs until the correlations of maps in the 1980s. It is just because of the defendant’s unawareness of the existence of the DAs or their encroachment by the plaintiffs and their predecessors that lot 1347 and Tong Tsai were erroneously positioned to the south and placed right next to the Lot.

171.Regarding the May 1924 sale, I do not think one should assume that the purchasers had paid for the parts of the DAs corresponding to the sections they purchased. There is no evidence on this. The 1924 division plan certainly does not support it though the plaintiffs said that it was scaled from the DD Control Sheet or lost grant plan which has the Lot wrongly drawn. However, the dimensions in the Villagers’ Plan also do not support it.

172.The defendant also submitted that the notice of the public auction of the Lot in 1916 clearly stated that the boundary measurement was “As per plan deposited in the District Office, Tai Po”. That alone defeats this proposition of the plaintiffs. I also accept the defendant’s submission that this proposition in reliance of General Condition 14 has not been pleaded. I therefore reject this proposition.

173.From the above discussions, it is clear that I do not accept the plaintiffs’ arguments and submissions that the DAs are part of the Lot. I accept the defendant’s case that the DAs lie outside the Lot and have been encroached upon by the plaintiffs and their predecessors. I find that the Lot was correctly drawn and positioned in the DD Control Sheet. Its boundary may need some refinement as shown in the LIP.

174.I find that the plaintiffs’ predecessors encroached upon unleased land knowingly. The price paid by the original grantee Wing Wa Tong for the Lot, the registered area of the Lot, the dimensions in the Villagers’ Plan, the areas stated for the individual sections in the sale memorials registered in May, 1924 and the magnitude of the DAs are the obvious pointers to their knowledge of their encroachment. When they purchased their sections from the Tong, they knew what land and how large it was that they were paying for. They also knew that some land adjacent to the section(s) they purchased was/were encroachment(s) and they took over and occupied the same knowing the existence of the risks of ejectment by the Government.

175.For the avoidance of doubt, I also make it clear that I accept the evidence of Mr Sin and reject that of Mr Wootten insofar as they are in conflict. Sin’s evidence is reasonable and in line with reality.

176.I have already expressed my views on the applicability of Mr S C Leung’s comments on the drawing of the Lot on the DD Control Sheet and I do not wish to repeat them. All in all the plaintiffs have failed to prove their claims for declarations that the boundary of the Lot should include the DA.

ENCROACHMENT

177.The plaintiffs and their predecessors had been occupying the DAs since sometimes before November 1924 until the construction of the access road to lot 1347 in the early 1990s. Since then, they have still been occupying the DAs save the access road. Such occupation is proved by the First Photograph, the subsequent aerial photographs as well as the oral evidence of the plaintiffs’ witnesses. The defendant does not dispute such occupation.

178.The plaintiffs claim that such occupation of the DAs is encroachment by the plaintiffs and their predecessors for their own benefit. As a result, the Government’s title to the DAs has been defeated under the Limitation Ordinance.

179.Alternatively, the plaintiffs say that if their encroachment is subject to the presumption that it is for the benefit of the Government as the landlord, then the DAs have been annexed to the holding of the Lot. They are therefore entitled to the DAs as part of their holding of the Lot until the expiry of the term of the Lot which has been extended by the New Territories (Leases) Extension Ordinance, Cap.150 (“the Extension Ordinance”) to on 30 June 2047. The defendant disputes both alternative claims.

Encroachment under presumption for the landlord’s benefit

180.I deal with the 2nd alternative first. On this claim, there is the presumption that the encroachment is for the benefit of the landlord.

The defendant’s arguments

181.The defendant submitted that if the presumption is not rebutted, then the doctrine of encroachment prevents the Limitation Ordinance from coming into play. The tenant will not acquire title of the encroached land by adverse possession. If the encroachment should last for 60 years or more, the land encroached will be annexed to the lease and will have to be delivered up to the landlord at the expiry of the lease. However, when the grant of the Lot expired on 30 June 1973, the plaintiff’s encroachment of the DAs had not reached 60 years. There was therefore no annexation of the DAs to the grant of the Lot. Whatever right the plaintiff might have over the DAs was coterminous with this grant.

182.The grant of the Lot was then renewed pursuant to its option to renew and the operation of the New Territories (Renewable Government Leases) Ordinance, Cap.152 (“the Renewal Ordinance”). The renewal was by the grant of a new lease for the Lot from 1 July 1973 and to last for 24 yeas less the last three days. However, the new lease did not include the DAs as they were not part of the Lot. This was so even if the DAs should have been annexed to the Lot by 60 years of encroachment. The reason being that there was no true annexation of the DAs. The DAs did not become part of the grant of the Lot and hence were not included in the new lease. From and after 1 July 1973, the plaintiff’s occupation of the DAs was and is a new phase of encroachment.

183.If the principle in AG v Tomline (No. 3) (1880) 15 Ch. D.150 should apply (as explained below), then this new phase of encroachment is not subject to the presumption and is for the benefit of the plaintiffs. In that event, the Limitation Ordinance commenced to run on 1 July 1973 in respect of the DAs. But the right, title and interest of the former British Hong Kong Government only lasted until 30 June 1997. The adverse possession of the DAs also ended on the same day. Regardless of this, this adverse possession in any eventhad not run for 60 years when the defendant counterclaimed for the DAs in this action. The plaintiffs therefore have not acquired any title over the DAs.

184.The defendant further submitted that even if the presumption should apply to this new phase of encroachment, the result is the same. This new encroachment had not reached 60 years when the right, title and interest of the former of the former British Hong Kong Government over the New Territories expired on 30 June 1997. It was also not extended by the Extension Ordinance which only applied to the new lease of the Lot that did not include the DAs. In any case, the new phase of encroachment had not reached 60 years. There was therefore no annexation of the DAs to the new lease of the Lot either on 25 April 1989, when the Extension Ordinance extended the new lease to 30 June 2047, or on 30 June 1997, when the interest of the former British Hong Kong Government over the New Territories expired.

185.The Extension Ordinance also did not extend any interest of the plaintiffs in the DAs regardless of whether the encroachment had matured into annexation as the ordinance only covered the title and interest of the new lease. In any event, this new encroachment had not reached 60 years when the defendant made the counterclaim in this action. There was thus no annexation of the DAs to the original grant or the new grant of the Lot. The plaintiffs have therefore acquired no interest in the DAs.

186.Furthermore, even if the encroachment could have continued despite the expiry of the original grant of the Lot on 30 June 1973 and matured to annexation at the latest in November 1984, the Extension Ordinance also did not extend any interest of the plaintiffs over the DAs as this ordinance only covered their title and interest in the new lease.

187.The defendant also disputes that annexation would have taken place upon commencement of encroachment.

Time when annexation takes place

188.I deal with the issue of when the encroachment would be annexed to the lease in the event that the presumption that encroachment is for the benefit of the landlord is not rebutted. It has all along been the defendant’s stance that annexation would only take place after the limitation period has passed. The doctrine of encroachment prevents the landlord’s title from being defeated by the passing of the limitation period under the Limitation Ordinance. However, before the limitation period has passed, the encroachment will not mature into annexation. The landlord can at any time before annexation sue for ejection of the tenant from the encroachment. But once the limitation period has passed, the encroachment will become annexed to the lease. The landlord cannot then recover the encroachment until the expiry of the lease.

189.The plaintiffs at first do not appear to differ from this view. Indeed, paragraph 108 of the plaintiffs’ closing submissions said that:

“where the limitation period has passed, the landlord is prevented from recovering the encroached land by way of action.  It is here that the doctrine of annexation begins to “bite”.

190.However, the plaintiffs further submitted in paragraph132 that “annexation” to the holding occurs once the tenant encroaches on land belonging to the landlord. This submission was repeated in paragraph 147. They further submitted in paragraph 149that when the new lease was granted pursuant to the option to renew in the original lease and the Renewal Ordinance on 1 July 1973 (which was less than 60 years from the grant in 1916), the DAs were annexed to the new lease on the same day. But the meaning of this submission is not very clear as the plaintiffs went on to say that they and their predecessors could not be ejected from the DAs until the expiration of this new lease by reason of the expiration of the limitation period of 60 years in 1984 (assuming that encroachment commenced in 1924).

191.The plaintiffs on the one hand seem to suggest that annexation happens at the commencement of encroachment, but on the other hand, they seem to accept that the landlord only losses the right to eject the tenant from the encroached land after the lapse of the requisite period of encroachment.

192.Regardless of the plaintiffs’ position, I think the correct position in law is that annexation cannot occur at the commencement of encroachment. It only occurs after the encroachment has lasted for the requisite period (in this case 60 years). Once annexation occurs, the landlord losses the right to eject the tenant and will have to wait for the expiration of the lease before he can recover both the leased land and the encroached land. But before annexation happens, the landlord can always eject the tenant from the encroached land (see King v Smith [1950] 1 All ER 553 at 556A to E and 557C to E).

Decision on encroachment subject to presumption

193.I now turn to the situation of encroachment with the presumption not rebutted. The evidence shows that the encroachment on the DAs had commenced at sometime between the grant of the Lot in July 1916 and the taking of the First Photographs in November 1924. The encroachment required 60 years to mature into annexation. After that the DAs would be annexed to the grant of the Lot. That would have happened at sometime from July 1976 to November 1984. However, the original grant of the Lot expired on 30 July 1973 which was before the DAs could have been annexed to the grant of the Lot.

194.If the annexation of the DAs could have taken place on or before 30 July 1973, then the right of the plaintiffs and their predecessors to occupy the DAs would have been coterminous with the original grant of the Lot. But for the grant of a new lease for the Lot pursuant to the option to renew in the original grant and the Renewal Ordinance, the plaintiffs and their predecessors would have no more right to occupy the Lot from 1 July 1973 onwards. In this situation, if the DAs should have been annexed to the original grant on or before 30 June 1973, the tenure of the plaintiffs and their predecessors over the DAs would also have expired on 30 June 1973.

195.Since the encroachment had not matured into annexation on 30 June 1973, whatever inchoate interest of the plaintiffs and their predecessors over the DAs also expired on 30 June 1973. The reason being that the position of the plaintiffs and the predecessors over the DAs before annexation could not be better than the case where annexation of the DAs had taken place.

196.The grant of the Lot to the plaintiffs’ predecessors was continued by a new lease born out of the said option and the Renewal Ordinance. But this was a new lease and not a continuation of the original lease (see Chung Ping Kwan & Ors v Lam Island Development Ltd [1997] AC 38 at 48A and 50A to F). When the new lease came into being, its duration was from 1 July 1973 for 24 years less the last three days. The defendant submitted that this new lease did not include the DAs as they were not parts of the Lot. The defendant therefore further submitted that it had the right to eject the plaintiffs and their predecessors from the DAs on 1 July 1973 despite the grant of the new lease for the Lot.

197.The plaintiffs however submitted (in paragraph 128 of their closing submissions) that the plaintiffs can continue to enjoy exclusive possession of the DAs by reason of the annexation which took place at the latest in November 1984 (60 years from the taking of the First Photograph). They further submitted that the doctrine of annexation also made their occupation of the DAs coterminous with the lease of the Lot on 30 June 2047 as the lease has been extended until then by the Extension Ordinance. They also submitted (in paragraph 140) that the Renewal Ordinance did not effect is a surrender and regrant of existing leases. Otherwise, the Privy Council would not have held in Lam Island that there was a seamless transition from the original lease to the new lease and the reversionary interest of the Government as landlord did not fall into possession after the expiration of the original lease on 30 June 1973. They further submitted (in paragraphs 142 to 143) that the new lease was just like a continuation of the original lease as in the case of Smirk v Lyndale Developments Ltd [1975] 1 Ch.317. They therefore further submitted (in paragraph 144) that the lease of the Lot and the DAs by annexation were subject to the same terms of grant which were renewed by the machinery of the Renewal Ordinance. The Lot including the DAs was not surrendered or regranted on 30 June 1973. I note that this submission assumes that annexation had taken place despite less than 60 years of encroachment. I have already held against this above.

198.However, the plaintiffs also submitted (in paragraph 145) that the Renewal Ordinance did not stop the running of time for limitation or encroachment on 30 June 1973 and the encroachment just continued to 1984 and matured into annexation. After annexation, the lease of the Lot including the DAs continued and will continue until 30 June 2047.

199.I hold that the situation of encroachment here is different from that in Lam Island. Lam Island was a case of a squatter against a Government lessee. For a squatter who commenced adverse possession before 1973 and did not succeed in defeating the lessee’s title by 1973, the Privy Council took the view that the potential benefits for the squatter under the Limitation Ordinance could be regarded as a right of the squatter that encumbered the new lease commencing 1 July 1973 by reason of section 4(4)(c) of the Renewal Ordinance. In the present case, since there was no annexation on 30 June 1973, the DAs were not subject to the Renewal Ordinance. The inchoate rights accrued by the encroachment up to 30 June 1973 were not continued. As can be seen from my discussion above, such rights, which could not have been better rights than annexation, ended on 30 June 1973. From 1 July 1973, the DAs were subject to a new phase of encroachment. The plaintiffs’ argument that the DAs were annexed to the lease of the Lot and continued by the Renewal Ordinance in 1973 fails at this point.

200.I also consider the plaintiffs’ submission that once the DAs are annexed to the lease of the Lot, it would become part of the new lease of the Lot by the operation of the option to renew and the Renewal Ordinance. This submission is made on the assumption that annexation has taken place on or before 30 June 1973. This submission is also made on the basis that annexation of the DAs resulted in the merger of the DAs with the Lot so that the original lease for the Lot had become a lease of the Lot comprising the DAs as well. The defendant’s position is different. It takes the view that annexation does not result in merger. Even if there were annexation, the Lot and the DAs would continue to be separate holdings though coterminous and subject to the same terms.

201.If the plaintiffs are correct, then the DAs after annexation will merge into and form part of the Lot. The plaintiffs and their predecessors can only enjoy the DAs as part of the Lot. They cannot do anything to the DAs which they cannot do to the Lot. For example, they cannot assign or dispose of the DAs other than as part of the Lot under the Government lease. But Kingsmill v Millard (1855) 11 Exch. 313 and King v Smith [1950] 1 All ER 553 at 556 F to G and 557 D to E show that the lessee could deal with the encroached land as an interest separate and independent of the leased land and not as leased land at all. The presumption that the encroachment is for the landlord’s benefit, unless rebutted, would apply to the encroached land up to the moment when it was conveyed by the lessee to another person. The presumption would then be rebutted by this conveyance if it was made known by the lessee to the lessor. This shows that the land encroached is not part and parcel of the leased land. But would annexation merge it with the leased land? I do not think so. Annexation only turned the encroached land into a leasehold interest subject to the same terms of the lease. It does not change the contents of the lease itself. If the encroached land should merge with the leased land and become part of the same lease, then there would be a change of the terms of the lease. I therefore hold that annexation will only result in the encroached land being converted into a leasehold interest subject to the same terms that apply to the lease. But the encroached land after annexation will still not become part and parcel of the lease. To this extent, I disagree with the plaintiffs.

202.However, I agree with the plaintiffs’ submission (in paragraph 51) that the DAs, as annexures to the Lot, were subject to the same terms of the lease of the Lot including the option to renew. Hence, if annexation should have taken place on or before 30 June 1973, then the plaintiffs and their predecessors were then vested with leasehold interests over the sections of the DAs occupied by them in the same terms including the option to renew as the lease for the Lot. Sections 3, 4(2) and (3) of the Renewal Ordinance provide:

“3.  This Ordinance applies to every Government lease existing immediately before the expiration of the 30th day of June 1973 under which land in the New Territories is demised for a term of seventy-five years from the 1st day of July 1898 and which contains a right of renewal for a further term of twenty-four years less three days, other than leases of land exempted from Part II of the New Territories Ordinance (Cap 97) under subsection (2) or (3) of section 7 thereof.

4.  (2)  In the case of an existing Government lease of a lot which has been divided into sections before the 1st day of July 1973, the right of renewal contained in the lease shall be deemed to have been exercised by the persons entitled to that right and on that date there shall be deemed to be granted to such persons separate new Government leases of the land respectively held by them immediately before that date under the existing Government lease.

(3)  Every new Government lease shall be deemed to be for a term of twenty-four years less three days from the 1st day of July 1973, …”

203.The defendant has argued that land held under the existing Government lease of the original term of the Lot could not and would not include the DAs. That is correct. But if there were annexation before 30 June 1973, then the DAs or the sections of the DAs would have been held by the plaintiffs and their predecessors from the Government as leasehold interest from 1 July 1973 in the same terms as the lease of the Lot. Those terms would of course include the option to renew which was exercised by the Renewal Ordinance. On this assumption of annexation, the leasehold interests of the plaintiffs and their predecessors over their corresponding sections of the DAs would have been extended for 24 years less last three days.

204.The plaintiffs have submitted on one more scenario of annexation of the DAs to the lease of the Lot. I have held that the inchoate rights accrued by the encroachment up to 30 June 1973 had ended on that day and a new phase of encroachment would start from afresh on 1 July 1973. If I were wrong, then the encroachment would have matured to annexation sometimes from 1976 to 1984. If the DAs should have been annexed to the lease of the Lot on or before 30 June 1973 or from 1976 to 1984, then it is necessary to consider the effect of the Extension Ordinance. Sections 2, 3(1) and 6 of the Extension Ordinance provide:

“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, …

3.  (1) In this Ordinance-

‘Mew Territories lease’ and ‘lease’ mean a lease of land in the New Territories granted by or on behalf of the Governor and include an agreement to grant such a lease;

…

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.”

205.The defendant submitted that the Extension Ordinance only extended the lease over the Lot and not the plaintiffs’ rights over the DAs. It submitted that the DAs were not subject to a lease granted by or on behalf of the then Governor, but was imposed by the courts. Hence, the Extension Ordinance did not apply to them.

206.I do not agree with this submission. All lands in the New Territories have been declared by section 8 of the New Territories Ordinance, Cap. 97 to be and to have been since 23 July 1900 the property of the Government. Logically, all leases of New Territories land existing before 30 June 1997 would have been granted by or on behalf of the Governor. If the court deems a holding as subject to the terms of a Government Lease with the reversion being owned by the Government, then the holding must be deemed to be a Government lease or a lease granted by or on behalf of the Governor. I do not think the Legislative Council, in defining the meaning of New Territories lease for the Extension Ordinance, had the intention of excluding such deemed Government lease from the ordinance. If there was such an intention, I expect to see clear wording of that. I therefore hold that if there was annexation on or before 30 June 1973 or between 1976 and 1984, then the DAs would have been annexed and the interest of the plaintiffs and their predecessors over them would be extended to 30 June 2047.

Was encroachment for the plaintiffs’ benefit

207.I now consider the plaintiffs’ alternative claim that they and their predecessors were holding the DAs not for the benefit of the defendant or in other words the presumption was rebutted. I consider whether the presumption was rebutted. The presumption is rebutted if the landlord and the tenant have so conducted themselves so as to show that the landlord treated the encroachment as not for his benefit. In AG v Tomline (No. 3) (1880) LR15 Ch D 150 where a lessee encroached on adjoining land. He then took a new lease of the original lease land and did not include the encroached land. The Court of Appeal held that the presumption was rebutted. The defendant herein submitted that the Renewal Ordinance only renewed the lease of the Lot. It did not renew the DAs. Hence, the presumption had been rebutted upon the renewal.

208.I do not think this analysis correct. The DAs were not included not because of any specific decision of the Government or the lessees of the Lot not to include them. The renewal of the lease of the Lot was by an administrative measure by the Renewal Ordinance which applied to all Government leases in the New Territories. No individual consideration had been given to the Lot and/or the DAs when the administrative measure was carried out. The situation was very much different from that of AG v Tomline. Furthermore, I have also held that if annexation of the DAs should have taken place on or before 30 June 1973, then the Renewal Ordinance would also have effected new Government leases for the sections of the DAs for 21 years from 1 July 1973 less the last three days.

209.The presumption is also rebutted if the acts of the tenant are such as to set the landlord at defiance (see Kingsmill v Millard (supra) at 316). One example is where the tenant during the term of the lease behaves in such a way as to show he is asserting his own title to the encroachment as against the landlord (see Long v Tower Hamlets London Borough Council [1998] Ch 197 at 203G to H).

210.The plaintiffs rely on three grounds to argue that it had set the landlord at defiance. The first ground is the sale of the Lot in the form of five sections in May 1924. They said that the sections of the Lot were sold with their corresponding sections of the DAs. The sale had been notified to the District Officer who also issued public notice of the same. The plaintiffs thus submitted that their predecessors had informed the District Officer of their intention to dispose of the DAs. Hence, such acts and conduct of the Government in receiving the notice of sale and posting public notice of the same showed that the Government in May 1924 did not regard the encroachment of the DAs was for the benefit of the Government. The presumption was therefore rebutted. However, I find this submission flawed as there is no evidence that the sale of the sections of the Lot was indeed coupled with the sale of the corresponding sections of the DAs. Even if that were the case, there is no evidence that the Government had been so notified. The division plan used to register the sale of sections of the Lot did not include the DAs. I have also decided above that the encroachment was not known to the Government. This argument thus fails.

211.The second ground is the user of the Lot and DAs. Since the 1990s, the user of the Lot and the DAs was contrary to the agricultural use stipulated in the grant. Since the 1990s, the fishponds had been reclaimed and sections A to D of the Lot and their sections of the DAs were used for parking purposes with an access road constructed on the DAs leading to the driving school on lot 1437. The fishpond in section E and its corresponding section of the DAs had been reclaimed but the land was left in dilapidation rather than put to agricultural use. The plaintiffs thus submitted that the user put to the DAs was inconsistent with the prescribed agricultural use and the presumption was rebutted. However, the sections of the DAs were always used as part of the sections of the Lot. The DAs were not put to a different use. I do not think this ground can show the rebuttal of the presumption.

212.The third ground is that the 2nd to 5th plaintiffs and the 6th to 10th plaintiffs have sold the bulk of sections B and C respectively and they now only occupy parts of these sections which are not contiguous to the DAs thereof. The sections retained are also used for purposes unconnected with the DAs as the DAs are used for the access road and parking. The 2nd to 10^th plaintiffs therefore said that the presumption for sections B and C had been rebutted. However, the user of the DAs was compatible with that for the whole of the Lot. I hold that this ground again cannot show the rebuttal of the presumption.

213.However, if I were wrong and that the presumption had indeed been rebutted before 30 July 1973, then the plaintiffs and their predecessors would have been in adverse possession of the DAs before 30 July 1973 and would have been doing so from May 1924. In that event, the adverse possession would have reached 60 years by May 1984 and the interest of the British Hong Kong Government in the DAs would have been defeated at that time. I now consider the consequence of such a scenario.

ADVERSE POSSESSION

214.The defendant does not dispute that the plaintiffs and their predecessors had been in continuous occupation of the DAs since sometime between the grant of the Lot in July 1916 to the taking of the First Photograph in November 1924. It however argued that the occupation was not with the necessary intention for adverse possession. They also argued that any interest acquired by adverse possession over the DAs had ended on 30 June 1997 when the interest of the British Hong Kong government over the New Territories ended.

Intention to possess

215.The defendant took the point that the plaintiffs and their predecessors did not have the intention to exclude the defendant from the DAs. The defendant submitted that the plaintiffs and their predecessors only intended to occupy and use the DAs until the defendant had some use of them and such intention was very much like that of a licensee. The defendant relied on the judgment of Li, CJ in Wong Tak Yue v Kung Kwok Wai David [1998] 1 HKC1 at 12I to 13G.

216.The defendant referred to the conduct of the plaintiffs and their predecessors in support of this submission. The defendant firstly referred to the plans used by the plaintiffs and their predecessors to register their divisions of the Lot into sections and the divisions and sub-divisions of the sections. These plans were registered at various times from May 1924 to 1998. The plans were registered in the 1990s were also prepared by authorised land surveyors. All these plans adopted the legal boundary of the Lot and excluded the DAs. The defendant therefore made the point that the plaintiffs and their predecessors had by these plans acknowledged the legal boundary. Such acknowledgement showed that they had abided by such boundary and did not intend to oust the defendant from the DAs.

217.The second point of the defendant is that the plaintiffs and their predecessors and in particular a former manager of the 1st plaintiff, Mr Chau Fuk Sze had no objection to the building of the access road by the driving school over the DAs in the 1990s. They also did not object to the reclaiming of part of their ponds in the DAs for such purpose. As a result, the defendant granted the driving school a short term waiver to and the driving school did reclaim parts of the ponds and build and use the access road on the basis that the DAs were Government land.

218.The defendant therefore submitted that such conduct of the plaintiffs and their predecessors established firmly that they in the past always accepted the legal boundary as the boundary of the Lot and were always ready to hand back the DAs to the defendant if the defendant should have use of the same. They therefore did not have the intention to exclude the defendant from the DAs. They were therefore not in adverse possession of the same.

219.Alternatively, by reason of their conduct in relation to the construction of the access road, the defendant submitted that the plaintiffs must be estopped from relying on adverse possession to the extent of disrupting the maintaining and use of the access road. The plaintiffs’ title derived from adverse possession, if any, should be subject to the defendant’s permission granted to the driving school to construct, maintain and use the access road over the DAs as if such permission was granted with the irrevocable authorisation of the plaintiffs.

220.The plaintiffs responded by arguing that all the plans registered for the divisions and sub-divisions had included the DAs. I reject this submission as it is factually incorrect. The scaled areas of the plans only have 18 acres and not 24.67 acres.

221.However, I do not think the defendant can take these plans as the acknowledgement by the plaintiffs and their predecessors of the legal boundary and hence as evidence that they did not have the necessary intention to be in adverse possession of the DAs. On my decision on the question of whether the DAs are part of the Lot, I have already decided that the plaintiffs’ predecessors were aware of what they had acquired and that they were encroaching upon the DAs. They were of course aware of the legal boundary, but they were also knowingly encroaching on the DAs. The DAs were not included in the plans for divisions and sub-divisions for the simple reason that the plans only dealt with the Lot and its sections but not with the DAs, hence the DAs were not included.

222.Regarding the building and use of the access road, the plaintiffs’ first answer is that the plaintiffs only discovered in the 1990s that the DAs were not included in the Lot. However, their adverse possession had already matured at the latest in November 1984. They therefore said that whatever they did in the 1990s had no bearing on the title they had already acquired over the DAs.

223.The plaintiffs further submitted that the building of the access road was to their benefits too. Without the access road, the Lot and the DAs could not be put to any economic use. Their lack of objection to the building of the access road therefore could not be taken to mean that they did not have the necessary intention for adverse possession of the DAs.

224.I agree with these submissions. I also refer to the substantial investments made by the plaintiffs’ predecessors in constructing fishponds on the DAs. They certainly did not intend to occupy the DAs on a temporary or short template basis. They also maintained a low profile of their occupation of the DAs so that the defendant was not aware of it until the correlation of plans in the 1980s. I find that the plaintiffs’ predecessors occupied the DAs exclusively with the intention of ousting the world at large including the defendant and to do so for as long as their occupation was not interrupted or determined by the due process of law. I find that the plaintiffs have proved on a balance of probability that the possession of the DAs by them and their predecessors was with the necessary intention that constituted adverse possession.

225.However, I also hold that by reason of their lack of objection to the building of the access road, the plaintiffs’ title to the DAs, if any, is subject to the defendant’s permission granted to the driving school to build, maintain and use the access road as if such permission was granted with the plaintiffs’ irrevocable authorisation. I take the view that the defendant’s grant of permission to the driving school has exposed it to a liability to the school and hence the plaintiffs should be so estopped.

Expiration of the interest of the British Hong Kong Government in the New Territories

226.If the occupation of the DAs by the plaintiffs and their predecessors amounted to adverse possession, then the title of the British Hong Kong Government to the DAs would have been defeated by the plaintiffs and their predecessors at the latest by November 1984. The defendant however submitted that the title of the British Hong Kong Government over land in the New Territories was only a 99-year interest under the Peking Convention running from 1 July 1898 to 30 June 1997. Upon expiry of this interest, the reversionary interest of the Chinese Government fell into possession on 1 July 1997. When the reversionary interest fell into possession, the limitation period started to count afresh. This submission appears to be correct. But it is disputed by the plaintiffs. The plaintiffs started by saying that the fundamental principles upon which the HKSAR is founded are:

“(1)  all previous rights acquired in relation to the disposal and use of land (indeed all legal rights) enjoyed prior to 1 July 1997 have expressly been preserved by the Sino-British, Joint Declaration, the Basic Law and legislation of the HKSAR, and will continue to be protected by law; and

(2)  there shall be a seamless transfer of the system of land administration and rights and rights of action, whether pending litigation or not, are preserved.”

227.The plaintiffs then referred to the New Territories Order in Council and the New Territories Land Court Ordinance 1900. Paragraph 1 of the Order in Council provided:

“1.  The territories within the limits and for the term described in the said Convention shall be and the same are hereby declared to be part and parcel of Her Majesty’s Colony of Hong Kong in like manner and for all intents and purposes as if they had originally formed part of the said Colony.”

Section 15 of the New Territories Land Court Ordinance 1900 declared:

“All land in the New Territories is hereby declared to be the property of the Crown, during the term specified in the Convention of 9^th Day of June 1898, hereinbefore referred to, and all persons in occupation of any such land, after such date as may be fixed by the Governor by notification in the Gazette, either generally or in respect to any specified place, village, or district, shall be deemed trespassers as against the Crown, unless such occupation is authorized by grant from the Crown or by other title allowed by the Court under this Ordinance, or by license from the governor or from some Government  officer having authority to grant such license, or unless a claim to be entitled to such occupation has been duly presented to the Court and has not been withdrawn or heard and disallowed.”

228.This section later became section 14 of the New Territories Regulations Ordinance No. 34 of 1910:

“14.  All land in the New Territories is hereby declared to be and to have been from the commencement of the New Territories (Land Court) Ordinance, 1900, the property of the Crown, and all persons in occupation of any such land after the commencement of this Ordinance shall be deemed to be trespassers as against the Crown, unless such occupation is authorised by grant from the Crown, or by other title allowed under this Ordinance, or by licence from the Government or from some Government officer having authority to grant such licence.”

The words “during the term specified in the Convention of the 9th day of June 1898” were dropped.  Section 14 of the New Territories Regulation Ordinance later became section 8 of the New Territories Ordinance.  The plaintiffs then said that these enactments and the granting of Block Crown Leases resulted in the vesting of the New Territories in the British Crown in perpetuity as if it had originally formed part of the colony.

229.The intention of these enactments was to incorporate the New Territories as part of the then British Colony of Hong Kong from 23 July 1900. But I cannot see any intent in the enactments to vest the New Territories in the British Crown in perpetuity as for the rest of the colony. I do not read the dropping of the reference to the term in the Peking Convention as a sufficient manifestation of intent of the legislature to treat the New Territories as having been vested in the British Crown in perpetuity. Though the Peking Convention was no part of the domestic law of Hong Kong, it was a treaty that the British Crown had to observe. There is no evidence that the British Crown did not observe the convention. The British Hong Kong Government also did not conduct itself as if the New Territories had been so vested in the British Crown but not just for the period specified in the Convention. The plaintiffs therefore fail on this point.

230.Apart from this point of perpetual vesting of the New Territories in the British Crown, the plaintiffs further submitted that since the defendant does not dispute the occupation of the DAs by the plaintiffs and their predecessors since sometimes between the grant of the Lot and the taking of the First Photograph, if such occupation amounted to adverse possession, then the adverse possession had reached 60 years at the latest in 1984 and the British Crown’s interest in the DAs was defeated at that time. The plaintiffs then referred to paragraph 3(5) of the Joint Declaration which they said had expressly protected their interests in the DAs. Paragraph 3(5) of the Joint Declaration declared:

“3.  The Government of the People’s Republic of China declares that the basic policies of the People’s Republic of China regarding Hong Kong are as follows:

(5)  The current social and economic systems in Hong Kong will remain unchanged, and so will the life-style … Private property, ownership of enterprises, legitimate right of inheritance and foreign investment will be protected by law.”

231.The Joint Declaration is clear that private property will be protected by law, but it did not extend any interest of the plaintiffs in the DAs which expired on 30 June 1997 together with the interest of the British Hong Kong Government in the New Territories. Hence, their reliance on this paragraph of the Joint declaration is to no avail.

232.The further said that their rights were also preserved by Articles 8, 18 and 105 of the Basic Law. The relevant parts of these articles provide:

“Article 8

The laws previously in force in Hong Kong, that is, the common law, rules of equity, ordinance, subordinate legislation and customary law shall be maintained, except for any that contravene this Law, and subject to any amendment by the legislature of the Hong Kong Special Administrative Region.

Article 18

The laws in force in the Hong Kong Special Administrative Region shall be this Law, the laws previously in force in Hong Kong as provided for the Article 8 of this Law, and the laws enacted by the legislature of the Region. …

Article 105

The Hong Kong Special Administrative Region shall, in accordance with law, protect the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property and their right to compensation for lawful deprivation of their property. …”

233.However, these articles also do not extend the plaintiffs’ interest in the DAs to beyond 30 June 1997. They do not assist the plaintiffs.

234.The plaintiffs also rely on Annex III of the Joint Declaration which declared that leases granted by the British Crown in the New Territories may be extended to 2047. But the declaration has not extended the plaintiffs’ interest in the DAs which were not and had not become by annexation leasehold interests granted by the British Hong Kong Government.

235.The plaintiffs also referred to the Reunification Ordinance which recognized that rights and liabilities of the British Crown or the British Hong Kong Government, which were vested or accrued before 1 July 1997, will continue and will be actionable on and after 1 July 1997 so as to effect a seamless transition of holding of property in Hong Kong. They disputed the defendant’s proposition that the HKSAR has the right to recover the DAs which accrued on 1 July 1997. They in particular referred to section 30 of the Reunification Ordinance which provides:

“(1)  For the avoidance of doubt, it is declared that all property, rights and liabilities vested in or belonging to the Crown or the Government of Hong Kong immediately before 1 July 1997 have been on and from that date, subject to the Basic Law, vested in or transferred to the Government of the HKSAR.

(5)  In this section-

‘Crown’ (官方) means the Crown in right of the Government of Hong Kong.”

236.However, this section of the ordinance only provided for the inheritance by the HKSAR Government of all rights and liabilities of the British Hong Kong Government. The interest of the British Hong Kong Government over the New Territories was derived from the Peking Convention and it had expired on 30 June 1997. It did not devolve upon the HKSAR Government. Though the leases of New Territories land had been extended by the Extension Ordinance, there was a change of lessor from the British Hong Kong Government to the HKSAR Government on 1 July 1997. There was of course the desire to ensure a seamless transition of all legal rights and obligations including property rights from the old regime to the new one, but it was not an extension of the expired interest into the new regime. The rights of the HKSAR Government to the new leases in the New Territories are derived from Article 7 of the Basic Law.

237.Article 7 of the Basic Law provides:

“Article 7

The land and natural resources within the Hong Kong Special Administrative Region shall be State property.  The Government of the Hong Kong Special Administrative Region shall be responsible for their management, use and development and for their lease or grant to individuals, legal persons or organizations for use or development.  The revenues derived therefrom shall be exclusively at the disposal of the government of the Region.”

238.The plaintiffs also said that the meaning of the word “property” should be as defined in section 3 of the Interpretation and General Clauses Ordinance as follows:

“‘property’ (財產) includes-

a.  money, goods, chooses in action and land; and

b.  obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, arising out of or incident to property as defined in paragraph (a) of this definition;”

239.The plaintiffs then submitted on the nature of estate in land before and since 1 July 1997. They said that insofar as the Limitation Ordinance was concerned, the British Hong Kong Government and the Government of HKSAR were the same party. They referred to the judgment of Chan Tin Shi v Li Tin Sung & Ors [2006] 1 HKLRD 185 where Lord Hoffman said at paragraph 37 that the policy of the Joint Declaration and the Extension Ordinance was to preserve the status quo both for lessees and the squatters on their lands. The plaintiffs then extended this reasoning and said that the status quo for the squatters in the New Territories as against the British Hong Kong Government prior to 1 July 1997 should likewise be preserved. But they provided no justification for the extension of this reasoning. This argument therefore also fails.

240.They further submitted that the word “Crown” in section 7(1) of the Limitation Ordinance means the Government of the HKSAR. They also referred to sections 1 and 2 of Schedule 8 of the Interpretation and General Clauses Ordinance and Article 7 of the Basic Law.

241.Section 7(1) of the Limitation Ordinance provides:

“(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.”

242.Sections 1 and 2 of Schedule 8 of the Interpretation and General Clauses Ordinance provide:

“1.  Any reference in any provision to Her Majesty, the Crown, the British Government or the Secretary of State (or to similar names, terms or expressions) where the content of the provision-

(a)  relates to title to land in the Hong Kong Special Administrative Region;

(b)  involves affairs for which the Central People’s Government of the People’s Republic of China has responsibility;

(c)  involves the relationship between the Central Authorities and the Hong Kong Special Administrative Region.

shall be construed as a reference to the Central People’s Government or other competent authorities of the People’s Republic of China.

2.  Any reference in any provision to Her Majesty, the Crown, the British Government or the Secretary of State (or to similar names, terms or expressions) in contexts other than those specified in section 1 shall be construed as a reference to the Government of the Hong Kong Special Administrative Region.”

243.They therefore submitted that by reason of either section 1 or section 2 of Schedule 8, the word “Crown” in section 7(1) of the Limitation Ordinance means the Government of the HKSAR. However, that submission still cannot extend the interests of the British Crown or the British Hong Kong Government in the New Territories to beyond 30 June 1997. The adverse possession as against the British Crown which started before 1 July 1997 may indeed continue to beyond this date if it should be over land not in the New Territories but in the rest of Hong Kong. The plaintiffs’ argument may be valid for the rest of Hong Kong but not for the New Territories.

244.The plaintiffs also relied on Article 160 of the Basic Law to say that their rights to a possessory title under the previous laws do continue to be valid and be recognized and protected by the Government of the HKSAR. Article 160 provides:

“Article 160

Upon the establishment of the Hong Kong Special Administrative Region, the laws previously in force in Hong Kong shall be adopted as laws of the Region except for those which the Standing Committee of the National People’s Congress declares to be in contravention of this law.  If any laws are later discovered to be in contravention of this Law, they shall be amended or cease to have force in accordance with the procedure as prescribed by this Law.

Documents, certificates, contracts, and rights and obligations valid under the laws previously in force in Hong Kong shall continue to be valid and be recognized and protected by the Hong Kong Special Administrative Region, provided that they do not contravene this Law.”

245.However, this argument is only valid if the rights of the British Crown in the New Territories had, despite the Peking Convention, continued after 30 June 1997. Though the Convention is not part of the domestic law of Hong Kong, the fact of the duration of interests of the British Government in the New Territories as derived from it cannot be ignored. The interests of the British Crown in the New Territories expired on 30 June 1997. The interest of the plaintiffs in the DAs likewise ended on this day. Article 160 is to preserve the legal validity of rights and obligations of the previous regime, not to extend rights and obligations which expired at the resumption of sovereignty by the Chinese Government.

246.The plaintiffs also submitted that there should be no distinction in the application of the Limitation Ordinance to the New Territories on the one hand and to Hong Kong Island and New Kowloon on the other. They referred to the defendant’s stance that the British Hong Kong Government’s interest in land in the New Territories ended on 30 June 1997 and did not continue thereafter. They said that it produced a different result for adverse possession against the Government in the New Territories from that in the Hong Kong Island and New Kowloon. They said that if that was the legislative intent, the Limitation Ordinance should have expressly provided for it. They also said that to interpret the Limitation Ordinance in this way as contended by the defendant would result in unfairness which the court should avoid. However, I am of the view that the difference in the result of adverse possession in the New Territories from that for the rest of the HKSAR is not the result of any distinction in the application or interpretation of the Limitation Ordinance. The difference came about because of the different tenure of the British Crown in the New Territories from that in the rest of Hong Kong.

247.The plaintiffs then referred to several judicial decisions for the proposition that declaration can be made against the Government of the HKSAR by virtue of adverse possession against the British Hong Kong Government prior to 1 July 1997. The decisions are Lau Fung Chim v Lau Siu Kwong David & Ors, DCMP 1767 of 2001, Yip Alice v Wong Shun (No.2) 2 HKC 528 and LAU Wing Hong & Ors v Wong Wor Hung & Anor [2006] 4 HKLRD 671. However, none of the decisions is relevant to the issues in this action.

248.Finally, the plaintiffs also rely on a speech by the Secretary for Housing, Planning and Lands made in the Legislative Council on 8 February 2006 and submitted that the Government also acknowledged that adverse possession of unleased government land prior to 1 July 1997 is also effective as against the HKSAR Government.

249.The speech of the secretary was to answer a question raised in relation to the CFA decision in Chan Tin Shi. The decision was on the Extension Ordinance. The CFA held that the ordinance did not result in any new lease which would have required the limitation period to start afresh. The secretary at the outset made it clear that the Extension Ordinance did not apply to unleased government land in the New Territories and the CFA’s decision was also not on unleased government land. Hence, the secretary’s answer was not directed to any issue as raised in this action. Furthermore, I agree with the defendant that the secretary was not making a speech to promote a bill, nor was he providing any guideline on the working of the Limitation Ordinance, hence his speech is not admissible to prove that the interest of the British Crown in the New Territories had continued after 30 June 1997 or that the interest acquired by adverse possession as against the British Crown in the New Territories could continue after that day. The plaintiffs therefore also fail in their alternative case of adverse possession.

PROPRIETARY ESTOPPEL

250.When I decided on the boundary issue above, I have already decided that the defendant was unaware of the existence or occupation of the DAs by the plaintiffs and their predecessors until the 1980s upon correlation of maps. I have also decided that the plaintiffs’ predecessors had encroached upon the DAs knowing full well that such were Government lands and not part of the Lot. Either decision would have defeated the plaintiffs’ claim of proprietary estoppel (see the five probanda in Willmott v Barber (1880) 14 Ch D 96 at 105-106).

251.Even if I were wrong and that the plaintiffs could succeed under the doctrine of proprietary estoppel, I would also declare that the estoppel had been exhausted by or before the early 1990s and before the building of the access road. I refer to Yaxley v Gotts & Anor [1999] 3 WLR 1217 at 1226H to 1227A where Robert Walker LJ discussed the range of relief that may be granted where proprietary estoppel is established. The learned judge said:

“The general aim is to ‘look at the circumstances in each case to decide in what way the equity can be satisfied’ (per Sir Arthur Hobhouse in Plimmer v Mayor of Wellington (1884) 9 App. Cas. 699, 714) and to achieve ‘the minimum equity to do justice to the plaintiff’ (per Scarman L.J. in Crabb v Arun District Council [1976] Ch.179, 198).  Sometimes the equity is given effect to simply by dismissing an adverse claim.  But in other cases more positive action is needed, extending (as Snell notes at p.578, with numerous examples) both to giving the claimant an equitable lien on the disputed property for his expenditure, and to the positive conferment of title on the claimant.”

252.Whatever investments the plaintiffs and their predecessors had put into the DAs, they had fully utilised the same and such investments were exhausted and produced no more benefit by the early 1990s. The fishponds on the DAs were laid to waste. I hold that the proprietary estoppel, if any, that the plaintiffs could have relied on had exhausted by then and they could derive no more rights over the DAs by relying on this doctrine. This is to give the plaintiffs and their predecessors the minimum equity so as to do justice to them. Whatever further investments they might have put in in and after the 1990s when there was the access road, these were put in after the plaintiffs had become aware that they had no title to the DAs. With this knowledge, they cannot rely on these subsequent investments to create a proprietary estoppel.

JUDGMENT

253.By reason of my discussions and findings above, I dismiss all the claims by the 1st to 15th plaintiffs. I further declare that the DAs are government land. I order under the counterclaim that the plaintiffs do deliver up to the defendant the sections of the DAs that they claim herein and of which they are still occupying.

254.I also make a costs order nisi that the plaintiffs do pay the defendant the costs of this action including the counterclaim with certificate for counsel and this order applies to all reserved costs orders and costs orders in the cause.

Mr Anthony Neoh, SC, Mr Valentine Yim and Mr Aidan Tam, instructed by Messrs S H Chan & Co., for the 1st to 15^th Plaintiffs

Mr Y C Mok, instructed by Department of Justice, for the Defendant

Appendix l

PLAN OF DISCREPANT AREAS ADJACENT TO

SECTIONS A, B C, D & E of

LOT 1212 IN D.D. 115

(I) Appeal by the plaintiffs to Court of Appeal allowed. Please refer to CACV26/2010 dated 14 February 2011 (II) Please refer to HCMP232/2012 for the relevant appeal(s) to the Court of Appeal.