Hong Kong: Adverse Possession: Mind Your Property

Last Updated: 13 May 2014
Article by Tanner De Witt

How is it possible that someone can end up rightfully possessing land by being a trespasser? Strange as it may be, this is possible under the centuries-old doctrine of adverse possession. Adverse possession allows someone to obtain a right to possess land by occupying it long enough under the Limitation Ordinance (Cap.347) to "extinguish" the original owner's title. Under the Limitation Ordinance, actions for recovery of land by any person are statute-barred after 20 years from the date the right of action accrued, if the action accrued before 1 July 1991. Where the right of action accrued after 1 July 1991, the prescribed period is 12 years.

Adverse possession – evidential burden

In order to establish adverse possession, it requires proof of two stages:

  1. the occupier has possessed the land as a matter of fact; and
  2. the occupier had the intention to possess the land to the exclusion of the whole world including the true owner.

Possession as a matter of fact

The occupier must show a degree of physical control of the land. Enclosure is said to be the strongest possible evidence of adverse possession but it is not indispensable (Seddon v. Smith [1877] 36 LT 168). The possession must be "adverse" (to put simply, it must be unlawful) – if the possession is with the permission, consent or license from the owner, it will not give rise to a claim in adverse possession. Possession must also be open and not secret, so that the owner has the opportunity to challenge the adverse possession within the limitation period.

Intention to possess

Apart from physical possession, the claimant must also show that he or she has the intent to possess the land to the exclusion of all other persons, including the true owner. Clear and affirmative evidence is required to show that such an intention to possess has been sufficiently clear to everybody, in particular to the attention of the paper owners. It was held by the Court of Final Appeal in Hong Kong that there was no intent to possess where an occupier admitted he or she would pay rent if the true owners had requested it. It demonstrated the occupier had no intention to exclude the paper owner, and treated oneself as enjoying possession under a lawful title.

However, the position in the UK seems to be different. It was held by the Court of Appeal of UK that it is not necessary for the occupier to show that he intended to own or acquire ownership of the land (Buckinghamshire CC v. Moran [1990] Ch 623). It has also been held by the House of Lords that willingness of an occupier to pay rent is not inconsistent with an intention to possess (JA Pye (Oxford) Limited v. Graham [2003] 1 AC 419).

Land held on trust

The issue of adverse possession is more complicated where the land is held on trust. Under the Limitation Ordinance, where land is held on trust and adverse possession is taken by a stranger, the trustee's title to the legal estate is not affected until all the beneficiaries have been time-barred. Further, under the Limitation Ordinance, the limitation period for land owners aged under 18 to commence actions to recover land is not 12 years after the right of action accrued, but 6 years after the the owner turns 18 .

New Territories land

Some New Territories land in Hong Kong is owned by tso (祖). A tso is a family group owning property for the purpose of ancestral worship. It was held by the Court of First Instance that tso is a form of Chinese customary landholding recognized under the New Territories Ordinance (Cap 97) (Leung Kuen Fai v Tang Kwong Yu (or U) T'ong or Tang Kwong Yu Tso [2002] 2 HKLRD 705). It has been accepted by the Hong Kong Courts that all male descendants of the common ancestor in a tso are entitled to an interest in the land for his lifetime. Each tso must appoint managers and register their names at the Land Registry. The managers are responsible for managing and disposing of the property in accordance with the will of the tso members, for example, maintaining temples or ancestral halls on the land.

Trust argument

Can a Tso be considered as a trust? If so, does it follow that manager's legal title to the land is not affected until all the beneficiaries in the tso have been time-barred?

In the case of Leung Kuen Fai, the Court found that the concept of trust was applicable to a tso with the managers as trustees and the members of the tso as beneficiaries. As a result, based on the case of Leung Kuen Fai, there cannot be any adverse possession against a tso if the right of at least one of the male descendants is not time-barred. Given the provisions relating to the limitation period for infant land owners, as long as new male members are born within the tso during the prescribed period of possession, claims of adverse possession on tso land will not succeed.

However, this position may change following our recent success in resisting an application for judgment on behalf of an occupier of a piece of New Territories land owned by tsos. In that case, the occupier possessed the land for more than 20 years and claims adverse possession over the land. The tso owners relied on the rights of several infant members born during the period of possession in defending the occupier's adverse possession claim. Relying on, amongst other cases, the Leung Kuen Fai case, the tsos applied for a summary judgment for possession of the land. We were successful in resisting the tsos' application for summary judgment after adducing the evidence of a leading expert in Chinese law and custom who suggested that, it is wrong to consider tso as a trust. Having considered the expert evidence, the Court had reservation in adopting the principles in the case of Leung Kuen Fai. During the disposal of various issues in this case, the Court made the following comments:

  1. it is the practice of the Hong Kong Courts to consider evidence of experts in Chinese law and customs when it is asked to determine issues in relation to Chinese law and customs;
  2. it appears the case of Leung Kuen Fai and the cases cited therein were decided without sufficient aid from expert witnesses in the area of Chinese law and custom; and
  3. expert evidence adduced by parties in relation to Chinese law and customs in this matter enriched the Court's jurisprudence.

Given the large number of land holdings in the New Territories registered under tso or t'ong (堂) (another form of land ownership under Chinese law and custom) or similar institutions, the issues discussed in our recent case are obviously of general importance.

As a result of the above comments, it is expected that the Court will re-consider the approach adopted in the case of Leung Kuen Fai case with more reliance on expert evidence in Chinese law and custom. This approach should be welcomed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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