Whither Adverse Possession in Hong Kong? A Comparative and Statistical Study

Whither Adverse Possession in Hong

Kong? A Comparative and Statistical

Study

Lei Chen*

Sng Ban Chuan Gordon

Adverse possession;; Comparative law;; Hong Kong

Introduction

The doctrine of adverse possession is a magical rule, as it transforms an initialwrong into an eventual right by mutating a squatter’s land-theft into a land title.It evokes a non-consensual transfer of land title from (paper) owners to anunauthorised occupant, after effluxion of time, subject to certain fact-intensiverequirements.Adverse possession has its root in the concept of possessory title, coupled with

the operation of rules on limitation of actions. A person may acquire title to aparcel of land not as a result of any formal rules or transfers, but simply by takingpossession of the land for a statutorily prescribed period of time. However, differentfrom contractual remedies, where monetary compensation can be used by the courtto provide a fair solution, the drastic consequence of adverse possession is thatwhenever a claim is made, one party (either adverse possessor or paper owner)will lose all rights to the land without any compensation. The judicial solution fora claim of adverse possession is “all or nothing” for either party. A hidden perilhere is worth noting: allowing adverse possession claims may seem to invite“opportunistic litigations” by encouraging non-owners to claim title to the landwithout paying compensation, and if successful, the original paper owner will alsohave to pay the litigation costs of the adverse possessor. This often triggerscontroversy and public outcry as a “free lunch for the land thief”.1

All around the world, researchers studying adverse possession have turnedtoward examining specific kinds of adverse possession cases—involving titledisputes and boundary disputes and critically assessing the justifications for thecontinued existence of this archaic rule in the 21st century.2 In Hong Kong, adversepossession cases are just as controversial and nerve-racking as they are elsewhere,but the unique conditions in Hong Kong make it especially controversial, in viewof the upcoming enactment of a title registration system and recent human rights

* Associate Professor, School of Law, City University of Hong Kong.1 http://www.onc.hk/pub/oncfile/publication/property/1010_EN_Free_lunch_From_a_possessor_to_an_owner_2

.pdf [Accessed September 21, 2014].2 L. Fox O’Mahony and N. Cobb, “Taxonomies of squatting: unlawful occupation in a new legal order” (2008)

71(6) M.L.R. 878;; M. Dixon, “Adverse possession and registered land” [2009] 73 Conv. 169.

413[2014] 78 Conv., Issue 5 © 2014 Thomson Reuters (Professional) UK Limited and Contributors

complaints. However, careful empirical and statistical analysis is required beforeproper conclusions can be reached.With a land mass of 1,054sq km3 and a resident population of more than 7

million,4 Hong Kong is one of the most densely populated cities in the world.5 Itis therefore understandable that land in HongKong (for both housing and economicuse) is extremely limited, expensive and vigorously pursued.6 According to theGlobal Property Guide, the average land price per square metre price in HongKong is US$20,660, which is the highest in Asia. Land prices in Hong Kong areeven higher than in Tokyo and Singapore.7 More strikingly, according to KnightFrank’s Global House Price Index (Q1 2013), Hong Kong’s residential propertyprices recorded an average increase of 28 per cent over a 12-month period fromQ1 2012 to Q1 2013. Due to reasons such as Hong Kong’s high land price policyand the influx of Chinese buyers, property prices in Hong Kong are expected tomaintain a steady upward trend in the foreseeable future.8

Against this background, this article reviews the case law, statutes, andlong-awaited public consultation paper on adverse possession (the “ConsultationPaper”) published by the Hong Kong Law Reform Commission in 2012, in orderto identify a suitable model for adverse possession reforms. This article employsa statistical study to identify the local factors in Hong Kong which may impact onthe suggested solutions. This article also employs a comparative study, takingreference from the various models adopted in other common law jurisdictions.The article is divided into four parts. Part One explains why there is a need toreform the doctrine of adverse possession in Hong Kong, and briefly provides ageneral overview of the current state of the law on adverse possession. Part Twoexamines the conventional arguments supporting the doctrine of adverse possessionand subsequently analyses which of these arguments still provide a convincingjustification for retaining the doctrine of adverse possession in the 21st century.Part Three discusses the reforms suggested by the Consultation Paper, in the lightof the upcoming introduction of the title registration system pursuant to the LandTitles Ordinance (Cap 585). Part Four will provide additional suggestions for thereform of adverse possession in Hong Kong, taking into consideration theexperiences of other jurisdictions.

Addressing the current system and the reasons for reform

Why there is a need to reform adverse possession?Some recent Hong Kong cases highlight the possible abuse of the doctrine ofadverse possession in the current system. Many adverse possessors have seized

3 The United States Central Intelligence Agency, The World Fact Book https://www.cia.gov/library/publications/the-world-factbook/geos/hk.html [Accessed August 25, 2014].

4 The current population of Hong Kong, as of mid-2014, is 7.23 million: http://www.censtatd.gov.hk/hkstat/sub/so20.jsp [Accessed September 22, 2014].

5 R. Ash, The Top 10 of Everything 2007 (Hamlyn, 2006), p.78.6 O. Jones, “Out with the owners! The Eurasian sequels to J.A. Pye (Oxford) Ltd v United Kingdom” (2008) 27

C.J.Q. 260, 268.7 Global Property Guide, “Square Metre Prices - Hong Kong Compared to Continent” http://www

.globalpropertyguide.com/Asia/Hong-Kong/square-meter-prices [Accessed September 21, 2014].8Global Property Guide, “Hong Kong housing bubble! Mainland buyers blamed”, November 6, 2009, http://www

.globalpropertyguide.com/Asia/Hong-kong/Price-History-Archive/Hong-Kong-housing-bubble-Mainland-buyers-blamed-1059 [Accessed September 21, 2014].

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[2014] 78 Conv., Issue 5 © 2014 Thomson Reuters (Professional) UK Limited and Contributors

every opportunity to take possession of all kinds of spaces, regardless of size andnature. From the whole floor of a building,9 a roof10 or a basement11 to part of alane, road or street12;; or even a first aid room and parking spaces,13 as long as thoseareas are of any commercial value, squatters would move in and take possessionin the hope that they can remain long enough to benefit from the operation of thelaw of adverse possession.For example, in the case of Hong Kong Buddhist Association v Cheung Ka

Leung Michael,14 the squatter was in adverse possession of the land from August28, 1991, which was around twomonths after the legislative amendment to reducethe limitation period from 20 years to 12 years for an adverse possession claim.The adverse possessor thereafter claimed title to the land after 12 years and 18days of adverse possession. The intention of the squatter is so obvious that anyreasonable person would come to the conclusion that the squatter acted in bad faithand in the hope of acquiring exclusive title to the disputed land by adversepossession. This is despite the fact that the bad faith of an adverse possessor isirrelevant, which will be discussed in the ensuing section.Additionally, the doctrine of adverse possession has been the subject of human

rights complaints.15 This challenge to the doctrine of adverse possession wasintensified in JA Pye (Oxford) Ltd v United Kingdom,16 where the Grand Chamberof the European Court of Human Rights eventually upheld the compatibility ofthe adverse possession provisions in the Land Registration Act 1925 with thepeaceful enjoyment of possessions enshrined in the European Convention for theProtection of Human Rights and Fundamental Freedoms.A similar concern, revolving around the constitutionality of the doctrine of

adverse possession, was resolved in Hong Kong by a series of court decisions in2006.17 In HongKong, art.6 of the Basic Law provides for the principle of protectionof property and art.105 enshrines the right to compensation for lawful deprivationof property. The constitutional issue appeared to be solved by limiting theapplication of art.105 to government expropriation.18 However, this justificationhas been thought to be thin and technical,19 and therefore the reform of the law onadverse possession in Hong Kong is clearly needed.Moreover, any proposed reform on adverse possession cannot be isolated from

the upcoming land registration system, as evidenced by experiences in otherjurisdictions. The Land Title Ordinance (“LTO”) was enacted in Hong Kong in

9Kuok Hong Neng v Yuen Sik Wah [2002] HKCFI 1045;; The Hong Kong Buddhist Association v The Occupiers[2007] HKCA 187.

10 Incorporated Owners of Wah Kin Mansion v Hong Kong Grouting Co Ltd [2003] HKLT 10;; The IncorporatedOwners of San Po Kong Mansion v Shine Empire Ltd [2007] HKCFA 38.

11 Thousand Treasure Investment Ltd v Pinkton Ltd [2007] HKDC 285;; [2009] HKDC 243;; [2010] HKDC 40.12Kam To Pui v The Incorporated Owners of Lux Theatre Building [2000] HKCFI 27;;Wong Shiu Hung v Lui Kuo

[2001] HKCFI 892;; Incorporated Owners of Wah Kin Mansion v Hong Kong Grouting Co Ltd [2003] HKLT 10;;Lee Theatre Realty Ltd v Tong Wah Jor [2009] HKCFI 1110.

13Chan Kwok Hing v The Incorporated Owners of Che Wah Industrial Building [2010] HKDC 3.14Hong Kong Buddhist Association v Cheung Ka Leung Michael [2006] HKCFI 1048.15 See more detailed explanations at K. Gray and S.F. Gray (eds), Elements of Land Law, 5th edn (Oxford: OUP,

2009), para.9.1.17.16 JA Pye (Oxford) Ltd v United Kingdom (44302/02) (2008) 46 E.H.R.R. 45;; 23 B.H.R.C. 405 ECtHR.17Harvest Good Development Ltd v Secretary for Justice [2007] 4 HKC 1;; The Hong Kong Buddhist Association

v The Occupiers [2006] HKCU 1520;; Chan Tin Shi v Li Tin Sung [2006] 1 HKLRD 185.18Harvest Good Development Ltd v Secretary for Justice [2007] 4 HKC 1 per Hartmann J.19 Jones, “Out with the owners: the Eurasian sequels to J.A. Pye (Oxford) Ltd v United Kingdom” (2008) 27 C.J.Q.

260.

Whither Adverse Possession in Hong Kong? 415


2004, but was oddly subject to public consultation soon afterwards, and has yetto come into effect. The LTO attempts to introduce a title registration system withconclusiveness and certainty in Hong Kong. It is notable that the Law ReformCommission of Hong Kong established a sub-committee in 2006 to considerpossible reforms. In 2012, this sub-committee released a consultation paper20

proposing reforms to the law of adverse possession in Hong Kong, which will bediscussed in greater detail in Part Three.

The current state of adverse possession law in Hong KongIn a nutshell, the law of adverse possession in Hong Kong by and large followsthe pre-2002 English system with minor deviations.21 Hence, in order to claim titleby adverse possession, the squatter must show that: (1) he or she has been inpossession of the land;; (2) the possession has been “adverse”;; and (3) the adversepossession has lasted for the statutorily prescribed time. For the element ofpossession, the squatter has to establish two things: first, the actual physicalpossession of the land;; and secondly, the intention to possess the land. In brief,the adverse possessor succeeds where he or she possesses and demonstrates theintention to possess the land for the requisite time period.The oft-cited authority on the true meaning of factual possession provides that

an adverse possessor

“has been dealing with the land in question as an occupying owner mighthave been expected to deal with it and that no-one else has done so”.22

Hence, if the squatter has done nothing to the land, he or she cannot be said to bein possession of the land. The squatter does not have to be physically present duringthe whole period. It is sufficient if the squatter grants a lease or a licence of theland to others to use it.23 Hence if the adverse possessor himself or herself, orthrough his or her tenant or licensee, adversely dispossesses the landowner for acontinuous and sufficient period, the adverse possessor would be entitled to makea claim for possessory title of the land.24

There cannot be adverse possession without an intention to possess (animuspossidendi). Such an intention “involves the intention, in one’s own name and onone’s own behalf, to exclude the world”.25 Under Hong Kong law, it does notmatter even if the squatter acts in bad faith, as adverse possession is often calledwrongful possession. The squatter may mistakenly but honestly think he or she is

20 The Law Reform Commission of Hong Kong, Adverse Possession Sub-Committee, Consultation Paper onAdverse Possession (2012).

21 InWong Tak Yue v Kung Kwok Wai David [1998] 1 HKLRD 241, the adverse possessor had always been willingto pay rent to the owner of the land if the owner turned up. It was held that the adverse possessor could not succeedin his adverse possession claim in Hong Kong, as his willingness to pay rent means that he lacks the intention topossess, which the HK courts held to be a crucial element of adverse possession. Cf. JA Pye (Oxford) Ltd v Graham[2002] UKHL 30;; [2002] 3 W.L.R. 221.

22Powell v McFarlane (1979) 38 P. & C.R. 452 Ch D, which has been adopted and approved inWong Tak Yue vKung Kwok Wai David [1998] 1 HKLRD 241.

23 Tang Kwan Tai v Tang Koon Lam [2002] HKCA 323;; Tang Tak Hong v Cheung Yat Fuk [2002] HKCFI 948.24 In Ricas Properties Ltd v Armed Forces Trading Co Ltd DCMP 75/2008, it was held that the grandson could

rely on the previous 20 years’ period of time that his grandfather had adversely dispossessed the owner in his defenceagainst the owner’s action for recovery of the land.

25Powell v McFarlane (1979) 38 P. & C.R. 452.



the true or rightful owner when he or she intends to exclude all others,26 and suchintention has to be manifested and proved.Nonetheless, it is worth noting that there is a difference between English and

Hong Kong laws concerning the declaration of a hypothetical willingness to payrent or a licence fee if demanded. InWong Tak Yue v Kung Kwok Wai David,27 theadverse possessor had always been willing to pay rent to the owner of the land ifso demanded. The Hong Kong Court of Final Appeal decided that the adversepossessor could not succeed in his adverse possession claim in Hong Kong, as hiswillingness to pay rent indicated that he did not intend to exclude the paper ownerfrom the land, and therefore lacked the intention to possess, which was a crucialelement of adverse possession in HongKong. However, there has been a divergencebetween the English and Hong Kong positions since 2002. In the English case ofJA Pye (Oxford) Ltd v Graham,28 the House of Lords held that so long as the adversepossessor maintained possession of the land at all times, it did not matter that theadverse possessor was willing to pay rent if requested. Nevertheless, in accordancewith the principle of stare decisis, Hong Kong’s lower courts are bound by theHong Kong Court of Final Appeal’s decision inWong Tak Yue on this point.29

Classical arguments for adverse possession

Although the doctrine of adverse possession has often been subject to hostile publiccriticism,30 the English Law Commission has accepted the four arguments for theexistence of the doctrine of adverse possession.31 We conducted case studies onrecent cases in Hong Kong (from July 1, 1997 to February 12, 2012) relating toadverse possession, which provided very valuable insights as to whether these fourclassical arguments remain relevant in HongKong today. The searchwas conductedusing Westlaw on both published and unpublished cases in Hong Kong, whichresulted in 126 cases.

26 Tsun Wai Man v Cheung Yung [2001] HKCFI 721.27Wong Tak Yue v Kung Kwok Wai David [1998] 1 HKLRD 241.28 JA Pye (Oxford) Ltd v Graham [2002] UKHL 30;; [2002] 3 W.L.R. 221.29M. Merry, “Adverse possession and the principle of encroachment: Secretary for Justice v Chau Ka Chik Tso”

[2012] 76 Conv. 333.30Merry, “Adverse possession and the principle of encroachment: Secretary for Justice v Chau Ka Chik Tso”

[2012] 76 Conv. 333.31M. Dockray, “Why do we need adverse possession?” [1985] 49 Conv. 272.



Figure 1 The number of cases in each respective year compared across different

geographical areas

The four arguments (and the relevant counter-arguments) are as follows:

Protection against stale claimsA landowner has a duty to protect his or her interests in land. If the landowner’sland is occupied by squatters, he or she should not sleep on his or her rights. Rather,the landowner is expected to seek the appropriate legal remedies to evict thesquatters because they are trespassers. However, if the landowner does nothingabout the squatters for too long, the law assumes that he or she does not value hisor her land enough to take any action to protect his or her title to the land. As statedin the Australian case of Newington v Windeyeper, “those who go to sleep upontheir claims should not be assisted by the courts in recovering their property”, as“there shall be an end to litigation”.32

Counter-argument: The unspoken assumption in the first classical argument isthat the property owner has knowledge that his or her rights are infringed upon.However, incidents of adverse possessionmay not be readily apparent to the owner.The statutory limitation period begins from the date the possession by the squatterwas adverse, even if the owner has no knowledge of the infringement. If the ownerdoes not have actual or constructive knowledge of the infringement, it would bepatently unfair to deprive the owner of his or her land as the owner is not trulysleeping on his or her rights.

32Newington v Windeyeper (1985) 3 NSWLR 555.



As can be seen from fig.2, in 16 per cent of the recent cases involving adversepossession, the owners were mistaken about the boundaries33 or the exact locationof the land.34 Given the inaccuracy of land surveys and the land register in relationto the New Territories (which will be discussed in more detail below), it is highlypossible that many landowners may not even realise that their lands have beeninfringed upon. The first classical argument for adverse possession is thereforenot very persuasive.

Figure 2 Percentage of Recent Adverse Possession Cases inHongKong involving

Boundary Disputes and Title Disputes

In the other adverse possession cases, which were in relation to title disputes(rather than boundary disputes), some paper owners had, within the limitationperiod, requested the tenants to pay rent or the occupants to move out. However,due to various reasons, they failed to regain possession of their properties withinthe limitation period. Some owners attempted to resolve the disputes amicably formany years35;; one owner failed to realise that his property was under adversepossession by the licensee’s family after the death of the licensee36;; one ownermistakenly received rent only in relation to another separate plot of land, and notincluding the plot of land claimed under adverse possession;;37 and one ownermistook the squatter as a sub-tenant of his tenant.38 As approximately 13.6 per centof the affected landowners tried to resolve their disputes with the squatters withoutresorting to legal action, which eventually cost them their land, it appears that asignificant proportion of landowners may not be familiar with the limitation periodin the law of adverse possession, and may have delayed taking legal action to theirown detriment. Although it is trite law that ignorance of the law is not a defence,the argument of protection against stale claims as a reason for the retention of thedoctrine of adverse possession is not persuasive, as it creates a “litigate or die”

33 E.g.Wong Lai Man v Wong Tat Kwong [2010] HKEC 66;; Tang Seng v Tang Kuen Kwai [2004] HKEC 79;;Tsang Tsang Keung v Fung Wai Man [2000] HKEC 1042.

34Cheung Yat Fuk v Tang Tak Hong [2000] 7 HKCFAR 70.35 E.g. Tso Lo Sang v Phi-Kong Land Development Ltd [2008] HKEC 55;; Hau Yin Ming v Hau Sun Chiu [2009]

HKEC 929;;Wai Ha Kan v Ho Tze Leung [ 2009] HKEC 795.36Chan Suk Yin v Harvest Good Development Ltd [2004] HKEC 244.37Cheung Yuk Por v Chan Kam Muk [2012] HKEC 1455.38Chan Yeuk Mui v Ng Shu Chi [1999] 2 HKLRD 376.



mentality instead of encouraging out-of-court resolution of conflicts. It alsoencourages squatters to hold out stubbornly and unreasonably in the hopes thatsquatting frogs can magically turn into landed princes upon the expiry of thelimitation period. This is clearly contrary to public policy.

Avoid land becoming neglected and undevelopedThe second classical argument for adverse possession is the public policy reasonof promoting the efficient use of land. It has been suggested that the doctrine ofadverse possession discourages paper owners from neglecting their lands, andencourages squatters to utilize land which would otherwise remain fallow andundeveloped.39

However, Dockray believes that this argument cannot justify the wide applicationof the doctrine of adverse possession, and may be relevant only in limitedcircumstances, e.g. where there has been long and peaceful possession of neglectedlands.40

If a large property developer wishes to leave large tracts of its land bankundeveloped so as to control the supply of properties entering the market, it caneasily perform annual checks on its vacant lands and commence legal action forrepossession whenever necessary. As such, the second classical argument foradverse possession is no longer applicable in modern day Hong Kong.Our case studies show that almost a quarter of recent adverse possession cases

in Hong Kong involve owners (or heirs) which have disappeared and cannot betraced. In such circumstances, the estate should revert to the Government, andneglected lands can be put to public use or re-sold to increase public funds, insteadof allowing opportunistic squatters to seize the land as a “legal windfall”.

Prevent hardship in cases of mistakeThe third classical argument revolves around preventing hardship for an innocentparty who has spent money and time on land which he or she believes to be his orher own, but who cannot find another remedy, such as proprietary estoppel.Nevertheless, adverse possession appears to be a harsh remedy, as it does notbalance the hardship to the innocent adverse possessor with the potential hardshipto a paper owner who is unaware of the adverse possession of his or her land.More to the point, this argument can only be justified if adverse possession

occurs in good faith, under mistakes of boundaries or ownership. However, goodfaith is not a requirement for a claim of adverse possession under current HongKong law.Our research has shown that of the recent cases in Hong Kong dealing with

adverse possession, only 31 per cent involved adverse possession in good faith.As such, this third classical argument is not very persuasive in the modern HongKong context.

39 J. Stake, “The uneasy case for adverse possession” (2001) 89 Geo. L.J. 2419, 2423.40 Dockray, “Why do we need adverse possession?” [1985] 49 Conv. 272, 277.



Facilitate conveyancing in unregistered landFor unregistered land in Hong Kong, a seller would be required to prove title overa period of at least 15 years, beginning with a good root of title.41 As such, thefourth argument was that it facilitates the investigation of title to unregisteredland.42 It has been concluded that the Statute of Limitations was designed tofacilitate unregistered conveyancing, by ensuring the time-barring of third parties’possible title claims to the land to be conveyed.43

This conventional wisdom appears to have survived unchallenged, and has evenbeen endorsed byMegarry andWade.44 Logic suggests, however, that using adversepossession to facilitate conveyancing is a two-edged sword—allowing adversepossession can also increase transaction costs, as purchasers would have to incurcosts to check thoroughly that there are no adverse possessors on any part of theland, and that there are no boundary encroachments.Furthermore, given the high property transaction volumes in Hong Kong, there

are many sellers who do not possess a property for more than 12 years beforeselling it. It is worth highlighting that the law of adverse possession does notfacilitate the conveyancing of any property which has not been held by the sameowner for a continuous period of 12 years. Unlike jurisdictions which require thewhole limitation period for adverse possession to have run against the currentpaper owner before a claim for adverse possession can be made,45 i.e. each transferto a new owner “wipes the slate clean”, the current state of adverse possession lawin Hong Kong allows the limitation period to run against multiple different owners,which could result in a ticking time bomb for any unwary purchaser. As such, itis suggested that the doctrine of adverse possession is more of a hindrance than ahelp when it comes to the conveyancing of unregistered land in Hong Kong.

Comments on the Consultation Paper

As the Consultation Paper covers a wide range of related issues and many wellthought-out proposals, this paper does not deal with every aspect of it. Rather, thispaper singles out some salient features for discussion which I believe merit furtherdebates. In particular, Ch.7 of the Consultation Paper provided severalrecommendations for the reform of the law of adverse possession in Hong Kong,46

which are discussed in detail in this Part. In a nutshell, the Consultation Paperproposes that the status quo on adverse possession be maintained until the LandTitles Ordinance (Cap 585) comes into effect, and that the English “10+2” model47

41Conveyancing and Property Ordinance (Cap 219) s.13. Note that all land in Hong Kong is currently unregistered,as the LTO has yet to come into effect.

42 Dockray, “Why do we need adverse possession?” [1985] 49 Conv. 272, 277.43 Dockray, “Why do we need adverse possession?” [1985] 49 Conv. 272, 284;; English Law Commission, Land

Registration for the Twenty-first Century, A Consultative Document (1998), Law Com. No.254, HC Paper No., para10.9.

44Megarry & Wade: The Law of Real Property, edited by Charles Harpum, 6th edn (London: Sweet & Maxwell,2000), para.21-001.

45 E.g. New South Wales.46 The Law Reform Commission of Hong Kong, Adverse Possession Sub-Committee, Consultation Paper on

Adverse Possession (2012).47 I.e. a squatter will only have a right to apply for registration after 10 years’ uninterrupted adverse possession,

the owner will be notified of the squatter’s application and will be able to object, and if the squatter is not evictedand remains in adverse possession for twomore years, then the squatter would be entitled to make a second application,and the matter can be referred to an adjudicator for resolution.



be adopted for land parcels which have been converted into registered land. Weshall address selected proposals in the Consultation Paper in the followingsub-sections.

Should adverse possession be retained under the existing unregisteredland system?In Hong Kong, title to land remains based on possession. Although the LTOintroduced a deeds registration system, it merely records the instruments affectinga particular parcel of land, and does not confer title, although it facilitates tracingof title. Against this background, the Sub-Committee has proposed that “the existingprovisions on adverse possession should be retained since they offer a practicalsolution to some of the land title problems”.48

As mentioned above, although adverse possession does offer a solution to someland title problems, allowing adverse possession can also increase transactioncosts, as purchasers would have to incur costs to check thoroughly or periodicallythat there are no adverse possessors on any part of the land, and that there are noboundary encroachments. The current state of adverse possession law in HongKong allows the limitation period to run against multiple different owners, whichcould result in a ticking time bomb for any unwary purchaser.Furthermore, given the high property transaction volumes in Hong Kong, there

are many sellers who do not own a property for more than 12 years before sellingit. The law of adverse possession is limited in its utility, as it does not facilitatethe conveyancing of any property which has not been held by the same owner fora continuous period of 12 years.The Sub-Committee subsequently proposed an outline of a scheme to deal with

adverse possession claims under the registered land system to be introduced underthe LTO (Cap 585).49 It is recommended that

“when a registered title regime is in place in Hong Kong, adverse possessionalone should not extinguish the title to a registered estate. The rights of theregistered owner should be protected.”50

Meanwhile, the Consultation Paper acknowledged that “such protection wouldnot be absolute” in certain circumstances. For instance, if the registered ownerfails to file an objection within the stipulated time after being notified, then theadverse possessor will be registered.51

This recommendation is well thought-out, but why should this proposed schemeapply only to registered land? Although the current deeds registration system doesnot guarantee title, there is no reason why this proposed scheme cannot beimmediately applied to unregistered land (non-LRO land), as it would increasethe level of protection for paper owners while still acting as a practical solution to

48 The Law Reform Commission of Hong Kong, Adverse Possession Sub-Committee, Consultation Paper onAdverse Possession (2012), p.107.

49 The Law Reform Commission of Hong Kong, Adverse Possession Sub-Committee, Consultation Paper onAdverse Possession (2012), pp.111–112.





the land title problems raised in the Consultation Paper. Although we understandthat there could be certain practical difficulties in locating the paper owners ofnon-LRO land, notices could be published, e.g. in the Hong Kong GovernmentGazette.It is therefore suggested that the proposed scheme be adopted immediately for

unregistered land (non-LRO land) in Hong Kong, with a slight modification thatthe whole limitation period for adverse possession has to run against the currentpaper owner before a claim for adverse possession can be made, i.e. each transferto a new owner “wipes the slate clean”. A new legislative provision can be includedto state that upon any transfer of title, where the adverse possessor has adverselyoccupied a piece of land for a period of time shorter than the limitation period, thetransfer will void the previous period of adverse possession. For the adversepossessor to acquire title against the new paper owner, the adverse possessor willhave to remain in occupation adverse to the new paper owner for another completelimitation period, i.e. the period of adverse possession against the new paper ownerwill only commence from the date of the transfer. This would facilitate theconveyancing of properties which have been held by an owner for less than therelevant limitation period, as it would automatically guarantee that there are noinchoate adverse possession claims on these properties which might unexpectedlyarise after the conveyance, while still facilitating conveyancing of properties thathave been held by a single owner for a duration longer than the limitation period.

Should adverse possession be retained under the prospectiveregistered land system?The Government has recently proposed an option for the introduction of theprospective title registration regime, which will involve a two-stage automaticconversion mechanism.Once the LTO comes into effect, all new land, i.e. land granted under a

government lease on or after the date of commencement of the LTO,52 willimmediately come under the new title registration system and indefeasibility ofregistered title will apply ab initio.For LRO land,53 i.e. land which is the subject of an existing government lease

for which a register has been maintained in accordance with the LRO, after theLTO comes into effect there will be a “lead-in period”, which will allow time forpreparatory work and learning from operating the title registration system for newland. Thereafter, all LRO land will undergo the first stage of conversion (primaryconversion), and after the incubation period of 12 years will automatically comeunder the LTO title registration regime. During the incubation period, the LROland will remain subject to subsisting interests (i.e. an interest, whether registeredor unregistered, subsisting as at the date of primary conversion, which would havebeen enforceable against the current registered proprietor if the land was underthe LRO system),54 while new transactions and interests created after the primaryconversion would be effected in accordance with the LTO. After the incubation

52 LTO s.20.53 LTO s.21.54 The Law Reform Commission of Hong Kong, Adverse Possession Sub-Committee, Consultation Paper on

Adverse Possession (2012), p.71.



period and upon full conversion to registered land, bona fide purchasers for valuableconsideration would be entitled to indefeasible title to the registered land. Anysubsisting interests which have not been registered would thereafter be subject tointerests recorded on the title registry.55

The Sub-Committee had a recommendation in relation to the introduction ofthe prospective title registration regime:

“[T]he law of adverse possession should be recast under the prospectiveregistered land system. Registration should of itself provide a means ofprotection against adverse possession, though it should not be an absoluteprotection … [T]hat registration alone should transfer or confer title.”56

This recommendation very rightly states that in a registered land system“registration alone should transfer or confer title”.57 It is therefore incongruousthat the Consultation Paper makes a bald assertion that registration “should not bean absolute protection” against adverse possession, without providing anysupporting arguments.Burns has pointed out that title registration systems all over the world have the

following “classic” similarities. First, a registered proprietor acquires absolute andindefeasible title and cannot be displaced by another person relying on the principleof relativity of possession.58 Secondly, the party who is registered as the proprietorof the legal estate must be divested of that legal estate before another person canacquire it.59

Although the details of the proposed title registration system in Hong Konghave not been fully fleshed out, the current provisions of the LTO state that theTitle Register (when implemented) will be conclusive evidence of ownership andregistered rights and interests to properties brought under the new title registrationregime, subject to certain exceptions, e.g. overriding interests and the provisionson rectifying the register.60 Unlike the current deeds registration system, a checkon title will no longer involve the examination of multiple legal instruments.One key principle of registered land systems is that of indefeasibility. It is

unlikely that the principle of adverse possession can co-exist comfortably with theprinciple of indefeasibility,61 as allowing possessory title to be imported wouldallow rights not recorded in the registry to prevail over registered title, as titlecould be acquired by possession unsupported by the registration of an instrumentevidencing the acquisition.62




58 F. Burns, “Adverse possession and title-by-registration systems in Australia and England” (2011) 35 Melb.U.L.R. 773.

59Burns, “Adverse possession and title-by-registration systems in Australia and England” (2011) 35 Melb. U.L.R.773.

60 LTO (Cap 585) ss.29(4), 28, 81 and 82.61This is despite the co-existence of adverse possession and title registration systems (Torrens) in some Australian

states, such as Tasmania and Western Australia.62 J.S. Williams, “Title by limitation in a registered conveyancing system” (1968) 6 Alta. L. Rev. 67;; L. Griggs,

“Possessory titles in a system of title by registration” (1999) 21 Adel. L. Rev. 157.



However, the current provisions of the LTO appear to retain the doctrine ofadverse possession even for registered land, as plots of registered land would stillbe subject to overriding interests that do not have to be registered.63 It has beenrealised in many jurisdictions adopting title registration systems, that fairness andequity often require some unregistered interests to be recognised. In Australia, forexample, unregistered easements or profits à prendre may burden registered landand affect the registered proprietor’s use of the land.64

However, recognising certain unregistered interests is not the same as allowinginchoate or possessory interests to be eventually acquired by an adverse possessor.Although other unregistered interests may have been created by the action of theregistered proprietor, the interest of an adverse possessor arises from the inactionof the registered proprietor. Moreover, although the recognition of unregisteredinterests may burden registered land, such unregistered interests do not extinguishthe title of the registered proprietor. Is it necessary to maintain a “broad doctrineof adverse possession to deal with these situations and effectively leave the dooropen for the interests of otherwise inactive registered proprietors”?65 TheConsultation Paper failed to address this question.

Abolishing adverse possession for registered land inHongKong?

There are several inherent flaws in adverse possession law that conflict with themodern approach to land acquisition and registration. It is difficult, in the moderncontext, to accept that it makes no difference whether an adverse possessor actedin good faith or in bad faith, and that only the empirical fact of possession matterswhen deciding on adverse possession claims. There is also no requirement for theadverse possessor to compensate the paper owner, unlike compulsory landacquisition schemes by government authorities or the imposition of easements bythe courts in Australia, which require monetary compensation.66

One distinct advantage of entirely abolishing adverse possession for registeredland is that it ensures that title can only be acquired through registration. Registeredproprietors will therefore have greater security of tenure, which under traditionaleconomic theory will boost investment in the land. Another economic reason isthat abolishing adverse possession will mean that judicial resources which havebeen expended on resolving such cases can be deployed elsewhere, and registeredproprietors will not have to waste time and money defending adverse possessionclaims.67

It is not clear why the Consultation Paper did not discuss the possibility ofentirely abolishing adverse possession for lands which have been fully convertedinto the proposed title registration system. Since the main justification given inthe Consultation Paper for retaining adverse possession was that it facilitates theconveyancing of unregistered land, once a parcel of unregistered land has been

63 LTO (Cap 585) s.28(1)(k).64 A.J. Bradbrook et al, Australian Real Property Law, 5th edn (Sydney: Thomson Reuters, 2011).65Burns, “Adverse possession and title-by-registration systems in Australia and England” (2011) 35 Melb. U.L.R.

773, 810–811.66Burns, “Adverse possession and title-by-registration systems in Australia and England” (2011) 35 Melb. U.L.R.

773, 815–816.67Burns, “Adverse possession and title-by-registration systems in Australia and England” (2011) 35 Melb. U.L.R.

773, 815.



fully converted into registered land, there remains no satisfactory reason whyadverse possession should not be abolished.

Additional suggestions in relation to Hong Kong Island and KowloonThe Consultation Paper referred to the relevant law in other jurisdictions, namelyAustralia, Canada, England and Wales, Ireland and New Zealand. It is strikingthat the example of Singapore was not considered, as there are marked similaritiesbetween Hong Kong and Singapore. As former colonies of England, Englishcommon law, including the doctrine of adverse possession, was introduced intothe legal system of both Hong Kong and Singapore. Due to the scarcity of land,high-rise residential blocks are also the prevalent form of housing in Singapore,Hong Kong Island and Kowloon.However, unlike Hong Kong, Singapore enacted the Land Titles Act 1993,

which prohibited all future claims of adverse possession, even in relation tounregistered land, although it did not affect land which was already in adversepossession for 12 years prior to the introduction of the Land Titles Act 1993.68

However, the transitional provisions only allowed adverse possession claims tobe made within six months of the coming into effect of the Land Titles Act 1993on March 1, 1994, and the transitional era in Singapore has ended.69

It is suggested that for land in Hong Kong Island and Kowloon, which havehighly accurate land surveys and boundaries, the Singapore model is recommendedby immediately abolishing adverse possession, even for unregistered land, oncethe title registration system is fully implemented.Figure 1 above shows the number of adverse possession cases in Hong Kong

by year and geographical area. As can be seen from the chart, there have not beenmore than five cases relating to adverse possession in any calendar year since 1997fromHongKong Island and Kowloon combined. As such, it is obvious that adversepossession plays a veryminor role in resolving land disputes in the highly urbanisedareas of Hong Kong Island and Kowloon, and does not appear to have much valuein facilitating the conveyancing of unregistered land in these areas.

Additional suggestions for the New TerritoriesTheNewTerritories deserve special attention for twomain reasons. First, accordingto the survey of cases, the majority of disputes arising from adverse possessionoccurred in the New Territories (see fig.3 below). Secondly, Ch.4 of theConsultation Paper acknowledged that there are numerous discrepancies betweenthe boundaries as shown on the DD sheet or New Grant Plans and the physicalboundaries on the ground in the NewTerritories. As a result, land boundary disputesare not uncommon in the New Territories, many parts of which are held underBlock Government Leases.

68 Singapore Land Titles Act 1993 (Act No.27 of 1993).69Tan Sook Yee, Principles of Singapore Land Law, Tang HangWu and Kelvin F.K. Low, eds., 3rd edn (Singapore

Malaysia and Hong Kong: LexisNexis, 2009).



Figure 3 The geographical distribution of all recent adverse possession cases

In response to questions raised in the Legislative Council on February 8, 2006,the then Secretary for Housing, Planning and Lands also commented that

“re-survey their boundaries that were surveyed one hundred years ago usinggraphical surveymethod according to the present survey standards will requirehuge resources and considerable amount of time. According to an estimateby the Hong Kong Institute of Surveyors, such a re-survey will cost about$1.9 billion and require 10 years.”

Although there are indeed numerous problems in relation to land boundariesand surveys in the New Territories, if the Government introduces the prospectivetitle registration system in the New Territories, the doctrine of adverse possessionbecomes a boon in the initial stages of the conversion process. The land registersshould be rectified to reflect the actual state of the land on the ground, and so longas the boundary between two plots has not shifted in the last 12 years, adversepossession would apply to prevent boundary disputes from arising.However useful adverse possessionmay be for the initial stages of the conversion

to registered land, the fact remains that adverse possession is incompatible withthe principle of indefeasibility. It is therefore necessary to distinguish betweenwhole parcel adverse possession and part parcel adverse possession. In a caseinvolving a claim of whole parcel adverse possession, the paper owner faces thedrastic consequence of losing title to the entire parcel of land. This was the casein England prior to 1833, where adverse possession of a portion of land less thanthe whole parcel was deemed to be occupation of the whole, even when theremainder of the parcel was not occupied. However, since the English law reformsin 1833, the concept of part parcel adverse possession has been recognised, i.e.that an adverse possessor only gains title to the part of the land parcel which isactually under adverse possession. In part parcel adverse possession, e.g. boundarydisputes, the paper owner only faces the consequence of losing the part of the landwhich has been adversely possessed.If the Hong Kong Government wishes to retain adverse possession in the New

Territories to resolve any residual disputes over land boundaries in land broughtunder the prospective title registration system, it is suggested that whole parceladverse possession be abolished, leaving behind only part parcel adverse possession.In order to prevent opportunistic squatters from attempting to take over parts ofregistered land parcels, part parcel adverse possession should only be allowed



between registered proprietors of adjacent plots of registered land, and only inrelation to disputed boundaries.Some jurisdictions which have prohibited adverse possession as a means of

acquiring title have introduced the concept of “statutory encroachment”, a statutoryrecognition of a proprietary right which can be applied for in limited circumstancessomewhat similar to adverse possession, e.g. when an applicant has constructedstructures or otherwise improved part of a land parcel, in the mistaken belief thatthe part of the land improved was owned by the applicant,70 or if there is a smallmargin of error in the location of boundaries.71

The common law rule of adverse possession is harsh and all-or-nothing, whichoften results in the remedy being excessive compared to the trespass committed.The provisions of statutory encroachment statutes overcome these limitations bygranting the courts wide discretionary powers in resolving boundary disputes, inorder to balance the interests of both parties by weighing the relative harm ordetriment suffered. The courts should consider the detriment suffered by thelandowner whose land has been encroached upon, and balance it against thedetriment which would be suffered by the mistaken improver, if the common lawrule of trespass is strictly applied and the original position of the two landholdersis restored. In such cases of statutory encroachment, courts have been given thediscretion to grant proprietary rights over the land mistakenly improved to themistaken trespasser, subject to payment of a reasonable fee to the landowner whoseland has been encroached upon. The adoption of statutory encroachment allowsfor a more nuanced approach, as contrasted to the all-or-nothing consequences ofapplying the rule of adverse possession.It is submitted that instead of retaining part parcel adverse possession for the

New Territories alone, it would be more coherent to follow the example of NewZealand and certain Australian states (e.g. New South Wales, Northern Territory)to adopt new legislation providing for statutory encroachment, which could alsobe applied to Hong Kong Island and Kowloon. Statutory encroachment legislation,which could also provide guidelines for compensation, would dovetail into theprospective title registration system, and provide a far more elegant solution forboundary disputes than the archaic principle of adverse possession.

Conclusion

The Consultation Paper is an excellent effort by the Adverse PossessionSub-Committee, and it clearly and succinctly provides the legal and historicalbackground and highlights the issues pertaining to adverse possession in HongKong.However, it is submitted that the proposals for reform, which follow the English

model, do not take into full consideration the unique characteristics of Hong Kong.The example of Singapore, which is much more similar in its population density,urbanisation and land prices, cannot be neglected, as it can shed some light on themodel to be adopted by Hong Kong.

70 E.g. New Zealand, New South Wales, Northern Territory.71 Victorian Property Law Act 1958 s.272.



As such, it is submitted that as the principles of adverse possession are notcompatible with the prospective title registration system (a viewpoint that is sharedby many),72 adverse possession should be abolished entirely in relation to land thathas been fully converted into the prospective title registration system. Althoughthere are many challenging issues in relation to land surveys and boundaries inthe New Territories, once the land has been surveyed to match the physical realityand fully converted into the prospective title registration system, the doctrine ofwhole parcel adverse possession should be abolished. The enactment of statutoryencroachment legislation with clear compensation principles, which can also beapplied in Hong Kong Island and Kowloon, would be a more coherent and elegantsolution than keeping the vestige of part parcel adverse possession.

72 See Burns, “Adverse possession and title-by-registration systems in Australia and England” (2011) 35 Melb.U.L.R. 773, 817;; Tan Sook Yee, Principles of Singapore Land Law (2009), p.826.



Whither Adverse Possession in Hong Kong? A Comparative and Statistical Study

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