The basis of the doctrine of encroachment

Encroachment applies when a tenant enters into possession of land neighbouring the demised premises. The annexed land is treated as being part of the demise. The Limitation Ordinance is not directly relevant (encroachment is not the same as a defence based on adverse possession). It is indirectly relevant where the landlord is also entitled to possession of the annexed land since until the limitation period has expired the landlord can recover possession of the annexed property. Encroachment rests on a concept that is akin to estoppel.

In Chau Ka Chik Tso v Secretary for Justice ([2011] HKEC 208, CA) the plaintiff was the tenant of land held on lease from the Government. The lease was for  75 years from 1 July 1898 with a right of renewal for a further 24 years less three days. The land was used as  a fish farm and since at least as early as 1924 the tenants had extended the farm into land that extended beyond that contained in the lease. They annexed neighbouring Government land into the fish farm.

The question was whether the tenant was entitled to retain possession of the annexed land. The Court of Appeal held that it was because the tenant could rely on the doctrine of encroachment. The Government would be entitled to recover possession of the demised property and of the annexed land at the end of the lease but not before. The effect of the doctrine of encroachment was that the annexed land was to be treated as if it formed part of the property contained in the lease. Rogers V-P approved of Lord Denning’s statement that the doctrine of encroachment rests on bases similar to estoppel. The Government had known of the situation for more than 70 years and had done nothing. It had thus impliedly indicated its acceptance of the tenant’s possession.

The limitation periods in the Limitation Ordinance are not strictly relevant to encroachment since a claim based on encroachment is conceptually distinct from a defence based on the Limitation Ordinance. Practically speaking the limitation periods are relevant since, had it brought an action within the limitation period, the Government could have brought an action to recover possession of the annexed land before the end of the lease.

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