The doctrine of encroachment in the Court of Final Appeal

Where a tenant encroaches onto adjoining land of the landlord, he is rebuttably presumed to hold the property as an addition to the property covered by the lease. Once the limitation period has passed in respect of the area encroached upon, the landlord will be unable to recover possession of the area covered by the encroachment until the lease comes to an end. The fact that the relevant lease was renewed (and a fresh lease granted) pursuant to the New Territories (Renewable Government Leases) Ordinance (Cap. 152) has no impact on the operation of the doctrine of encroachment in relation to the land.

In Secretary for Justice v Chau Ka Chik Tso ([2011] HKEC 1617, CFA) 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 tenant claimed to be entitled to possession to the extra land encroached upon until the lease comes to an end on 30 June 2047 (the term having been extended by virtue of the New Territories Leases (Extension) Ordinance). The Government counterclaimed for possession of the relevant land.

The Court of Appeal had found in favour of the tenants (see here for a description of the Court of Appeal decision). The Court of Final Appeal unanimously rejected the Government’s appeal and found in favour of the tenants. The doctrine of encroachment had the effect contended for by the tenants and their claim was not affected by the fact that the exercise of the right of renewal (and consequent grant of a new lease) had occurred while the limitation period was still running in respect of the land encroached upon. It was enough that the tenants had been in possession of the land for an uninterrupted sixty year period as required by section 7 of the Limitation Ordinance.

There was a thorough exploration of the juridical basis of the doctrine of encroachment: Ribeiro PJ had a view as to the nature of the doctrine that differed from that of Lord Scott of Foscote NPJ. Common to all is an acceptance that the encroachment creates a rebuttable presumption that the tenant possesses the land as an addition to the lease. Lord Scott thought that added to this is a straightforward application of the doctrine of adverse possession (the expiry of the limitation period prevents the landlord from being able to recover possession). Lord Scott thought that the intention of the tenant modified the operation of the doctrine of adverse possession ([112] – [113]). Ribeiro PJ thought that this solution was unavailable since it seems to clash with section 17 of the Limitation Ordinance (which extinguishes the landlord’s title). He thought that the landlord’s eventual right to recover the land arose from a presumption that the encroachment is an an annexation of the relevant land to the demised property and an estoppel binding on the tenant preventing the tenant from asserting that his possession is adverse to the landlord (paras. [40] – [41]). In Ribeiro PJ’s view, the Limitation Ordinance is not directly relevant (para. 41) but it is indirectly relevant in that, in the absence of the doctrine of encroachment, the tenant could claim to have extinguished the landlord’s title.

Michael Lower

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