Archive for the ‘Encroachment’ Category

Inchoate encroachment claims: did the Handover start time running again?

April 15, 2015

In Li Kwok Ching v Secretary for Justice [2015] HKEC 552, CFI) the plaintiff was the Government lessee of land near Sheung Shui. He sought a declaration that the Government was barred from recovering possession of neigbouring unleased land by virtue of the doctrine of encroachment. The claim failed because the  plaintiff was unable to establish that he had been in possession for the sixty year period demanded by section 7(1) of the Limitation Ordinance. In case, he was wrong on this, however, Godfrey Lam J. went on to consider the Government’s contention that the handover started time running afresh against the Government.

The argument was that the Peking Convention made the British Government a lessee of the land in the New Territories. The effect of the handover was to bring that lease to an end and to give possession to the Government of the Hong Kong SAR (on behalf of the Chinese State). Thus, time started running again against the Government of the Hong Kong SAR in 1997. The plaintiff’s possession up to 1997, it was argued, could only possibly have affected the title of the British Government.

Godfrey Lam J. rejected the Government’s argument on the basis that the Peking convention did not grant a leasehold estate. The Peking Convention operated at an international level and did not create an estate in land that was justiciable in domestic courts ([75]). As far as this type of inchoate encroachment claim was concerned, the Government of the Hong Kong SAR simply stepped into the shoes of the British Government ([76]). Article 120 of the Basic Law made it clear that the Goverrnment’s rights to land were subject to leases in existence in 1997 and ‘all rights in relation to such leases”; the rights of one who, like the plaintiff, had encroached upon Government land were among such rights ([80]). The Government’s argument failed.

Michael Lower

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Encroachment by Government lessee: time did not start to run again in July 1997

February 27, 2013

In Lee Bing Cheung v Secretary for Justice ([2013] HKEC 255, CFI) L rented property in 1949 and bought the property in 1952. The land that he rented and then bought was partly land held under a lease from the Government and partly on unleased land. In January 2010, the Government evicted L from the unleased land. L sought a declaration that he was entitled to possession (either as a result of the doctrine of encroachment or of proprietary estoppel). L also sought mesne profits from the Government.

L succeeded on the basis of the doctrine of encroachment. He had been in possession of the land from 1949 to 2010. L was entitled to possession until the Government lease ended (it was a lease for 999 years). The Government’s argument that time started to run again with the resumption of sovereignty in 1997 failed ([181]).

At a time when the Government already knew of L’s occupation of the disputed land it stood by and allowed him to spend a considerable amount of money on works partly on the buildings on the unleased land. Even though the Government could not be said to have known of L’s mistaken belief that he occupied the land under the terms of the Government lease, the Government would have been estopped from taking back possession. This wanot the basis for the outcome (which rested on encroachment).

The doctrine of encroachment in the Court of Final Appeal

December 12, 2011

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

Encroachment: for whose benefit?

May 23, 2011

The doctrine of encroachment applies to land owned by third parties as well as to land owned by the landlord. It is part of Hong Kong Land Law. It creates a rebuttable presumption that any rights acquired over third party land are for the benefit of the landlord.

In Lau Wing  Hong v Wong Wor Hung ([2006] 4 HKLRD 671) a tenant encroached on land owned by third parties next to the property included in the lease. From the very beginning the landlord acknowledged that he did not own the land encroached on. He further made it clear that he wanted no part in any dispute arising out of the encroachment and that it was not his affair. He granted two further leases that made no mention of the land encroached on. It was held that the doctrine of encroachment applies to third party land as well as to land owned by the landlord. It creates a rebuttable presumption that the land has been encroached on for the benefit of the landlord. Here the presumption was rebutted because the landlord had made it clear that he wanted nothing to do with the land and because the later leases did not mention it. It was the tenant who had acquired title to the land.

The operation of the doctrine of encroachment when the tenant acquires the reversion

March 17, 2011

The doctrine of encroachment means that a tenant is deemed to possess neighbouring land not included in the demise (to which his only claim is based on possession) on behalf of the landlord. The landlord is entitled to possession of it at the end of the lease. If the tenant acquires the reversion (or a new lease) there is a presumption that the sale (or lease)  includes the land encroached on. This situation also leads to an equitable presumption that the lease and the reversion are not to merge.

In Tower Hamlets LBC v Barrett ([2005] EWCA Civ 923) the Barretts were annual tenants of a pub the freehold of which was owned by the brewery. Through 12 years’ adverse possession they defeated the title of Tower Hamlets to land adjoining the pub in 1989 / 1990.  In 1993 the Barrretts bought the freehold of the pub from the brewers. One question was whether the freehold of the land encroached on belonged to the brewery or their tenants. The English Court of Appeal decided that it belonged to the tenants. The logic of the doctrine of encroachment led to a presumption that the sale to the Barretts included the freehold title of the land acquired through their adverse possession. Alternatively, it was plainly in the Barretts’ interest that the lease and freehold reversion should not merge since until they did the Barretts could retain possession of the land encroached on (presumed to form part of the lease).

Encroachment and lease renewals

March 5, 2011

The Limitation Ordinance is indirectly relevant where a tenant encroaches on other land of the landlord neighbouring the demised premises. Until the limitation period has expired the landlord may be able to recover possession of the land encroached upon. Where a lease was renewed by virtue of the New Territories (Renewable Leases) Ordinance the renewal did not start time running again against the tenant.

In Chau Ka Chik Tso v Secretary for Justice ([2011] HKEC 208, CA) the Tso was a tenant of the government. It had encroached on unleased land of the government since the 1920s. Encroachment and adverse possession are distinct concepts but the limitation period is indirectly relevant to the former in that the Government might be able to recover the land encroached upon during the limitation period. In this case the lease was for a term of 75 years from 1 July 1898 with a right of renewal for a further 24 years less three days. One question was whether the tenant’s rights against the Government in respect of the land encroached on had been affected by the lease renewal. The CA decided that they had not been affected. Relying on Chung Ping Kwan v Lam Island Development Ltd ([1997] AC 38) it held that there was in effect a single lease divided into two periods (para. 38) or that the right to renewal was also subject to the inchoate rights of the tenant at the time of renewal (para. 39).

The basis of the doctrine of encroachment

March 5, 2011

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.