On 20 October 2014, the Law Reform Commission released a report on Adverse Possession.
A consultation exercise commenced on 10 December 2012. Over 110 organisations and individuals had provided us with their views and other useful information.
With regard to the question whether the law on adverse possession should be retained under the existing law, the organisations that responded were mostly in favour of retaining the existing law. The Hong Kong Bar Association was one of the organisations that supported the recommendation. A number of other organisations had a neutral stance on this issue. The Law Society of Hong Kong, however, suggested that the existing law should be altered such that the notification scheme devised for a registered title regime should be applied to the present unregistered title regime in Hong Kong. Two organisations were against retaining adverse possession under the existing unregistered title system. Heung Yee Kuk was, for example, one of these organisations.
The responses from individuals, however, were rather different. By and large, the responses were of the view that the law on adverse possession was unfair to property owners and mentioned that failure of the paper owner to manage his own property should not be a ground for the squatter to encroach upon the property.
We are aware that individual owners are concerned about the hardship caused by adverse possession, and would like to see some curtailment of the rule. Hence, we have deliberated on the feasibility of applying the notification scheme originally intended for a registered title regime to the existing un-registered title regime in Hong Kong. We found that the effect of such a change unsatisfactory. If a squatter were to be required to give notification of adverse possession, this requirement would effectively deprive the squatter of the chance to establish adverse possession. Also, without the due diligence enquiries made when a registered title is established, including the sorting out of any boundary disputes, the application of the notification scheme to Hong Kong's present land title regime could create more problems than it solved.
The recommendations of the Report are made against a background of a deeds registration system as opposed to a title registration system of conveyancing in Hong Kong. The existing deeds registration system gives no guarantee of title. Even if a person is registered as the owner of a property, there may still be uncertainties or defects in his title to the property. Hence, title to land is relative and depends ultimately upon possession.
The main provisions on adverse possession can be found in the Limitation Ordinance (Cap 347). Except in the case of Government land for which the limitation period is 60 years, no action to recover landed property is allowed after 12 years from the date upon which the right of action accrued. Time starts to run when the owner has been dispossessed of his land and the adverse possessor has taken possession of the land.
The Commission has considered the case law and has made recommendations on various aspects of the case law. Further, in view of the broader and on-going reviews of the Land Titles Ordinance, the Commission has made recommendations applicable to Hong Kong when a registered title regime is in place.
The recommendations in the report are:
- After careful consideration of the situation in Hong Kong, including the existing possession based un-registered land regime, the land boundary problem in the New Territories, and that the existing provisions in the Limitation Ordinance on adverse possession have been held to be consistent with the Basic Law, we are of the view that the existing provisions on adverse possession should be retained since they offer a practical solution to some of the land title problems.
- We recommend that the law of adverse possession should be recast under the prospective registered land system. Registration should of itself provide a means of protection against adverse possession, though it should not be an absolute protection. This is to give effect to the objective of a registered land system - that registration alone should transfer or confer title.
- We recommend that when a registered title regime is in place in Hong Kong, adverse possession alone should not extinguish the title to a registered estate. The rights of the registered owner should be protected. If, for example, the registered proprietor is unable to make the required decisions because of mental disability, or is unable to communicate such decisions because of mental disability or physical impairment, then a squatter's application will not be allowed. However, such protection would not be absolute. Under the proposed scheme:
- The squatter of registered title land will only have a right to apply for registration after 10 years' uninterrupted adverse possession.
- The registered owner will be notified of the squatter's application and will be able to object to the application.
- If the registered owner fails to file an objection within the stipulated time, then the adverse possessor will be registered.
- If the registered owner objects, the adverse possessor's application will fail unless he can prove either: (a) it would be unconscionable because of an equity by estoppel for the registered owner to seek to dispossess the squatter and the circumstances are such that the squatter ought to be registered as the proprietor; (b) the applicant is for some other reason entitled to be registered as the proprietor of the estate; or (c) the squatter has been in adverse possession of land adjacent to their own under the mistaken but reasonable belief that they are the owner of it.
- If the squatter is not evicted and remains in adverse possession for two more years, then the squatter would be entitled to make a second application, and the matter can be referred to the adjudicator for resolution.
- We recommend that the "implied licence" principle should be abolished, and there should be in the Limitation Ordinance (Cap 347) a provision to the effect that:
"For the purpose of determining whether a person occupying any land is in adverse possession of the land it shall not be assumed by implication of law that his occupation is by permission of the person entitled to the land merely by virtue of the fact that his occupation is not inconsistent with the latter's present or future enjoyment of the land.
This provision shall not be taken as prejudicing a finding to the effect that a person's occupation of any land is by implied permission of the person entitled to the land in any case where such a finding is justified on the actual facts of the case."
- We are aware of the possible anomalous situation in which a dispossessed registered owner remains liable for the covenants in the Government Lease. However, we do not recommend devising a statutory presumption or assignment to the effect that the adverse possessor become liable under the covenants in the Government Lease.
- We recommend that Government should be urged to step up its efforts to address the boundary problem in the New Territories. However, we are of the view that a comprehensive resurvey of the boundaries alone could not solve the problem, because persons who suffer any loss or disadvantage under the re-surveyed boundaries may not accept the new boundaries. It would appear that the land boundary problem in the New Territories is best dealt with together and in the context with the implementation of the Land Titles Ordinance.
- In relation to a mortgagee's right to take possession of a mortgaged property vis-a-vis the mortgagor, we recommend the enactment in the Limitation Ordinance (Cap 347) a provision to spell out clearly that the limitation period starts to run from the date of default of the mortgagor's obligations.
- We are aware that practically speaking it is almost impossible to establish adverse possession on "Tso" land, but we do not see the need to change the law on this issue.
- We recommend the enactment in the Limitation Ordinance (Cap 347) a provision to the effect that willingness to pay rent by a squatter is not inconsistent with the requisite intention to possess in order to establish adverse possession.
- We recommend that there should be in the Limitation Ordinance a provision to the effect that:
"Without prejudice to the law on the rights and obligations of landlord and tenant in relation to the land encroached upon by the tenant, the nature and extent of the estates acquired by a person who has successfully extinguished the title of another person by virtue of section 17 of the Limitation Ordinance shall not be affected by the actual or presumed intention of the person as to what estate he intends to acquire by his adverse possession."
|Press Release (PDF) (MS Word)|
|Executive Summary (PDF) (MS Word)|
|Report (PDF) (MS Word)|