Introduction: Existing Principles

The doctrine of Adverse Possession is governed by the Limitation Ordinance (Cap. 347) and relevant case law.Pursuant to section 7 of Limitation Ordinance, no action could be brought by any person to recover any land after the expiration of 12 years[1] from the date that the land has been adversely possessed by a squatter.

In establishing that the land is adversely possessed, the squatter would have to establish that (a) he has had exclusive and factual possession of the land; (b) he had the intention to possess the land; and (c) his possession was adverse to the title of the owner of that land.[2]

Adverse Possession Illustrated

In the recent judgment of Chan Yuk Por v Chan Kam Muk DCCJ 3826/2007, the court was invited to rule on a very typical case of adverse possession.

Background

The Plaintiff’s case is that his parents had built a wooden hut on the Defendant’s land on Lamma Island back in 1958.The hut was built there without the consent of the Defendant.Since then the wooden hut was occupied by the Plaintiff’s parents, followed by a licensee who was allowed by the Plaintiff’s parents to occupy the wooden hut, and then the Plaintiff himself till the day he commenced this current proceedings in 2007.

The Plaintiff argues that by building and occupying the wooden hut on the Defendant’s land coupled with the fact that at no time did the Plaintiff and his parents pay rent for the Defendant’s land, he has strong evidence of factual possession and intention to possess the land.Furthermore, the fact that the Plaintiff had carried out refurbishment/renovation work to the hut shows that the Plaintiff acted as if he were the paper owner of the land.The Plaintiff further argues that as the limitation period had already expired[3], he should be entitled to acquire good title to that piece of land.

The Defendant tries to contest the Plaintiff’s case by arguing that by virtue of a Tenancy Agreement dated 15^th October 1999 entered into by the Plaintiff and the Defendant’s son (“the TA”), both the Plaintiff’s parents and the Plaintiff had agreed to pay and did pay rent to the Defendant for occupying the land.If the Plaintiff did pay rent as alleged by the Defendant, the Plaintiff (and so were his parents) would be nothing more than tenants, and this would show that the possession of the Plaintiff (and his predecessors) was not adverse to the title of the Defendant, and hence the claim of adverse possession should fail.

Decision

It is well established that a subsequent acknowledgement of the registered owner’s title by the squatter whether by conduct or by law cannot revive the title.Such acknowledgement may take the form of the squatter signing a tenancy agreement with the registered owner or paying rent to the registered owner etc.In the present case, the Court found that by the latest in 1989, the Defendant’s title to the land would have extinguished.Hence, the TA which is dated after 1989 and being a subsequent acknowledgement of the Defendant’s title cannot revive the title.Hence, it is not necessary for the Court to determine the effect of the TA.Notwithstanding the aforesaid, the Court ruled that the TA should be void in law because the Plaintiff was induced to sign the same after being misled that the TA concerned only the farmland adjacent to the wooden hut.The Court being satisfied with the Plaintiff’s case gave judgment to the Plaintiff.

Consultation Paper on Adverse Possession December 2012

The Law Reform Commission of Hong Kong has published a consultation paper in December 2012 regarding the existing law of adverse possession.The consultation paper recognizes several justifications for keeping the doctrine of adverse possession which include: -

1. The existing provisions in the Limitation Ordinance on adverse possession have been held to be consistent with the Basic Law.The right of private ownership of property; the right to the acquisition, use, disposal and inheritance of property and the right to compensation for lawful deprivation of property should be protected.

2. Adverse possession helps to prevent stale claims.Adverse possession is one aspect of limitation law and allows squatters to have possessory title once they are in continuous possession of the land for 12 years.As time passes, it becomes more difficult to investigate the claims.

3. Adverse possession promotes land development.If there is a discrepancy between ownership and possession of land, marketability of land will be affected and this will undoubtedly hinder development of land.

4. Adverse possession helps to reduce hardship in case of mistakes.The land boundary problems are common in New Territories land.It is not uncommon that there are discrepancies between the boundaries as shown in the Demarcation District sheet or New Grant Plans and the physical boundaries on the ground in the New Territories. Hardship would occur if a squatter spent a substantial amount in improving the land on the mistaken yet reasonable belief that he is the registered owner of the land but he does not fulfil the requirements of proprietary estoppel.Under such circumstances, it is just and fair that the squatter should have a claim in adverse possession.

5. Adverse possession facilitates conveyancing of unregistered land.It is of public interest that a squatter who enjoys a continuous possession of land is able to deal with the land as the registered owner. Possessory title acquired by the squatter enables the title of such land to be conveyed in the open market.

Balance between Registered Title Owner and Effective use of Land

After taking into account of the above justifications, the consultation paper recommends, inter alia, that the doctrine of adverse possession should be retained.Yet the consultation paper also noted that the right of the registered title owner deserves some respect, and there needs to be a balance between these registered titles and the use of the doctrine of adverse possession in situations where there are compelling grounds.

The Law Reform Commission recommends, implementing the reform already taken place in England and Wales, that adverse possession alone should not extinguish the title to a registered land.The new regime of adverse possession, as suggested by the consultation paper, shall take several steps:-

1. The squatter shall be entitled to file an application to get his title registered against a piece of land after continuous adverse possession of that land for a period of 10 years;

2. The registered owner will be notified of the squatter’s application and will be able to object to the application;

3. If the registered owner fails to file an objection to the squatter’s application within a stipulated time period, the adverse possessor will be registered;

4. 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;

5. On objection to the adverse possessor’s application, the registered owner has a period of two years to obtain possession of the land from the adverse possessor, either by judgment or eviction following a judgment, or to begin possession proceedings against him; and

6. If the squatter is not evicted within 2 years of his first application, he shall be entitled to file a second application, and if an objection is raised to the squatter’s second application, the matter can be referred to an adjudicator for a resolution.

Conclusion

The most prominent recommendation of this consultation paper is undoubtedly the implementation of the requirement that the squatter should register an application for adverse possession before he could acquire absolute title to the land.

This helps protect the rights of the property owner in a sense that he would be notified of the squatter’s intention to claim adverse possession and thus would have a chance to object to such application.After all, in some boundary dispute cases the title owner doesn’t even know where the boundary of his land lies, and thus would not know if his land is under the possession of his neighbour.Under the current law he could have lost his title at the expiration of 12 years, without any prior alarm to the fact that his land was being adversely possessed.If this recommendation from the consultation paper is enacted, squatters can no longer stealthily take away title owner’s land without alerting the title owner of such intention.