PCLL Conversion Exam Course and Read Contents of Hong Kong Land Law Notes

1. Quick, easy and effective notes for PCLL Conversion Examinations! H o n g K o n g L a n d L a w N o t e s Hong Kong Land Law Notes 2017 1st Edition PCLLConversion.com Copyright PCLLConversion.com © 2017 Page 1

2. Quick, easy and effective notes for PCLL Conversion Examinations! H o n g K o n g L a n d L a w N o t e s TABLE OF CONTENTS 1.INTRODUCTION ....................................................................................... 7 A.How to use Conversion Notes .............................................................................................. 7 2.DEFINITIONS AND FORMALITIES ............................................................... 7 A.Form of land title in HK ........................................................................................................... 7 i. Leasehold tenure ............................................................................................................................. 7 ii. Freehold Tenure .............................................................................................................................. 7 B.Right to airspace ........................................................................................................................ 7 i. tresspass ............................................................................................................................................. 8 1) Projections ............................................................................................................................... 8 ii. Remedy for trespass ...................................................................................................................... 8 1) Trespass as a result of development projects ............................................................ 8 C.rights below ground ................................................................................................................. 8 D.What is land? ............................................................................................................................... 8 i. Legal Estates ..................................................................................................................................... 9 ii. Equitable interests .......................................................................................................................... 9 iii. Easement ............................................................................................................................................ 9 1) Claims to easement .............................................................................................................. 9 2) Limited owners ....................................................................................................................... 9 3) Multi-storey buildings ...................................................................................................... 10 iv. Fixtures ............................................................................................................................................. 10 1) Objective intention ............................................................................................................ 10 2) Presumption of fixture ..................................................................................................... 10 3) Presumption of chattel..................................................................................................... 11 4) Part and parcel test ........................................................................................................... 11 E.written agreement for the disposition of land ............................................................. 11 i. essential terms .............................................................................................................................. 11 ii. agreement subject to contract ............................................................................................... 11 iii. exchange ......................................................................................................................................... 11 iv. deposit ............................................................................................................................................. 12 v. conditional contracts .................................................................................................................. 12 F.Oral contract supported by sufficient memo in writing............................................ 12 i. Form .................................................................................................................................................. 12 ii. content ............................................................................................................................................. 12 iii. Joinder of documents ................................................................................................................ 12 iv. Signature ......................................................................................................................................... 12 G.Oral contract absent sufficient written memo .............................................................. 12 i. Enforce by Statute ....................................................................................................................... 13 ii. part performance ......................................................................................................................... 13 1) In performance of concluded contract ...................................................................... 13 2) Point to some contract .................................................................................................... 13 3) Must first show part performance ............................................................................... 13 4) Fraud ....................................................................................................................................... 13 H.formalities ................................................................................................................................... 13 i. legal estates ................................................................................................................................... 13 ii. equitable interest ......................................................................................................................... 14 iii. trusts ................................................................................................................................................. 14 I.interests at will .......................................................................................................................... 14 Copyright PCLLConversion.com © 2017 Page 2

3. Quick, easy and effective notes for PCLL Conversion Examinations! H o n g K o n g L a n d L a w N o t e s 4.PRIORITY &REGISTRATION ..................................................................... 14 A.registration of deeds .............................................................................................................. 14 i. vacation ............................................................................................................................................ 14 ii. The Manner of Rego ................................................................................................................... 14 B.Registrable instruments ........................................................................................................ 15 i. Deeds and conveyances ............................................................................................................ 15 ii. Other instruments in writing ................................................................................................... 15 1) Non registrable interests subsumed by later written instrument ................... 15 iii. Judgments ...................................................................................................................................... 15 1) Charging orders .................................................................................................................. 15 iv. Lis Pendens relating to land .................................................................................................... 16 1) Relating to land ................................................................................................................... 16 C.priority of registered instruments ..................................................................................... 16 i. instruments and judgments ..................................................................................................... 16 ii. Lis pendens and charging orders .......................................................................................... 16 iii. expiration ........................................................................................................................................ 17 D.Non-registration of registrable instruments ................................................................. 17 i. Bona fide/ good faith ................................................................................................................. 17 ii. For Valuable consideration ...................................................................................................... 17 E.Leases and options ................................................................................................................. 17 i. Written options ............................................................................................................................. 17 ii. Unwritten options ........................................................................................................................ 17 F.Parol Evidence Rule ................................................................................................................. 18 G.Unregistrable interests- Common Law Priority rules ................................................. 18 H.Bona Fide Purchaser for Value Without Notice ........................................................... 18 i. Bona fide ......................................................................................................................................... 18 ii. For Value ......................................................................................................................................... 18 iii. Notice ............................................................................................................................................... 18 1) Actual notice ........................................................................................................................ 18 2) Avoidance of notice .......................................................................................................... 18 3) Constructive notice ............................................................................................................ 19 4) Constructive notice and duty to make enquiries................................................... 19 I.Unregistrable interests- Common Law Equities/ unwritten equities ................... 19 i. advancement of money to discharge loan ........................................................................ 19 ii. Lien .................................................................................................................................................... 20 iii. Oral agreement ............................................................................................................................. 20 iv. trust ................................................................................................................................................... 20 J.Land titles Ordinance ............................................................................................................. 20 5.PARTITION OF LAND IN JOINT OWNERSHIP ............................................. 20 K.Partition Ordinance ................................................................................................................. 21 i. tong and tso land ........................................................................................................................ 21 ii. Parties to proceedings ............................................................................................................... 21 iii. Court inquiries ............................................................................................................................... 21 iv. Principles for exercising discretion under section 2....................................................... 21 v. Order for partition ....................................................................................................................... 21 vi. Order for sale ................................................................................................................................. 22 vii. Proceeds of sale............................................................................................................................ 22 viii. Buy out ............................................................................................................................................. 22 ix. No order .......................................................................................................................................... 23 Copyright PCLLConversion.com © 2017 Page 3

4. Quick, easy and effective notes for PCLL Conversion Examinations! H o n g K o n g L a n d L a w N o t e s 6.ADVERSE POSSESSION............................................................................. 23 A.Limitation ordinance .............................................................................................................. 23 i. time begins to run ....................................................................................................................... 23 ii. Accrual of right for landlords .................................................................................................. 23 iii. time stops running ...................................................................................................................... 24 iv. Aggregation of periods of adverse possession ............................................................... 24 v. New Territory ................................................................................................................................. 24 B.Conditions for Adverse Possession ................................................................................... 24 i. Factual possession ....................................................................................................................... 24 ii. Intention to possess not to dispossess (not intention to own) ................................. 24 iii. “Adverse” possession ................................................................................................................. 25 1) Licence .................................................................................................................................... 25 2) Lawful title ............................................................................................................................. 25 3) Mortgage ............................................................................................................................... 25 4) Lease ........................................................................................................................................ 25 iv. Owner’s intentions ....................................................................................................................... 25 C.Effects of Possessory title ..................................................................................................... 25 i. Lessee remains liable under the lease ................................................................................. 26 ii. Fairweather issue .......................................................................................................................... 26 D.Co-owners and Adverse Possession ................................................................................. 26 7.GOV LEASES AND CONDITIONS ................................................................ 26 A.Background ................................................................................................................................ 26 i. Lots .................................................................................................................................................... 26 ii. sections ............................................................................................................................................ 26 iii. subdivision ...................................................................................................................................... 27 B.land disposal methods .......................................................................................................... 27 i. private treaty grants.................................................................................................................... 27 ii. grants subject to conditions .................................................................................................... 27 iii. conditions of sale, grant, regrant, extension or exchange .......................................... 27 C.Restriction on alienation and obligation to create a DMC ...................................... 27 D.Nature of the grantee’s interest under conditions ..................................................... 28 i. Equitable interest ......................................................................................................................... 28 ii. legal estate ..................................................................................................................................... 28 1) Compliance ........................................................................................................................... 28 iii. vendor’s title .................................................................................................................................. 28 E.nature of Government Leases ............................................................................................. 29 i. HK Island, Kowloon and New Kowloon ............................................................................... 29 ii. New Territories .............................................................................................................................. 29 1) Duration of Block Government Leases ...................................................................... 29 F.Lease Conditions ...................................................................................................................... 29 i. Standard Terms ............................................................................................................................. 30 ii. The Design Disposition and Height Clause ....................................................................... 30 1) User restrictions .................................................................................................................. 30 2) Offensive trade clause ...................................................................................................... 30 3) Repair ...................................................................................................................................... 30 G.Obligation of the Government under the Lease .......................................................... 31 i. Covenant for quiet enjoyment ................................................................................................ 31 ii. not to derogate from grant ..................................................................................................... 31 H.Variation of Government Leases ........................................................................................ 31 i. Express Waiver .............................................................................................................................. 31 Copyright PCLLConversion.com © 2017 Page 4

5. Quick, easy and effective notes for PCLL Conversion Examinations! H o n g K o n g L a n d L a w N o t e s implied waiver ............................................................................................................................... 32 1) Waiver by acquiescence .................................................................................................. 32 Waiver of breach of covenant vs waiver of covenant .................................................... 32 Estoppel ........................................................................................................................................... 32 I.Termination of Gov Lease ..................................................................................................... 32 i. resumption ..................................................................................................................................... 32 ii. right of re-entry/forfeiture ....................................................................................................... 33 1) Relief against forfeiture ................................................................................................... 33 2) Vendor’s title ........................................................................................................................ 33 8.THE SYSTEM OF MULTI-UNIT DEVELOPMENT OWNERSHIP IN HK ............... 34 A.DMC .............................................................................................................................................. 34 i. Sub-dmc .......................................................................................................................................... 34 B.subsequent purchaser ........................................................................................................... 34 i. subject to DMC and Sub-DMC ............................................................................................... 34 ii. Allocation and reallocation of shares .................................................................................. 34 1) Increasing shares ................................................................................................................ 34 2) Pairing shares ....................................................................................................................... 35 C.Exclusive possession ............................................................................................................... 35 i. proving right to exclusive possession .................................................................................. 35 ii. common area................................................................................................................................. 35 D.Common Terms in DMCs ..................................................................................................... 35 i. Express terms ................................................................................................................................. 35 ii. Covenants implied into the DMC by the Building Mgmt Ord ................................... 36 E.Principles of enforceability of Covenant in DMC ......................................................... 36 i. Covenants run with the land ................................................................................................... 36 ii. Owner not party to covenant .................................................................................................. 36 iii. positive and negative covenants ........................................................................................... 36 1) Positive covenants ............................................................................................................. 36 2) Doctrine of Halsall v Brizell ............................................................................................ 36 iv. registration ..................................................................................................................................... 37 v. touch and concern the land ..................................................................................................... 37 1) Personal covenants ............................................................................................................ 37 2) Enforcing personal covenants ....................................................................................... 37 vi. burden of covenant expressed or intended to run with the land ............................ 37 1) Breaches of successors in title....................................................................................... 37 vii. expressed and intended to benefit ....................................................................................... 38 1) Expressed and intended to be made with the covenantee ............................... 38 2) Benefit the land ................................................................................................................... 38 viii. Retain the land .............................................................................................................................. 38 F.Enforcement of the DMC and Remedies ........................................................................ 38 i. Non-payment of management fees ..................................................................................... 38 ii. Remedies for breaches of other covenants ....................................................................... 39 1) Injunctions ............................................................................................................................. 39 2) Damages ................................................................................................................................ 39 iii. Defences .......................................................................................................................................... 39 9.SMALL HOUSE POLICY ............................................................................ 39 A.free building license ............................................................................................................... 39 B.private Treaty grant ................................................................................................................ 40 C.Certificates of exemption...................................................................................................... 40 i. Failure to obtain certificate ...................................................................................................... 40 ii. iii. iv. Copyright PCLLConversion.com © 2017 Page 5

6. Quick, easy and effective notes for PCLL Conversion Examinations! H o n g K o n g L a n d L a w N o t e s Effect of certificate ....................................................................................................................... 40 D.Restrictions on alienation ..................................................................................................... 40 i. alienation ......................................................................................................................................... 40 1) Private Treat Grant ............................................................................................................. 41 2) Free Building License ........................................................................................................ 41 ii. vendor’s title .................................................................................................................................. 41 E.Showing Good title to New territory Land ..................................................................... 41 10.CHINESE CUSTOMARY TRUST-TSOS &TONGS ...................................... 41 A.TSO ................................................................................................................................................ 41 B.tong .............................................................................................................................................. 41 C.Creation of trust ....................................................................................................................... 41 i. tso ...................................................................................................................................................... 42 ii. tong ................................................................................................................................................... 42 D.Management of tsos and tongs ......................................................................................... 42 i. legal status ...................................................................................................................................... 42 ii. appointment of manager ......................................................................................................... 42 E.Regulation of dealings ........................................................................................................... 43 i. appointment of manager registered after completion date ...................................... 43 ii. execution of instrument ............................................................................................................ 43 iii. leases ................................................................................................................................................ 43 F.dealings by the manager ...................................................................................................... 43 i. objections ........................................................................................................................................ 44 ii. instrument to be executed in the presence of the district officer ............................ 44 G.Applicable laws ......................................................................................................................... 44 i. land .................................................................................................................................................... 44 ii. perpetuity rules ............................................................................................................................. 44 H.Chinese customary trusts and adverse possession ..................................................... 44 ii. Copyright PCLLConversion.com © 2017 Page 6

7. Quick, easy and effective notes for PCLL Conversion Examinations! H o n g K o n g L a n d L a w N o t e s 1.INTRODUCTION A.HOW TO USE CONVERSION NOTES The Hong Kong Land Law Notes are formatted into a step-by-step guide, which you can use as a checklist in your exams to ensure that every element of the exam question is answered. You may find the Table of Contents to be a quick and useful overview of the law to be applied. You should also answer the exam question using the ILAC method, which will ensure your answer is comprehensive. Issue State the legal issue relevant to the problem Law Identify the relevant case law and legislation Analysis Analyse and apply the law to the legal issue. This is the most important part, so ensure your legal analysis is very thorough. Conclusion Form a conclusion based on your analysis and application of the law, giving some practical advice to the hypothetical client. It is very important to spend time perfecting your analysis section, as this is the part that examiners are most interested in. Do not worry if you reach the correct conclusion (there often isn’t one clear answer) – examiners will give more weight to your legal analysis, and sometimes may even reward answers that propose an innovative and unconventional answer! 2.DEFINITIONS AND FORMALITIES A.FORM OF LAND TITLE IN HK i.LEASEHOLD TENURE The form of title in HK is that of leasehold tenure (Winfat Enterprise v AG of HK). Before July 1 1997, land in HK was granted on Crown Leases. Since the handover to China, land has been granted on Government leases. Therefore all land transactions are affected by the terms of the Government lease. ii.FREEHOLD TENURE The only lot of land on freehold tenure in HK is that of St John’s Cathedral in Central. All other land are held on leasehold tenure as discussed above. B.RIGHT TO AIRSPACE While the CPO does not expressly confer rights to airspace by landowners, the common law restricts a landowner’s right to airspace as to ‘such height necessary for ordinary use and enjoyment of land’ (Bernstein v Skyviews). Copyright PCLLConversion.com © 2017 Page 7

8. Quick, easy and effective notes for PCLL Conversion Examinations! H o n g K o n g L a n d L a w N o t e s i. Any intrusion below ‘such height necessary for ordinary use and enjoyment of land’ height is trespass which is actionable without proof of any damage (Kelson v Imperial Tobacco). 1)Projections Kelson v Imperial Tobacco: • Projections such as advertisement signs fixed to a property projecting out 8 inches into the airspace of another constitute trespass. • There is no need to show that the plaintiff actually intended to use the subject airspace or that the plaintiff suffered any injury as a result of the trespass. Westland Estates v Swilynn: • Projections such as air conditioners on the external wall of a building did not interfere with rights of passage as it was 8 feet above the road. Thus there was no trespass of airspace. TRESSPASS ii.REMEDY FOR TRESPASS The usual remedy for trespass is to apply for a court injunction to stop the interference with the owner’s rights although the court has the discretion to refuse the application. The court would make an order so that one’s property would not be unfairly taken advantage of (John Trenberth). 1)Trespass as a result of development projects Where the interference is a result of a development project which will be completed within a short period of time, the court may suspend the injunction (Wollerton). This case however has been disapproved in Jaggard v Sawyer. It is unclear which authority HK courts would follow. C.RIGHTS BELOW GROUND Under the common law, owner of land owns down to the centre of earth (Pountney v Clayton) including the minerals in the ground (Mitchell v Moseley). However this common law right is limited by section 3 of the MiningOrdinance (Cap 285) which states that all minerals in the land within HKSAR are government property. D.WHAT IS LAND? Section 2 of the CPO provides that land includes: • land covered by water (s2(a)) • any estate, right, interest or easement in or over any land (s2(b)) • whole/part of undivided share in land and any estate, right, interest or easement therein (s2(bb)) Copyright PCLLConversion.com © 2017 Page 8

9. Quick, easy and effective notes for PCLL Conversion Examinations! H o n g K o n g L a n d L a w N o t e s things attached to land or permanently fastened to anything attached to land (fixtures) (s2(c)) • Note that land does NOT include the outer wall of a building (Leung Kwok-Kau). i.LEGAL ESTATES Section 2 of the CPO defines legal estates as: (a) term of years absolute in land; (b) legal interest in easement for a period equivalent to a term of years absolute; (c) a legal charge (a mortgage expressed to be a legal charge) ii.EQUITABLE INTERESTS Equitable interests is defined in section 2 of CPO as any estate, interest or charge which is not a legal estate or a freehold. A purchaser obtains an equitable interest in property from the day of contract of an enforceable contract for sale of land: Lysaght v Edwards iii.EASEMENT An easement is the right of one landowner to use or restrict use of land of another. Section 2 of the CPO provides that legal easement must be for a period of time equivalent to a term of years absolute. Section 16 of the CPO further provides that assignment of land assigns all rights, interests, easements and fixtures appertaining to that land. 1)Claims to easement Claim to easement is founded upon the common law prescription of modern grant (Tang Tim-Fat). Proof of user for more than 20 years gave rise to a presumption of modern grant rebuttable only by evidence that the grant was impossible (Bryant). 2)Limited owners Over the years, there has been uncertainty as to whether the doctrine of common law prescription is only applicable to fee simple owners. If so, then there could be no prescriptive easements in HK as all land in HK are leasehold. However, in recent years, the trend seems to suggest that the doctrine may be applied to limited owners such as leaseholders. It was held in Kong Sau Ching and Cheung Yeung Hung that a limited owner such as a leaseholder can obtain a right of way by prescription against another limited owner. We hope you have enjoyed this short preview of the Hong Kong Land Law Notes. Don’t forget to check out the Study Tips we have on our website at www.PCLLConversion.com! Copyright PCLLConversion.com © 2017 Page 9