LLAW3105 Land Law III Christopher Chan

LLAW3105 Land Law III (Conveyancing)

New Territories

Learning objectives

1. Background

2. New Territories Ordinance

3. Preservation of traditional rights by the BL

4. Development of NT and NT Small House Policy

a. NT Small House Policy

b. Small house
c. Building covenant
d. Non-alienation
e. Documents and permissions to be obtained
f. Village houses in practice
g. Future of small house policy

5. Chinese lineage endowments of communal land

a. T’so
b. T’ong
c. Common features of t’so and t’ong land
d. Are t’so and t’ong trusts?
e. Manager
f. Future of lineage endowments

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LLAW3105 Land Law III Christopher Chan

1. Background

Under the Convention of Peking 1898 the area of the colony of Hong Kong was extended tenfold by the
grant of a 99-year “lease” of land in San On (Xinan) County north of Boundary Street to the Shumchun
River and numerous nearby islands: the “New Territory”. (This is technically a cessation of land for a
limited time.) This land was acquired for purposes of defence.

By the NT Order in Council made 20.10.1898, the extension was declared to be part of the Colony of HK
and all laws in force in the colony were to take effect in the NT. Customary law will be honoured.

To discover those interests, a land survey was carried out from 1899 to 1904 and a land court set up to
adjudicate upon disputed claims. The territory was divided into demarcation districts and lots. Crown
leases, generally of 75 years from 1.7.1898 with a right of renewal for a further 24 years less 3 days, were
granted in 1905 to those who proved to be the owners of lots. The grants were made in blocks, one lease
covering all the lots in a particular area, the lots being set out in a schedule to the lease. The schedules
listed the lot no., owner, use, area and rent.

In the meantime, ordinances were passed, declaring all NT land to be the property of the Crown. The last
of these was the NT Land Ordinance 1905. This gave the Land Officer power to decide land disputes
summarily and to recognise and enforce any Chinese custom or customary right in relation to land.

Land granted under block Crown lease in the early twentieth century became known as “old schedule
lots”. Grants of land made subsequently were (and are) called “new grants”. Both types of grant expired
3 days prior to 30.6.1997 but before then were extended to 2047 by legislation.

2. New Territories Ordinance, Cap.97

A. NT land is the property of the government

All NT land is the property of the government: NTO s.8.

However, this is subject to exemptions granted by the Chief Executive from the application of Part II of
the NTO: NTO s.7(2).

- In practice, most NT properties, notably those in “New Kowloon” (the urban areas immediately
north of Boundary Street), in the new towns and in villa-type developments, are exempt.

- Broadly, Part II still applies to rural or village land but not to urban or suburban areas.

For the administration of NT, district officers may be appointed as necessary: NTO s.3.

B. Application of Chinese customary law

Part II of NTO preserves and applies Chinese customary law to the land: the law in force in Imperial
China and the local customs of NT villages in 1898 continue to apply.

DC and CFI have jurisdiction to determine all questions and disputes concerning NT land: NTO s.12.

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LLAW3105 Land Law III Christopher Chan

Courts ‘shall have power to recognise and enforce any Chinese custom or customary right’ affecting NT
land: NTO s.13.

- This means that the courts MUST apply these customs: Tang Kai-chung v Tang Chik-shang
[1970] HKLR 276, 295.

- The customary law applicable in NT is the law of the Ch’ing dynasty (in 1898) as modified by
local custom: Chu Tak-hing v Chu Chan Cheung-kin [1968] HKLR 542.

- The court informs itself about customary law by means of texts, judicial precedent and expert
opinion: In re Tse Lai Chiu, dec’d [1969] HKLR 159, 175.

3. Preservation of traditional rights by the Basic Law

Traditional rights of indigenous NT inhabitants are also protected not just by the Basic Law.

The lawful traditional rights and interests of indigenous inhabitants of the NT shall be protected by the
HKSAR: BL 40.

The law previously in force in HK shall be maintained; this includes customary law: BL 8.

The government rent payable by indigenous males for their houses is to remain unchanged for so long as
they occupy them; everyone else pays 3% of rateable value: BL 122.

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LLAW3105 Land Law III Christopher Chan

4. Development of New Territories and NT Small House Policy

A. Development of New Territories

Until the 1970s, the predominant use of land in the main body of the NT, outside the market towns,
remained agricultural, with some low-density residential and recreational uses.

i. Condition against building without government permission

The Town Planning Ordinance and the Buildings Ordinance (both of which restricted building
construction) did not apply but block Crown leases included a condition against building without
government permission.

- The lessee would NOT convert any ground expressed to be demised as agricultural or garden
ground into use for building without licence from the Crown.

- This was not a covenant against building as such but imposed a requirement that approval be
obtained for the intended building, i.e. was concerned with the design, safety and hygiene of
the building: Niceboard Development Ltd v China Light & Power Co Ltd [1994] HKDCLR 69.

- The District Office would generally allow a villager to construct a house on land that he owned in
or about his village (the “ding ngok”). This was in accordance with the custom by which the head
of a family was allowed to build for himself and each of his sons [upon marriage] a house on land
he owned within the village. The size of such houses was one hundredth of an acre (yat fan dei),
about 436sf, one or two storey, with wood beamed pitched roof and cockloft. Almost 36,000
were recorded in the survey.

ii. Approval under Buildings Ordinance and village house exemption

In 1961, the main provisions of the Buildings Ordinance, which require plans to be drawn and submitted
by an authorized person and approved by the Building Authority, for various other permissions to be
obtained before building works can be carried out and for a permit to be obtained from the Authority
before a building could be occupied, were extended to the NT.

However, there was an exception for construction of village houses of a certain size: the New
Territories Exempted House (NTEH).

During the 1960s, villagers were allowed to build houses of up to 25 ft height with concrete flat roofs.
Many of these houses were sold to non-villagers. By the end of that decade there were about 43,000
village houses (both old schedule and new grant).

Use of vacant or erstwhile farm land for open storage, parking, etc was permitted since the words “padi”,
“dry cultivation” and the like in the schedule to block Crown leases were only descriptive: A-G v
Melhado Investment Ltd [1983] HKLR 327 (CA).

- Cf. Binding covenants in the body of the Block Crown lease which delineated the land as
‘agricultural or garden land’ from being used for building purposes: Watford Construction Co v
Secretary for the New Territories [1978] HKLR 410 (CA).

- The only restriction was the condition against building without government permission.

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The planning legislation was applied to the NT in 1991. This provided for Outline Zoning Plans and
Development Permission Areas and forbade any changes in existing use of land without permission. It
also introduced the “V zone” within which village-type development is always permitted. Houses also
may be built with special permission of the Town Planning Board if within 300 feet of the existing
village.

B. The New Territories Small House Policy

Introduced by the government in December 1972, this was formulated to allow an indigenous inhabitant
to apply for permission to erect for himself during his lifetime a small house on a suitable site within his
own village or its environs. The object was to regularise traditional practices whereby male villagers
would build a family home [upon marriage].

The intention was that construction of houses for native villagers would be free of building controls and
the need to engage professional advisers so that they could be erected quickly and cheaply.

Whether the
Whether the Whether the
NTEH would Whether
person is an Whether it is a restrictions are
be built in permission is
indigenous small house? complied
recognised/list obtained?
villager? with?
ed village?

i. Indigenous villager

An indigenous villager is a male person at least 18 years old who is descended through the male line from
a resident in 1898 of a recognised village.

- The indigene does not have to have been born in his village, nor does he need to be resident
within it.

- If living overseas, the indigene must convince the District Lands Officer that he will return to
reside in the village in order to receive a grant of government land.

- An indigenous male could build in his village a small house for himself or for his son upon
marriage.

ii. Recognised village

A recognized village is one of 642 villages on a list kept by the Director of Lands. Many NT villages are
not on the list, even though they existed in 1898.

- In those unlisted villages, a NTEH may be erected by villagers or others but the government will
not make land available for them.

- Similarly, NTEHs may be erected in all villages by owners of old schedule house lots.

iii. Entitlement of grant

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LLAW3105 Land Law III Christopher Chan

An indigenous inhabitant is entitled to the grant from the government by private treaty of one piece of
land within his village or its environs at a low price (concessionary premium; about two-thirds of the
market value; i.e. a concessionary grant) for construction of a house not exceeding certain dimensions.

- If the villager already owns suitable land, he will be given permission to build a small house
thereon without a premium (i.e. a free building licence).

- If he owns land but it is unsuitable, he may be able to exchange it for government building land at
a reduced or nil premium (surrender and regrant). The grant or the licence will be upon certain
conditions (more below).

iv. Building within the V-zone and outside of it with special permission

Land owned by a villager which might be used for a small house had to be within the environs of the
village, i.e. within 300 feet of existing village buildings.

To accommodate the demand for sites, in 1981 the government instituted village expansion areas under
which the administration would resume private land on the periphery of villages and make it available for
small house lots.

Expansion areas are no longer made but any land within the V-zone may now be used for housing.

Houses may also be built outside the V zone with special permission.

v. Three valuable rights as a result of the NT Small House Policy

Accordingly, the policy gives indegenes three valuable rights: to buy building land (without a bid), to do
so at a discount and to erect a house without further premium.

They MUST however pay the discounted price and the cost of erecting the house.

C. Small house

The Schedule of the Buildings Ordinance (Application to the New Territories) Ordinance Schedule Part I
provides the definition of a “small house” (NTEH), which is a building of:

- No more than 3 stories and 27 feet (8.3m) in height;

- With a roofed-over area not exceeding 700 square feet (65.03 square metres);

- With a balcony or canopy not exceeding 4 feet (1.22 m);

- The thickness of the walls must be at least 6.89 inches (175 mm) if of reinforced concrete or
13.39 inches (340 mm) if of brick.

There are also restrictions upon the height of any rooftop structures such as stairhood, water tank and
parapet and requirements regarding kitchen, bathroom, toilet, septic tank and drains.

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A house of greater dimensions would NOT be a NTEH, so the Buildings Ordinance and regulations
would apply to its construction. Also, once a NTEH has been built, any changes to it are subject to the
BO and the regulations.

- Approval from the Building Authority would have to be obtained.

D. Building Covenant

The government grant of a small house lot, or licence to build, will stipulate that a house be constructed
within 36 months (or previously, 24 or 30 months).

E. Non-alienation

Since the grant or licence is personal to the villager and at a reduced or nil premium, it contains a
restriction upon sale or assignment of the land. The grantee is forbidden to transfer the land to someone
who was not indigenous, BUT can mortgage it to raise money to build the house.

- When introduced in 1976 this was an absolute prohibition, lasting for the length of the lease in
the case of grants of government land and for 5 years from the date of the certificate of
compliance in other cases.

- In 1979, the restriction was relaxed in that the government would waive the condition if the full
premium was paid to the government by the owner.

- However, for a grant of government land within a village expansion area, the restriction would
not be waived for the first 3 years.

F. Three documents and/or permissions required:

i. Certificate of exemption

Since Oct 1987, when the Buildings Ordinance (Application to the New Territories) Ordinance was
amended, new village houses require certificates from the District Lands Officer (DLO) that they are
exempt from the provisions of the BO and the regulations: Cap.121 ss.5-6.

- Certificates in respect of the building works, site formation works and drainage works are
required before construction work can commence: this requires the engagement of consultants
such as engineers and building surveyors.

- Conditions (e.g. relating to health and safety) can be imposed on a certificate: Cap.121 s.9.

A condition that planning permission for village-type development should be obtained (since the
proposed house being on green belt) was upheld: Rita Enterprises Co Ltd v District Land Officer,
Taipo [1996] 4 HKC 410.

- A certificate of exemption has been held to be a document of title : Lau Kwok Wai v Chan Yiu
Hing [1995] 1 HKC 197.

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LLAW3105 Land Law III Christopher Chan

ii. Certificate of compliance

After construction of the house has finished, a certificate or letter stating that all the (positive) conditions
in the Conditions of Grant etc have been complied with the grantee MUST be obtained from the DLO.

- This will serve as proof that the building covenant and other conditions have been observed and
therefore that there is no risk of government action for failure to comply with the Conditions.

The builder and engineer engaged by the villager submit a construction completion report and, if satisfied,
the DLO issues the certificate.

iii. Letter of no-objection

Another document which is needed before the house can be used is a letter from the DLO stating that
there is no objection to the house being occupied. This is similar to an occupation permit.

G. Village houses in practice

i. Scheme of commercial development

Entrepreneurs (builders, agents, brokers, developers) soon recognized that the NT Small House Policy
presented a business opportunity. These practices have been approved: Li Pui Wan v Wong Mei Yin
[1998] 1 HKLRD 84 (CA).

- They recruited indigenous males, often not resident in NT, to apply for permission to build on
privately-owned village land transferred to and registered in the male’s name but beneficially
owned by the entrepreneur or for concessionary grants of land, then assisted the villager to
obtain the necessary permits and build the house.

- The indigenous male would be required to give the entrepreneur power of attorney, make a
declaration of trust in favour of and a will leaving the house to the entrepreneur/developer.

- The indigenous male would be rewarded with money or part of a house.

- The project would be financed by sale of the house (or flats within it) to third parties.

The sale would typically take place before completion of building and would be in breach of the
restriction on alienation. So, the purchasers would pay the land premium, including the amount
for relaxation of the condition against alienation, as part of the price.

- More ambitious middlemen would assemble contiguous village lots with the cooperation of a
number of villagers and develop on the lots an estate of houses.

Each house would be on its own land. The common areas of the estate would consist of land
owned by the developer and/or rented government land.

There would be a DMC for the development, to regulate relations between the owners of the
individual lots; because there is no co-owned land, this DMC is NOT a document of title:
Fortune Link Ltd v Grand House Ltd [2010] 1 HKC 253.

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LLAW3105 Land Law III Christopher Chan

In the late 1990s, the government introduced a requirement that the villager make a declaration that he
intended to live in the house and was the sole owner (i.e. beneficially owned) the land upon which it was
to be built. This did not prevent houses from being built and resold. But the scheme would be tainted by
illegality. (The requirement has since been discontinued after pressure from HYK.)

ii. Defence of illegality and locus poenitentiae (repent)

Since these schemes involve the making of a false representation by the applicant ding for a building
licence/grant of land, they are illegal and unenforceable: Best Sheen Development Ltd v Official
Receiver [2001] 3 HKC 79; Cheng Mui Teck v Hang Tak Buddhist Hall Assn [2001] 2 HKLRD 471, CA;
Cheerbond Devt Ltd v Tung Kwok Yu [2010] 3 HKC 530.

- In Tiu Sun Fai v Shum Sing Development Ltd [2010] 1 HKC 258, the purchaser of a NTEH had
second thoughts about completing. To avoid the contract, he objected that the sale was illegal
because of the villager’s misrepresentation concerning ownership.

The judge agreed, ruling the contract void, but said that because the purchaser knew about and
participated in the illegality, he was in pari delicto and the law would not assist him to claim back
the deposit.

- In Tang Teng Hong Tso v Cheung Tin Wah [2014] 4 HKC 515, one landowner who in 1997
participated in such a scheme (by joint venture with a developer, the landowner contributing the
land and the developer the building construction, dings, applications, etc) but repented after 14
years and before it was carried to fruition was allowed to have its land back under the
doctrines of locus poenitentiae and resulting trust.

iii. Risk of double-dealing

The end-purchaser under these schemes is at risk of double-dealing by the ding or the entrepreneur (using
the Power of Attorney) because his purchase agreement cannot be registered until after the restriction on
alienation is lifted, nor can he pursue court action against the developer because of the illegality involved.

Until the premium for relaxation of the no-alienation covenant has been paid and the government has
consented to the alienation, the indigenous villager remains the registered legal owner of the lot.

- In Lou Siu Ping v Lam Tsz Man [2014] 4 HKC 458, the villager had somehow managed to
mortgage the land for a loan despite the developer holding the deeds, so the mortgagee lender,
whose mortgage had been registered, took priority over the purchaser: she successfully sued her
solicitor for not advising her of the risks involved.

iv. Unauthorised building works

A more tolerant attitude towards UBWs has been taken by District Land Offices than by the Building
Authority in urban areas. The government introduced a scheme by which NT owners could register their
UBWs, without stipulating what the consequence would be: many villagers ignored this.

H. Future of small house policy

i. Whether the NT Small House Policy is constitutionally protected by BL 40?

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LLAW3105 Land Law III Christopher Chan

HYK maintains that the policy is a traditional right protected by BL 40 and points to dicta to that effect
by Chun Wah v Hang Hau Rural Ctee (2000) 3 HKCFAR 459, 477 (CFA). However, the policy is an
administrative measure dating from 1972.

- Cf. Koon Ping Leung v Director of Lands [2012] 2 HKC 329, where Lam J explained that the
CFA dicta were obiter and suggested that the free building licence element in the policy reflects
the indigenous’ customary right to build on their own land but that the concessionary grant
does not.

- Lam J did not need to consider the exact content of the traditional housing right. Similarly, Dep-J
Horace Wong SC in Best Star Holdings v Lam Chun Hing HCA 409/2008 (22.2.12) declined to
do so without expert evidence.

ii. Whether the requirement of declaration that the ding was the sole owner was constitutional?

A group of dings who made declarations that they were sole owners of the land in such a scheme has been
prosecuted and convicted of deception, to the displeasure of the HYK. The constitutionality of elements
of the policy may be challenged in any appeal.

The requirement that the ding declare that he is sole owner was NOT unconstitutional: Chan Yau v Chan
Calvin [2014] 6 HKC 634, CFI.

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LLAW3105 Land Law III Christopher Chan

5. Chinese lineage endowments of communal land

In 1898, about one quarter of NT land was found to be owned in common by members of families (or
clans) and associations. Hence provision was made in the New Territories Ordinance for such land.

Two types of customary institution were frequently encountered: the t’so and the t’ong (collectively t’so
t’ong). They are both rooted in Confucian ideals of veneration of ancestors and filial duty. They also
reflect traditional ideas of the importance of males. They were encouraged by Imperial authorities in the
18th and 19th centuries, although some date back earlier. They have been abolished in mainland China.

The government maintains a register of t’so t’ong and their constitutions at NT District Offices.

The land held by these institutions was originally largely used for agriculture but there is no customary
restriction upon usage and today the land is often put to more profitable purposes, such as open storage:
see A-G v Melhado Investment Ltd.

A. T’so

In Tang Kai-chung v Tang Chik-shang [1970] HKLR 276, a t’so (“ancestor” or “lineage”) has been
described as:

- An ancient institution of ancestral landholding whereby land derived from a common ancestor is
enjoyed by his male descendants for the time being living, for their lifetimes and so from
generation to generation indefinitely.

- Every male descendant of the common ancestor automatically becomes entitled at birth to an
interest in the land for his lifetime.

- On his death his interest merges so as automatically to enlarge the interest of the surviving male
descendants.

- Thus, his interest at any given moment during his lifetime depends upon the number of male
descendants then living and on his death his interest ceases and forms no part of his estate.

Some characteristics of t’so:

- It is usually created after the death of the landowner by his (male) heirs. Occasionally a living
male person may form a t’so for land which he has acquired.

In contrast with a t’ong, a t’so is ALWAYS named after the common ancestor, with the character
for t’so appended.

- The t’so is intended to benefit the clan or lineage by providing money for ancestral worship,
maintenance of shrines and graves, and care and education of members of the family, with any
surplus income being distributed amongst living members.

These are good causes but NOT charitable causes (only a limited class is benefitted).

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- The custom is said to be to preserve the t’so land intact and to pass it on to succeeding
generations. But it seems incorrect that t’so land cannot be sold or assigned.

- T’so land comes within NTO s.15.

- In contrast with a t’ong, a t’so has NO hall.

B. T’ong

T’ongs are ‘essentially in the nature of unincorporated associations composed of individuals and with
continuous succession through patrilineal descent from their founding members’: Secretary for Justice v
To Kan Chi [2009] 3 HKC 217.

- T’ong (hall) covers a variety of associations, not necessarily owning land and not necessarily
operating in NT.

T’ongs can be business organisations formed between clansmen (sometimes called a ‘wui’) or
between friends and associates (sometimes called a ‘heung’); or they can be religious (temples,
monasteries, nunneries) or scholastic in nature.

As a result, the purposes to which income from t’ong land may be put are wider than that from
t’so land: e.g. ancestral worship, maintenance of the family temple and education of members of
the t’ong but also support for the welfare, health, social activities and businesses of members.

T’ong has greater responsibilities than a t’so, but it is NOT a charity.

- By contrast with t’so, most NT t’ongs have been created by a land owner during his lifetime to
ensure that land is held by his clan or family for the communal benefit of its (male) members.

- The founder’s intention is usually to keep the land intact so that all his descendants benefit,
thereby avoiding arguments about division of the land and ensuring that funds are available for
t’ong purposes.

- All types of t’ong are contemplated by NTO s.15, provided that they hold land in the NT.

- In contrast with t’so, a t’ong usually builds a hall to house ancestral tablets.

- A t’ong does NOT necessarily use the formal name of the family, e.g. it may use a lucky
name. It may use the character for “yuen” instead of “t’ong”.

- A t’so may be a member of a t’ong. One of Hong Kong’s oldest temples, Tsing Wan Kan, is a
t’ong owned by several t’sos and clans: Secretary for Justice v To Kan Chi (2000) 3 HKCFAR
481.

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LLAW3105 Land Law III
A quick summary contrasting the differences between t’so and t’ong:
T’so
Creation of the interest Usually created after the death of
landowner by male heirs
Nature of the interest A communal life interest in land
NT land will be regulated under NTO
s.15
Naming of the interest After the common ancestor
Intention of creation Preserve the t’so land intact and to
pass it on to succeeding generations
Purpose of the interest Benefit the clan or lineage by
providing money for ancestral
worship, maintenance of shrines and
graves, and care and education of
members of the family, with any
surplus income being distributed
amongst living members
Not a charity
Presence of a hall No hall
C. Common features of t’so and t’ong land
The starting position for land in these customary landholding is that:
- The land is held collectively for the benefit of the lineage
- Members are direct agnatic descendants of the common male ancestor
- Members have only a life interest with no rights of succession
- The land is in theory inalienable
- The land is to be preserved intact
- The institution is perpetual and may also be irrevocable by the settlor.
Although the land is in principle inalienable and must be preserved, these are NOT absolute rules.
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Christopher Chan
T’ong
Usually created by landowner
during his lifetime
Not necessarily owning land and not
necessarily operating in NT
NT land will be regulated under
NTO s.15
Not necessarily formal family name;
may use lucky name
Keep the land intact so that all his
descendants benefit, thereby
avoiding arguments about division
of the land and ensuring that funds
are available for t’ong purposes
Ancestral worship, maintenance of
the family temple and education of
members of the t’ong but also
support for the welfare, health,
social activities and businesses of
members
Not a charity
There is usually a hall to house
ancestral tablets
LLAW3105 Land Law III Christopher Chan

- The land may be sold if ALL members consent and; where NOT held for ancestor worship,
maybe if only a majority consent: Re Man Sam Chung Wai [2010] HKEC 1921, CA.

Since many clan members live abroad and may be untraceable, the administration’s practice is to
require consent of 80% of owners.

- For example, different t’sos had participated in separate schemes with the same developer to
build ding houses; the t’so provides the land to be developed and sold: Tang Tang Hong Tso v
Cheung Tin Wah [2014] 4 HKC 515, Li (or Lei) Ting Tit Tso v Cheung Tin Wah HCA 2500/2013.

T’so and t’ong land passes from generation to generation for ever, and hence offend the rule against
perpetuities.

- However, as they are customary institutions and customary law is preserved and recognized by
NTO, the rule does NOT apply to them so long as the land in question is in NT: Tang Kai-chung
v Tang Chik-shang (above), Kan Fat-tat v Kan Yin-tat [1987] HKLR 516.

- Likewise the law of partition does not apply.

- However, the law of land registration DOES apply: Wu Kan Tai v Wu Yau Loi [1996] 2 HKLR
437, PC.

T’so t’ong always have manager(s) who are usually senior members. Typically, one manager is appointed
from each family (or fong) within the clan.

T’so t’ong land is entitled (on application) to exemption from the requirement to pay government rent at 3
per cent of rateable value.

D. Are t’so t’ong trusts?

It has repeatedly been held at first instance that managers are trustees and the members beneficiaries even
though a trust is a common-law concept with no equivalent in customary law which regards each member
as having an interest in the land.

- In Tang v Tang, Mills-Owens J found that the t’so was a trust on the basis of the 1905 block
Crown Lease, the schedule to which recorded in Chinese the t’so or t’ong as the grantee followed
by the names of the managers followed by “sze lei” in brackets. This was translated in the next
column as “(trustee)”. But this is a mistranslation: a manager is not a trustee but an agent.

- Moreover, the Crown lease itself described the t’so, NOT the managers, as owner. The t’so is an
unincorporated association consisting of individual members. At common law the individuals
would be regarded as legal owners, not mere beneficiaries. This also seems to be so under
Chinese customary law which has no concept of, or word for, trusts.

- If the intention had been to make managers trustees (legal owners), there would have been no
need for the provision in NTO s.15 NTO enacted contemporaneously with the block leases by
which, where land was held by clan, family or t’ong, a manager must be appointed “to represent
it” and the registered manager was given powers of dealing as if sole owner. There is no mention
of trust/ee in NTO s.15.

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- Conversion of t’so t’ong into trusts would have been inconsistent with Blake’s declared intent of
not interfering with land and custom.

- If the motivation is to protect members from dishonest managers, that is unnecessary because
both NTO s.15 NTO (below) and custom (which requires managers to act unanimously and with
consent of all members) provides that protection.

- To accommodate customary institutions as trusts and recognize the primacy of custom, judges
have had to exempt them from some of the law of trusts such as the rule against perpetuities: this
indicates that they are NOT really trusts.

- In the case of one 20th century t’so (i.e. no block lease, so no description of managers as trustees),
Kan Fai Tat v Kan Yin Tat [1987] HKLR 516, R. Tang Dep-J presumed an intention by the
settlor to create a trust. But how can that be, since the intention was to create a t’so the very
nature of which is that members all hold the land as owners?

E. Manager

Both t’ong and t’so are NOT legal entities and so must have a manager or managers (sze lei).

The manager(s) is appointed by the members, not by the government, but his appointment MUST be
notified and proved to, and approved by, the District Office (Home Affairs Dept) which then registers the
manager: NTO s.15. Usually each branch (fong) nominates one manager.

- The appointment of the manager can be by the majority of members rather than unanimously and
is often by consensus among clan elders but the process of appointment must be fair: To Kin Wah
v Tuen Mun District Officer [2003] 4 HKC 213.

- A manager is usually a senior (male) member of the t’so t’ong but there have been instances of a
deceased’s manager’s widow succeeding him.

E.g. the widow of the founder who died without issue was recognised as the temporary manager
pending the naming of an heir: Li Tang-shi v Li Wai-kwong [1969] HKLR 367; and the manager
of a t’so in Kam Tin from 1950 to 1978 had been a Madam Chung: Pang Lai Yung v Wong Hoi
Lam HCMP 1742/2004 (9.1.08).

The position of a manager is analogous to if not the same as that of a trustee. A manager as an agent if
not a trustee owes fiduciary duties to the members.

- Accordingly, in his management of the t’so t’ong, a manager must use the due diligence and
reasonable care which the ordinary prudent man of business would exercise, he must act honestly
and reasonably and he must pay equitable compensation for breach of duty: Man Fong Hang v
Man Ping Nam (2003) HCA 7935/98 (CFI); (2005) CACV 104/2004 (CA); (2006) 9 HKCFAR
674).

Managers MUST act unanimously on the basis that a manager is a trustee: Tang Kam Wah v Tang Siu
Cheung HCA 10141/1998 (Chu J).

- Anyway, customary law requires unanimity, or at least absence of disagreement, since each
manager represents a different branch of the clan.

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Traditionally a manager would be appointed for life or until retirement though more recently some t’so
t’ong have stipulated a term of office.

- Upon the death of one manager, the surviving manager(s) does NOT become the sole manager; a
replacement MUST be appointed, or a decision not to replace the deceased MUST be made, at a
meeting of the family: Mak Lai Chuen v Lau Kar Yau [2009] 3 HKC 217 (DC).

- Can such a decision be inferred from failure to appoint a replacement for a deceased manager
over many years?

Section 15, New Territories Ordinance

The position of managers is governed by NTO s.15. The purpose is (1) to facilitate transactions regarding
the land by managers as representatives of t’so t’ong and (2) to protect members from malpractice by
managers: Lai Chi Kok Amusement Park (No 2) v Tsang Tin-sun [1966] HKLR 124, 130.

Appointment of manager

If satisfied regarding the manager’s appointment, the DO will register the manager’s name. For the
convenience of dealing with land, the manager then has “full power to dispose of or in any way deal with
the said land as if he were the sole owner thereof”: NTO s.15.

Failure to report and prove the appointment of a manager within 3 months of that appointment may lead
to the government re-entering the land: NTO s.15.

The DO may cancel the appointment of the manager(s) for good cause; and appoint and register a new
manager: NTO s.15.

- Examples of good cause would be maladministration, misappropriation of funds and forgery of

signatures on documents leading to doubts as to the manager’s representativeness (Ng Shiu Hung
v Sai Kung District Officer HCAL 2683/2000).

Dealings/decisions made by the manager

The manager(s), NOT the members, deals with the land, including letting it out: NTO s.15.

- The acts of the manager cannot be overridden by the members: Light Ocean Investments Ltd v
Enway Development Ltd [1994] 3 HKC 31, CA.

- Any dealing, however, must be approved by and executed in front of the DO, for the protection of
the members against a dishonest manager.

- By custom, a disposal of the land by the manager should also be approved by members of the
clan (though approval may be inferred from knowledge and failure to object); whether unanimity
is required is a question of evidence as to the custom: Re Man Sam Chung.

Consequences of not following NTO s.15

If the formalities in s 15 are not observed, it may affect the title of the person who deals with the manager.

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- A sale agreement had been entered into by managers whose appointment had been reported to but
not yet approved or registered by the DO; nor had the sale been consented to by or executed
before the DO; the agreement was at best conditional: Light Ocean Investments.

- Consent was a mere administrative requirement and was NOT needed for a lease as opposed to a
sale: absence of consent would at most render a lease voidable and whether it would be avoided
would depend upon the circumstances: Man Ping Nam v Man Mei Kwai (2002) CACV 193/2002.

Consent may be deduced from one of the managers’ failure to object to a letting and that consent
may be given retrospectively: Man Kit v Hip Hong Timber Co Ltd CACV 137/2002 (12.5.05).

- Title and capacity to sue should be distinguished: Hip Hong Timber Co Ltd v Tang Man Kit
(2004) 7 HKCFAR 212, CFA.

Registration of managers goes to title but unregistered managers may sue, e.g. for rent due.

Capacity to sue is a matter of internal administration of the t’so t’ong and outsiders may not
challenge this.

F. Future of lineage endowments

Although land held by t’ong and t’so passes from generation to generation perpetually, such land is
gradually being sold off to developers and resumed by the government for public purposes. Little income
is generated from agriculture and more lucrative uses are now controlled by planning restrictions. This
tempts the members to agree that the land be sold.

The modern attitude is shown by Tang Teng Hong Tso v Cheung Tin Wah [2014] 4 HKC 515 where the
plaintiff’s managers sold and assigned t’so land in 1997, purportedly for $3.88m, to developer Ds for Ds
to divide up into house plots and transfer into names of indigenous males for small house applications.
Managers told DO that the $3.88m was to be used for repair of t’so property, ancestor worship and
education of members’ children. In fact only $200,000 deposit was paid; the true consideration was that
the t’so was to receive 5 houses once built. But the property market fell and processing of applications
for building licences was delayed so the land remained vacant and producing no income for 17 years until
court declared assignments void.

As time passes, the number of members tends to increase and so does the potential for disagreement.
Family and village ties are not as strong as previously. The government discourages creation of new t’so
t’ong.

A NT landholder who wishes to dedicate his land to the benefit of future generations is nowadays likely
to use a private company and give shares to his children and grandchildren.

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