FACV Nos. 2, 3 & 4 of 2021

[2021] HKCFA 38

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NOS. 2, 3 AND 4 OF 2021(CIVIL)

(ON APPEAL FROM CACV NOS. 234, 317 AND 319OF 2019

 (HEARD TOGETHER))

___________________________

BETWEEN

       KWOKCHEUK KIN

       1stApplicant

(Appellant)

       and

       DIRECTOROF LANDS

CHIEF EXECUTIVE IN COUNCIL

SECRETARY FOR JUSTICE    1st Respondent

2nd Respondent

3rd Respondent

       and

       HEUNGYEE KUK   Interested Party

___________________________

Before:   ChiefJustice Cheung, Mr Justice Ribeiro PJ,

Mr Justice Fok PJ, Mr Justice Chan NPJ and

Lord Sumption NPJ

Dates of Hearing:  11-12 October 2021

Date of Judgment: 5 November 2021

       JUDGMENT   

The Court:

Introduction

1.    Allmajor political transformations are haunted by the ghosts of the previousregime. There are few matters on which traditional habits are more persistentthan the system of land tenure, which has a profound effect on the customs andusages of any settled community. This appeal is concerned with the impact ofsuccessive political transformations in the New Territories on its system ofland tenure.

2.    TheSmall House Policy is a non-statutory administrative policy operated by theLands Department which authorises grants of land and building licences to theindigenous male population of certain villages in the New Territories on morefavourable terms than those available generally. It was formalised insubstantially its present terms by a decision of the Executive Council on 14November 1972, which also gave it its current name. But it has existed in oneform or another since the beginning of the 20th century, when the NewTerritories were being incorporated into Hong Kong as an extension to theBritish colony. The question at issue on this appeal is whether it isconstitutional under the Basic Law which governed the transition from colonialrule when the People’s Republic of China resumed the exercise of sovereignty over Hong Kong in 1997. TheAppellant contends that it is invalidated by the anti-discrimination provisionsof the Basic Law and the Hong Kong Bill of Rights . It is common ground that itis prima facie discriminatory on grounds of both sex and social origin. But theRespondents and the Interested Party say that it is validated by a provision ofthe Basic Law, Article 40,  protectingthe lawful traditional rights and interests of the indigenous population of theNew Territories.

The Small House Policy

3.    Itis common ground that the Small House Policy as currently applied is accuratelydescribed in a pamphlet entitled “How to Apply for a Small House Grant”published by the Lands Department in December 2014. For present purposes, thefollowing summary is sufficient.  Thebeneficiaries of the Policy are “indigenous villagers” of the New Territories.This means adult males descended through the male line from a resident in 1898of a recognised village. Recognised villages are villages included in a listapproved by the Director of Lands. There are currently 642 recognised villages.The Policy relates to land in the village or its immediate environs which arenot affected by any impending development or future planning or developmentproposals. Its object is to enable an eligible villager to build, once in hislifetime, a small house in his own village for his own occupation. It allowshim to apply for three kinds of grant: (i) a free building licence, which is alicence to build on private land at a nil premium in the case of pre-1898villages or a full premium in the case of villages recognised since that date;(ii) a private treaty grant of government land at a reduced premium; and (iii)an exchange, involving the surrender of an existing title in exchange for thegrant of a new title at a nil premium so far as it was private land and areduced premium so far as it was government land. In any of the three casesthere must be no “substantiated” local objection to the proposal. Typicalobjections include objections based on the indigenous villager status of theapplicant, as well as those based on environmental or technical issues, orpolitically sensitive issues such as village boundary disputes or feng shui.Over the years, benefits under the Policy have come to be known as “Dingrights”.

Historical background

4.    Asis well-known, the British colony of Hong Kong comprised three blocks ofterritory occupied at different times. The island of Hong Kong was ceded toGreat Britain by the Treaty of Nanking in 1842 and the southern part of the Kowloon peninsula by the Conventionof Peking  in 1860. Under the SecondConvention of Peking, in 1898, the Qing Government leased part of theadministrative district of San On to Great Britain for 99 years with effectfrom 1 July 1898, and the district thereafter became known as the NewTerritories.

5.    Shortlyafter the cession of Hong Kong Island, the colonial administration introduced anew system of land tenure which has subsisted in its essential respects to thisday. All land became the property of the Crown, which granted only leaseholdinterests to others. In principle, leases were granted at a premium reflectingthe market value of the land, subject to strict contractual and statutorycontrols over development. Conversion of agricultural or garden land tobuilding use, where it was available, was granted at a premium reflecting theenhancement of the market value. The same system was applied to southernKowloon after its cession in 1860. In the case of the New Territories, an Orderin Council of 20 October 1898 (the so-called First Proclamation) provided thatwith limited exceptions all laws and ordinances in force in the colony of HongKong were to take effect in the New Territories until amended or repealed.Accordingly, the New Territories (Land Court) Ordinance  provided by section 15 that “all land in theNew Territories is hereby declared to be the property of the Crown” during theterm of the New Territories lease from the Qing Government. All persons inoccupation of land were to be deemed trespassers as against the Crown unlesstheir occupation was authorised by grant from the Crown, by title allowed bythe Land Court, or by licence from the Crown.

6.    Atthe time of their cession to Great Britain, Hong Kong Island and southernKowloon had been thinly populated and undeveloped. The New Territories werevery different. They comprised an extensive area of about 356 square miles onthe mainland (including northern, or “New” Kowloon) and surrounding islands,with a population of about 90,000 people living in a large number of villages.The colonial authorities were therefore faced for the first time with theapplication of a land settlement originally devised for an almost emptyterritory to one which was already extensively settled by a substantialpopulation with existing rights over land. Some adaptation of the new landsystem was therefore necessary if it was to accommodate existing entitlementsand avoid significant social disruption. Upon taking possession of the NewTerritories in April 1899 the Governor, Sir Henry Blake, declared that thegovernment’s policy would be to protect the existing commercial and landedinterests and the usages and good customs of the inhabitants.

7.    ChowJ (as he then was)  heard expert evidenceabout the system of land tenure in force before the cession, which thesearrangements replaced.  He found that intheory land tenure before 1898 was governed by the Qing Code.  Under the Code, all land was nominally theproperty of the Emperor and its occupation by others was permissible only bygrant of the Imperial authorities in return for the payment of land tax. By thelate 19th century, however, land tax was rarely collected, the Code had falleninto desuetude and a system of customary tenure had taken its place. The basicfeatures of this system were that plots were treated as belonging to the ownerof the subsoil, whose title was derived from leases from the Emperor and whoseobligation was to pay the land tax. But the exclusive right of use andoccupation belonged to the owner of the topsoil, whose title derived fromleases granted by the subsoil owner. Both the subsoil leases and the topsoilleases created interests in the land which were perpetual, heritable andpartible. This left the topsoil owner with an unlimited dominion over the landsubject to payment to the subsoil owner of a rentcharge. There was also nolegal restriction on building.

8.    Theeffect of the new system of land tenure was that customary titles under thepre-colonial system were abolished and replaced by a system of Crown leases fora limited term not exceeding 99 years, subject to various covenants andstatutory provisions restricting development. Between 1899 and 1903, land inthe New Territories was surveyed, cadastral plans were drawn up, and a systemof registration of title was established. All claims to land were required tobe presented to a Land Court created in 1900, whose function was to receive theclaims and determine those which were disputed. The New Territories weredivided into blocks, in respect of each of which a Block Crown Lease was issuedfor a term of 99 years less 3 days corresponding to the term of the lease from the Qing Government. EachBlock Crown Lease contained a Schedule listing lots comprised within the Block.It recorded title to each lot, where title had been established, described itscurrent use, and contained covenants against building without governmentconsent. Existing title to 354,277 lots was established under this procedure. ACrown rent was fixed for each of them. These lots were commonly referred to as“Old Schedule lots”.

9.    TheLand Court fixed a terminal date for presenting claims in each district. Landunclaimed by the terminal date was deemed to be Crown land available to besold. At some time between 1901 and 1904, the colonial government began togrant leases of Crown land. Lots disposed of by the Crown in this way after1901 were referred to as “New Grant lots”.

Free building licences

10.   Bytwo Gazette notices of 1906, Nos. 191/1906 and 192/1906, the Governorauthorised Assistant Land Officers to grant building licences in respect ofagricultural or garden land in the New Territories and to approve buildingserected pursuant to the licences. The introduction of a regime of buildingcontrols created potential difficulties in relation to Old Schedule lots. Theywere addressed in a memorandum in January 1906 by Mr. Cecil Clementi (then ajudge of the Land Court) to the Colonial Secretary. Mr. Clementi pointed out that before 1898there had been no restrictions on use and no distinction between agriculturaland building land. Landowners had been entitled to build on their land, subjectonly to a theoretical obligation (in practice never enforced) to report thechange of use to the officers of the Imperial government so that an increasedland tax could be charged reflecting its enhanced value. For this reason, itbecame the practice of Land Officers to grant “free” licenses to buildvillage-type houses on Old Schedule lots. These licences were granted at anincreased Crown rent but without premium. By comparison, a full market premiumwas charged for building licences issued in respect of New Grant lots.

11.   Theapplication of the free building licence policy was straightforward enough whenthe relevant proprietor was the original owner of an Old Schedule lot recordedin the relevant Schedule, or his descendant. After about 1920, however,outsiders steadily bought up Old Schedule agricultural land. A number of thesepurchasers applied for free building licences to build large luxury villas.From time to time the law officers pointed out that the original policy of 1906had not distinguished between inheritors and purchasers of Old Schedule lots,and suggested it should make no difference who the owner of a lot was. Ingeneral, however, District Land Officers did not act on that view. They treatedfree building licences as a concession available only to villagers and theirsuccessors in title by descent. They generally refused to grant free buildinglicenses to outsiders and even to indigenous villagers who acquired OldSchedule lots by purchase. Moreover, they strictly enforced the limitation offree building licences to village-type houses (“native cottages”) on lots in orclose to recognised villages. Some of them applied this limitation to OldSchedule lots wherever located.

12.   Differencesbetween the practices of different Land Officers regarding free buildinglicences ultimately led in 1957 to the standardisation of the Policy regardingfree building licences. This was achieved by the Executive Council approvingthe policy as described in a memorandum dated 2 April 1957.  The effect of the 1957 Memorandum was to laydown that for Old Schedule lots:

“A bona fide villager will in general bepermitted, subject to planning and fung-shui considerations, to build avillage-type house for his own occupation, and such permission (by buildinglicence) will be free of premium.”

13.   Forthis purpose, the 1957 Memorandum abolished the distinction between villagersderiving their title from inheritance and those deriving it from purchase:

“It is not proposed to make a distinctionin applying these conditions between applicants who have inherited Old Schedulelots and those who have purchased them. While it would be theoretically correctto make such a distinction, it is not thought that it would be practicable andthat if the advantages of the concessionary terms proposed for the owners ofOld Schedule lots were restricted to those who had acquired them by inheritancethe way would be open for other applicants to seek the same benefits by fraudor mis-representation.”

The restriction to applicants descended inthe male line from a resident in 1898 continued.

14.   In1960, the system of free building licences was further modified so as to dealwith the increase in the population of the New Territories, which had led tothe geographical expansion of many villages. Free building licences were madeavailable for New Grant lots in respect of which grants had been made beforethe Second World War. The reason for the limitation to pre-war grants was thatthese were thought less likely to have been made to outsiders.

15.   The1957 Memorandum referred to a note prepared by the District Commissioner forthe New Territories, which was annexed to it. This identified five policyconsiderations underlying the revised policy. They included “the need to honourour undertakings towards the country people”, along with ordinary considerations of town planning, development controland government revenue. Expanding on this point, the District Commissionerobserved:

“We have said many times that the granteesof old schedule lots and their descendants are not required to pay premium forconversion of their agricultural land to build traditional village houses fortheir own occupation; and although in town layout areas this 'right' (whichderives simply from the fact that the Chinese government, who provided noservices, also charged no premia for grants of land, only a land tax; and didnot exercise any control on buildings beyond charging increased land tax) hasbecome modified, and in New Kowloon it has never been recognised at all,elsewhere it has been treated for so long as ‘entrenched’ that it would now bedangerous to deny it.”

16.   Thisis one of a substantial number of internal documents of the colonialauthorities recording the government’s view that it was honour bound to respectthe building rights which had formerly been enjoyed by those holding OldSchedule lots in 1898. This was never the only consideration, however. Otherfactors included development control, improving building standards, dealingwith the squatter problem, catering for the larger needs of an expandingpopulation, and maintaining government revenue. A desire to reflect at leastsome of the advantages enjoyed by the village population before the lease toGreat Britain was one consistent strand of official thinking on this subjectbefore the Policy was formalised in 1972. But although the historical origins ofthe Policy were never forgotten, it is clear that in due course it acquired alife of its own, to some extent independent of the considerations which had ledto its adoption in the first place. It created entrenched vested interests andexpectations which would have been politically difficult to displace.

Sale of Crown land on concessionary terms

17.   Theavailability of Crown land for sale to indigenous villagers has always been anessential adjunct to the Small House Policy. As the population increased, morevillagers found themselves without land on which to build a house, or withoutland of a size, shape or location suitable for building.

18.   Variousmethods of sale of Crown land have been employed at different times, but all ofthem encountered a common problem when the land was located in a village area.The villagers arranged matters so that they did not compete against each otherfor the land. The existence of an effective market for village land thereforedepended on applications by outsiders. They, however, were commonly frozen outby existing villagers. Those outsiders who did succeed in buying Crown land invillage areas were habitually prevented from building on it by threats to thebuilders. It is not clear how long this problem subsisted, but the evidenceshows that it was still a significant issue at the time when the Small HousePolicy was formalised in 1972.

19.   Until1909, New Grant lots were sold by public auction. In December 1908 theGovernor, Sir Frederick Lugard, submitted a proposal to the Secretary of Statethat small lots in the New Territories (apart from New Kowloon and the shoresof Junk Bay) should in future be sold by private treaty unless there was alikelihood of significant development in the area. This was because there wasnever any competition at auctions, as a result of which the premium rarelyexceeded the upset price (reserve) and any profit was almost always swallowedup by advertising costs. In their joint report, the experts who gave evidencebefore the Judge agreed that “the villagers had shown themselves quite capableof ensuring that only one bidder would appear at an auction.”  The Secretary of State, Lord Crewe, acceptedthe proposal with modifications. As a result, from 1909 until shortly after theSecond World War, sales were conducted by private treaty, generally at whatwould have been the upset price at an auction. Although there was no formalrestriction to male indigenous villagers, in practice grants were made only tothem.

20.   Auctionsales were reintroduced shortly after the Second World War. Initially, theywere open auctions, but a practice quickly developed by which in practice theybecame “restricted” or “closed” village auctions. The auction was limited toindigenous villagers or non-indigenous villagers who had (or whose fathers had)lived in the village before the Japanese occupation. This was achieved byvarious administrative devices, such as restricting the publication of noticeof the sale or holding the auction in the village. There would usually be onlyone bidder, put forward by agreement between the villagers, and the lot wouldbe knocked down at the upset price. Lots were withdrawn if an outsider was seento be bidding. These auctions can fairly be called a charade. But the evidencesuggests that they reflected a realistic appreciation of the villagers’ abilityto control the market for village land.

21.   Whenthe Policy was formalised by the Executive Council in 1972, private treatysales were restored. But they were restored at a fixed premium of two-thirds ofthe market value, which corresponded to the upset price previously set forvillage auctions.

“Exchanges”

22.   Exchangesdo not call for separate consideration. A villager who owned a plot of landwhich was not suitable for building on would commonly apply to surrender hisplot in exchange for the grant of a plot, usually comprising all or part of hisoriginal plot plus some adjoining Crown land. Similar principles applied inthese cases. The regrant was at a nil premium in the case of land which hadbeen private and at a reduced premium in the case of Crown land.

Exclusion of women

23.   Grantsof Crown land under the Small House Policy and its predecessors have alwaysbeen available only to men. Whatever the method of disposal, female purchaserswere excluded even if they were indigenous villagers. This was achieved byarrangement with the village elders, who invariably objected to sales to womenunless they were buying to build houses for their infant sons. The reasons forthe exclusion of women are explained in the expert evidence. The villages hadgenerally originated in family settlements, and their inhabitants retained thecharacter of clans. Before 1898 women had not been entitled to inheritland.  Traditional relationships withinvillages would have been seriously disrupted if a woman had been able toinherit land, because this would have enabled her and her children after herdeath to hold land in a village to which she no longer belonged and herchildren had never belonged.  The sameconsequences would have followed if a woman had been able to apply for a grantunder the Small House Policy. In a report on the incorporation of the NewTerritories into the colony, laid before the Legislative Council by theGovernor in 1912, it is stated:

“A Chinese community like that of the NewTerritories is by its structure and its long habit of decentralised governmentvery easy to administer. But its old established customs and institutions mustnot be lightly changed or affronted, and necessary innovations have to beintroduced with the greatest delicacy. In the New Territories as elsewherecontinuous descent in the male line is the paramount object in the life of theChinese, and the necessity for this is the foundation for many of their habitsand customs.”

24.   Althoughwomen are now entitled, as a result of changes in the law, to acquire land bywill or upon an intestacy, the evidence is that in practice this rarely happensin the case of village land.

The statutory framework

25.   On19 December 1984 the governments of the PRC and the United Kingdom jointlydeclared that the PRC would resume the exercise of sovereignty over Hong Kongwith effect from 1 July 1997 and that Hong Kong would become a SpecialAdministrative Region  of the PRC. TheJoint Declaration set out the “basic policies” of the PRC with regard to HongKong. The fundamental principle underlying the Joint Declaration wascontinuity. Paragraph 3(3) of the Joint Declaration provided that:

“the laws currently in force in Hong Kongwill remain basically unchanged”.

Paragraph 3(5) provided:

“The current social and economic systems inHong Kong will remain unchanged, and so will the life-style. Rights andfreedoms, including those of the person, of speech, of the press, of assembly,of association, of travel, of movement, of correspondence, of strike, of choiceof occupation, of academic research and of religious belief will be ensured bylaw in the Hong Kong Special Administrative Region. Private property, ownershipof enterprises, legitimate right of inheritance and foreign investment will beprotected by law.”

26.   TheJoint Declaration stated that the “basic policies”, together with theelaboration of them in Annex I, would be embodied in a Basic Law. Itspreparation was entrusted to a drafting committee comprising members from theMainland and Hong Kong. In its final form, the Basic Law was adopted as a lawof the PRC at the Third Session of the Seventh National People’s Congress on 4April 1990 and promulgated by the President of the PRC on the same day. It laiddown the “systems to be practised” in the Hong Kong SAR with effect from thehandover on 1 July 1997.

27.   TheBasic Law provides, so far as relevant:

“Article 25

All Hong Kong residents shall be equalbefore the law.

Article 39

The provisions of the InternationalCovenant on Civil and Political Rights… as applied to Hong Kong shall remain inforce and shall be implemented through the laws of the Hong Kong SpecialAdministrative Region.

The rights and freedoms enjoyed by HongKong residents shall not be restricted unless as prescribed by law. Suchrestrictions shall not contravene the provisions of the preceding paragraph ofthis Article.

Article 40

The lawful traditional rights and interestsof the indigenous inhabitants of the ‘New Territories’ shall be protected bythe Hong Kong Special Administrative Region.

Article 120

All leases of land granted, decided upon orrenewed before the establishment of the Hong Kong Special Administrative Regionwhich extend beyond 30 June 1997, and all rights in relation to such leases,shall continue to be recognized and protected under the law of the Region.

Article 122

In the case of old schedule lots, villagelots, small houses and similar rural holdings, where the property was on 30June 1984 held by, or, in the case of small houses granted after that date,where the property is granted to, a lessee descended through the male line froma person who was in 1898 a resident of an established village in Hong Kong, theprevious rent shall remain unchanged so long as the property is held by thatlessee or by one of his lawful successors in the male line.”

28.   Afterthe promulgation of the Basic Law but before its coming into effect, the HongKong Bill of Rights Ordinance  and theSex Discrimination Ordinance , were enacted in 1991 and 1996 respectively. Bothremain in force.

29.   TheHKBORO gives statutory effect to the International Covenant on Civil andPolitical Rights . Article 22 of the BOR , which gives effect to Article 26 ofthe ICCPR, provides:

“Article 22

Equality before and equal protection of law

All persons are equal before the law andare entitled without any discrimination to the equal protection of the law. Inthis respect, the law shall prohibit any discrimination and guarantee to allpersons equal and effective protection against discrimination on any groundsuch as race, colour, sex, language, religion, political or other opinion,national or social origin, property, birth or other status.”

30.   TheSDO also gave effect, although only in part, to the 1979 Convention on theElimination of All Forms of Discrimination Against Women.  The SDO outlawed certain kinds of sexdiscrimination. Section 21 of the SDO prohibited discrimination by thegovernment in the exercise of its powers, but was subject to a generalexception in Schedule 5, Part 2, for:

“that policy of the Government (a) known asthe small house policy; and (b) pursuant to which benefits relating to land inthe New Territories are granted to indigenous villagers who are men.”

31.   Sinceboth the United Kingdom and the PRC were parties to the CEDAW, thisnecessitated a reservation by both governments, on 14 October 1996 in the caseof the United Kingdom and on 10 June 1997 in the case of the PRC. Both were insimilar terms, providing that:

“Laws applicable in the New Territorieswhich enable male indigenous villagers to exercise certain rights in respect ofproperty and which provide for rent concessions in respect of land or propertyheld by indigenous persons or their lawful successors through the male linewill continue to be applied.”

The judgments below

32.   ChowJ held as follows:

(1)   TheDing rights could properly be regarded as “rights or interests” capable ofbeing protected by BL40. On that footing, the critical questions were whetherthey were (i) lawful, and (ii) traditional.

(2)   The word “lawful” was purely descriptive of those traditional rights which theindigenous inhabitants of the New Territories had enjoyed before 1 July 1997.All of the Ding rights were therefore lawful.

(3)   “Traditional”rights were rights “traceable” to those which the indigenous villagers hadenjoyed before the inception of the lease of 1898. The right to a free buildinglicence for Old Schedule lots could be so described. The practice of grantingsuch licences was therefore constitutional.

(4)   Butthe practice of granting government land by private treaty sale at aconcessionary premium to indigenous males only, and the practice of exchangingprivate land for government land at a reduced or nil premium with indigenousmales only, were not traceable to rights existing before 1898 and weretherefore unconstitutional.

(5)   Theexception of the Small House Policy from the SDO in Schedule 5, Part 2, wasunconstitutional as being inconsistent with the Basic Law.

33.   Allparties appealed. The Court of Appeal agreed with the Judge that Ding rights were relevant “rights andinterests”, but held that the relevant date for determining both the lawfulnessand the traditional character of the rights protected by BL40 was April 1990when the Basic Law was promulgated.  Onthat footing, they held that the Small House Policy was constitutional in itsentirety. They also considered that even if “traditional” rights were confinedto those derived from rights enjoyed by indigenous inhabitants before 1898, allthree forms of grant made under the Small House Policy satisfied that test.

34.   Therewere issues in both courts below about the Appellant’s standing and as to hisdelay in bringing the proceedings, to which we will return at the conclusion ofthis judgment.

Construction: the legal context

35.   Beforeembarking on a detailed analysis of the language of BL40, it is necessary toask what can be deduced about its purpose from the historical background andthe circumstances in which it was enacted. As the Court of Appeal held, therelevant date for this exercise is April 1990, when the Basic Law waspromulgated. In Director of Immigration v Chong Fung Yuen,  this court held that extrinsic material whichthrew light on the context or purpose of the Basic Law was available toconstrue it. This included the state of domestic legislation at the time of itspromulgation in April 1990:

“Because the context and purpose of theBasic Law were established at the time of its enactment in 1990, the extrinsicmaterials relevant to its interpretation are, generally speaking, pre-enactmentmaterials, that is, materials brought into existence prior to orcontemporaneous with the enactment of the Basic Law, although it only came intoeffect on 1 July 1997.”

36.   Giventhat the Basic Law maintains in effect so far as consistent with its terms theexisting laws of Hong Kong (Article 8), the existing rights and freedoms ofresidents (BL39) and the existing rights of leaseholders (BL120), BL40 must beaddressed to rights and interests of the indigenous inhabitants of the NewTerritories which are (i) special to those inhabitants and not common to thegenerality of residents, and (ii) potentially open to challenge in the absenceof a protective provision like BL40. One obvious basis for such a challenge wasthe anti-discrimination provisions of the ICCPR. The incorporation of the ICCPRinto the domestic law of Hong Kong had not occurred in June 1990 but wasrequired by BL39.

37.   Shortlyafter the Joint Declaration, the Heung Yee Kuk, the representative body of the New Territories villages, identifiedeight existing privileges of their constituents. In the course of the draftingprocess, discussions of the traditional rights or interests of indigenousvillagers were conducted by reference to this list. The eight privileges were(i) the right to be represented to the Hong Kong government by the Kuk, astatutory body, and by the chairmen of rural committees; (ii) the right to builda small house in accordance with the Small House Policy formalised in 1972;(iii) a rent freeze while the property remained in the hands of a persondescended in the male line from a pre-1898 resident, which was proposed inAnnex III of the Joint Declaration and ultimately embodied in BL122; (iv) theright to a grant of alternative land when villages were compulsorilyexpropriated for industrial development or public housing; (v) exemption fromrates for village houses; (vi) the right to bury deceased family members at thehillside near the village, instead of at the public cemetery, and to becompensated for the demolition of graves; (vii) the right to have a deceasedestate distributed according to Chinese custom to the deceased’s male offspringor to have land (tso/t’ong land) held in a customary family trust fordescendants in the male line; and (viii) the equal right of residence andentitlement to ancestral estates enjoyed by indigenous villagers livingoverseas if they return. Two points should be noted about these privileges. Thefirst is that only (i), (iii), (v) and (vii) had a statutory basis. The otherswere benefits under non-statutory policies applied as a matter ofadministrative discretion. The second is that only (vi) and (vii), and arguably(ii), could be said to originate in some right enjoyed in pre-colonial times.

38.   Ina society where building land was scarce and expensive, the Small House Policywas by far the most important of the privileges identified by the Kuk, and bythe same token much the most controversial. There were persistent demandsbefore the promulgation of the Basic Law that it should come to an end alongwith the colonial government which had devised it. BL40 marked the rejection ofthese demands.

“Rights and interests”

39.   Thestarting point is to identify the nature of the “right” or “interest” which anapplicant under the Small House Policy may be said to have. The existence ofthe Policy is implicitly acknowledged in a number of Ordinances, as well as theBasic Law itself. They included notably the Buildings Ordinance,  which applied to the New Territories since1961 in the manner provided by the Buildings Ordinance (Application to the NewTerritories) Ordinance,  and exemptedcertain categories of houses there, including those which did not exceed thedimensions specified for the purpose of the Small House Policy; the provisionfor rating exemption in section 36(1)(c) of the Rating Ordinance;  and the provision for a rent freeze in BL122.But the Policy itself has never had a statutory basis. It is applied as amatter of administrative discretion. In those circumstances, it cannot giverise to a legal right in the ordinary sense of the word. The actual grant of abuilding licence or a lease gives rise to a right which is good against theworld, but an application for such a right or interest does not. The relevantright is founded entirely on public law. We would define it as a right to haveone’s application dealt with in accordance with the criteria laid down in the government’sstatements of current policy, subject to the lawfully exercised discretion ofthe Lands Department. That discretion is not unlimited. It is governed by law.“Where a public authority has issued a promise or adopted a practice whichrepresents how it proposes to act in a given area, the law will require thepromise or practice to be honoured unless there is good reason not to do so”: R(Nadarajah) v Secretary of State for the Home Department;  c.f. Ng Siu Tung v Director ofImmigration,  and Mandalia v Secretary ofState for the Home Department.  This istherefore an inherently imperfect right. It depends on the availability of judicialreview, a jurisdiction with highly flexible remedies. Moreover, unless BL40makes the Small House Policy immutable (a question which we do not decide), itmay change. But while the Policy remains in force in its current terms, itcreates something which is clearly a “right” in the sense meant by BL40.Otherwise BL40 applies to very little.

40.   Inthose circumstances the concept of an “interest” does not call for separateconsideration, but it is clearly at least as broad as the concept of a “right”.

“Lawful”

41.   InApril 1990, when the Basic Law was promulgated, there were no relevantstatutory rules against discrimination in Hong Kong. Neither the HKBORO nor theSDO had been enacted, although BL39 expressly envisaged that effect would indue course be given by domestic legislation to the ICCPR “as applied to HongKong”, i.e. not necessarily in its entirety. At common law, it has been saidthat “treating like cases alike and unlike cases differently is a general axiomof rational behaviour”: Matadeen v Pointu. As Lord Hoffmann went on to point out, thiswas “frequently invoked by the courts in proceedings for judicial review as aground for holding some administrative act to have been irrational.”  However, the test of irrationality in thiscontext is not the same as the test for unjustified statutory discrimination,and Mr Martin Lee SC  for the Appellantconfirmed that the only basis of public law challenge to the Small House Policythat could then have been advanced was irrationality.  It is difficult, however, if not impossible,to assess at this stage, on the hypothetical basis that this argument is nowsuggested, what prospect of success this challenge might have had.

42.   Oncethe Basic Law came into force in 1997, the law of Hong Kong contained tworelevant anti-discrimination provisions, BL25 and BOR22. BL25 is of course partof the same instrument as BL40, and must be read together with it. BOR22,although enacted separately by domestic legislation, also falls to be construedtogether with BL40. This is because by virtue of BL39, in particular its secondparagraph, the BOR is incorporated into the Basic Law and given constitutionaleffect under it: see Comilang Milagros Tecson v Director of Immigration.

43.   Thepresent argument turns on the relationship between BL40 on the one hand and thetwo anti-discrimination provisions on the other. The substance of theAppellant’s case is that consistency with the anti-discrimination provisions isa condition for the application of BL40. Otherwise, the Policy cannot be lawfuland is not protected. In other words, the anti-discrimination provisionsqualify and limit the scope of BL40. The substance of the Respondents’ and theInterested Party’s case is that BL40 is the dominant provision. It qualifiesand limits the application of the anti-discrimination provisions, not the otherway round.

44.   Inour judgment, the latter analysis is correct, for the following reasons:

(1)   TheBasic Law is founded on the principle of continuity, with specific exceptionswhere this was inconsistent with the PRC’s basic policies for Hong Kong.Indeed, Article 5 of the Basic Law stated that “the previous capitalist systemand way of life shall remain unchanged for 50 years.” One starts, therefore,with the expectation that a significant element in what paragraph 3(5) of theJoint Declaration calls “current social and economic systems” will remainunchanged. On the face of it, BL40 is a saving provision seeking to give effectto that principle by protecting an existing entitlement of a particular classof persons.

(2)   Itis a principle of statutory construction that the specific prevails over thegeneral. This is simply one aspect of the more general principle thatlegislative instruments must be read as a coherent whole:

       “Therule is, that wherever there is a particular enactment and a general enactmentin the same statute, and the latter, taken in its most comprehensive sense,would overrule the former, the particular enactment must be operative, and thegeneral enactment must be taken to affect only the other parts of the statuteto which it may properly apply”: Pretty v Solly.

       Thesame principle applies to constitutional interpretation. BL25 and BL39 andBOR22 are general provisions. BL40 is a specific provision dealing with thespecial position of the indigenous inhabitants of the New Territories.

(3)   AbsentBL40, all the various advantages enjoyed by the indigenous inhabitants of theNew Territories  would be inherentlydiscriminatory unless they can be objectively justified as being necessary inpursuit of a legitimate aim: see Secretary for Justice v Yau Yuk Lung.  If consistency with the anti-discriminationprovisions is treated as a condition of their being protected by BL40 (as theAppellant proposes), then either (i) the discrimination is justified, in whichcase BL40 is unnecessary; or (ii) it is unjustified, in which case BL40 appliesto nothing. Yet BL40 was plainly intended to have some effect.

(4)   BL122,which deals with the level of rent payable on “old schedule lots, village lots,small houses and similar rural holdings”, assumes that grants will continue tobe made under the Small House Policy to descendants in the male line ofpre-1898 village residents, notwithstanding the discriminatory features of thePolicy which are specifically referred to in that Article. It is fair to saythat the assumptions of the legislator are not necessarily the same as hisenactments. But this assumption casts a good deal of light on what the draftersof the Basic Law must have believed that they had provided for in BL40.

45.   Bothcourts below described the word “lawful” as “descriptive”.  Mr Lee fairly submits that on that footing itis redundant and without legal effect. In our judgment, the word is neitherpurely descriptive nor redundant. It goes to the lawfulness of the way that thediscretion is exercised as a matter of public law. We have defined the relevantright or interest of an applicant under the Small House Policy as a right tohave his application dealt with in accordance with the criteria laid down inthe government’s public statements of the current Policy, subject to a lawfullyexercised administrative discretion of the Lands Department. That right orinterest is lawful if the discretion to make a grant under the Policy islawfully exercised as a matter of public law. It would not be lawful if, forexample, the discretion was exercised in a manner contrary to some enforceablelegitimate expectation of the applicant or was vitiated by corruption or bias.“Lawful” is not intended to refer to the absence of discriminatory featuresforbidden by BL25 or BL39, whose application in the special context ofindigenous rights is addressed by BL40 and excluded.

“Traditional”

46.   Thiswas the point on which the courts below differed. The Judge considered that tobe “traditional”, a right or interest of the indigenous villagers had to be“traceable” to a right or interest which his ancestors had enjoyed before thelease of the New Territories in 1898. By “traceable” he meant based on, orcapturing the essence of, the earlier right. In his view, the grant of a freebuilding licence satisfied that test because there had been no buildingcontrols before the New Territories were incorporated into the colony of HongKong. By comparison, he thought that the right to a grant or exchange of Crownland had no equivalent under Qing rule. The Appellant’s case was substantiallyan adoption of that view, although he contended that not even free buildinglicenses were “traceable” to a pre-1898 right or interest. The Court of Appeal,by comparison, considered that “whether a right or interest is traditional forthe purpose of BL40 is to be determined by reference to the state of affairs inApril 1990.”  “Traditional” rights werethose which was recognised as traditional at that point. In our judgment, theCourt of Appeal were right about this.

47.   Thereis nothing in BL40 which requires a protected right or interest to be traceableto the period before 1898. BL40 does not say so in terms. Is there any groundon which such a principle might be implied? In our opinion there is not. Theprinciple of traceability is not implicit in the concept of tradition as amatter of language. It is not necessary for the efficacy of BL40. And it is notconsistent with the purpose of BL40. In view of the importance which has alwaysbeen attached to purposive construction in interpreting the Basic Law, thislast point calls for some expansion.

48.   Inthe first place, it is clear from the history that we have summarised abovethat the Small House Policy did not replicate the essence of the old pre-1898system. It was introduced by the colonial authorities in order to soften thetransition from customary tenure, which conferred on the topsoil ownerpractically complete dominion over the land, to an utterly different system ofintensively administered time-limited Crown leases and tightly controlleddevelopment. It was because the two systems were so completely different thatmanaging the transition in this way was conceived to be politically necessary.

49.   Secondly,the limitation of eligibility to those whose ancestors had held Old Schedulelots in the same village before 1898 ensured that families whose forebears hadknown the old system were the sole beneficiaries of the new one. But theconnection inevitably became looser and more remote as time went on. Pre-1898residents died off, to be succeeded by their sons, grandsons, andgreat-grandsons who had never known the old system. The Policy was extended toeligible purchasers on the same basis as it had applied to heirs. Once therestrictions on alienation had expired, the land was marketable. For this andother reasons, village land often found its way into the hands of outsiders. Atthe same time, some areas were designated for development, which transformedthe landscape and way of life of villagers. The Small House Policy itselfunderwent substantial changes in the course of the 20th century. As we havealready observed, the Small House Policy has acquired a life of its own. Thereality is that the rights arising under it were new rights originallyconferred by the colonial administration in the first decade after theinception of the New Territories lease of 1898, and maintained in variousiterations and with some modifications thereafter. They were derived from thePolicy itself. By 1990, they had become a tradition of the colonialadministration. They were traditional in 1990 not because they were traceableto any rights or interests which had existed before 1898, but because thebeneficiaries were confined to members of long-standing and relatively immobilevillage communities which had been treated as a separate category throughoutthe period of colonial government, and because they had by then passed throughthe male line in the same families for nearly nine decades.

50.   Thirdly,it is right to remember that on the Mainland too, political, social andeconomic systems had fundamentally changed between 1898 and 1990. The Basic Lawwas addressed to the problem of continuity between the colonial regime and thesystem which would follow it. The problem of continuity between the Qingdynasty and the colonial regime was of no subsisting relevance by 1990. Therewas therefore no rational reason why the PRC, whose basic policies regardingHong Kong were embodied in the Basic Law, should wish to make the preservationof indigenous rights which they would inherit from the colonial regimedependant on their similarity to rights which had existed before 1898. The factthat only descendants of pre-1898 villagers were eligible for small housegrants and that the Small House Policy had been devised for an earlier transferof power was part of the description of the system which the SAR inherited andwhich BL40 protected. But it was not an indication that between 1997 and 2047the survival of those rights should depend on disputable antiquarian researchinto land rights which had been extinguished nearly a century before.

The SDO

51.   Inthis analysis, we have not referred to the SDO because of the express exclusionof the Small House Policy from its ambit by Schedule 5, Part 2. The Judge heldthat the exclusion was unconstitutional because it was inconsistent with BL25and BL39. Once one concludes, as we have done, that BL40 takes the Small HousePolicy out of the ambit of BL25 and BL39, this issue falls away.

Delay and standing

52.   Ourconclusions on the substance of the issues make it unnecessary to deal with thetwo procedural objections to the Appellant’s claim for relief. We do so becauseof their implications for public law generally and because we differ from theCourt of Appeal.

Delay

53.   Thepresent proceedings were begun by an application dated 28 December 2015, whichwas substantially amended in September 2016 and April 2019. In its amended formthe decisions challenged were (i) the decision of the Director of Lands to“implement on and after 8 June 1991… the [Small House Policy], and hissubsequent decisions to continue to implement the [Small House Policy]”, and(ii) the exemption of the Small House Policy from the SDO by Schedule 5, Part 2of that Ordinance. Realistically, the relevant date would not have been 1991,but 1997. If the Appellant’s case had been accepted, that is the date fromwhich the Small House Policy would have become unconstitutional. That was someeighteen years before the commencement of these proceedings.

54.   Applicationsfor judicial review vary greatly in their nature and their potentialconsequences. For this reason, the rule that they must be brought promptly hasnever been absolute. Section 21K(6) of the High Court Ordinance  provides that the Court may refuse leave toapply for judicial review or refuse to grant relief on the ground of delay “ifit considers that the granting of the relief sought would be likely to causesubstantial hardship to, or substantially prejudice the rights of, any personor would be detrimental to good administration.” Hardship or prejudice toindividuals and disruption of good administration are more likely in caseswhere the relief would operate retrospectively to undo transactions on whosevalidity people will have relied. Where the object of the proceedings is toobtain the decision of the court on some general issue of legal orconstitutional principle, these consequences are less likely and the publicimportance of having the issue resolved is greater. Delay is therefore likelyto be a less significant factor. If a policy of the executive isunconstitutional or otherwise beyond its powers, it is in the public interestthat the courts should say so. It cannot be right to allow the executive tocontinue to act unlawfully, simply because no one challenged it at the outset.The observations along these lines of Ma CJHC (as Chief Justice Ma then was) inLeung v Secretary for Justice  haveconsiderable force as applied to cases like this one.

55.   Thepresent proceedings seek the decision of the court on a controversialconstitutional issue of considerable public importance. The relief sought inthe present proceedings is entirely declaratory. There is no claim to quashpast decisions made pursuant to the Small House Policy. In any event, it isexceedingly unlikely that the courts would have been persuaded to quash pastgrants in favour of persons acting in good faith on the strength of the LandsDepartment’s publicly stated policies, even if they had accepted theAppellant’s case in principle. The Appellant having obtained leave to bring theproceedings, delay could only have operated as a ground for refusing to makethe declarations sought, even if the court was satisfied that they were justifiedin principle. This would have been a surprising course for the Judge to havetaken. It would have meant that the executive was unlawfully discriminating onthe basis of sex and social origin from day to day, but the court, althoughseized of the issue, was disabled from intervening by the conduct of theparticular individual who had brought the matter to its attention. We considerthat the Judge’s decision to grant relief (on the view that he took of themerits) cannot be faulted in principle and was within his discretion. The Judgehaving decided the procedural issue, it would have been extraordinary for theobjection to be taken by an appellate court charged with deciding whether hewas right on the substantive issue.

Standing

56.   Section21K(3) of the HCO and Order 53, rule 3(7) of the Rules of the High Court  both provide that the Court shall not grantleave “unless it considers that the applicant has a sufficient interest in thematter to which the application relates.” The rule is identical to that laiddown for judicial review in the High Court in England by section 31(3) of theSenior Courts Act 1981.

57.   MrKwok is a self-appointed public guardian with a long record of public lawlitigation. The objection on the ground of lack of standing is that he has nogreater interest in the constitutionality of the Small House Policy than anyother member of the public. He is not eligible or potentially eligible for agrant under the Policy. He does not own or occupy or intend to own or occupyland in any area affected by the Policy. Lord Pannick QC  submits that he is, in the time-honouredphrase, a “mere busybody”. The Judge disagreed. He held that Mr Kwok qualifiedbecause he was a permanent resident of Hong Kong and the case related to theuse of land resources and revenue in the public interest. The question iswhether that is a sufficient interest.

58.   Wherethe decision of a public authority is challenged on account of its impact onsome particular person or group of persons personally and directly affected byit, someone else who seeks to complain by way of judicial review may well lackstanding. But the position is more complicated when the object of the processis not to redress some particular injustice but to vindicate the rule of law byraising a general legal or constitutional issue. An issue of that kind may besaid to affect everyone equally. There is no general principle that it mustaffect the applicant more than others. What then is the general principle?

59.   InKwok Cheuk Kin v Commissioner of Police, Chow J held that claims to act as a representative of the publicinterest called for careful scrutiny of the applicant’s good faith, but thatthe court should adopt:

“a holistic approach by taking into accounta host of relevant considerations including the merits of the application, theimportance of vindicating the rule of law, the importance of the issue raised,the existence and absence of any other challengers who have a greater interestin the matter, and the nature of the breach of duty against which relief issought.”

60.   InAXA General Insurance v H.M. Advocate, Lord Reed (with whom the rest of the Supreme Court of the United Kingdomagreed) observed:

“A requirement that the applicantdemonstrate an interest in the matter complained of will not however operatesatisfactorily if it is applied in the same way in all contexts. In somecontexts, it is appropriate to require an applicant for judicial review todemonstrate that he has a particular interest in the matter complained of: thetype of interest which is relevant, and therefore required in order to havestanding, will depend upon the particular context. In other situations, such aswhere the excess or misuse of power affects the public generally, insistenceupon a particular interest could prevent the matter being brought before thecourt, and that in turn might disable the court from performing its function toprotect the rule of law. I say "might”, because the protection of the ruleof law does not require that every allegation of unlawful conduct by a publicauthority must be examined by a court, any more than it requires that everyallegation of criminal conduct must be prosecuted. Even in a context of thatkind, there must be considerations which lead the court to treat the applicantas having an interest which is sufficient to justify his bringing theapplication before the court. What is to be regarded as sufficient interest tojustify a particular applicant's bringing a particular application before thecourt, and thus as conferring standing, depends therefore upon the context, andin particular upon what will best serve the purposes of judicial review in thatcontext.”

61.   Bothof these statements of principle were adopted by the Court of Appeal in KwokCheuk Kin v President of Legislative Council. We consider that they represent the normal principle to be applied inthis jurisdiction.

62.   Thecritical question in a public interest case is accordingly whether the purposeof judicial review, and in particular the rule of law, will be best served byallowing the applicant to proceed. In our judgment the Judge was right, onessentially this ground, to accept that the Appellant had standing. Thedecisive consideration is that the only people who can be said to have amanifestly greater interest in the constitutionality of the Small House Policythan the generality of the public are those who have obtained or hope to obtaingrants under the Policy. They are actual or potential beneficiaries of thePolicy with no interest in challenging it. Wider categories of applicants mayhave a direct personal interest in other aspects of the Policy, for example itsplanning or environmental consequences for neighbours, but not in itsconstitutionality. The reality is that the Policy will in practice be beyondchallenge even if unconstitutional. Given the significance and controversialcharacter of the issue, that state of affairs would do no service to the ruleof law.

Disposition

63.   Theappeal is dismissed. We make an order nisi that there be no order as to costsas between the Appellant and the Respondents, and as between the Appellant andthe Interested Party. We further direct that any submissions that the partiesmay wish to make as to costs be submitted in writing within 14 days of the dateof the handing down of this judgment and that, in default of such submissions,the order nisi stand as an order absolute without further directions.

(Andrew Cheung)

Chief Justice  (R A V Ribeiro)

Permanent Judge  (Joseph Fok)

Permanent Judge

(Patrick Chan)

Non-Permanent Judge (Lord Sumption)

Non-Permanent Judge

Mr Martin Lee SC, Mr Jeffrey Tam and MsIsabel Tam, instructed by Ho Tse Wai & Partners, assigned by the Directorof Legal Aid, for the 1st Applicant (Appellant)

Mr Benjamin Yu SC and Mr Anthony Chan,instructed by the Department of Justice, for the 1st, 2nd and 3rd Respondents

Lord Pannick QC, Mr Jat Sew-Tong SC, Mr JinPao SC and Mr Danny Tang, instructed by T.K. Tsui & Co., for the InterestedParty