In a landmark decision on 31 March 2023, the CA ruled that the “reliance” test under Tinsley v Milligan was no longer good law in Hong Kong, adopting the “range of factors” test under the UKSC’s 2016 decision in Patel v Mirza. Until the CFA rules otherwise, the judgment in Monat Investment Ltd v All Person(s) in Occupation of Part of The Remaining Portion of Lot No. 591 in Mui Wo D.D. 4 No.16 Ma Po Tsuen, Mui Wo, Lantau Island & Anor [2023] HKCA 479 now represents Hong Kong law on the defence of illegality.
P’s appeal arose out of the trial judge’s dismissal of its claim for possession of land, and judgment in D2’s favour on his counterclaim for adverse possession. D2 was represented in the CA and at trial by Vincent Lung and Leticia Tang.
At trial, P argued that D2 should not be permitted to rely on illegal conduct – including the erection of a house in breach of s.14 of the Buildings Ordinance (“BO“), which required the Building Authority’s approval before the commencement of buildings works – to establish his case.
P argued in the CA that the trial judge was wrong in holding that:
- The maxim ex turpi causa did not apply in the adverse possession context;
- If it did, Patel’s “proportionality” approach should be adopted over Tinsley’s “reliance” approach;
- On the facts, the maxim did not apply.
The CA dismissed the appeal, addressing the 3 points as follows.
Is Tinsley no longer good law in Hong Kong? (Point 2)
Yes – until otherwise expounded by the CFA. The CA also noted that it was more apt to refer to Patel’s test by the term “range of factors”, rather than “proportionality”, approach. The court is to consider a “trio of necessary considerations”, of which proportionality is only one:
- first, the underlying purpose of the prohibition transgressed;
- secondly, conversely, other public policies which may be rendered ineffective or less effective by denial of the claim; and
- thirdly, proportionality.
The CA’s clarification on the application of the common law in Hong Kong
The CA held that, in the absence of a CFA authority on point, applying the stare decisis rule, a UKSC decision on point concerning the common law should be followed, provided there are no local circumstances making it inappropriate to do so. Adherence to an old rule would lead to disconnect with other common law jurisdictions and confusion in commercial transactions.
Does ex turpi causa apply in adverse possession cases? (Point 1)
It can – it depends. Given that adverse possession can involve breaches of different statutory provisions, the first consideration under the “range of factors” approach will affect the analysis differently depending on the circumstances. It was therefore too sweeping for the trial judge to rule that the ex turpi causa maxim does not apply to adverse possession cases, whatever the statutory provision which may have been transgressed.
Did ex turpi causa apply in the present case? (Point 3)
No. Taking into account: (1) the purpose of s.14 BO, including public safety in buildings construction; (2) the purpose of adverse possession, including the discouragement of stale claims and the use of land as a natural resource; and (3) proportionality, the CA held that the judge’s findings of fact were sufficient for him to hold that the ex turpi causa maxim did not apply here.
The CA dismissed P’s appeal, with costs to D2.