Legal development limits public power in land resumption

Authors: Ryan Ip, Head of Land and Housing Research, and Monte Mu, Researcher at Our Hong Kong Foundation.

The Foundation’s former Assistant Researcher Christopher Lin also contributed to the article.

The government must be aware of the courts’ evolving treatment of land related cases involving private interest versus public interest, as judges give more consideration to European, non-Common Law cases.

The road to solving Hong Kong’s land shortage problem has never been straightforward, as each option raises particular issues. In a recent special meeting, the LegCo members received public views on “Land Sharing Pilot Scheme”. There were views that believed the scheme helps provide incentives to release private land relatively swiftly. But others thought it is better for the government to use the Land Resumption Ordinance (LRO) to resume all private land for public housing development.

While the government had resumed land in the past, it is planning to do more. Chief Executive Carrie Lam Cheng Yuet-ngor announced in her latest Policy Address the government would use LRO to resume 400 hectares of private land in the coming five years, far more than the 20 hectares resumed in the past five years.

The magic cure for land shortage?

Why is the government so determined to engage large-scale land resumption? One reason is the urgency of the housing crisis. If short-to-medium term land supply fail to catch up, a serious housing supply shortfall will appear soon. Another reason is that the government had won all of the eight judicial review cases involving land resumption from 1997 to 2017. Many people feel this excellent track record made LRO the magic cure for the city’s land shortage problem.

This may seem the case if we look at the LRO in its literal sense. It provides for the “resumption for any purpose of whatsoever description… which the Chief Executive in Council may decide to be a public purpose”. With the serious supply housing shortage, isn’t resuming land for public housing serving a “public purpose” and thus a safe approach? This line of reasoning, however, ignores the elephant in the room, namely, the protection of property right as stipulated in the Basic Law, and a series of complications caused by it.

Property right shielded by the Basic Law

An important court case in this regard is the Hysan Development v Town Planning Board FACV 21/2015, when the Court of Final Appeal (CFA) held that that Article 6 and 105 of the Basic Law were engaged, and the case became an arbitration of the relative merits of private interest and public interest. In the end, Proportionality Test was used and helped CFA concluded that Hysan’s property right was unfairly infringed by the authority’s planning restriction.

The principle of Proportionality, in plain English, can be described as “You must not use a hammer to crack a nut, if a nutcracker would do.” Proportionality Test serves as a “balance” for courts to decide in cases involving conflicting private interest and public interest. This is completely fine. However, if we look at the development of Proportionality Test in Hong Kong, the story gets complicated and interesting.

In a chapter from the book “Is the Hong Kong Judiciary Sleepwalking to 2047”, written by former CFA permanent judge Henry Litton, the author worried that Hong Kong’s legal system was undermined by some evolving trends. In developing his arguments, Judge Litton also quoted the Hysan case, which stirred up our interest.

Balance being tilted towards private parties

Looking through verdicts in private versus public cases, Judge Litton found a rather puzzling development - Hong Kong’s Common Law practice has been increasingly influenced by European jurisprudence. It is normal for the city’s courts to refer to rulings from other Common Law judiciaries, like Britain and Canada. The European Union, instead, practices Civil Law, which is foreign to Hong Kong’s judicial system. However, counsels representing private parties have been increasingly citing court rulings from European Courts, especially cases from the European Court of Human Rights (ECHR) where private parties claimed victory over public administrators. As the CFA becomes more accommodating toward such “transplanting” of European jurisprudence, the balance might be tilted in favour of private bodies in future cases.

This trend reached a climax at the CFA’s verdict in the Hysan case, when the property developer’s senior counsel quoted court cases from the ECHR, and successfully elevated the discussion to the constitutional level. The result was that the CFA not only used the Proportionality Test, it also referred to a case from ECHR to give the three-step Proportionality Test a fourth step – comparing the public benefits brought about by the public power with the damage caused to private interest using Fair Balancing Test.

From now on, every time a new case of the sort arises, the courts will always engage this upgraded four-step Proportionality Test, which will no doubt elongate the process. In future cases, will the Hong Kong’s courts accept more European human right cases from counsels? We don’t know, but we do know that private rights are getting more attention as a result of consideration of non-Common Law cases, which brings about more uncertainties in future cases.

Facing this situation, when choosing legal avenues to reclaim land for housing development in the future, the government should be well prepared for the potential legal challenges ahead in order to attain its ambitious goal.