Written by: Rachelle Lam (Guest writer, Cambridge University)
In the landmark decision of Kwok Cheuk Kin v Director of Lands, the Hong Kong Court of First Instance ruled that Private Treaty Grants and Land Exchanges under the Small House Policy were unconstitutional. Consequently, male indigenous villagers no longer have the right to apply for permission to build houses on government land at concessionary premium. On the other hand, the right to build houses on private land in the form of Free Building Licences under the Small House Policy was upheld as constitutional and deemed protected under Article 40 of the Basic Law.
The Small House Policy (“SHP”)  was implemented by the British colonial government in Hong Kong in 1972 to address the poor housing conditions of indigenous residents of the New Territories. It confers upon NTIIs (“male indigenous inhabitants of the New Territories”) the opportunity to apply for permission to build a small house for himself, by way of:
i) a Free Building Licence (“FBL”), on agricultural land owned by the applicant himself free of premium;
ii) a Private Treaty Grant (“PTG”), on government land at concessionary premium; or
iii) a Land Exchange (“Land Exchange”), free of premium for the private land portion and at concessionary premium for the government land portion.
However, in light of Hong Kong’s land scarcity and growing housing demand, the SHP has come under fire for not only being discriminatory against female indigenous inhabitants and non-indigenous people, but also for being prone to abuse through the illegal selling of these rights to property developers. As such, this judicial review case represents an important step towards clarifying the scope of constitutional rights enjoyed by indigenous inhabitants.
Issues in dispute
The applicants argued that:
i) The SHP did not constitute “lawful traditional rights and interests of the indigenous inhabitants of the New Territories” within the meaning of Article 40 of the Basic Law (“BL 40”); and
ii) The SHP was unconstitutional because it discriminated against non-indigenous people and female indigenous villagers, in contravention of Articles 25 and Article 39 of the Basic Law, and Article 22 of s.8 of the Bill of Rights (“BOR 22”).
Therefore, the two key issues in contention were:
1. Whether the benefits conferred on NTIIs under the SHP are (a) “traditional” and (b) “lawful” within the meaning of BL 40?
2. Whether the rights and interests which can be regarded as “traditional” can nonetheless be challenged on the ground of discrimination or other grounds of unlawfulness?
Anderson Chow J found that the SHP was prima facie unlawful by reason of its discriminatory nature or effect, because it gave preferential treatment to the NTIIs based on social origin and sex, contrary to Article 25 and BOR 22. The court also noted the fact that the SHP would otherwise be an unlawful discriminatory policy unless it was excepted from the operation of the Sex Discrimination Ordinance was fully recognised by the government during the drafting of that statute. It is interesting to note that neither the respondent nor the interested party attempted to justify such preferential treatment.
Consequently, the crucial question was whether the SHP could be rendered lawful by BL 40. This in turn depended on whether the SHP could satisfy the “traditional” and “lawful” elements in BL 40. According to the court, establishing the meaning of these elements requires an examination of the context and purpose of BL 40 in order to ascertain the legislative intent as expressed in the language of the Basic Law.
The context of BL 40 was that, during the drafting process, it was believed that there were some existing rights enjoyed by the NTIIs only, which were based on customary practices rather than prescribed by law. These rights had been in practice at the time of the New Territories Lease in 1898 and were still being practised during the drafting of the Basic Law.Accordingly, the court accepted the government’s submission that the “traditional” element referred to rights and interests of NTIIs traceable to before the commencement of the New Territories Lease in 1898. Hence, the right would be considered “traceable” if it captured or reproduced the essential features of a right that was enjoyed by NTIIs before 1898.
The court held that the rights and interests in the form of FBL were “traceable” to the NTIIs’ “traditional” rights and interests. The FBL, which was initiated by the British colonial government in 1906, had been made on the understanding that prior to the New Territories Lease, NTIIs were entitled to build houses on their land without having to seek the approval of, or make any payment to, the Imperial authorities during the Qing dynasty. For example, Mr Cecil Clementi, a member of the Land Court appointed in 1903, who later became Governor of Hong Kong from 1925 to 1930, wrote in 1906: ‘… the villagers have as a rule built houses on their own padi fields… They certainly considered themselves entitled - & I think that they are entitled – to build houses on their padi land…’ Although the details of FBL may have evolved over time (such as the type and size of the house and alienation restrictions), this does not detract from the original basis on which free conversion of agricultural land into building land was permitted by the British government.
On the other hand, the court did not consider the rights and interests in the form of PTG or Land Exchange to be “traceable” to any “traditional” right or interest. Having examined the expert evidence, the court concluded that grants of land made by the British colonial government to NTIIs since 1904 were not made in recognition of the existence of any right of NTIIs to acquire land to build houses before 1898. For example, closed village auctions (where auctions of village land were effectively restricted to participation by the villagers) were permitted not because the government accepted that the NTIIs had any traditional right to build small houses in their villages; rather, ‘it was a device adopted by the District Officers to avoid practical difficulties arising from outsiders intruding into the community of a village’. Land was sold by the government to the villagers to address their housing needs, which was simply a matter of ordinary land administration.
The court found that ‘the “purpose” of BL 40 is to protect those existing rights and interests enjoyed by the NTIIs which may properly be regarded as their “traditional rights and interests” after 1 July 1997 (when Hong Kong was handed over by Britain to China) in accordance with the theme of continuity of the Basic Law’. Thus, it would not be consistent with the purpose of BL 40 to allow the rights which could be regarded as “traditional” to be challenged on the ground of discrimination, since it was clear to everyone at the time of drafting that some rights might be open to objection on the ground that they were discriminatory. Therefore, the court concluded that “lawful” in the present context was merely descriptive of the traditional rights and interests enjoyed by NTIIs, and did not constitute an additional, independent criterion which had to be fulfilled in order to gain protection under BL 40.
The court’s ruling has profound repercussions that significantly curtail the circumstances under which male indigenous villagers are permitted to build their houses. At present, there are 642 officially recognised villages in Hong Kong and 43,000 small houses have been built under the SHP. The ruling means that male indigenous villagers will now only be able to apply for permission to build a home on his own land at nil premium. However, if he does not own agricultural land, he can no longer apply to build on government land on concessionary terms. Moreover, even if he owns a plot of land but it is of insufficient size, he can no longer surrender his land in exchange for government land on which to construct his house on concessionary terms. The Heung Yee Kuk, a body which represents the interests of rural clans, condemned the lawsuit as “an attack with ulterior motives” on villagers; but on the other hand, the policy has been heavily criticised for exacerbating Hong Kong’s dire housing shortage, as well as for its inherently discriminatory nature.Due to the significant consequences of the case for both indigenous and non-indigenous people, it is likely that an appeal will be brought in the Hong Kong Court of Final Appeal.
Disclaimer: The opinions expressed in this post are those of the authors, and do not reflect the views or opinions of the Durham Asian Law Journal.
  HKCFI 867  The Hong Kong government owns all the land in Hong Kong. Under the current land administration policy, where a conversion of land use results in an increase in land value, the developer is liable to pay a premium to the government: D Pilling, ‘Hong Kong’s land system that time forgot’ (Financial Times, 9 March 2011)<https://www.ft.com/content/2731d5f0-4a87-11e0-82ab-00144feab49a> accessed 10 July 2020; P Sito, ‘Hong Kong government urged to review land premium assessment system to raise home supply’ (South China Morning Post, 1 July 2015) <https://www.scmp.com/property/hong-kong-china/article/1829270/hong-kong-government-urged-review-land-premium-assessment> accessed 10 July 2020.  The Basic Law is Hong Kong’s “mini constitution”: ‘Hong Kong: What is the Basic Law and how does it work?’ (BBC, 20 November 2019) <https://www.bbc.co.uk/news/world-asia-china-49633862> accessed 10 July 2020; Government of Hong Kong Special Administrative Region, ‘Full Text of the Constitution and the Basic Law’ <https://www.basiclaw.gov.hk/en/basiclawtext/index.html> accessed 10 July 2020.  Carole J. Peterson, ‘Equality as a Human Right: The Development of Anti-Discrimination Law in Hong Kong’ 34 Colum. J. Transnat’l L. 335 19.  The New Territories is one of the three main regions in Hong Kong, and makes up 86.2% Hong Kong’s territory.  Kwok Cheuk Kin (n 1)   See Wah Hing Strategy Co Ltd v. Tang Wai Hung (HCA 16690, 16692, 16693/1999)  “All Hong Kong residents shall be equal before the law”.  “The provisions of the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, and international labour conventions as applied to Hong Kong shall remain in force and shall be implemented through the laws of the Hong Kong Special Administrative Region.”  The International Covenant on Civil and Political Rights is implemented in Hong Kong through the Hong Kong Bill of Rights Ordinance (Cap. 383). BOR 22 provides that: “All persons are equal before the law and are entitled without any discrimination to the equal protection of the law. In this respect, the law shall prohibit any discrimination and guarantee to all persons equal and effective protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.”  Kwok Cheuk Kin (n 1)   ibid   ibid   ibid   ibid   ibid   ibid ,  ibid  ibid   ibid   ibid   ibid ,   ibid   ibid  ibid   Government of Hong Kong Special Administrative Region, ‘List of Recognized Villages under the New Territories Small House Policy’ <https://www.landsd.gov.hk/en/images/doc/rv0909_text.pdf> accessed 10 July 2020.  Hong Kong Free Press, ‘Hong Kong Court partially upholds policy granting special d rights to male villagers’ <https://hongkongfp.com/2019/04/08/breaking-small-house-policy-upheld-constitutional-hong-kong-court/> accessed 28 November 2020.  Harbour Times, ‘New Case Shines Light on Small House Policy’ <https://harbourtimes.com/2018/12/21/new-case-shines-light-small-house-policy/> accessed 28 November 2020.