The Small House Policy and the Basic Law

Introduction

Hong Kong’s Small House Policy confers significant benefits on indigenous inhabitants of the New Territories (‘NTIIs’). NTIIs are male persons, at least 18 years old, descended through the male line from a resident in 1898 of a recognised village.

The Small House Policy confers the following rights (exercisable only once) on NTIIs:

1. a free building licence (allowing the NTII to build a residential house on land owned by him in the village without paying the usual premium);
2. the Private Treaty Grant (allowing the NTII to buy Government land in the village at a concessionary rate);
3. land exchange (enabling the NTII to exchange land owned by him in the village for other Government-owned land more suitable for residential building in the same village).

These rights have substantial financial value. It is accepted that they discriminate against females and against Hong Kong residents other than NTIIs.

The question for the Court of Appeal in Kwok Cheuk Kin v Director of Lands ([2021] HKCA 54) was whether the Small House Policy infringes articles 25 and 39 of the Basic Law and article 22 of the Bill of Rights. Alternatively, are the rights conferred by the Small House Policy ‘lawful traditional interests of the indigenous inhabitants of the New Territories’? Article 40 of the Basic Law requires these interests to be protected by the Government of the Hong Kong SAR. This protection would, it was argued, legitimate the Small House Policy rights despite their discriminatory nature and effects.

Interpreting article 40

Poon CJHC delivered the judgment of the Court of Appeal. The courts are to take a ‘contextual and purposive’ approach ([33]). The relevant contextual features taken into account were:

• the new Colonial Government’s stated intentions concerning land ownership and respect for customs ([35] – [38])
• the history of land ownership arrangements in the New Territories ([40] – ([47]);
• the history of special policies and practices for small houses in New Territories villages, both before and after the introduction of the Small House Policy in 1972 ([[48] – [67]);
• the relationship between the Small House Policy and the policies and practices that preceded it ([68] – [70]);
• the ways in which legislation (before and after 1972) took account of the Small House Policy ([71] – 76]);
• the recognition and preservation of ownership rights arising under the Small House Policy in the Joint Declaration ([77] – [82]);
• contemporaneous materials relevant to the issue of rights protected by article 40 ([83] – [85]) which seem to suggest a level of controversy as to whether the Small House Policy rights were covered by article 40; and
• the fact that there was no prior legal challenge to NTII rights under the Small House Policy ([86]).

Poon CJHC went on to say that ‘[w]hether a right or interest is traditional for the purposes of BL40 is to be determined by reference to the state of affairs in April 1990’ ([90]). A right might be traditional if it is an evolved form of a pre-1898 right, ‘provided it retains its essential or core features’ ([91]).

He continued:

‘In our view, “lawful traditional rights and interests of the NTIIs” in BL40 mean those which are, as a matter of historical fact, recognized to be the NTIIs’ lawful traditional rights and interests in the Hong Kong legal system at the time of the promulgation of the Basic Law on 4 April 1990 .. BL40 continues and elevates the recognition and protection to a constitutional level for such lawful traditional rights and interests of NTIIs after 1 July 1997.’ ([93])

Poon CJHC’s review of the contextual features listed above led him to conclude that NTII rights under the Small House Policy were lawful and traditional for the purposes of article 40 of the Basic Law ([94]). They are protected despite their discriminatory nature ([95]). Thus, ‘the Small House Policy is constitutional in its entirety'([116]).

The Court of Appeal disagreed with the first instance approach of considering whether each of the rights conferred by the Small House Policy could be traced back to the time before the New Territories Lease. That said, the court thought that each of the rights conferred by the Small House Policy could satisfy a ‘traceable’ test.

The first instance judge thought that the building licence could satisfy the test while the private treaty grant could not. The Court of Appeal, however, thought that the private treaty grant ‘captures or satisfies the essential feature(s) of a right or interest that was enjoyed by the NTIIs before the commencement of the New Territories Lease’ ([119]).

The rights of the ‘topsoil tenants of the customary tenure’ ([120]) were replaced by various forms of sale at a concessionary rate to NTIIs ([121]).

Michael Lower