Court of Final Appeal clarifies Adverse Possession law: Wong Chee Sing v Hung Wah and the end of the Wong Tak Yue/Pye divergence
A note on [2026] HKCFA 33 (FACV 4/2026, 14 October 2026)
For two decades, Hong Kong courts and practitioners have grappled with a divergence between two landmark decisions on adverse possession: the Court of Final Appeal’s 1998 decision in Wong Tak Yue v Kung Kwok Wai (No 2) (1997-98) 1 HKCFAR 55 and the House of Lords’ 2002 decision in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419.[1] The divergence that has put practitioners in a difficult position as to what is the correct position. Parties and practitioners have, based on Wong Tak Yue, deployed lines of questioning to extract fatal “willingness to pay rent” admissions from squatters which according to Wong Tak Yue would indicate a lack of intention to possess.
By a main judgment by Lam PJ with which the other members of the Court unanimously agreed, Wong Chee Sing v Hung Wah, the Court of Final Appeal has now expressly departed from Wong Tak Yue and realigned Hong Kong law with the principles laid down in Pye, holding that a squatter’s hypothetical willingness to pay rent if asked is not inconsistent with having the requisite animus possidendi.
The facts in brief
The plaintiff landowner, Wong Chee Sing, held the Government Lease of 50-52 Battery Street under a 1968 lease and had let out the units in the building on that land since 1966. The Rear Shop on the ground floor was originally let to a tenant, Liu, under tenancy agreements dated 1966 and 1974. After 24 February 1976, no rent was received from Liu and the evidence of what happened between 1976 and 1992 was unclear, save that the Shop was occupied without any payment of rent to Wong.
The respondent squatter, Hung Wah, began occupying the Shop in 1992, operating a Chinese medicine business there. He ran that business at the Shop continuously since 1992 without paying anything to the plaintiff. The plaintiff owner continued to pay rates and government rent and, through his agents, handled Building Orders concerning illegal structures at the premises.
In an action brought by Wong to recover possession, the trial judge dismissed Hung’s adverse possession defence, holding that Hung had neither factual possession nor the requisite animus possidendi because he had not dealt with the Shop in a way an occupying owner would (he had not paid rates or government rent and had not responded to the building orders) and had merely sought to “lie low” to avoid payment of rent for as long as possible. The Court of Appeal reversed the decision, holding that the judge had conflated ownership with possession.
The two certified questions
The Appeal Committee granted leave on two questions:
(1) whether the law on animus possidendi stated in Wong Tak Yue is consistent with Pye and, if not, whether the Court should depart from Wong Tak Yue; and
(2) notwithstanding the non-payment of rent, whether the continued, unprotested dealings by an occupier with a paper owner, knowing that in such dealings the paper owner believes himself to be acting as landlord, negative the requisite adverse intent to possess.
The Court’s reasoning
Reaffirming the statutory foundation
The Court reminded readers that the law of adverse possession derives from the Limitation Ordinance (Cap. 347): s.17 extinguishes a landowner’s title once the limitation period for recovery expires, and section 7(2) sets that period at 12 years for non-Government claimants, and s.13(1) defines “adverse possession” as land being in the possession of a person “in whose favour the period of limitation can run”.
Possession and the cause of action for recovery of land are, as Lam PJ put it, “two sides of the same coin”: if the nature of occupation or use is sufficient to give rise to a cause of action for recovery of land, it would be sufficient to give rise to adverse possession, and vice versa.
Adopting Pye
The Court approved and adopted the principles distilled by Lord Browne-Wilkinson and Lord Hope in Pye. In summary:-
• Since the Real Property Limitation Act 1833, the old doctrines of ouster and “non-adverse” possession have ceased to be part of the law; the use of the expression “adverse possession” used in the Limitation Acts of 1939 and 1980 does not revive them.
• The word “adverse” in “adverse possession” refers simply to the lack of consent from the paper owner. It carries no suggestion that an element of aggression, hostility or subterfuge is required.
• Adverse possession occurs when a right of action to recover land accrues to the paper owner and time begins to run in favour of the squatter.
• Legal possession has two elements: (i) factual possession (a sufficient degree of physical custody and control) and (ii) intention to possess (the intention to exercise such custody and control on one’s own behalf and for one’s own benefit).
• As the inquiry is made in respect of factual possession, one is confined to physical control instead of other dealings concerning the property which is not physical and cannot be observed by the paper owner. In the present case, the squatter’s non-payment of rates and government rent, and failure to respond to building orders, were irrelevant to the issue of factual possession.
• Since possession is single and exclusive, the squatter’s possession without the consent of the paper owner is “adverse” to the latter. The assumption of possession by the squatter necessarily dispossesses the paper owner if the paper owner has not discontinued his possession before that.
• In absence of any consent from the paper owner, the question is simply whether a squatter has gone into ordinary possession of the land by obtaining a sufficient degree of physical custody and control, with an intention to exercise such custody and control on and for his own benefit. Such intention is frequently deduced from physical acts of possession.
• The relevant intention is an intention to possess, not an intention to own or to acquire ownership.
• Though the animus possidendi involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title, this is only an intention to exclude the paper owner so far as is reasonably possible and so far as the processes of the law will allow.
• A squatter’s admission that he would be willing to pay rent, or take a lease, if asked to do so, is not inconsistent with his having the intention to possess in the meantime.
The first certified question: departing from Wong Tak Yue
In Wong Tak Yue, Li CJ had held that an occupier’s willingness to pay rent if asked was “plainly and completely inconsistent” with the intention to possess, because his intention was to possess “as of right” rather than “as of wrong”. Lam PJ held that there is a clear divergence between Wong Tak Yue and Pye as to the effect of the willingness of a squatter to pay rent, and that Li CJ’s dichotomy between possession “as of right” and “as of wrong” cannot sit with Lord Browne-Wilkinson’s and Lord Hope’s analysis in Pye. In doing so, the Court exercised its power to depart from its previous decisions “sparingly with circumspection“, bearing in mind the fundamental premise of their Lordships’ judgments in Pye which provides sound guidance to the development of the law on adverse possession.
It followed that the line of cross-examination inspired by Wong Tak Yue (challenging claims for adverse possession in Hong Kong by asking squatters whether they would be willing to pay rent if demanded by paper owners)[2] should no longer be permitted since it is irrelevant to deciding whether the squatter has the requisite intent.
The second certified question
As a matter of law, lying low by the squatter is not inconsistent with the intention to possess; it is not necessary for a squatter to establish that he had the specific intent to exclude the paper owner deliberately.
On the second question, the Court held that, in the absence of deliberate concealment or written acknowledgement, when the dealings between the parties do not give rise to any implied licence by estoppel, a paper owner’s mistaken belief that he is landlord (and the squatter’s knowledge of that belief) does not negative an intention to possess that is otherwise manifested by unequivocal exclusive physical use and control of the property.
Practical takeaways for owners, squatters and practitioners
1. The distillation of principles in Pye set out by Lam PJ is now authoritatively Hong Kong law on adverse possession.
2. The CFA has stated in terms that the line of cross-examination inspired by Wong Tak Yue “should not be permitted since it is irrelevant to deciding whether the squatter has the requisite intent”.
3. A squatter’s “lying low” is not consistent with the intention to possess.
4. As the inquiry is made in respect of factual possession, one is confined to physical control instead of other dealings concerning the property which is not physical and cannot be observed by the paper owner. The squatter’s non-payment of rates and non-compliance with building orders were in this case irrelevant to factual possession.
5. The owner’s mistaken belief that he is the landlord of the squatter, and the squatter’s knowledge of such belief, it did not follow that the squatter did not have requisite intention to possess in view of the objective acts of possession. If there were a representation by the squatter to the owner and reliance by the owner, a case of implied consent based on estoppel may be run, but must be pleaded. Owners advancing a case of possession should also consider advancing cases of tenancy or licence, whether by estoppel or otherwise, or put forward a case of acknowledgement of title or fraudulent concealment. Without such pleas put forward by the appellant landowner in this case, the Court could only decide the case by reference to whether adverse possession for the requisite duration has been established.
6. For paper owners of unregistered title property, regular physical inspection, service of formal notices, and the use of signed written acknowledgements of title or short-form licences or leases will be the surest ways to stop time running. Reliance on rates receipts, Building Order correspondence addressed to the owner, or a subjective belief that the occupier is a tenant will no longer carry the weight it once did.
7. Occupiers asserting possessory title should document continuous exclusive physical control: keys, locks, business operations, repair and maintenance, and continuous presence. Statements that would once have been treated as fatal admissions (“I would have paid if asked”) no longer carry the same weight, but equivocal use of land would remain vulnerable.
8. Watch the registered title regime: The Court noted that reform of the law has been undertaken for land subject to the registered title regime under the Land Titles Ordinance (Cap. 585), but that the law of adverse possession as clarified in this judgment will continue to apply to the many Hong Kong properties still subject to the unregistered title regime; any further rebalancing in favour of paper owners is a matter for the Legislature.
[1] See for example, Yuk Lan Fung v Ko Suk Ping (HCMP 1801/2015, 24 November 2016) in which Chow J stated at §15: “It is, I believe, well recognised that Wong Tak Yue and Pye cannot be reconciled (see The Hong Kong Buddhist Association v Cheng Ka Leung Michael, HCMP 4108/2003 (unreported, 8 September 2006), at paragraphs 48 and 49 per DHCJ Saunders (as he then was); Lau Wing Hong v Wong Wor Hung [2006] 4 HKLRD 671, at paragraphs 33 and 34 per Recorder McCoy SC; and Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 5) [2007] 5 HKC 122, at paragraphs 84 to 92 per Lam J (as he then was)).”
[2] For example, Chan Ting On v Multi-Skill Investments Ltd DCCJ 2786/2013, 20 Jun 2017; Kwan Chi On v 張偉雄 [2022] HKDC 704 cited at footnote 80 of the CFA’s Judgment.
[3] For example, Chan Ting On v Multi-Skill Investments Ltd DCCJ 2786/2013, 20 Jun 2017; Kwan Chi On v 張偉雄 [2022] HKDC 704 cited at footnote 80 of the CFA’s Judgment.
Authored by Emily Ting.
Emily Ting
“Emily is a top-class junior barrister with an amazing ability to process masses of information and documents quickly. and extract the key points. She is also able to leverage her skills across a range of commercial litigation to great effect in competition law cases.”
Legal 500 Asia-Pacific 2026, Competition, Rising Star
Emily is a Charles Ching Scholar and has been recognised by Legal 500 Asia-Pacific 2025 and 2026 as a Rising Star in Competition, as well as Doyles Guide 2026 on Leading Competition & Antitrust Barristers in Hong Kong as Recommended Junior Counsel.
Emily has a broad civil practice. She has particular experience in land and property matters, including land compulsory sale applications, mortgage actions, adverse possession, building management disputes, and planning. She handles a growing number of competition matters. She also advises and acts in a diverse range of matters, including commercial disputes, insolvency, trusts and probate, family, tax, and judicial review.
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This article was first published on 15 October 2026.
Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photographs which appear in this article are included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related. The views and opinions expressed in this article/material are solely those of the members authoring it and do not necessarily reflect the official policy or position of Denis Chang’s Chambers, or of any other member or members of Denis Chang’s Chambers.