Hong Kong Law Journal 1971 - 2024

Banks have hardly been given due recognition for their contribution to the common law system. Many important cases emanate from banks anxious but determined to recoup at least part of the money they have lent. In the current economic downturn, there is no shortage of such cases. A recent addition is the Court of Final Appeal’s decision in Bank of China (Hong Kong) Ltd v Fung Chin Kan and Lee Yuen Wah. In many respects, this case is simply one of the many mortgagee actions heard by the Hong Kong courts. Two features, however, make the BOC case special: first, the Court of Final Appeal’s rather radical approach towards collateral contracts, and secondly, the brevity with which the Court of Final Appeal disposed of the undue influence argument put forward by one of the defendants, Mrs Fung. This article examines the first of these two points.

The recent Court of Appeal decisions of Typhoon 8 Research Ltd v Seapower Resources International Ltd and Another considered the question of whether deposits paid upon a lease agreement could give rise to a trust under the doctrine established by Barclays Bank Ltd v Quistclose Investments Ltd. This note argues that both the reasoning and decision of Typhoon 8 Research are flawed.

This article compares the administration of indeterminate sentences in Hong Kong with developing practices in the United Kingdom and critiques the Hong Kong decisions in the light of recent rulings of the European Court of Human Rights. The author explains that while the Hong Kong courts have ruled on some aspects of the constitutional validity of an indeterminate sentence, the ultimate question of the Chief Executive’s power to detain prisoners after a recommendation of the Long Term Prison Sentences Review Board to substitute a determinate sentence for an indeterminate one has yet to be addressed. The author concludes that should the Chief Executive’s right to effectively determine the release date of life-sentenced prisoners be challenged, it would likely be judged invalid for inconsistency with the Bill of Rights and the Basic Law.

This article addresses the issue of the personal liability in tort of directors of one-person companies. The point of departure for this examination is Williams v Natural Life Health Foods Ltd. The author considers a variety of approaches in both contract and tort case law to explain how it can be that a one-person company may be found liable, but not its directors. It is suggested that the reasoning of Williams be regarded as based on the question of duty of care for purely financial loss. The author concludes that in such cases the main question for analysis should be this aspect of negligence law rather than the alter ego reasoning in company law.

Many Hong Kong companies, including listed companies, are controlled by a small group of shareholders with family ties. The inadequacy of the law has made it possible for controlling shareholders to expropriate corporate assets by using complex corporate structures to the detriment of minority shareholders. This article analyses the inadequacy of the law on the appointment of directors, self-dealing and shareholder legal remedies, and the current proposals for legislative reform. Drawing on the experience of some Western European countries where dominant shareholding is also a strong feature, it argues that such problems can be overcome by having a system of law and regulation which provides adequate shareholder protection and effective enforcement of such law.

This article explores the way in which statutes can operate in time and the interpretive presumptions applied by the courts to determine what facts – past, present or future – a statute should be considered to affect. It describes the current terminological and analytical confusion that obscures investigation of questions of legislative temporality, and in particular questions whether the temporal application of statutes should be subject to one presumption or two. After examining the jurisprudence in the area and its underlying logic, the article suggests that the temporal analysis of statutes is best guided by two temporal presumptions: a presumption against retroactivity and a presumption against interference with vested rights. It then proposes a clear test for the applicability of each presumption, and concludes by confirming the viability of the proposed analysis by testing the legal framework for each presumption against a range of professed exceptions and challenging hypothetical scenarios.

This article reviews the Hong Kong law on company directors’ duties of skill and care in the context of existing regulatory frameworks and developing case law in other common law jurisdictions, including in particular that of the United Kingdom. The discussion focuses on a recent review undertaken by the Hong Kong Standing Committee on Company Law Reform and criticises its decision to recommend acquiescence in the face of an option to codify the law in this field. The primary conclusion drawn is that Hong Kong will find itself out of step with the current international trend to reform and tighten the law on directors’ duties, to the detriment of its reputation as an international centre of finance and commerce, unless steps are taken promptly to introduce a statutory benchmark.

This article reviews developments in the understanding of a right to self-determination under international law in terms of the right’s applicability and potential for resolving the Tibetan people’s claims for self-government or independence. While a right to self-determination could likely justify Tibetan independence or secession from China, especially in light of continuing human rights abuses in Tibet, current political realities and global trends toward an expansion of “internal” options for realising self-determination within existing states make secession unlikely. Less radical solutions, such as greater autonomy, federal political structures and an improved minority rights regime, could provide more realistic mechanisms for settling the Tibetan question. Successful resolution, however, ultimately depends on the level of genuine international concern as well as the extent to which the Chinese Government is willing to accept greater democratic participation and consider more flexible notions of state sovereignty and territorial integrity.

Modern states, democratic ones in particular, have grown to prefer the use of more subtle, or at least less visible, police surveillance to open confrontation in a courtroom, where the state itself may be scrutinised in public. Well-equipped national security agencies enable the state to respond to potential security threats before they mature. Hong Kong’s political police unit, the Special Branch, was indispensable to Hong Kong's colonial political order. Although it was disbanded before the handover of Hong Kong to China in 1997, political policing and monitoring probably continue under the new legal order. This article examines the historical origin of political policing in Hong Kong, including the establishment of the Special Branch and its initial focus on communist activity in Hong Kong. It then traces the demise of the Special Branch prior to the handover, examines the role played by the Independent Commission Against Corruption, and explores the relevance of political policing to contemporary society.

This article describes and analyses the problems of China’s criminal defence lawyers in gaining access to and representing detained clients during the investigation, indictment and trial stages of the criminal process, with brief reference to problems at the appeal and post-conviction stages. The article also discusses the harassment and intimidation suffered by defence counsel who live under threat of prosecution for waging too vigorous defences and who are subject to other restraints and sanctions. It concludes with some suggestions for foreign co-operation with and support for these embattled but essential lawyers in China.

The enactment of the Securities and Futures Ordinance, which came into effect in April 2003, marked the end of a decade-long effort to consolidate ten ordinances regulating the securities and futures markets in Hong Kong. While it is primarily a consolidating ordinance to regulate financial intermediaries and facilitate Internet trading, there are new provisions in the Ordinance that are likely to have significant implications for corporate governance in Hong Kong. This article analyses those provisions and concludes that while the Ordinance is a major positive development from the corporate governance perspective, there remain a number of unresolved issues, such as the status of the Listing Rules, and the independence of auditors, that still require urgent reforms.

This paper examines recent family law / mediation research undertaken by various agencies in Hong Kong. It examines proposals made for change and it poses the question “Where to from here?”. The author argues that Hong Kong is now ideally placed to bring about a state-of-the-art-multi-disciplinary family law system designed to carry us confidently through the present century. The paper asks whether Hong Kong is willing and able to rise to that challenge.

The Inland Revenue Ordinance (IRO) is not capable of dealing adequately with taxation issues of e-commerce in Hong Kong. This is particularly evident in the realm of profits and withholding tax. The IRO is only able to cover tax issues of the Old Economy, but not the New Economy, and therefore, new solutions are needed before Hong Kong’s tax base becomes seriously eroded as e-commerce becomes a more substantial portion of business in Hong Kong in the future. However, it is dangerous at this stage to implement new hard, crystallised legislation for taxation of e-commerce because of the fast and ever-changing nature of business in the New Economy. Therefore, the Inland Revenue Department would have to consider using soft law (as indeed it has in the form of guidelines DIPN 39) or even no law, as alternatives. Both of these alternatives have got advantages and drawbacks, but in the final analysis, the soft law solution would appear to be the most appropriate at this stage, as this seems to be the best compromise: it is a form of written rules minus the inflexibility of entrenched hard law. It can be altered to meet the changes of cyberspace commerce, but at the same time, provide some level of current certainty for corporate tax planning in Hong Kong.

Execution of conveyancing documentation by companies has given rise to considerable anxiety to vendors, purchasers and their solicitors. Only gradually have the courts construed and applied the straightforward Section 20(1) and the enigmatic Section 23 of the Conveyancing and Property Ordinance, leaving in their wake a host of defective titles. Now the Hong Kong legislature has come to our aid by enacting a new Section 23A. The purpose of this article is to examine the meaning of this section and to explore the extent of its curative effect.

Isolated from the rest of the world, the military junta in Burma continues to rule the country by force and fear. The government has consistently suppressed opposition activities, used extra-judicial killings, disappearances, torture, arbitrary arrests, denial of fair trial rights and more. In addition to restrictions of human rights and freedoms, other factors contribute to a silent emergency in Burma. These include the internal displacement of people, the practice of forced labour, and an Acquired Immune Deficiency Syndrome (AIDS) crisis fuelled by the drug trade. In this context the severity of the humanitarian situation there is examined, as well as whether the human rights and humanitarian situation are deserving of external humanitarian intervention. The very notion of humanitarian intervention is considered against the backdrop of international developments over the last few years. Also scrutinised are the possible legal grounds under international law for humanitarian action, as well as the legal tension that exists between humanitarian relief and political intervention in domestic affairs, in the context of Burma.

The Administrative Licensing Law (xingzheng xuke fa) will constitute a major addition to Chinese administrative law, and the rhetoric surrounding its drafting promises path-breaking reform of the Chinese regulatory state. This report critically assesses that promise by chronicling the actual course of shenpi (licensing) reform carried out in Shenzhen in 2001. Shenpi reform derives its novelty from questioning the rationale of regulatory policies and not just the procedures by which they are carried out. In Shenzhen, however, the reform revolved around an effort to achieve quantitative reduction in the number of shenpi procedures, which could reflect either changes in the substance of policies or mere success in cutting red tape. Close examination reveals that Shenzhen’s reform was a combination of house cleaning against errant rule-making and an attempt to further increase bureaucratic efficiency, whereas little was accomplished in policy reorientation. A key difficulty in overhauling regulatory policies in China is the extremely insular policymaking process, where policy development falls entirely into the hands of specialised agencies. Not only is legislative and judicial oversight over agency rule-making absent, Shenzhen’s experience also suggests that accountability has been difficult to establish even within the executive branch. This is due both to the weakness of internal monitoring institutions and the limited concept of accountability the government employs. The report concludes that incremental reform is possible to allow greater input into the policymaking process and to impose greater accountability on that process, even if robust legislative and judicial supervision is not politically or institutionally feasible in the near future.

Before 1 September 2000, the District Court’s civil jurisdiction was limited to claims of up to HK$120,000. From 1 September 2000, the District Court’s civil jurisdiction was extended to claims of up to HK$600,000. With effect from 1 December 2003, the civil jurisdiction of the District Court was further increased from HK$600,000 to HK$1 million. The main objective of this paper is to assess the impact of the enlargement of the District Court’s jurisdiction on the usage rates of barristers in the conduct of civil cases in the District Court. Having performed a loglinear analysis of the legal representation statistics on the hearings for civil claims in the Hong Kong District Court over a two-year period from 1 September 1999 to 31 August 2001, the authors discovered, inter alia, that the enlargement of the District Court’s jurisdiction has resulted in less use of barristers (relative to the use of solicitors) when all other factors are being controlled.

Telephone tapping, a measure adopted by law enforcement agencies for the prevention and detection of crime, is carried out under section 33 of the Telecommunications Ordinance. However, the section does not pass the forseeability test required for it to be regarded as “law”. The present practice of telephone tapping violates the right to privacy and to freedom of expression guaranteed by the Basic Law. The Personal Data (Privacy) Ordinance, which may be invoked by persons suspecting their telephones to have been tapped, has limitations. These people stand a better chance by relying on the Hong Kong Bill of Rights Ordinance. Accordingly, to avoid the courts being landed with the invidious task of either rendering the rights in question a nullity or denying law enforcement agencies a necessary tool, the Hong Kong Special Administrative Region (HKSAR) Government should take immediate action to enact legislation along the lines recommended by the Law Reform Commission in 1996.

The purpose of this article is to explore how the concept of possession has played an important role in modern land law and whether that importance has remained with the same degree of force in the 21st Century – particularly in light of the enactment of the Land Registration Act 2002 in England, and in light of the human rights perspective. The Land Registration Act 2002 aims to introduce a system of complete and accurate registration of title, thereby facilitating on-line investigation of title (and in turn will allow for the gradual introduction and implementation of a system of electronic conveyancing). The consequential movement to an absolute notion of title, disturbed only in exceptional and limited circumstances, does not accommodate a concept of de facto possession which has its origins in a context where land titles are relative. Hong Kong is gradually moving towards a similar approach by the proposals put forward in the Land Titles Bill and as such, many of the ideas about the way in which we conceptualise possession apply equally to Hong Kong.

In October 2002, the authors published an article which discussed the challenges posed by self-representation for litigants and other stakeholders in the civil justice system, identified the gaps in knowledge about litigants in person and charted a course for further empirical research to fill those gaps. The purpose of this second article is to report on a survey of the Hong Kong solicitors’ profession that the authors carried out in the spring of 2003. The survey was designed to gather information on the issues raised by self-representation from the perspective of solicitors for represented parties.

Two journalists were arrested and handcuffed by the police on 25 April 2002 while covering a protest in Chater Garden in Central. Hong Kong journalists and their counterparts overseas have encountered increasing restraints by the police in their coverage of protests and demonstrations. Under existing practices, police discretion to tolerate both the protests and the coverage of such events by journalists has been decisive. This article explores and argues for a right of journalists to cover protests and demonstrations. Such a right stems from the guarantee of the right to freedom of expression, which covers both press freedom and the right to express dissenting political views. To minimise any future interference, the authorities should devise guidelines so that journalists may only be excluded from protests and demonstrations in extreme situations where the presence of the press would cause demonstrable and immediate harm to others. Otherwise, they should be permitted to freely report on such incidents.

The purpose of this article is to use the intense public debates of two legal issues – the right of abode case and the Public Order Ordinance – as examples to show how the legitimacy of law has been contested in Hong Kong. Adopting an approach that separates “law” into four components – legislative decisions, judicial decisions, legislative process, and judicial process – the article argues that the legitimacies of these components are interrelated. A number of discourses employed in the debates which may have general significance and be redeployed in future events will be identified, and how and why they were adopted will be explained. It will be shown that a host of factors unique to the post-colonial setting of Hong Kong – the Special Administrative Region government and the Provisional Legislative Council’s perceived lack of legitimacy and the resultant “colonial nostalgia”, the common law’s symbolism for the autonomy of Hong Kong, an Occidentalist inclination of viewing the West as the ideal Other, and a perceived need of maintaining a Westernised legal system to attract foreign investments – along with the more universal emphases on human rights and legality, have affected, and been reflected in, the discourses adopted in the debates.