In 2004, the Land Titles Ordinance (LTO) was enacted to begin the transformation of land dealings in Hong Kong from the existing deeds system under the Land Registration Ordinance (LRO) to a new registration of title system. At that time, there was a clear understanding that the legislation would not come into effect until necessary amendments were made to various aspects of it, including the nature of the registration (Torrens title or English registration) and several other substantive elements of the system to be introduced.

The Proposed Conversion Mechanism

One of the major areas of concern for the Working Party - a concern held since its inception in 1990, almost 20 years ago - is the question of conversion. How, and when, would the existing 'title' to the land (ie the government lease) convert to the new system whereby the title would first be created by registration in the register, and then subsequently by registration of dealings with the land?

The execution of the transfer (replacing the assignment or conveyance) itself would create nothing. It would merely be evidence of information required to change the details of the registered owner to those of the new purchaser. When this information was registered the transferee would become the legal (statutory) owner. So registration would create the title, and for this title a guarantee would be given by the government within the terms of the LTO, which provides for an indemnity to be paid in certain situations.

The difficult parts of the conversion were the timing and the manner. In considering the draft bill which eventually became the LTO, three possible schemes for conversion were analysed in detail by the Working Party, which looked not only at the implications of the various forms, but also the defects of each. The three possible schemes were categorised as the 'midnight', the 'daylight' and the 'half-way house' schemes, considered and queried by the Working Party in the following terms:

1. Was conversion to occur automatically, immediately and of all titles as soon as the legislation took effect (the 'midnight' conversion)? This would have involved an automatic conversion, on a given date, of all titles. One problem with this mechanism would be that those with claims to titles or interests in the land would not be protected on the automatic conversion.

2. Would conversion be effected within the timeframe set out in the LTO, with the possibility of reducing this timeframe (the 'daylight' conversion)? Such a process would last for 12 years. It would give claimants to titles or interest in the land sufficient time to take the available actions for protection, which would usually end up with them pursuing their claims in court. The LTO made provision for (a) a caution against conversion which gave a limited amount of time (12 months) to take action to prove the claim; this time could be extended by court order. The entry of the caution would freeze the register during its currency; and (b) a caveat to give notice of a claim. Unlike the caution, the caveat was not designed to freeze the register but to give notice (converted into a non-consent caution when conversion took place) of the claim to anyone dealing with the land, and of course also to the owner.

3. Would there have to be some half-way house between these? The half-way house would provide that 'conversion' would occur - partially - on the date of coming into force or at a later date; however this 'conversion' was in name only because the title would not become LTO registered title until later approval by the Land Registry.

A midnight conversion was rejected for the obvious inequities it would create. The half-way house method, creating a sort of 'limbo period', was also not accepted by the Legislative Council. Its problems, too, are manifest.

First, and not least, the title is neither one (registered with all the connotations of the guaranteed title) nor the other (still a deeds registration but with potential to become a statutory guaranteed title). What would be needed to make the transition? Would it require action by the Land Registry over 12 or 15 years? Or would the owner have a right to move the transition onwards, even outside any dealing with the land?

Would the value of the land differ from that of the 'new land' (ie land alienated anew after the coming into force of the LTO) or of any existing land (ie land alienated prior to the coming into force of the LTO and thus subject to the LRO)? New land would be totally LTO land with the features of title by registration as guaranteed by the government. Existing land would be on the way to becoming LTO land but the timing would be doubtful and perhaps subject to adverse claims which would delay further the transition to the guaranteed, registered title. Until then, the land would be subject to the LRO. The value of the two different sets of land would vary not because of inherent value differences but because of title problems and anomalies associated with the type of title to which the lands were subject.

What protection would be given to limping or unregistered or doubtful equities or equitable interests? Could claimants for these interests 'get' on the register? How would dealings be effected during the transitional period?

Under the LTO, the Registrar would issue a Certificate of Title to land held under the LTO. That certificate would not represent the usual document issued by a land registry under most of the schemes for registration of titles. For example, the usual position is that there are two formal titles to land under these systems. One is the registry title which contains all relevant information as to dealings and entries on title made by the registry. A duplicate certificate (variously called, for example an 'issue document of title' under the National Land Code of Peninsular Malaysia) mirrored most of the information on the registry but it did not record entries, such as caveats or cautions, and was required to accompany dealings presented to the registry for registration of a dealing. The Certificate of Title proposed to be issued under the LTO would merely represent a historical record, as at the time of issue of the certificate, without recording entries of caveats or cautions or other such matters, and would not be updated on subsequent dealings. So it would have no value as a document of title. Under the half-way house scheme, owners wanting a certificate of title have to wait many years for this piece of paper.

These were just some of the problems that would result from the half-way house scheme. In the event, the scheme was not adopted. Instead a daylight conversion was accepted. The benefit of this approach - although not ideal - would be that claimants would have time to take action to adjudicate their claims, and there would be a definitive period in which the transition from a deeds system to registration of title would take place. Hopefully, that transition would be a seamless, trouble-free process. The period from the coming into effect of the Ordinance and the conclusion of the transitional period was referred to as the incubation period.

Since 2004, the Working Party has continued to review and comment upon the extensive amendments and the substantial redraft of the LTO. However, the review has met a major problem. The problem relates to conversion, which we are now advised will not use the daylight method but instead will revert to the previously rejected half-way house scheme.

Doubtful Titles and Conversion

The manner of conversion to be adopted in Hong Kong is clearly of paramount importance, particularly because:

• there will not be new surveys;
• there will not be a Land Court to review all titles; and
• transition is expected to be a time-consuming process, including for the Land Registry in preparing the registers and other housekeeping matters, on the last day of which all existing title will be registered title.

The process therefore relies on the state of the existing registers being appropriate for the transformation; that is, they do not exhibit defective entries negating the transformation.

In 2004, a daylight conversion was thought to be the best approach for Hong Kong absent of any warning as to the unfit state of the registers. However, the government has now indicated that there are numerous problems in some registers, caused in part by a series of inappropriate recording methods.

Some of these problems have been disclosed to the Working Party. It is the Working Party's opinion that most of the identified defects in this group of titles would not inhibit the conversion to the new system and would not result in the loss of any existing (and enforceable) rights of potential claimants. Nonetheless, hand in hand with these problems, the government has now suggested that the best method of conversion will be the half-way house. The result is that conversion will not be an automatic process within the statutory time-frame. Instead, it will have the prospect of litigious activity, of the possibility of being required to defend an existing title, and ultimately of doubts over a long period of time.

What does this mean at this point in time, when we have been anticipating that the amendments would be presented to LegCo during the current legislative sittings? Not the least of the confusion and problems with the half-way house suggestion is the terminology. For example:

• A 'converted' title will not be a converted title. It will be the title from the LRO register which will automatically be transformed in accordance with the terms of the LTO (considered to take three years after the coming into effect of the LTO). Prior to the conversion, it would seem that any dealing with the 啐nconverted?land will still be subject to the Conveyancing and Property Ordinance (the CPO as currently enacted, not in the to-be-amended form).
• An 'upgraded title' will be a truly converted title. This will be the converted title (after a further 12 years) which has been undergone metamorphosis and been fully transformed and converted into a LTO title. This event will take place either on the application of the Land Registrar or as a consequence of a voluntary application by the owner consequent on a dealing with the land.

The scheme proposed by the government does not seem to offer a solution for those titles which it envisages are problematic. On the whole, the scheme would seem to be placing titles in a dubious position pending action by the owner to convert when effecting a dealing with the land. The 'converted title' would need investigation by the Land Registry, needing to pass the test of being a 'good, holding title' before it can be elevated to a 'registered title'. The cost of the conversion scheme to the owner is unknown, and no estimates have been presented to the Working Party.

If the owner wants a statutory, guaranteed title he must convert. His title will be treated as a 'converted title' when the Ordinance comes into effect (or at least within three years of that happening). That title will then need to be 'upgraded' by examination by the Land Registry before it becomes a 'registered title'. Imagine the cost, imagine the delays, and try and imagine what proofs, documentation and such the Land Registry will require.

Now compare daylight conversion. Whilst not ideal, the process of conversion is technically automatic on the passing of time - not on the application by the owner for conversion and then the examination by the Land Registry. Daylight conversion puts the duty to examine title on those with claims to interests in the land. If claimants do not act timeously, at the end of the 'incubation' period their claims will no longer be effective against the land. So all 'existing' land would be treated equally.

The time has now come for members of the profession to reflect on the type of conversion mechanism they consider to be most appropriate to ensuring good titles, economic conversion methods and a successful transition from deeds to title registration.



Judith Sihombing
Member, Working Party on the Land Titles Ordinance
The Law Society of Hong Kong

《土地業權條例》：催生轉換方案的陣痛 
詩鴻屏女士批評政府最近所提出的香港過渡至土地業權註冊制度方面的建議。

2004年，立法會通過了《土地業權條例》，而香港的土地交易制度，亦將會從現行在《土地註冊條例》下的契據制度，轉化成為一個嶄新的業權註冊制度。當時存在著很清晰的理解，就是該項法例暫時不會生效，以便經各方面作出必要的修訂，包括註冊的性質(Torrens註冊制度或English registration)以及將會在該制度下實行的其他數項實質元素。

建議的轉換機制

工作小組的其中一個關注範疇就是轉換的問題（這是自其於1990年開展以來的差不多20年時間內，都一直備受關注的問題）。現行的土地「業權」（即政府租契）將如何及何時轉換至新制度之下（在新制度下，業權首先於註冊紀錄上作出登記，其後藉著與該土地之交易有關的註冊而設定）？

轉讓書的簽立（取代轉讓契或轉易契），其本身並不作出任何設定，而只是該等將註冊業權人的細節變更成為新買家的細節所須的資料證明。該等資料被登記後，受讓方便成為法定所有人。因此，業權乃通過註冊而設定，而政府會就此一業權提供在《土地業權條例》條款範圍內的擔保，並提供在若干情況下作出支付的彌償保證。

轉換上所存在的困難，部份是在於時間選擇和方式方面。工作小組在審閱該最終成為《土地業權條例》的草案時，對三個可能的轉換方案進行了仔細分析，並且不單是查看各種方式的含意，亦查看了每一個方案的缺點。該三個方案分別被稱為「午夜」、「白日」及「中途之家」方案。工作小組對它們作出了研究並提出疑問如下：

1. 法例生效後，轉換是否自動及即時發生，和涉及所有業權（「午夜」轉換）﹖它將會涉及所有業權於某一個日期自動地轉換。這一機制所存在的其中一個問題是，在自動轉換機制下，對土地的業權或權益提出權利主張的人士將不會受到保障。

2. 轉換是否會在《土地業權條例》所設定的期限內生效（連同縮減期限的可能性）（此即「白日」轉換）﹖這一過程將會維持12年。它會給予對土地業權或權益提出主張的人士充分時間，採取保障其自身利益的行動，而結果通常是向法院提出他們的權利主張。《土地業權條例》的條文規定 (a) 須就轉換提出警告，當中並會提供一個採取行動以證明其主張的時限（12個月） ﹔這一時限可藉法院命令加以延長。警告書的登錄，在其流通期間會將有關的註冊紀錄凍結；及(b)發出權利主張通知的知會備忘。與警告書不同，知會備忘的目的並非為了凍結註冊紀錄，而是發給與該土地有關的任何人士權利主張通知（當轉換進行時，它將轉化成為非同意警告書），當然亦包括業權人在內。

3. 這兩者之間是否會有一個「中途之家」﹖「中途之家」將規定，「轉換」將（部分地）於生效日期、或是一個較後的日期發生；但這一「轉換」其實只是名義上的，因為該業權並不會成為《土地業權條例》下的註冊業權，直至其於較後時間獲得土地註冊處核准為止。

午夜轉換因著其所產生的明顯不公平之處而被否決。設定一個「中間過渡時期」的「中途之家」方案亦不為立法會所接納，而它存在的問題亦是顯然的。

首先，該業權乃既非這樣（以被擔保業權的所有內涵註冊），亦非那樣（仍然是一項契據註冊，但有可能成為法定的擔保業權）。我們需要作出甚麼來完成這一過渡呢？是否需要土地註冊處在12或15年的期間採取行動呢？又或是，業權人是否有權將過渡期移前，即使在不涉及該土地的任何處理的情況下？

該土地的價值與「新土地」（即於《土地業權條例》生效後的土地重新讓與）或是任何現有土地（即於《土地業權條例》生效前並因而受《土地註冊條例》所規限的土地重新讓與）的價值是否有所不同？新土地將全為《土地業權條例》下的土地，其業權藉註冊而獲得政府擔保。現有的土地將逐漸成為《土地業權條例》下的土地，但時間的安排將成疑，並也許會出現對抗性的權利主張，因而進一步推遲過渡至擔保和註冊業權的階段。但在這之前，土地仍將受《土地註冊條例》的規限。這兩套土地的價值將會有所不同，這並非因為它們的固有價值不同，而是因著該土地所屬的業權類別而產生的業權問題和異常情況所致。

對於不穩的、未註冊或不確定的權利或衡平法權益，可以給予其甚麼保障呢？提出此等權利主張的人是否可以獲得註冊呢？在過渡期內，交易應如何進行呢﹖

根據《土地業權條例》，土地註冊處處長會向在該條例下持有的土地發出一份業權證明書，而該證明書並不等同於土地註冊處在大多數業權註冊計劃下所通常發出的文件。例如，通常的情況是，在該等制度下存在兩項正式的土地業權，一項是註冊處業權，當中包含註冊處所作的關於業權交易及登錄的一切相關資料。一份證明書複本（有不同的稱謂，例如根據National Land Code of Peninsular Malaysia，它稱為「業權發出文件」）反映註冊紀錄上的大多數資料，但並沒有記載任何登錄，例如知會備忘或警告書，並規定需要隨附向註冊處報告的交易，以供進行交易登記。所建議的根據《土地業權條例》發出的業權證明書，只代表在發出證明書當時的一項歷史性記錄，而沒有登錄任何知會備忘或警告書或其他該等事宜，亦不會就其後的交易進行更新。因此，它並不具備作為一份業權文件的價值。在「中途之家」方案下，期望獲得發給業權證明書的業權人，恐怕必須等候許多年才能夠如願以償。

上述的僅為「中途之家」方案所導致出現的其中一些問題。不管怎樣，該方案並沒有被接納，取而代之的是白日轉換機制。這一方案的好處是（雖然並非理想），提出權利主張的人士會獲得時間採取行動來就其主張要求法庭作出裁決，而從契據制度過渡至業權註冊制度，亦會有一個明確的實行期限。假如過程順利的話，這一過渡將會是一個無縫和暢順的過程。從條例生效至過渡期的結束，這被稱為一個孕育期。

自2004年開始，工作小組已經就《土地業權條例》的廣泛修訂和大幅度的重新草擬持續地進行審議和提出意見。然而，該等審議遭遇到一個重大問題，而它卻是與轉換方案有關。我們現時被告知，政府將不會採納白日方案，而是會採用之前被否決的「中途之家」方案。

不明確的業權及轉換

香港採納甚麼轉換方式，很明顯是非常重要的，尤其是因為：

• 將不會進行新的調查；
• 將不會設立土地法院來審核所有業權；及
• 預期有關的過渡期將會是一個漫長的過程，包括需要由土地註冊處製備所有註冊紀錄及處理其他內部事宜，而在這個過程的最後階段，所有的現行業權將會轉而成為註冊業權。

因此，這一過程很視乎現有的註冊紀錄是否適於進行轉化；即是說，它們並沒有顯示有任何足以否定轉化的不完善登錄存在。

2004年，在註冊紀錄沒有被提出存在任何不完善地方的情況下，香港採納了被認為是最適合的白日方案。然而，政府現在表示，一些註冊紀錄存在很多問題，部分原因是採用了連串不當的記錄方法。

工作小組已經獲得披露若干此等問題，然而工作小組認為在這一組業權當中，大多數被識別的缺陷並不會對轉換至新制度構成妨礙，亦不會導致可能提出權利主張的人士的現有（和可強制執行）權利喪失。然而政府現時已提出，最佳的轉換方案將會是「中途之家」方案。這意味，轉換過程並不會在一個法定的時限內自動進行。相反，它將會存在訴訟的可能，並可能需要就現行的業權進行爭訟，以及導致長時間存在不明朗的境況。

當我們預期該等修訂將會在現行會期內向立法會提交時，這表示一些甚麼呢？「中途之家」方案的最大混淆和存在問題之處是在其術語方面。例如：

• 一項「轉換」業權將不會是轉換業權。它將會是來自《土地註冊條例》註冊紀錄的業權，並會根據《土地業權條例》的條款自動轉化（預期需要在《土地業權條例》生效之後的三年時間）。在轉換之前，任何有關「未轉換」土地的交易，看來將需要受《物業轉易及財產條例》（按現行所制定而非將來的修訂方式）所規管。
• 一項「升級業權」將會是真正的轉換業權。它將會是一項經過蛻變的轉換業權（在另一12年之後），並完全轉化和轉換成為一項《土地業權條例》下的業權。這一情況的發生，可能是由土地註冊處處長提出申請，又或是由業權人基於某一項土地交易而自動提出申請。該「轉換業權」需要由土地註冊處進行調查，並需要在其被提升為「註冊業權」之前，通過一項「妥善、持有業權」的驗證。業權人將需要為轉換方案付出多少代價，我們目前仍不清楚，而工作小組仍未獲得提供任何這方面的評估。

假如業權人希望獲得一項法定、擔保業權，他便必須進行轉換。在條例生效後（或至少在發生該等情況的三年內），他的業權將被視作一項「轉換業權」。在該項業權成為「註冊業權」之前，它需要先經過土地註冊處的查核和「升級」。你可以想像，在這一過程中需要耗費多少成本和將會造成怎樣的遲延，而土地註冊處又需要處理多少證明和文件。

那麼，白日轉換機制又如何呢？它雖然並非最理想，但在技術上，它的轉換過程是隨時間的過去而自動發生，而並非由業權人提出轉換申請，然後由土地註冊處進行查核。白日轉換機制將查核業權的責任，置於向土地提出權利主張的人身上。假如提出權利主張的人未能適時採取行動，那麼於「孕育」期完結後，他們對土地提出的權利主張便不再有效，而所有「現有」土地將會被平等對待。

現時正是時候讓業界的各成員反映他們認為哪一種轉換機制是最適合的時候，以確保能夠達至妥善業權、經濟的轉換方案及一個從契據註冊到業權註冊的成功過渡。

詩鴻屏
香港律師會
《土地業權條例》工作小組成員