Tso and Tong in the New Territories

• Traditional family/clan landholding organizations known as Tso (祖) and Tong (堂) ("Tso/Tong") in the New Territories ("NT") have existed for centuries.^{1There are other terms to describe Tso/Tong such as ancestor worship/land trust and Chinese customary trust, though the term trust might not totally match the trust under Common Law. See Malcom (2012).} Despite the absence of official information on the aggregate size of land held by all Tso/Tong (also known as ancestral land and referred as Tso/Tong land below), Tso/Tong land is widely considered strategic to the proposed new metropolis in the northern NT ("Northern Metropolis") and thus the overall land supply of Hong Kong. While Tso/Tong land could be mandatorily resumed by the Government for development purposes, they could also be sold to private developers with Government's consent and subject to relevant procedures. Between 2015 and 2019, over 300 Tso/Tong land sale applications were approved by the Government.^{2See GovHK (2020). According to a news report, the number of applications for land sale from 2015 to 2020 was 461, and 378 of them (82%) were approved. However, the number of approvals in each year has been declining (from 82 to 45 cases). See 信報財經月刊(2021).} Yet, the process of sale of Tso/Tong land has been considered cumbersome due to the requirement of unanimous consent from all Tso/Tong members, on top of the fact that Tso/Tong were traditionally set up with an objective to ensure that ancestral land-holding can be enjoyed by descendants from generation to generation indefinitely. Besides, such land sale is also constrained when the manager of Tso/Tong responsible for land sale is unreachable or the position is left vacant. As such, development on Tso/Tong land was described in the 2021 Policy Address as "an impasse".
• The 2021 Policy Address pledged to unlock the Tso/Tong land potential for development through reviewing the relevant Tso/Tong management mechanism. More specifically, the review, led by the Home Affairs Bureau, will be conducted in collaboration with the Development Bureau and Heung Yee Kuk – the statutory body representing the interest of the NT indigenous residents. It aims to work out specific amendments to the law governing Tso/Tong and their land matters, on the premise that the NT customs and traditional rights would continue to be respected. Against this background, this issue of Essentials provides an overview of Tso/Tong, covering its history, forms, current status, regulatory framework, and the issues hindering their development potential as a key source of new land supply.

• The institutions of Tso/Tong can be traced back to as early as Song dynasty (宋朝) 1 000 years ago,^{3See 薜浩然(2019) and Hayes and Ching (1976).} which were widespread in traditional China including what is now known as NT where ancestors of prominent local clans settled centuries ago. The traditional custom of establishing Tso/Tong was mainly for ancestor veneration and clan solidarity, through income generated from properties/land deliberately set aside and not to be divided or disposed of by descendants. These landholdings were protected by the Qing Code (大清律例) in certain ways, like penalizing fraudulent sale of such land.^{4See HCA331/2002, par. 44.} After the downfall of Qing dynasty (清朝), and subsequent political changes, Tso/Tong were believed to be no longer in existence on the Mainland.^{5See Selby (1991), 廖書蘭(2021) and HCA2071/1966.} In Hong Kong, they have been preserved in NT under British control since the late 1890s,^{6In 1898, the then Governor Henry Blake proclaimed that the commercial and land interest of NT residents would be protected and the "good customs" would not be interfered with. See Haydon (1995).} and become recognized in the New Territories Ordinance ("NTO") (Cap. 97) enacted in 1910 to deal with NT affairs. Under various arrangements, Tso/Tong were allowed to register and continue to control their land.^{7All lands in NT were declared by the New Territories Land Court Ordinance 1900 to be the property of the British Crown during the term specified in the Convention for the Extension of Hong Kong Territory in 1898. Between 1899 and 1905, the colonial government commissioned a land survey to delineate the land boundary and titles in NT and introduced a Block Crown Lease system. Under this system, once freehold lands in NT were turned into leased land owned by the British Crown, while the landholders became lessees of the British Crown land. See Land Registry (2022a, 2022b), HCA2071/1966, and 劉智鵬編(2010).}

• Although the expression of Tso/Tong is widely used, NTO only contains the expression of "clan, family or t'ong" (宗族、家族或堂). While the term Tso is not explicitly found in NTO, Tso land is considered as clan/family land and is therefore subject to the same registration requirement under NTO.^{8See HCA1763/1967, par. 17, and HCA2071/1966.} Although none of these terms/expressions is defined in NTO, the traditional meaning of Tso/Tong could be found in court proceedings as NTO empowers the courts to recognize and enforce Chinese customs and customary rights affecting Tso/Tong land.
• According to a widely cited court ruling in 1970,^{9See HCA2071/1966.} Tso is described as: "an ancient Chinese institution of ancestral land-holding whereby land derived from a common ancestor is enjoyed by his male descendants for the time being living for their lifetimes and so from generation to generation indefinitely." ^{10Tso/Tong is not regarded as a legal entity, and hence proceedings cannot be brought in its name. Tso/Tong is more referred to as unincorporated association as NTO exempts eligible Tso/Tong from registration under Companies Ordinance. See CACV138/1995 and Section 16 of NTO.} Tso is usually created and named after the ancestor following his death by setting aside part or all of his estates which are intended to be "perpetual, inalienable, and indivisible". In other words, once Tso is formed, its landholding is not supposed to be partitioned and sold, and it shall exist indefinitely for benefits of future generations. The emphasis on landholding is conceivable in the then heavily agriculture-based society where land was an important factor of production and means of livelihood.
• Unlike Tso, Tong is formed by a living male clan member who wishes to be commemorated after his death by setting aside his property undivided. In this case, it is often referred to as Family Tong which closely resembles Tso in terms of membership structure, perpetual landholding, etc. What also distinguishes Family Tong from Tso is that the former can be flexibly named and assumes more functions such as education and welfare apart from ancestor veneration. Besides Family Tong, there are also other types of Tong that may comprise members without hereditary link.^{11Apart from Family Tong, there are Business and Religious Tong. Religious and Business Tong are not necessarily formed by members from the same clan. However, under NTO, they are also required to be represented by a manager. See Wong (1990), CACV138/1995, and HCA595/2019. In this Essentials piece, the focus of discussion is Family Tong.}
• With the above background and considerations, it is worth noting that membership and beneficiaries of Tso and Family Tong are generally confined to every living male descendent of the ancestor, who becomes entitled at birth to an interest in the land until his death. A member's interest in Tso/Tong will not form a part of his own estate and cannot be inherited directly by his descendants. With members from different generations, it is not uncommon for Tso/Tong to have hundreds of members at a time.^{12For instance, according to HCA881/2012, the Man Wing Sau Tso (文永壽祖) established about 400 to 500 years ago had about 600 members/beneficiaries as at 2018.}

• NTO requires the appointment of and registration with the District Office a manager to deal with land matters. It was last revealed in 2004 that there were 13 000 registered managers appointed by 7 300 Tso/Tong, but there was no breakdown between the number of Tso and Tong.^{13See Housing, Planning and Lands Bureau (2004). The number was about 1 300 more than the reported figure in 1980s when it was quoted in a journal article that there were about 6 000 Tso/Tong, including 3 800 Tso and 2 100 Tong. See Wong (1990).}
• As to the landholding of Tso/Tong, the Government indicated that it did not have current information on the total number, size, and geographical distribution of the Tso/Tong land.^{14The Government has claimed that it does not compile and possess current updated information on the total number, size and geographical distribution of the Tso/Tong land. See GovHK (2020, 2021b).} According to some studies on Tso/Tong conducted by experts of the subject, it was estimated in the 1980s that about 2 400 to 2 790 hectares of land were held by Tso/Tong at that time.^{15See Wong (1990) and 薜浩然(2019). The former source cited a figure of 6 000 acres (2 400 hectares) provided by a government department in 1987; whereas the latter cited 2 790 hectares, sourced from the "Report of the Working Group on the New Territories Ordinance" dated 1988. To put the figures in perspective, the Northern Metropolis Development Strategy put forward by the Government in October 2021 indicates that the Development Strategy can contribute to further developing about 600 hectares of housing and economic land in the Northern Metropolis, translating into an increase in the supply of up to 186 000 residential units and 84 000 jobs according to the preliminary estimate.} Even though Tso/Tong are supposedly set up with objectives of perpetual landholding and keeping the site inalienable, some of their land have already been resumed by the Government or acquired by private developers over the years. Therefore, the landholding size today might be less than these estimates made over 30 years ago.
• While eligible Tso/Tong land are generally exempted from government rent,^{16See Section 4 of Government Rent (Assessment and Collection) Ordinance (Cap. 515).} they are still subject to land use restrictions set out in their land leases and statutory zoning plans. Currently, Tso/Tong land are commonly used for various purposes from agriculture, open storage to religious purposes, and Tso/Tong usually derive their revenue from rental income.^{17See HCA2071/1966, and HCA2336/2004.} Tso/Tong lands resumed by the Government are believed to be catering for public works projects such as public housing or related infrastructures, while those sold to developers could become the developers' land reserve for potential private residential development.^{18For example, it was reported that a piece of Tso land in Yuen Long recently resumed by the Government was a proposed site of high-density subsidized housing. It had also been reported that a private developer had indeed attempted to acquire that particular plot of Tso land for a private residential housing project but failed to obtain consent from all Tso members. See 香港01(2021a), 文匯報(2021a) and GovHK (2021a).}

• As mentioned above, NTO is the legislation governing certain aspects of Tso/Tong and other NT affairs.^{19NTO was the revised edition of the New Territories Regulation Ordinance (No.34 of 1910) enacted in 1910 to consolidate and amend the laws relating to the administration and regulation of NT passed from 1899 to 1908. See Land Registry (2022a) and HCA2071/1966.} The law was amended over the years with obsolete provisions removed. Today, those parts relevant to Tso/Tong land (mainly sections 13 and 15) remain intact and cover mainly the following:
  • (a)
    Appointment of manager: section 15 provides that each Tso/Tong must be represented by a manager appointed by their members. The manager so appointed must register with the District Office with proof as required by the Secretary for Home Affairs ("the Secretary").^{20In the past, it was the District Lands Officer responsible for functions specified in NTO.} The Secretary may on "good cause shown" cancel an appointment, and select and register a new manager in his place. Failure of Tso/Tong to make and prove appointment of manager within certain period under specified circumstances may lead to re-entry of their land by the Government.^{21Section 15 of NTO specifies that the Government shall be lawful to re-enter upon the land held by Tso/Tong when (a) it fails to make and prove the appointment of manager within three months after land acquisition by Tso/Tong or (b) it fails to prove the appointment of a new manager within three months after the manager is changed.}
  • (b)
    Powers and responsibilities of the manager: under section 15, a registered manager assumes full power to sell or deal with the land as if he were the sole owner of the Tso/Tong land, subject to the requirement of giving the required notices and obtaining the consent from the Secretary. Any instruments the manager signs in the presence of the Secretary and attested by the Secretary are considered equivalent to being signed by all clan members.
  • (c)
    Roles of the court: under section 13, NTO allows court (Court of First Instance or the District Court) to recognize and enforce Chinese customs and customary rights affecting NT land, which also include Tso/Tong land.
• As the Government considers Tso/Tong as a private institution, it has generally refrained from interfering in Tso/Tong decision-making process.^{22See GovHK (2021b).} Hence, Tso/Tong run its internal affairs based on their available written rules, if any, or established practices. That said, due to various reasons, Tso/Tong may fail to appoint or replace a manager on their own. While no comprehensive data on the prevalence of manager vacancy is available, the Government found that, during land resumption process, at least 49 Tso/Tong do not have manager in place.^{23The information was obtained by the Government in the course of land resumption. However, it is unclear about the total number of Tso/Tong involved in land resumption in the past. See Endnote 35.} Manage vacancy, coupled with the seemingly high threshold for sale of Tso/Tong land, may have limited the development potential of Tso/Tong land sites in NT. Relevant issues are discussed below:

• Although NTO requires registration of Tso/Tong manager with the Government, it does not provide for a prescriptive mechanism for manager appointment. The appointment is, according to literature, customarily made at a meeting usually open to all Tso/Tong members, by consensus and co-option rather than by election.^{24See Wong (1990).} In some cases, each "fong" (房) – a family branch of the clan – can select one manager to represent the groups, and within the "fong" the manager position can be rotated among "fong" members.^{25See 張少強(2016) and HCA2071/1966.} NTO does not specify the number of manager to be appointed, so the clan could decide it on its own.^{26For example, see CACV358/2004. In this case, members of a Tong had once resolved to appoint six managers or two managers from each of the three "fongs". Each "fong" would convene its own meeting to select the managers.} A Tso/Tong manager usually serves for life, unless otherwise provided for in written rules of Tso/Tong. Some allow succession from father to son though the appointment still requires approval by the Secretary under NTO.^{27See Selby (1991).}
• In approving manager registration, the Secretary may ask for proof of the appointment as required. According to a court judgment in 2006, it was heard that the District Office had a duty to consider if the appointment had been made in accordance with the internal regulations or established practice of Tso/Tong, or that the appointment process was overall fair.^{28See CACV358/2004.} From publicly available information, it is not clear whether the Government has a set of internal guidelines on the documents required for proof of appointment, although it is noted that the District Office would generally invite objection by posting notices of submitted manager appointment in places like the ancestral hall. If no objection is filed within a specified period, the appointment can usually be approved and registered.^{29See Wong (1990).} In addition, it has been revealed that the District Office would also require Tso/Tong to show that a resolution over the appointment was passed properly.^{30See CACV358/2004.} In a recent application for approval, it was observed that the Office required the submission of a full list of Tso/Tong members so as to ascertain if the appointment is agreed by a majority of the members.^{31See Kwai Tsing District Council (2020).}
• According to the Government, it is the responsibility of Tso/Tong to update any change of manager status including appointment, resignation or death. Without such notification, it would not be able to grasp the latest situation of individual Tso/Tong including their membership and landholdings.^{32See GovHK (2021a).} However, there have been situations that the managers reportedly have moved abroad, or even deceased without a new manager nominated as replacement.^{33See 香港商報(2018).}
• All in all, given that Tso/Tong may not have clearly written procedures and in the absence of agreement among members, manager appointment could be the source of disputes within Tso/Tong, with some resulting in legal challenges.^{34See for example CACV358/2004 and HCA1763/1967.} Manager(s) with appointment in dispute or positions that are left vacant may have not just affected Tso/Tong land disposal, but also led to the holding up of millions of dollars of land resumption compensation paid by the Government. As at September 2021, there were at least 49 Tso/Tong unable to claim the compensation due to manager vacancy, though that could not obstruct the statutory land resumption process.^{35As at 27 September 2021, about HK$760 million involving 70 Tso/Tong were still held by the Government due to manager vacancies (involving 49 Tso/Tong) and objection from Tso/Tong members over manager receiving the compensation (involving 21 Tso/Tong). See GovHK (2021b).}

• While Tso/Tong land, in Chinese custom, is intended to be indivisible and perpetual, Tso/Tong might still dispose of their land under circumstances of "necessity" (e.g. when descendant encountering economic hardship or serious complication in management, or the need to pay for litigation expenses), after obtaining unanimous consent from members. Information from past legal proceedings revealed that the requirement of unanimous consent in Chinese custom was conceivably intended to prevent unauthorised/fraudulent land sale or ensure that the future generation's benefits were not unreasonably deprived of.^{36The information was cited in a court judgment in which a ruling made by Da Li Yuan (大理院), the then Supreme Court on the Mainland, was referred. See HCA331/2002. As regards the necessity factor, some have noted that it may be interpreted differently now by Tso/Tong. See Wong (1990).}
• Based on court judgments, the Government also holds the view that unanimity, though not prescribed in NTO, is required for sale of Tso/Tong land.^{37See GovHK (2021b)., 38A widely cited High Court judgement in 1986 stated that "That being the case, prima facie, in the New Territories, unanimous consent of all members are required unless local customs or the New Territories Ordinance require otherwise." See HCMP865/1982.} The District Officers therefore must ensure that unanimous consent is obtained from all members when handling applications from Tso/Tong managers for sale of Tso/Tong land. Similar to manager appointment, it is the usual official practice to post notice on the intention of sale at prominent places of the clan's villages for a certain period to ascertain if the sale is unopposed.^{39According to Halsbury Laws of Hong Kong [285-063], in case some members reside overseas, the manager may be asked to contact the members and seek their consent too.} If no objection is received, the Secretary could issue the consent.
• Some have considered that the requirement of unanimous consent from all members too stringent and may not be entirely pragmatic in some circumstances. As a result, there have been suggestions to lower the threshold, such as by requiring a majority of Tso/Tong members' consent instead of all.^{40See 香港01(2021). Indeed, according to HCMP 865/1982, the application of the unanimous consent principle may potentially be varied in certain cases based on local custom. In the hearing of this case, the court has reviewed submissions from Chinese customary law experts who cited Mainland court rulings in the early 20th century that among others, there were cases where ancestral land sale could still be valid if (a) there was an established local custom or a provision in the clan's charter permitting the decision to be made unanimously by the heads of the "fongs" jointly representing all the members of the clan or (b) by a majority of the clan members at a meeting called jointly by the heads of the "fongs".}

• Indeed, to address matters relating to Tso/Tong, the Home Affairs Bureau formed in 2018 a working group with Heung Yee Kuk, focusing on improving the internal procedure and practice of Tso/Tong. The group produced a guide on internal rules of Tso/Tong (祖堂內部守則範本) which was distributed to each Tso/Tong via the rural committees.^{41See GovHK (2021b) and 大公報(2020).} However, in a reply to a written question by the Legislative Council, the Bureau said that Heung Yee Kuk had actively followed up the matters with Tso/Tong but some members of Tso/Tong had reservation over making of internal rules.^{42See GovHK (2021b).} As these rules have never been made public, it is not known to what extent they have been adopted.
• Following the 2021 Policy Address, the Government has set up a new working group with relevant stakeholder groups including Heung Yee Kuk to review the existing Tso/Tong management mechanism, with a view to improving the Tso/Tong management and facilitating the sale of land by Tso/Tong. While it is not yet clear about the concrete proposal of the working group on how to amend NTO, any changes are expected to make the management of Tso/Tong more organized, systemic and transparent,^{43For example, a taskforce member from Heung Yee Kuk has reportedly suggested that Tso/Tong management should be improved by drawing references from the Company Ordinance or the Building Management Ordinance. See 東網(2021).} and to ensure that Tso/Tong could still survive and continue to function even when its properties have been converted into non-land assets.^{44See 施永青(2021b) and 文匯報(2021b).}

• Tso/Tong may hold a notable portion of land in NT with development potential, thus playing an important role in boosting land supply for economic development and housing which are highly relevant to the development of the proposed Northern Metropolis. Based on the literature review and analysis on publicly available information, it is noted that releasing Tso/Tong land faces barriers due to the requirement of unanimous consent from Tso/Tong members and the dependence on having a validly appointed manager to act as the sole authority to deal with the land matters. Yet given that the circumstances and practices across Tso/Tong may vary significantly, there could be further challenges and issues specific to individual Tso/Tong that may hinder some Tso/Tong from reaping the full development potential of their landholdings.
• The Government has pledged to study the possibility of amending NTO to lower the land sale threshold and providing a mechanism for addressing issues arising from vacancies of Tso/Tong managers, so as to address various problems identified by different stakeholders. While details of the proposal remain to be seen, the development will undoubtedly be closely followed.