TNAG-0943-FCO40-1162-Future-of-Hong-Kong-1980 — Page 58

#*w*མས་བབས་ བ- F-L1་ མ་ཡw P2f

(1)

Lease Dated Past 1997

This option would clearly set more minds at rest in the business community, if it could be shown to be legally

effective.

(ii) This concept is open to the same legal objections as the grant of freehold, namely whether the Crown has power under the present Orders in Council and Letters Patent to grant leases beyond 1997 (see Section I of Opinion). There is no doubt that legislation in the U.K. and not just in Hong Kong would be required to obviate the real risk of such leases being challenged. The types of situation in which the question might be directly tested in the courts are illustrated by the S.G. in M.24 (for example, where a sub- tenant whose sub-tenancy has expired refused to quit and is sued for possession by the head tenant, the issue of whether or not the head lease granted to him by the Government is valid is likely to be raised by the sub-tenant in order to show the hed tenant has no right to the premises and hence to expel him).

(iii) The granting of such leases would undoubtedly cause considerable interest in legal circles both within and outside Hong Kong. I can foresee learned articles by emminent professors in Law Journals worldwide. This, even more than the grant of the freeholds, would be likely to alert the legal advisers to commercial organisations to the problem. They would be bound, for instance, when advising a mortgagor or

a foreign corporation contemplating investment to caution against the risk of the lease being held invalid by the court.

(c)

Pre 1997 Lease with Option to Renew to post 1997

(i)

This could be done without the danger of challenge of the initial period and without legislation. But it only postpones the problems of a post 1997 lease until such time as the option to renew has been exercised. Moreover the legal debate about the option to renew together with the commercial disadvantages of such an argument could commence at once.