At first instance and on appeal, these judicial review applicants (Xs) contended that the New Territories Small House Policy (the SHP) was unconstitutional in its entirety for three reasons. First, because in contravention of arts.25 and 39 of the Basic Law (the BL) and/or art.22 of the Bill of Rights (the BOR), the SHP discriminated against persons who were of “non-indigenous” status by birth or social origin. Secondly, because in contravention of those three articles, the SHP and the relevant exemption in the Sex Discrimination Ordinance (Cap.480) discriminated against female indigenous villagers on the basis of gender. And thirdly, because in contravention of art.7 of the BL, the Government had failed to manage, use or develop land in Hong Kong for the benefit of all Hong Kong residents. At first instance and on appeal, the respondents (Rs) and the interested party contended that the SHP was constitutional in its entirety. The trial Judge saw the central issue as whether such discrimination as the SHP involved was rendered constitutional by art.40 of the BL (BL40). He treated that issue as dependent on whether the rights or interests enjoyed by the beneficiaries of the SHP (Ding rights) formed part of “the lawful traditional rights of the indigenous inhabitants of the ‘New Territories’” within the meaning of BL40. Of the three principal forms of land grant by the Government that Ding rights involved, namely private treaty grant (PTG), free building licence (FBL) and Exchange, he held that the SHP was constitutional insofar as it related to FBL but unconstitutional insofar as it related to PTG and Exchange. All parties repeating the arguments which they had advanced at first instance, Xs appealed against the trial Judge’s judgment insofar as it held FBL constitutional while Rs and the interested party appealed against that judgment insofar as it held PTG and Exchange unconstitutional.
Held, dismissing Xs’ appeals and allowing Rs’ and the interested party’s appeals to set aside the trial Judge’s judgement insofar as it declared PTG and Exchange unconstitutional and to dismiss Xs’ application for judicial review, that:
1) Beginning with the factual context in which BL40 was to be construed, it was to be borne in mind that the SHP had never been subject to any legal challenge since 1972 until the proceedings below. In other words, until the judgment below, the SHP in its entirety had all along been recognised as lawful under Hong Kong’s legal system both before and after 1997, notwithstanding its inherent discriminatory nature and notwithstanding the coming into force of the BOR in 1991 (Winfat Enterprises (HK) Co Ltd v Attorney General  HKLR 211, Winfat Enterprises (HK) Co Ltd v Attorney General  HKLR 32, Winfat Enterprise (HK) Co Ltd v Attorney General of Hong Kong  AC 733, Cole v Whitfield (1988) 165 CLR 360, Ng Ka Ling v Director of Immigration (1999) 2 HKCFAR 4, Brownlee v The Queen (2001) 207 CLR 278, Director of Immigration v Chong Fung Yuen (2001) 4 HKCFAR 211, Vallejos v Commissioner of Registration (2013) 16 HKCFAR 45, Comilang Milagros Tecson v Director of Immigration (2019) 22 HKCFAR 59 applied). (See paras.33–86.)
2) As to the purpose and objective of BL40, the lawful and traditional interests of indigenous inhabitants of the New Territories (NTIIs) under that article were those which, as a matter of historical fact, had been recognised to be their lawful and traditional rights and interests under Hong Kong’s legal system at the time when the BL was promulgated on 4 April 1990. Applying the theme of continuity, BL40 continued and elevated to a constitutional level the recognition and protection of those lawful and traditional rights and interests of NTIIs after 1 July 1997 (Vallejos v Commissioner of Registration (2013) 16 HKCFAR 45, W v Registrar of Marriages (2013) 16 HKCFAR 112 applied). (See paras.87–93.)
3) Having regard to the relevant history, to Hong Kong’s legal system both before and after 1 July 1997, to China’s policy on the implementation of the Sino-British Joint Declaration, to the need to read BL40 coherently with arts.120 and 122 of the BL, to Britain and China’s relevant reservations under the Convention on the Elimination of All Forms of Discrimination Against Women and to the legitimate expectations created by the SHP, Ding rights were, on a proper construction of BL40, within the NTIIs’ lawful and traditional rights and interests covered by that article and were, despite their inherently discriminatory nature, entitled to constitutional protection in full (Ng Ka Ling v Director of Immigration (1999) 2 HKCFAR 4, Ng Siu Tung v Director of Immigration (2002) 5 HKCFAR 1, Nadarajah, Abdi v Secretary of State for the Home Department  EWCA Civ 1363, Mandalia v Secretary of State for the Home Department  1 WLR 4546, Chief Executive of HKSAR v President of the Legislative Council  1 HKLRD 460, Comilang Milagros Tecson v Director of Immigration (2019) 22 HKCFAR 59, ZN v Secretary for Justice  3 HKLRD 778 applied). (See paras.94–116.)
4) The trial Judge’s approach included a tracing exercise concerning land holding and land administration in the New Territories beginning with land tenure before the New Territories Lease. He regarded FBL as thus traceable. But he did not regard either PTG or Exchange as thus traceable. As to that, however, Rs and the interested party were correct in their submission that PTG captured or reproduced the essential or core features of an eligible villager’s right to apply for new land on which to build a house under customary tenure in the pre-Colonial era. And they were also correct in their submission that Exchange was just a derivative of FBL. So even on the trial Judge’s approach, the SHP was constitutional in its entirety. (See paras.18–19, 116–128.)
These were the appeals of the applicants, respondents and interested party against the judgment of Anderson Chow J in the Court of First Instance declaring that the New Territories Small House Policy was constitutional insofar as it related to a land grant in the form of free building licence but unconstitutional insofar as it related to land grants in the form of private treaty grant and exchange (see  1 HKLRD 988).
Editorial Note: For the quick-reference purposes which a headnote is meant to serve, the foregoing holdings sufficiently indicate the essentials of the Court of Appeal’s reasoning in concluding that the Small House Policy is constitutional in its entirety; but the whole of the judgment should of course be read with care for its details, its account of the relevant history and its in-depth analysis.