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Colonial Cases

Fangtan Land Case, 1941

[land law]

Fangtan Land Case

Court of Consuls, Shanghai

North China Herald, 29 October 1941



HOLDING that if the Land Regulations were free from ambiguity it would be unnecessary to consider extraneous matters, including the fact that the tax claimed by the Council had never been levied before, and that the Council was empowered to tax unregistered "fangtan" land in the Settlement, the Court of Consuls yesterday delivered judgment in favour of the S.M.C. in the "fangtan" case.  The action was instituted by four Chinese holders of "fangtan" land claiming damages against the Council for requesting the Power Company and Telephone Company to discontinue their supply of power and telephone service for their failure to pay "fangtan" land tax.  The action involved the right of the council to levy a tax amounting to more than $1,000,000 on "fangtan" land annually.


The case occupied ten afternoon sessions commencing at the beginning of the year.  Most of the hearings were before Mr. E. A. Long, Secretary of the Consular Body, and the final hearing was held on May 12, before the full court composed of Mr. A. H. George, Consul-General for Great Britain and president of the court; Mr. Frank P. Lockhart, U.S. Consul-General, and Mr. T. Horiuchi, Japanese Consul-General.  The Municipal Advocate, Mr. R. T. Bryan, Jnr. appeared for the Council, and Mr. S. Francis Liu for the plaintiffs, Messrs. Fang Chin-ho, Hu Tsing-fang, Fang Ven-tuck and Tse Zay-tsing.


In a written judgment the court ordered each party to pay their own costs and to share the court costs equally between them. In dismissing the plaintiffs' claim for damages against the Council the court in its judgment found that they had in fact withheld payment of the Municipal Land Tax, that the evidence had failed to establish that the Council had committed any wrongful act against them.  The court held that the Council was empowered to discontinue a public service, electric power, supplied to plaintiffs' premises for non-payment of taxes.  The full text of the judgment follows:-

- The plaintiffs' claim, and are admitted to be the owners of certain land in the International Settlement of Shanghai.

- On the ground that this land is unregistered fangtan land, they claim

That they are not obliged to pay Municipal Land Tax;

That even if they are obliged to ay Municipal Land Tax, the Council is not entitled to request the Shanghai Power Company to disconnect the supply of electricty and the Shanghai telephone Company to disconnect telephones to houses owned by the plaintiffs on the said land for the purpose of enforcing the payment of the said land tax.

These claims are based on the Land Regulations.

  The Council joins issue on this point and also relies on the proclamation of taotai Land of the 24th February, 1885, and upon the resolution of a meeting of foreign ratepayers.  The plaintiffs' representative in turn joins issue on those points put forward by the Council, and adds in reply that Municipal Land Tax has never in fact been levied or paid on unregistered fangtan land.


- The Council is a corporate body, instituted by and functioning under the Land Regulations, and it is clear that the answer to the plaintiffs' claim to hold the land free of Municipal Land Tax depends upon the extent of the Council's powers under the Land Regulations and therefore upon the interpretation of those regulations.

The Court is of the opinion that, if the Land Regulations are free from ambiguity, it is unnecessary to consider extraneous matters, such as the Taotai's proclamation, resolutions of ratepayers, the fact that the tax claimed by the Council has never been levied or paid, and other extraneous matters, brought to the consideration of the Court.


The Court holds that the Land Regulations are not ambiguous on this point.  It considers that regulation 9 gives the Council power to tax unregistered fangtan land within the International Settlement. It considers that the words "the said land" mentioned in Regulation 9 cannot be construed by reference to any particular regulation preceding Regulation 9, but must be construed by reference to all the preceding sections.  The Court has therefore reached the conclusion that the words "the said land" include all land within the International Settlement regardless of the title under which it is held.

  This opinion is fortified by the fact that in Regulation 1 there is a specific exemption from tax, that is in the case of land belonging to the Temple of Rewards.   There being a specific exemption in respect of unregistered fangtan land contained in the very regulations upon which the plaintiffs rely and no other specific exemptions in those regulations, the Court is driven to the conclusion that no other exemptions were intended.

  Accordingly, the Court holds that the Municipal Council is entitled to levy and collect from the plaintiffs in this case, who are the owners of unregistered fangtan land, the Municipal Land Tax as levied and collected from other owners of land in the International Settlement.


- With regard to the second contention of the plaintiffs, it may well be that the Municipal Council, in ordering the discontinuance of the electric current and telephone service from the plaintiffs' houses in the present case, relied on the fact that on a previous occasion the supply of electric current to the premises of residents of the Settlement had been discontinued on account of the nonpayment of tax. The party against whom this action was taken applied to the Court of  Consuls for relief in a case entitled China Publishing Company Inc, vs. Shanghai Municipal Council, decided in 1927, which was cited in this action.

  The electric power company was then owned outright by the Municipal Council and was subject to its complete control in all matters.  That ownership passed to a private corporation in 1929.

  The Court of Consuls, in the decision cited above, reasonably held that the Municipal Council had the right to discontinue a public service (electric power) supplied by the council itself to the plaintiffs' premises for non-payment of taxes.  Neither the Shanghai Power Company nor the Shanghai Telephone Company is now owned or operated by the Municipal Council, but both presumably function under franchise.  The question whether the right remains in the changed circumstances does not arise, since no evidence was submitted to the Court on the question whether the Municipal Council does or does not now possess a contractual relation with the Shanghai Power Company or the Shanghai Telephone Company to require either of them to discontinue their services to customers as a means of aiding them in collecting Municipal Land Tax. It may well be that powers of this nature do in fact exist, but in the absence of Evidence of that fact, the Court must find that there is no evidence that the Council was in a position, vis-a-vis the utility companies, to give the orders alleged by the plaintiffs.


-With respect to the question of damages, the Court holds that the plaintiffs have wrongly withheld payment of the Municipal Land Tax, that it has not been established by the evidence that the Municipal Council has committed any wrongful act against the plaintiffs, or that the plaintiffs have suffered any material loss or damage.  No damages are therefore payable and it is so ordered.

  Each of the parties will pay their own costs, and the Court costs are to be divided into two equal parts, one part to be paid by the plaintiffs and the other by the defendant.


This appears to be the last Court of Consuls case before the Japanese takeover of Shanghai.

Published by Centre for Comparative Law, History and Governance at Macquarie Law School