Building Authority v. Appeal Tribunal (Buildings)

CACV 229/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 229 OF 2016

(ON APPEAL FROM HCAL NO 180 OF 2013)

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Before: Hon Lam VP, Kwan JA and McWalters JA in Court

Date of Hearing: 21 July 2017

Date of Judgment: 11 August 2017

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J U D G M E N T

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Hon Lam VP:

1.I respectfully agree with the judgment of Kwan JA and there is nothing I wish to add.

Hon Kwan JA:

2.This appeal from the judgment of Au J handed down on 27 October 2016 (“the Judgment”) was brought by ENM Holdings Limited (“ENM”), the interested party in an application for judicial review by the Building Authority (“the BA”) in respect of a determination dated 17 September 2013 (“the Determination”) of the Appeal Tribunal (Buildings) (“the Tribunal”).  By the Determination, the Tribunal effectively allowed the appeals of ENM in respect of two dangerous hillside orders served by the BA on ENM.  The BA sought to challenge the Determination in the judicial review contending that the Tribunal had misdirected itself in law. Au J allowed the application for judicial review.

Background

3.The relevant background matters, taken largely from the Judgment, may first be related as follows.

4.ENM became the registered owner of Lot No 360 in DD 454, the Extension to Lot No 360 in DD 454 and the Extension thereto (“the Lot”) by a New Grant dated 12 November 1976 (“the Grant”).  The Grant is a condition of exchange made between ENM and the Government and was made to ENM for the purpose of building a private country club on the Lot.  The Hilltop Country Club was later built and is operated by ENM.  The only access road to the club is Hilltop Road.

5.Hilltop Road is not within the Lot.  The original Hilltop Road was formed around 1963, before the Grant was made.  On the plan annexed to the Grant, it was shown as a long winding strip and was coloured brown (“the Brown Area”).  The original Hilltop Road was formed by cutting into the natural terrain and end tipping the loose soil fill (extracted from the cutting) onto the natural hillside, with the road being constructed on top of the cutting and end tipping.  The end tipping created man-made soil fill slopes and embankments on the downhill side of Hilltop Road, giving support to the relevant portions of Hilltop Road.  Two such slopes created are the subject of the dangerous hillside orders[1].

6.Under section 27A of the Buildings Ordinance, Cap 123, the BA may declare any natural, formed or man-made land, or any earth-retaining structure as dangerous and serve a dangerous hillside order on the owner of the land or structure or the person who under the terms of a Government lease is under an obligation to maintain the land or structure, requiring that person to submit proposals for remedial work to be done for approval by the BA, and on approval being given to carry out such approved work.

7.On 27 December 2006, the BA served on ENM a dangerous hillside order (“the 1^st DH Order”) relating to part of a man-made slope on the southern side embankment of Hilltop Road, which was identified by the BA as “Feature 156(1)”[2]. Feature 156(1) lies on Government land to the south of the Lot.  Hilltop Road is located immediately at the crest of this slope.

8.On 25 January 2008, the BA served on ENM a dangerous hillside order (“the 2^nd DH Order”) relating to part of another man-made slope on the west side of the end of Hilltop Road, near the entrance to the club[3]. It was identified by the BA as “Feature 33(1)”.  It is also on Government land.  Hilltop Road is located immediately at the crest of Feature 33(1).

9.The Stage 2 Study Reports of the two consultants (Maunsell Geotechnical Services Ltd (“Maunsell”) and Scott Wilson Ltd (“Scott Wilson”)) retained by the Geotechnical Engineering Office of the Civil Engineering and Development Department showed that Feature 156(1) was formed between 1949 and 1963, probably in association with the construction of the original Hilltop Road, and Feature 33(1) was formed between 1954 and 1963, likewise probably in association with the construction of the original Hilltop Road.

10.The Lands Department, which is responsible for advising the BA on the person liable to maintain a particular slope, took the view that ENM was (1) obliged to maintain both Features 156(1) and 33(1) under Special Condition (31) of the Grant (“SC31”)[4]; and (2) in any event, ENM was obliged under Special Condition (13) of the Grant (“SC13”)[5] to maintain Feature 33(1).

11.Under the 1^st and 2^nd DH Orders, ENM was required to investigate the two slopes and submit proposals for remedial preventive work for BA’s approval.

12.ENM appealed against the 1^st and 2^nd DH Orders to the Tribunal.  The appeals were heard together over eight days in 2012, with evidence given by ENM and the BA.  The primary task of the Tribunal was to determine whether ENM is a person “who under the terms of a Government lease is under an obligation to maintain the land or structure” under section 27A of the Buildings Ordinance.

13.By the Determination, the Tribunal allowed the appeals and held that:

(1) On a proper construction of SC31, ENM has no obligation to maintain both Features 156(1) and 33(1) under this provision.  SC31 defined the rights and liabilities of ENM within the Brown Area and only applies to things and matters that happen inside the Brown Area.  Hence, ENM’s maintenance obligation is limited to Hilltop Road and everything that was constructed on its surface and does not cover the slopes.

(2) ENM’s maintenance obligation under SC13 is limited to only the northern end of Feature 33(1) (“the Northern End”).

14.The BA applied for leave to apply for judicial review to challenge the Determination in relation to the above holdings.  It contended that the Tribunal had erred in law in its construction of SC31.  Further, the Tribunal had misunderstood BA’s case under SC13 or in any event failed to give adequate reasons in explaining its conclusion under SC13.  The BA asked for the quashing of the Determination, and declarations on the proper meaning of SC31 and that ENM is under an obligation under SC13 and SC31 to maintain Features 156(1) and 33(1).

15.Au J gave leave to apply for judicial review.  ENM was joined in the proceedings as the interested party.

16.By the Judgment, Au J quashed the Determination and remitted the appeals to the Tribunal, differently constituted if necessary, for reconsideration in light of his findings in the Judgment.  He held that:

(1) On a proper construction of SC31, ENM was responsible for maintenance of all man-made slopes which resulted from the grantee’s (i.e. ENM’s) construction of the paved way over the original Hilltop Road and are substantially connected to or in support of Hilltop Road, whether or not they are within or outside the Brown Area (i.e. Hilltop Road)[6].

(2) The Tribunal erred in determining the scope of ENM’s obligations under SC13, as it failed to engage with BA’s case that ENM is obliged under SC13 to maintain the entire Feature 33(1) not just the Northern End.  It had either misunderstood BA’s case or had failed to consider it properly and, if it had, failed to give adequate reasons for its conclusion[7].

(3) The matter should be remitted to the Tribunal for reconsideration of (a) whether Features 156(1) and 33(1) are man-made slopes which resulted from the grantee’s construction works and are substantially connected to or in support of Hilltop Road[8]; and (b) the scope of ENM’s duties under SC13[9].

17.ENM appealed against the Judgment to this court. Two broad issues are raised in this appeal:

(1) whether the judge was correct in his conclusion on the proper construction of SC31 as stated in this way in §77 of the Judgment:

“the words “everything … pertaining to” the paved way in SC31 refer to “everything” that is formed or resulted from the paving construction carried out by the grantee in constructing paved way and which are substantially connected to or in support of the “paved” Hilltop Road”; and

(2) whether the judge was correct to overrule the Tribunal’s holding that only the Northern End was under ENM’s obligation to maintain under SC13, having regard to how BA’s case had been advanced before the Tribunal.

SC31 and Au J’s construction

18.SC31 provides as follows:

“The grantee shall construct a paved way to the standards laid down in the Building (Private Streets and Access Roads) Regulations over the area shown coloured brown on the plan annexed hereto and shall uphold, maintainand repair such paved way and everything forming portion of or pertaining to itto the satisfaction of the said Director, and the grantee shall be responsible for the whole as if he were absolute owner thereof. Any alteration to the public street from which the paved way is to be constructed, absorbing a portion of such paved way or affecting the gradient thereof, shall not give rise to any claim by the grantee, who shall carry out all consequent alterations to such paved way constructed by him. The Government reserves the right to grant rights-of-way over such paved way to the owners of any other lots in the vicinity now or in the future, or to take over the whole or any portion of the said paved way for the purposes of a public street without payment of any compensation to the grantee or to other owners to whom rights-of-way over the whole or any portion of the said paved way may have been granted.” (Emphasis added)

19.Au J arrived at his construction by this reasoning:

(1) The objective meaning and intention of SC31 is that the grantee has an obligation to construct a paved way on the Brown Area (i.e. on the original Hilltop Road), to a quality that satisfied the requirements of the Building (Private Streets and Access Roads) Regulations (“the Regulations”), and having constructed the paved way, the grantee then thereafter has the obligation to uphold and maintain (i) the paved way (i.e. Hilltop Road after “paved” to the requisite quality); and (ii) “everything” that is portion (“forming”) of Hilltop Road as paved or belonging (“pertaining”) to Hilltop Road as paved as an owner of “the whole” (i.e. Hilltop Road as paved and “everything” that is portion of or that is belonging to Hilltop Road as paved)[10].  The two sets of obligations on the grantee are not co-extensive[11].

(2) Given the linking word “and” (in “shall uphold, maintainand repair such paved way and everything forming portion of or pertaining to it”),the reference to “everything” that has become portion of or belonging to the “paved way” was intended to be something other than and in addition to the “paved way” itself, since SC31 already provides that the grantee shall have the obligation to maintain and repair the “paved way” itself[12].

(3) The objective context at the time of the Grant was that the grantee had to construct the paved way over the original Hilltop Road, which was laid between hill slopes and banks.  In the premises, it must be objectively within the parties’ reasonable contemplation at the time of the Grant that, in constructing the paved way on the original Hilltop Road to a standard and quality required under Regulations, necessary corresponding constructing works might have to be carried out at those hillside slopes along the original Hilltop Road[13].

(4) In light of the objective context, it must have been the objective intention of the parties that the grantee would have an obligation to maintain and repair not only the paved way constructed by it, but also other structures formed as a result of the construction works, and which are necessary for the construction and support of the paved way.[14]

(5) Once read against the objective context, and objectively construed, the words “everything … pertaining to” the paved way are intended to refer to everything that is formed as a result of the paving construction works, and which has become substantially connected to or in support of the “paved” Hilltop Road.  This is also consistent with the ordinary meaning of the word “pertain”, which means something that is substantially connected to or dependent on the principal matter.  This phrase is intended to cover something that is formed as a result of the paving construction works and are substantially connected to or in support of the paved Hilltop Road, whether it is within or outside the Brown Area[15].

(6) The potential need to carry out construction works on the hillside slopes to upgrade and in particular re-site the original Hilltop Road is within the objective and reasonable anticipation of the parties[16].  At the time of the Grant, before any works had been carried out, it is impossible and impracticable to describe all the hillside slopes that the grantee is under the obligation to uphold, maintain and repair with any precision and mark them on the plan[17].  The liability thus construed is a limited one, and whether a slope or structure outside the Brown Area would fall within that meaning would depend on the evidence[18].

(7) It is of common and commercial sense that the grantee would be responsible to maintain and repair those hillside slopes where construction works had been carried out by the grantee in constructing the paved road and which provide substantial support to that road[19].

BA’s construction of SC31

20.However, Au J’s construction of SC31 was not actually the construction advanced by the BA before him.  At the hearing of this appeal, we gave leave to the BA to file a respondent’s notice out of time to argue its construction[20] as an additional ground for supporting the Judgment that the Tribunal’s determination of the construction of SC31 should be quashed.  On our indication that we were not inclined to grant leave to argue other matters in the draft respondent’s notice which are really in the nature of a cross appeal, Mr Y C Mok, who appeared for the BA with Mr Anthony Chan here and below, informed us that he would not argue that the judge’s construction was erroneous.

21.BA’s construction and the reasons in support of it are as follows:

(1) The proper construction is that (i) the grantee was treated as having assumed the responsibility to construct or to complete the construction of the Hilltop Road, which would involve constructing the necessary supporting soil filled slopes via the cutting and tipping method, to the requisite standards in the Regulations; and (ii) after completing the construction, the grantee is responsible to uphold, maintain and repair the paved way and everything forming portion of or pertaining to it and “be responsible for the whole as if he were the absolute owner thereof.”

(2) The factual matrix is that the original Hilltop Road was constructed around 1963, prior to the Grant in 1976.  And both Features 156(1) and 33(1) were formed together with and as a result of the construction of the original Hilltop Road, which is immediately at the crest of these slopes and the slopes provide integral and essential support to the road.

(3) The common intention was that the Government was not treating (and was not assuming the responsibility to treat) the original Hilltop Road which existed at the time of the Grant as a good enough access road.

(4) Whatever the position might have been as to who had constructed the original Hilltop Road and who was responsible for the maintenance prior to the Grant, by SC31 the grantee was treated as having assumed the responsibility of constructing, or completing the construction of, the original Hilltop Road and the necessary supporting soil filled slopes, even though the grantee might not actually have constructed the road and the supporting structures.

(5) By the conditions of the Grant, the grantee would enjoy what is “by and large” an “exclusive and vital benefit of a right of way over Hilltop Road”, which, under SC31, the grantee was treated to have constructed.

(6) Given that the grantee was treated to have assumed responsibility to construct the road and the supporting structures, it would be contrary to common and commercial sense if the grantee were responsible only for the maintenance of the paved way but not for the supporting soil filled slopes that were formed as a result of and necessary for the construction of that paved way.

(7) The grantee’s two obligations are not co-extensive.  The maintenance obligation is more extensive as it covers the paved way and everything forming portion of or pertaining to it.  This is consistent with the ordinary meaning of the words “pertaining to”.

22.The material difference with Au J’s construction is that the BA contended that the grantee was treated to have constructed the original Hilltop Road and the supporting soil filled slopes, whereas the judge construed the provision on the premise that it was within the reasonable anticipation of both parties that the grantee might need to carry out construction work on the slopes to upgrade and re-site the original Hilltop Road and hence ENM’s liability would depend on the evidence whether the Features resulted from the construction work actually carried out by ENM, and for this purpose the appeals would be remitted to the Tribunal for re-hearing.

23.I pause here to mention that on the available evidence, it did not appear that Feature 156(1) had been modified by ENM after the Grant[21]. In 1981, the northern end of Feature 33(1) was modified by ENM for construction of the carpark platform within the Hilltop Club[22], but this was not in connection with any work to upgrade or re-site the Hilltop Road.  Realignment works were carried out to the lower parts of Hilltop Road adjoining Lo Wai Road in the early 1980s by the Government.  But it was accepted by both sides that the remaining parts of Hilltop Road including the parts adjacent to Feature 156(1) and Feature 33(1) remained the same as that identified in the plan annexed to the Grant[23].

24.It was on account of the above matters that ENM’s counsel, Mr Ambrose Ho, SC (appearing with Mr Allen Lam on appeal and below) criticised the judge’s order of remitting the matter to the Tribunal to determine if the Features resulted from construction work actually carried out by ENM as a “wild goose chase”.

ENM’s construction of SC31

25.Mr Ho submitted that the proper construction of SC31 is that it imposes an obligation on the grantee to maintain everything within the boundaries of Hilltop Road, including the “paved way” and “the public street from which the paved way is to be constructed” referenced in SC31 and any incidental structures such as manholes, signage, drains and kerbstones, but does not cover the slopes along Hilltop Road.  This is more or lessto the same effect as the construction of the Tribunal.

26.Counsel’s reasoning will be discussed in my analysis of SC31.

My analysis of SC31

27.Both sides have referred us to a number of relevant authorities laying down the principles on interpretation of a contract.  The court is concerned to find the intention of the parties, and it does this by identifying the meaning of the relevant words, (a) in the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time that the document was executed, and (v) common sense, but (b) ignoring subjective evidence of any party’s intentions.  Contractual terms are construed by interpreting the words used in their documentary, factual and commercial context (Secretary for Justice v Joseph Lo Kin Ching (2015) 18 HKCFAR 169 at §29).

28.I begin with the objective surrounding circumstances known or reasonably known to both parties before the Grant was executed.  I have summarised earlier the known facts regarding the original Hilltop Road and the man-made slopes formed at the same time which included the Features.  I set out further details taken from the Determination:

“… evidence has revealed that in fact well before 1976, there was already in existence a paved way which was constructed sometime in the 1960s. There is no evidence to show when and by whom the paved way was constructed. The only evidence is that according to an aerial photograph taken in 1963, the paved way was already in existence. Both the BA and [ENM] proceed on the basis that this paved way in fact is the same paved way which the Government required [ENM] to build under SC(31). For the purpose of this Appeal, it is also common ground that this paved way is Hilltop Road.

Evidence has also revealed that in 1976, this paved way was in fact the main access road to other lots in the vicinity …”[24]

29.There are other undisputed facts which would form part of the factual matrix, as Mr Ho has pointed out:

(1) The Government was responsible for the upholding, maintenance and repair of the original Hilltop Road prior to the Grant[25].

(2) There was an access road for vehicles within Feature 33(1) cutting Feature 33(1) into two halves.  This access road was constructed between 1963 and 1964.  There is no information who constructed it.  It leads from Hilltop Road to other areas and was not related to ENM.  There is no record that the Government had provided funds for its construction, maintenance or repair[26].

(3) There was a footpath leading from the access road mentioned above to other areas.  The footpath is not within Feature 33(1).  It was constructed between 1963 and 1964 and was not related to ENM. The Government was apparently not responsible for the maintenance of the footpath prior to the Grant[27].

(4) There were human activities within Feature 33(1), including the presence of squatters and other structures, which had been permitted on Government land.  A village house was constructed between 1964 and 1973.  All those activities were unrelated to ENM[28].

(5) ENM and visitors to the club would not be the only users of Hilltop Road.  As stated by the Tribunal, the “paved way was in fact the main access road to other lots in the vicinity and that explains why the Government was prompted to reserve in SC(31) its right to grant right of way over the paved way to the owners of other lots in the vicinity at that time or in the future” and “it was also the contemplation of the Government that in some future time the whole or any portion of the said paved way may be taken over by the Government for the purposes of a public street”[29], as reflected in the last sentence of SC31.

30.Mr Ho also submitted it is part of the factual matrix that not only was the Government responsible for the maintenance and repair of the original Hilltop Road prior to the Grant, its maintenance responsibility should also cover the adjoining slopes and embankments which were formed as a result of the road construction and provided support to the road.  Mr Mok submitted there is however no evidence who constructed the original Hilltop Road and who was responsible for the maintenance of the slopes prior to the execution of the Grant.  The Government’s admission in these proceedings of its maintenance responsibility is only in respect of the paved way over the Brown Area.  I am not prepared to treat the Government’s maintenance responsibility as extending to the adjoining slopes as part of the factual matrix.

31.There was much debate whether the original Hilltop Road was a “public street” or “private street” prior to the Grant, according to the statutory meanings of these terms.  Mr Ho submitted it was not a “private street” or “access road” as defined in section 2(1) of the Buildings Ordinance, as it was not a street or road on land “held under lease, licence or otherwise from the Government or on land over which the Government has granted a right of way”.  He submitted that prior to the Grant, it was a “public street” as defined in section 2 of the Regulations, being “a street vested in and maintained by the Government.”  He construed the words “the public street” in the second sentence in SC31 (“the public street from which the paved way is to be constructed”) as referring to the original Hilltop Road.

32.In my view, what matters in this construction exercise is not so much the actual status of the original Hilltop Road prior to the Grant (whether it was a “public street” or “private street”), but its status on the common assumption of the parties following from the Grant.  It seems to me it was clearly envisaged in the Grant that a right of way may (not will) be granted over the paved way (i.e. the original Hilltop Road) by the Government, see SC25 (“The grantee shall have no right of ingress or egress to or from the lot, except between points X and Y shown and marked on the plan annexed hereto for the passage of motor vehicles.”); SC30 (“The Government cannot guarantee any right-of-way to the lot and the grantee will accordingly have to make his own arrangements for acquiring such right-of-way.”); and SC31 third sentence (“The Government reserves the right to grant rights-of-way over such paved way to the owners of any other lots in the vicinity now or in the future, or to take over the whole or any portion of the said paved way for the purposes of a public street without payment of any compensation to the grantee or to the other owners to whom rights-of-way over the whole or any portion of the said paved way may have been granted.”).  It is fairly clear from the above provisions it is the common assumption that the paved way is to be treated as a private street following from the Grant.  I agree also with Mr Mok’s reading of the words “the public street” in the second sentence in SC31; they do not refer to the original Hilltop Road, but to the public street system from which the original Hilltop Road branched out.

33.I come back to the first sentence in SC31 which gives rise to the present dispute.  Given that the grantee is to take over the maintenance responsibility of the original Hilltop Road from the Government, does this cover the adjoining hillslopes formed in the road construction which provide support to the road, and which on any view is a very substantial and onerous obligation[30]?

34.The judge would seem to have recognised the width of the words “and everything … pertaining to” the paved way in SC31.  In his construction, he attempted to cut down the apparent width of the maintenance responsibility by restricting this to the situation where the hillslopes resulted from the grantee’s construction works, and are substantially connected to or in support of the road.  But the judge had proceeded on a false premise that it was within the reasonable anticipation of the parties that the grantee would need to carry out construction works on the hillside slopes to upgrade and in particular re-site the original Hilltop Road. There was no evidence to suggest there might be such a potential need for the grantee to carry out construction works on the slopes.  The grantee’s obligation, as provided in SC31, was to construct the paved way to the standards of the Regulations over the Brown Area, which was the existing road that had already been constructed by cutting into natural terrain and end tipping the soil fill thereby forming man-made slopes and embankments.

35.Further, if works to the man-made slopes were reasonably required and envisaged to be carried out by the grantee, it would be surprising, as submitted by Mr Ho, that no provision was made in the Special Conditions for the grantee to submit proposals to the Director of Public Works for approval and no works were to be carried out until approval was obtained and in compliance with the Director’s requirements, similar to SC28 which deals with construction or repair work of the grantee to avoid damage to any Government or other existing drain, watercourse, sewer, footpath, pipe, cable, wire, utility service or other works or installations running over, under or adjacent to the Lot.

36.The second sentence of SC31 would also militate against the suggestion that the grantee might carry out construction work to the man-made slopes.  This sentence deals with the situation where there is “alteration to the public street from which the paved way is to be constructed” by the Government, in the course of which a portion of the paved way might be absorbed or the gradient of the paved way might be affected.  It is provided that this “shall not give not give rise to any claim by the grantee, who shall carry out all consequent alterations to such paved way constructed by him.” (Emphasis added)

37.For the above reasons, I do not think the judge’s construction can be supported.

38.The BA’s construction would seem to be an attempt to grapple with the problem about the reasonable anticipation that the grantee would need to carry out construction work on the slopes.  Mr Mok acknowledged that everything would fall into place if at the time of the Grant the original Hilltop Road had yet to be built and by SC31 an obligation was imposed on the grantee to construct the paved way by cutting into the natural hillside and end tipping the loose soil fill to create man-made slopes and embankments.  It would make sense for the grantee to be responsible not only for the maintenance of the paved way but also the slopes which were part of the road construction works carried out by the grantee, see the judge’s reasoning in §§54 and 64 of the Judgment.

39.To overcome the difficulty arising from the context that there was already an existing road and the man-made slopes had been formed, Mr Mok submitted that SC31 should be interpreted to mean that the grantee was treated to have assumed the responsibility for constructing the original Hilltop Road and the supporting soil filled slopes, and has thereby also assumed maintenance responsibility for the road and the slopes, even though the construction work was not carried out by the grantee.

40.The maintenance responsibility according to this interpretation would cover all the man-made slopes that were constructed at the same time as the original Hilltop Road and provided support to the road.  It is much wider than the judge’s interpretation.

41.This seems to me to be a strained interpretation.  I agree with Mr Ho there is nothing to support the contention that the parties to the Grant had intended to treat or to assume that the factual basis of the Grant were to be otherwise than the state of affairs prevailing at the time.  There is no apparent basis to import any deeming of a contradictory state of affairs.  I would reject BA’s construction.

42.In my view, the first sentence of SC31 should be construed to mean it only imposes an obligation on the grantee to maintain everything within the boundaries of the paved way being the Brown Area on the plan annexed to the Grant, and any incidental structures on the paved way such as kerbstones, manhole covers and gratings, drains, sewers and channels referred to in sections 19 to 25 of the Regulations.  This is the same as the construction adopted by the Tribunal.

43.Notwithstanding the wide scope of the words “and everything forming portion of and pertaining to” the paved way and that “the grantee shall be responsible for the whole as if he were absolute owner thereof”, I do not think these words should be construed to cover the man-made slopes as part of the maintenance responsibility of the grantee. My reasons are as follows:

(1) The grantee had nothing to do with the construction of the man-made slopes on Government land, which were formed at the time the existing road was built.  The maintenance of all the man-made slopes which provided support to the road is a very substantial and onerous obligation.  If it had been the common intention that the grantee should take up such responsibility, this would have been provided in much clearer terms and detailed provisions would have been made along similar lines as in SC13, which spelt out specifically the grantee’s responsibility of construction, maintenance and reinstatement where there is cutting away of hillside or banks for the purpose of or in connection with the development of the Lot.

(2) The grantee and the visitors to the club would not be the only users of the road, which was to be treated as a private street following from the Grant according to the common assumption of the parties.  The paved way was and is the main access road to other lots in the vicinity and SC31 expressly reserves to the Government the right to grant rights-of-way over the paved way to the owners of any other lots in the vicinity.  Further, there were structures and human activities on the slopes that had nothing to do with the grantee and over which the grantee would have no control.  In these circumstances, it would be contrary to common sense and commercial sense to require the grantee to take up the very onerous responsibility of maintaining the adjoining slopes in addition to the paved way.

(3) As for the consideration that the linking word “and” (in “shall uphold, maintain and repair such paved way and everything forming portion of or pertaining to it”) was intended to refer to something other than and in addition to the paved way itself, this could be construed to cover the incidental structures on the paved way referred to in sections 19 to 25 of the Regulations as the grantee was obliged to construct the paved way up to the standards laid down in the Regulations.  It is provided in General Condition 4 of the Grant that where any private street is required to be formed, it shall be surfaced, kerbed, drained, channelled and maintained by and at the expense of the grantee to the satisfaction of the Director of Public Works.  This is the reasoning of the Tribunal at p 15 of the Determination.

(4) Section 27A of the Buildings Ordinance was not enacted at the time of the Grant[31].  If it was the common intention that the grantee should be responsible for maintaining the man-made slopes, one would expect to find detailed provisions, if not an exhaustive statement, of the scope of the grantee’s obligation to repair and maintain dangerous hillsides in the conditions of the Grant.  In stark contrast with SC13, no provision was made as to who is to determine if maintenance work to the slopes should be carried out, how the area for maintenance should be delineated and in what way the work should be done.  I reject BA’s argument there is no unacceptable uncertainty if SC31 is construed to impose an obligation on the grantee to maintain the slopes in that the court would be the ultimate arbiter if there is dispute on the parties’ legal rights and duties.

44.Mr Mok has prayed in aid the principle that where the wording in a Government lease is obscure or equivocal, the contra proferentem rule is inverted and a presumption in favour of the Government applies, citing New Mercury Holding Corporation v The Secretary for Justice, CACV 73 & 74/2013, 15 April 2014 at §14, in which the Court of Appeal adopted these observations of Slade J in Earl of Lonsdale v Attorney General [1982] 1 WLR 887 at 901F to G:

“The effect of these cases[32], as I read them, is that, if the wording of a grant by the Crown is clear and unequivocal, the grantee is entitled to rely on it as much as if the grantor had been any other subject of the Crown; if, on the other hand, the wording is obscure or equivocal, the court must lean towards the construction most favourable to the Crown, unless satisfied that another interpretation of the relevant words in their context is the true one.”

45.This principle is a rule of “last resort” and “in many cases it will have little practical significance” (Earl of Lonsdale at 932H).  I do not propose to apply the principle here as I am satisfied that another interpretation of the relevant words in their context is the true one for the reasons given above.

46.In conclusion, I would allow the appeal of ENM in relation to the construction of SC31 and set aside that part of the Judgment and the consequential orders and in lieu thereof dismiss that part of BA’s application for judicial review.

The determination in relation to Feature 33(1) concerning SC13

47.I turn to consider the other broad ground in this appeal, in which the judge overruled the Tribunal’s holding that ENM’s obligation to maintain under SC13 is only in respect of the Northern End, and not the whole of Feature 33(1).

48.SC13 provides as follows:

“Where any cutting away, removal or setting back of adjacent or nearby hillside or banks or any building up or filling in is required for the purpose of or in connection with the formation, levelling or development of the lot or any part thereof, the grantee shall construct or bear the cost of the construction of such retaining walls or other support as shall or may then or at any time thereafter be necessary to protect and support such hillside and banks and the lot itself and to obviate and prevent any falling away, landslip or subsidence occurring thereafter, and shall at all times maintain the said retaining walls or other support in good and substantial repair and condition. In the event than as a result or arising out of any such formation, levelling or development any landslip, subsidence or falling away occurs at any time, whether in or from the adjacent hillside or banks and whether the same be Crown or leased land, or in or from the lot itself, the grantee shall at his own expense reinstate and make good the same and shall indemnify the Government from and against all costs, charges, damages, demands and claims whatsoever which shall or may be made, suffered or incurred through or by reason of such landslip, subsidence or falling away. In addition to any other rights or remedies herein provided for breach of any of the conditions hereof the Director of Public Works shall be entitled by a notice in writing to call upon the grantee to carry out such construction and/or maintenance or to reinstate and make good any falling away, landslip or subsidence, and if the grantee shall neglect or fail to comply with such notice within the period specified therein the said Director may forthwith execute and carry out the work and the grantee shall on demand repay to the Government the cost thereof.” (Emphasis added)

49.There was no dispute in the appeals before the Tribunal on the construction of SC13 as to the grantee’s obligations.  What was in dispute before the Tribunal was only in relation to the facts concerning the status and state of Feature 33(1)[33]. On the factual dispute whether the Northern End was modified by ENM when ENM constructed a car park platform at the Extension Area, the Tribunal accepted all the evidence of the BA and rejected ENM’s evidence.  The Tribunal did not think it necessary to find whether ENM had carried out works at the Northern End, having found as a fact that it was the construction works carried out by ENM at the Extension Area that caused a risk of landslip, subsidence or falling away at the Northern End and that was sufficient to trigger off the obligation to repair, reinstate and make good under SC13[34].

50.The judge has apparently accepted BA’s submission that it has always been its case before the Tribunal that ENM is obliged under SC13 to maintain the whole of Feature 33(1) not just the Northern End, and that is what was stated in the 2^nd DH Order[35].  Mr Mok submitted that SC13 provides for three sets of consequential obligations where any cutting away, removal or setting back of nearby hillside or banks is required for the purpose of or in connection with the formation, levelling or development of the Lot or any part thereof and the obligation the parties are concerned with here is the obligation to maintain the support (by which the hillside above the slope is prevented from collapse) in good and substantial repair and condition. BA’s case before the Tribunal is that this maintenance obligation was triggered when construction work was done in respect of the car park area between 1979 and 1981, which was for the purpose of site formation, levelling or developing part of the Lot.

51.Mr Ho submitted that the BA had changed its case in its written[36] and oral[37] opening submissions to the Tribunal, giving the impression that it was only seeking ENM to maintain the Northern End under SC13 (the judge agreed that the relevant paragraphs quoted by Mr Ho may well have given that impression[38]).  He contended that in light of this stance, ENM had conducted its examination and cross-examination of the witnesses focusing on the issue whether the Northern End was modified in connection with the construction of the car park.  He said it was only in BA’s written closing submission[39] that it was stated clearly for the first time that the maintenance obligation triggered off under SC13 was in respect of the entire Feature 33(1).

52.Mr Ho emphasised that in the proceedings before the Tribunal, the written opening submission of the BA was the only document before oral evidence was led that fully set out the factual and legal basis of BA’s case on the maintenance obligation as regards Feature 33(1).  The requirement of putting forward one’s entire case prior to viva voce evidence applies to proceedings before the Tribunal.  Hence, as a matter of fairness, BA’s case must be restricted to the propositions advanced in its written opening submission.  Otherwise, ENM would have been deprived of the chance to adduce relevant evidence, such as evidence on the causal connection between the car park construction works and the instability to Feature 33(1) as a whole.  Mr Ho submitted that the statements of Arden LJ in R (Mackenzie) v Secretary of State for Justice [2009] EWCA Civ 669 at §§34 to 35 cited by the judge[40] do not provide support for the suggestion that a tribunal is duty bound to engage with a new argument raised only in the closing submission.  He contended that in any event the Tribunal was justified in not engaging with BA’s case in its written closing submission mentioned in just one paragraph and was not developed in the rest of the submission or orally.

53.I do not agree with Mr Ho that BA’s case that SC13 imposes an obligation on ENM to maintain the entire Feature 33(1) was not developed in its written closing submission[41]. That is not a fair reading of the closing submission.  Nor do I think the closing submission had sought to re-formulate BA’s case, as Mr Ho has argued.  As the judge has said, the opening and closing submissions of the BA should be read in the round and together.  It is pertinent also to have regard to ENM’s case before the Tribunal, that it had only carried out construction work within the Extension Area but not at the Northern End and hence SC13 was not engaged.  Those parts of the opening submission of the BA that Mr Ho singled out for attention may have given the impression that the BA was only seeking to make ENM liable for maintenance of the Northern End under SC13.  That could well be because the BA was seeking to address ENM’s case about the Northern End.  But one must not lose sight that throughout the BA was seeking to defend the 2^nd DH Order, which relates to the whole of Feature 33(1).  And no objection was taken to BA’s case in its written closing submission, whether by ENM or the Tribunal.

54.In my view, the judge is correct in holding that the Tribunal was required to engage with BA’s case that SC13 imposes an obligation on ENM to maintain the entire Feature 33(1).  The Tribunal gave no reason for restricting the obligation to maintain to the Northern End, notwithstanding its acceptance of BA’s evidence (which included evidence from the consultant that Feature 33(1) provides essential support to Hilltop Road and the car park) and rejection of all ENM’s evidence.  I agree with the judge that as the Tribunal had failed to properly carry out its duty to make sufficient and proper enquiry, the determination of the Tribunal that the maintenance obligation under SC13 is limited to the Northern End should be quashed and the matter be remitted to the Tribunal for reconsideration.  I would dismiss ENM’s appeal against this part of the Judgment.

Conclusion

55.I would allow ENM’s appeal only in respect of the construction issue on SC31.  I would set aside the costs order below and substitute it with an order that the ENM should pay one-third of the BA’s costs, with a certificate for two counsel, to reflect the result that the application for judicial review should have been granted only in respect of the determination of the Tribunal that the maintenance obligation under SC13 is limited to the Northern End.

56.For the costs of this appeal, I propose to make an order nisi that the BA should pay two-thirds of ENM’s costs, with a certificate for two counsel.

Hon McWalters JA:

57.I respectfully agree with the judgment of Kwan JA.

Mr Ambrose Ho SC and Mr Allen Lam, instructed by Ford, Kwan & Co, for the Interested Party (Appellant)

Mr Mok Yeuk-Chi and Mr Anthony Chan, instructed by Department of Justice, for the Applicant (1^st Respondent)

The Respondent (2^nd Respondent), in person (absent)