Attorney General v. Melhado Investment Ltd
Read the full judgment text of CACV 79/1982 on BabelCite. This Court of Appeal judgment.
1. The Respondent took out an Originating Summons for the construction of a Block Crown Lease relating to land in the New Territories. The issue concerned the use to which the Lease permitted the land to be put.
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CACV000079/1982
BETWEEN
Coram: Sir Alan Huggins, V.-P., Leonard, V.-P. and Fuad, J. A. Date of Judgment: 13th March 1983. ___________ JUDGMENT ___________ Sir Alan Huggins, V.-P. : 1. The Respondent took out an Originating Summons for the construction of a Block Crown Lease relating to land in the New Territories. The issue concerned the use to which the Lease permitted the land to be put. 2. All the lots listed in the Originating Summons are now held by the plaintiff Respondent for the remainder of a term of 24 years less 3 days from 1st July 1973 pursuant to a Block Crown Lease dated 24th January 1905. It is common ground that the Lease has to be construed in the light of the circumstances existing at the time of its execution. In 1898 the Crown had concluded the Convention of Peking, under which the area which was to be known as the New territories was leased to the Crown. It was agreed, inter alia, that the existing inhabitants of the New territories would not be disappropriated, but their rights had to be fitted into the framework of the British legal system and this was to be done by the grant of Crown Leases to those who were able to establish their claims to the satisfaction of a Land Tribunal. To this end a survey was carried out of the entire area and, to avoid the necessity for separate leases to each individual, the device was adopted of the Block Crown Lease, which set out in a schedule the name of each 'owner' in a particular district, details of his holding and the initial rent which he was required to pay. The Lease contained a provision for review of the rent after ten years and also provided
The need for a licence arose from a term that the lessees would not
3. The Schedule contained a column for indicating "Description of Lot" and in this column were inserted descriptions such as "Padi", "Waste", "Grave" and "Dry cultivation". Another, similar, Block Crown Lease was before the judge, without objection, in which one lot was described as "Broken latrine". 4. The Plaintiff, as the successor in title of one of the original grantees, entered into a sub-lease which purported to allow the sub-lessee to use the land "for storage of steel only" and the evidence showed that a large quantity of steel girders had been stacked upon the land. It was not in dispute that these were intended for construction purposes. The Crown objected and these proceedings resulted. 5. Mr. Justice Jackson Lipkin granted the declarations sought, to the effect that the storage of these girders would not constitute a breach of the terms of the Block Crown Lease, and the Attorney General appealed to this court. The judge appears to have thought that his decision was, to his regret, hampered in some way by the decision of this court in Watford Construction Company v Secretary for the New Territories 1978 H.K.L.R. 410, although he observed that it would be improper of him to dissent from that decision. He did not indicate how he would have differed and we are unable to see how he was in any way hampered by that decision when it is properly understood. The case arose out of a claim for compensation following a resumption of land. The land was described in the Schedule to the relevant (but similar) Block Crown Lease in a manner which was accepted to be "agricultural". No licence to build had been given. The owner sought compensation on the basis that it had the right to build otherwise than for the proper occupation of the same ground as agricultural or garden ground, whilst the Crown contended that the assessment should be made on the basis that no buildings could lawfully be erected without a licence - for which an enormous premium would be charged. No other possible use of the land was in contemplation. The only conclusion reached which is germane to the present case was that the description of the land in the Schedule was what it purported to be - merely a description - and was not to be construed as, of itself, limiting the use which could lawfully be made of the land: the limitation on use was imposed by the covenant against building without a licence. We see no reason to doubt the correctness of that decision and none has been suggested to us. 6. What may have caused difficulty is the ambiguity of the phrase "demised as agricultural or garden ground". As is apparent from Watford Construction Company v Secretary for the New Territories that could mean, on the one hand, that the land was demised on terms which prohibited its use for anything but agriculture or gardening, or, on the other, that it was land which was described as agricultural or garden ground. 7. In our view the contention on behalf of the Attorney General that the words in the Schedule are something more than descriptive is completely untenable, even if we were not bound to follow the earlier decision on the point. The Lease itself contains the words "that piece or parcel of ground .... set out and described in the Schedule''. The whole purpose of the Schedule was to identify the lands and the parties to which the Lease related, and then to particularize the terms and the rents which had been reserved by the body of the Lease. If anything more were required to show conclusively that the descriptions in the Schedule were not intended to constitute a limitation on the use of the lands during the terms, it is to be found in the fact that the body of the Lease does contain. a restriction on building without a licence: if the lessee of every plot expressed to be demised as "padi" was obliged by the Schedule to maintain it as padi, the restriction on building would be unnecessary. The ultimate absurdity of the suggestion can be seen when one sees the contemporaneous and identical Block Crown Lease, the Schedule to which describes one lot as "Broken latrine". We decline to adopt a construction which would compel the lessee to maintain that lot not merely as a latrine but as a broken latrine for 75 years. 8. The second argument advanced on behalf of the Attorney General was that there was an implied covenant against use for any purpose other than that which apparently existed at the time of the letting, at least without the previous licence of the Crown. Again, if such a term is to be implied, it was unnecessary to express the general restriction on building. The conditions which have to be fulfilled before a covenant will be implied are succinctly stated in B. P. Refinery (Westernport) Pty. Ltd. v President, Councillors and Ratepayers of the Shire of Hastings (1978) 52 A.L.J.R. 20, 26D:
The suggested covenant certainly does not fulfil conditions (2) and (3). 9. The final submission for the Appellant was that there was a custom that there should be no change of use of demised land in the New Territories without the consent of the landlord. It was argued that such a custom did exist under the Common Law in England in relation to agricultural land. If there was such a custom, it required (as do all customs) to be proved by evidence. We can find no jot or tittle of evidence to support a finding of such a custom here, nor was it ever suggested before Mr. Justice Jackson-Lipkin that there was such a custom. Indeed, the only evidence upon which reliance is now placed is the existence of the Schedule itself. The most that could possibly be inferred from that is that the use of the land was as described in the Schedule both at the date of the survey and at the date of the Lease. That does not begin to establish a custom of the kind contended for. Yet again, if there was such a custom, was it necessary expressly to restrict building on the land? 10. The reality of the matter is that in 1905 no one ever imagined that land in the New Territories might be wanted otherwise than for cultivation or building; therefore the Crown did not think it necessary to cover such a possibility by express provision in the Lease. The law is clear and was stated by the late Mr. Justice Pickering in Watford Construction Company v Secretary for the New Territories at p. 413 thus:
11. It will have been observed that we have throughout assumed that, where the restrictive covenant in the Block Crown Lease refers to ground "hereby expressed to be demised as agricultural or garden ground those words are appropriate to include ground demised as "padi" and "dry cultivation". The term "padi" is commonly used to describe not only the crop grown in a padi field but also the field itself. "Dry cultivation", it is true, is not strictly descriptive of land but of a use to which land may be put, but we think it would be unjustifiable to construe those words in the present context otherwise than as intended to describe the land by reference to its existing use. 12. We must further make it clear that no issue was raised before us whether the storage of the steel might be "use for building purposes" on the basis suggested in Directors etc. of the London and South Western Railway Company v Blackmore (1870) 4 H.L. 610, 616/7 and that for that reason there was a breach of the restrictive covenant. We can readily conceive of circumstances in which storage of building materials would be so closely associated with the work of construction as to constitute a building purpose. This aspect of the matter was not canvassed in the affidavits. 13th March 1983. |
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