CINAT COMPANY LIMITED v THE ATTORNEY GENERAL

HCMP003876/1992

1992, No. MP 3876

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

(MISCELLANEOUS PROCEEDINGS)

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1992, No. MP 1032

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Coram: Hon Liu J. in Court

Dates of hearing: 5 and 6 July 1993

Date of delivery of judgment: 9 July 1993

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J U D G M E N T

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1. In 1976, Mai Lee Enterprises Ltd. was the owner of parcels of land fronting King Street with Electric Road in the rear. I shall call it "Mai Lee". Earlier in 1970, Government was considering placing a MTR station and exit in the part of Mai Lee's land adjoining King Street. A triangular portion was reserved in that location for such a potential MTR user. In 1976, Mai Lee proposed to develop its said parcels of land and conducted negotiation with Government. From beginning to end, these parcels of land of Mai Lee had together been put forward as the subject-matter of the proposed development. It was clearly understood that the portion contiguous to King Street had been earmarked for MTR purposes and the elongated strip in the rear running parallel to Electric Road was to be surrendered to Government for road widening. The proposed development consisted of a twin-tower block resting on a podium, now known as the Carson Mansion. In the concluded terms of negotiation, Government was to allow a calculation of plot ratio on the entire area of Mai Lee's said parcels. In addition, Mai Lee had managed to secure from Government extra roofed-over area representing five times the area in the rear to be surrendered for the widening of Electric Road and the area in front earmarked for MTR purposes. Mai Lee would also enjoy a 52% increase in shadow area.

2. On 13th December 1976, the proposed building plans for Mai Lee's development, incorporating these concessions were approved by Government.

3. On 23rd May 1978, by a Deed Poll of even date, of its said parcels Mai Lee together with Citibank as its mortgagee carved out 6 lots. One lot was to be surrendered for widening Electric Road, two lots in front would be earmarked for MTR purposes and the three remaining lots were left for the proposed Carson Mansion and its surroundings or curtilages.

4. Subsequently, MTR had no use for the lots reserved for its purposes. At one time the dedication of these two lots reserved for MTR was sought to be accomplished. As can be seen in the communication from the Chief Estate Surveyor to the Chief Building Surveyor dated 18th April 1978, the proposed dedication could be carried into effect within a month of receipt of instructions and plans. An internal objection was taken. The draft deed of dedication prepared was never delivered to or accepted by Government; nor was it executed by Government.

5. The evidence placed before me suggests that Mai Lee went into liquidation in early December 1979. On 1st July 1988, for $12m the applicant acquired the two lots formerly reserved for MTR purposes from the then owner which was not Mai Lee. I shall call it "the triangular area". The area is 9,644 sq.ft. The Building Authority believes that it is 9,336 sq.ft. No evidence was adduced in these consolidated proceedings to challenge the applicant as a bona fide purchaser for value, although some 28 days after the applicant's acquisition of the triangular area formerly earmarked for MTR, in an application to the Town Planning Board made for Shell Company of Hong Kong Limited, the applicant's authorised architect was proposing to demolish two residential units in the Carson Mansion to provide the triangular area with a "floating" plot ratio for the proposed building volume. The structure was intended to be a petrol filling station. That application was refused. In these proceedings, nothing turned on the applicant's rights in his claimed capacity of a bona fide purchaser for value.

6. The applicant then applied for permission to erect a 36-storeyed building on the triangular area. Government, through the Building Authority, rejected the proposed building plans submitted on behalf of the applicant on the ground that the triangular area was left with only 19 sq.ft. affordable roofed-over area for construction.

7. By a Notice of Motion filed pursuant to leave granted, the applicant sought judicial review of the decision of the Building Authority. The applicant also commenced proceedings by an Originating Summons for a declaration that the Building Authority's rejection of its submitted building plans for the proposed development of the triangular area was contrary to the Building (Planning) Regulations. A further declaration asked for in the summons was that the triangular area constituted a "site" for the purposes of calculating the plot ratio and site coverage under the same regulations. By consent, the proceedings had been consolidated.

8. The amendments hitherto introduced to the Building (Planning) Regulations do not seem to be relevant in these proceedings. For the purposes of the planning regulations as regards site coverage and plot ratio, the site on which a building is erected would include an area falling within Reg.23(2)(b). Reg.23(2)(b) provides that for such a site "there shall be included any area dedicated to the public for the purposes of passage". Once the area of the site is known, Reg.21(3) would enable the plot ratio of the proposed building to be calculated by reference to it.

9. It cannot be denied that the triangular area had been earmarked for potential MTR purposes at the time of Mai Lee's proposed 1976 development. Leading counsel for the applicant in these consolidated proceedings argued that it was not Mai Lee's intention to include this triangular area in its development. In fact, it could not be. Hence, so Mr Griffiths submitted, the meaning of "site" given in A.G. v. Cheng Yick Chi and Others (Privy Council Appeal No.32 of 1982, the advice of the Board was delivered by Lord Fraser on 21st June 1983) precluded the triangular area from forming part of Mai Lee's "site" for its 1976 proposed development. Therefore, the triangular area was available for the applicant's instant proposed scheme and the Building Authority was wrong in rejecting the applicant's submitted plans.

10. Lord Fraser said :

" Mr Widdicombe for the respondents said that the site for purposes of development is normally a whole 'lot', using 'lot' to mean the leased area held directly or indirectly under a lease from the Crown. That may well be so. But (rightly) he did not contend that the 'site' was necessarily co-extensive with the 'lot', because the word site must be flexible enough to apply to a case in which the person holding several adjacent lots under Crown leases proposes to develop them together as a single site. It must also apply where the owner develops only part of his lot, or develops it bit by bit at different times. For example, if a development scheme applies to a substantial area of perhaps an acre or more, to be developed by building a detached house on part of it, with the rest of the land being laid out as a garden and tennis court, the whole area would be the site. If some years later the tennis court is sold off in order to build a separate house on it, the site for that later development would be limited to the tennis court.

Their Lordships are of the opinion that the land which forms a 'site' for the purposes of the regulations must be ascertained as a question of fact in the case of each development. It means, in addition to the land on which it is proposed to erect buildings, any land which the developer bona fide proposes to include in the development. It can only include land which he owns or which he has a realistic prospect of controlling. The additional land must be at least sufficient to enable the proposed building to comply with the regulations and it must, of course, not have been taken into account and, so to speak, used up in enabling some other existing building to comply with the regulations." (Emphasis supplied)

11. The regulations Lord Fraser examined were the Building (Planning) Regulations which cater for planning and design in building construction. In their Lordships' House, the meaning of a "site" for the purposes of these regulations was considered. The Law Lords were called upon to deal with "site" in the planning and design phase of our building construction. In that passage of Lord Fraser's speech, the reference to "land which the developer bona fide proposes to include in the development" must not be cut adrift from its moorings i.e. the planning and design phase of a proposed development. At that interim stage, as Lord Fraser explained, "any land which the developer bona fide proposes to include in the development" would form part of the site. Such land need not be included in the permanent sense. It is not the case that such land must necessarily be retained after the period of negotiation with government on planning and design. Lord Fraser did not require such land to be continually held in the scheme to qualify as part of the site in its earlier planning and design phase.

12. Much was sought to be made of the example given by Lord Fraser of a later use or re-use of available land, taken from a developed site, as the "site" for a new development scheme. Mr Griffiths suggested that the meaning supported by the applicant of the word "site" was foreshadowed in Lord Fraser's example. The reference to garden and tennis court in that example was said to carry the message that only land permanently incorporated as curtilages of the proposed building could be included as part of the site under these regulations. Of course, I am presently addressing myself to "land to be included in the development" other than land on which it was proposed to erect the building. Counsel spared no effort in highlighting the passage in Lord Fraser's speech which, read in isolation, could suggest that "no land would form part of the site" unless "the developer bona fide proposes to include (it) in the development". Mr Griffiths invited the Court to hold that no land could be included in the development unless it was proposed to incorporate it as part of the curtilages. The invitation seems to have ignored the aim and object of the regulations.

13. By the possibility of re-using unbuilt upon land such as a garden or tennis court in his example, Lord Fraser set out to illustrate the flexible application of the meaning of a "site" "at different times" to even land taken from "part of (a developer's) lot". It was not intended to exclude from the meaning of "site" in the planning and design phase, land which would not form part of building land or the curtilages in terms of a garden, yard, court, field, or other vacant space near or belonging to the proposed building. After all, the regulations made under s.38 of the Buildings Ordinance before their Lordships in Cheng Yick Chi related to the planning and design of a development. The question pertinent to these proceedings then under consideration by the Board was the meaning of a "site" for the exclusive purposes of those planning and design regulations. In other words, in the Privy Council the issue canvassed was what constituted the site in the planning and design phase. It was not sought to be determined the effect of land having been so included but not being ultimately incorporated into the scheme.

14. Reflecting on the case instanced by Lord Fraser, Mr Griffiths submitted that whilst the meaning of "site" for the purposes of these regulations must be resolved as a question of fact in each development, it could only comprise land "which (Mai Lee) bona fide (proposed) to include in the development". Counsel further relied on the Law Lord's observation that the land capable of being so bona fide included, must be land that (Mai Lee) owned or land which it had "a realistic prospect of controlling". The triangular area was not, so run counsel's argument, land which Mai Lee was expecting to continue to own or exercise control over. It had been earmarked for a potential MTR user. It must be clear to Mai Lee, so Mr Griffiths pressed upon me, that Mai Lee could not incorporate that land in the construction of its 1967 development scheme. Mai Lee did not therefore propose to include it in the development at all.

15. Taken to its logical conclusion, counsel's argument has at least the advantage of simplicity. Even for land which is agreed in a proposed development scheme to be dedicated for public purpose under Reg.23(2)(b), it would be included for plot ratio and site coverage calculation at the planning and design stage. In that exercise, land may have already been effectively dedicated pursuant to some consensus reached in the very scheme, long before building plans are submitted. We are not concerned with that aspect. On the meaning of "site", Mr Kwok for the respondent was, in my view, correct in his submission that by ownership or the realistic prospect of control, Lord Fraser focused on ownership or prospect of control at the time of the planning and design of a proposed scheme for Government's consideration. Land to be included in a proposed development submitted for Government's consideration must be or be expected to be at the disposal of the developer so that he is able to freely negotiate with the Building Authority in his attempt to seek permission to develop. In this type of negotiation with Government, land may be surrendered and property rights re-arranged by one side or another resulting in a variation, diminution or change in land ownership or control. What Lord Fraser reminded us of is that the capability of the developer in that phase is to be ascertained as a question of fact.

16. By the unfailing courtesy of Mr Kwok, counsel for the respondent, the Court was supplied with his submitted cut-off dates for determining the characteristic of land proposed to be included in the development. He maintained that the developer would be committed once approval was given but that land so included would be, in the words of Lord Fraser, used up at the time of completion. But for the approach taken in this judgment, the distinction drawn would be interesting. However, I do not find it necessary to express any concluded view upon it.

17. In the result, the triangular area was at the time material to the regulations owned and controlled by Mai Lee. The triangular area was made available for inclusion by Mai Lee in its 1976 development and formed part of the site for the purposes of the Building (Planning) Regulations. It was so made available "to enable (Carson Mansion) to comply with the regulations" and was "used up in enabling (Carson Mansion) to comply with the regulations". The triangular area has thus utilized its full building potential except for a 19 sq.ft. roofed-over area. In rejecting the submitted building plans of the applicant and in refusing to grant approval to them, the Building Authority was not guilty of any of the sins alleged. These consolidated proceedings are therefore dismissed with costs to the respondent.

Representation:

Mr John Griffiths, Q.C. & Mr Warren Chan inst'd by M/s Shea, Ma & Ho, for the Applicant

Mr S.H. Kwok, S.C.C. & Miss S. Sit, C.C. of Crown Solicitors, for the Respondent