The Incorporated Owners of Wisdom Court v. The Secretary for Justice Representing the Director of Lands

HCMP 1284/2023 [2026] HKCFI 1469

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1284 OF 2023

________________

________________

BETWEEN

________________

________________________

J U D G M E N T

________________________

I. INTRODUCTION

1.Before me is the Originating Summons filed 10 August 2023, subsequently amended and re-filed on 29 February 2024 (the “Amended Originating Summons”). By the Amended Originating Summons, the Plaintiff seeks, among others, for a determination of whether the permanent toilets (the “Proposed Toilets”) of approximately 8.5 square metres which the Plaintiff proposes to build on the Ground Floor of Block A of Wisdom Court would contravene the following clause of the Government Lease governing the land in question, namely, Clause (1) (“Clause (1)”) of the Deed of Variation dated 5 July 1972. It provides:-

“AND will not erect or allow to be erected on the said piece or parcel of ground or any part thereof any building other than a building or buildings not exceeding Ten storeys in height which shall in all respects comply with the Building Ordinance any regulations made thereunder and any amending legislation and shall not have a total roofed-over area exceeding 22.55% of the area of the said piece or parcel of ground (it being agreed and declared that properly accessible car ports under the proposed building or buildings will be permitted in addition to the number of storeys hereinbefore stated and that any storey designed and used solely for such purpose will not be regarded as a storey for the purpose of calculating such coverage limitation)”.

2.For convenience, I shall refer to the height limit of ten-storeys as the “Ten-Storey Height Limit”, and the 22.55% limit on the total roofed-over area as the “Roofed-Over Area Limit”.

II. BACKGROUND

3.Wisdom Court is situated on Inland Lot No. 1874 governed by the Government Lease dated 2 October 1916. The Government Lease was subsequently varied by the aforesaid deed of variation and a further deed of variation dated 28 October 1981.

4.Wisdom Court consists of four blocks (the “Four Blocks”), namely, Blocks A, B, C and D respectively. Each block consists of a Ground Floor, and 1 – 10 Floors of residential flats immediately above the Ground Floor, and two basement levels (namely, B1 and B2) designed and used solely as car ports under the Ground Floor.

5.The occupation permit issued on 27 September 1985 for Wisdom Court provides that the occupation is permitted for the following purposes:-

“Basement 2: Carparks and ancillary accommodation for non-domestic use.

Basement 1: Carparks and ancillary accommodation for non-domestic use.

Ground Floor: Carparks, swimming pool and ancillary accommodation for non-domestic use.

1st to 10th Floors (inclusive):
Block A: 3 flats per floor for domestic use.
Block B: 3 flats per floor for domestic use.
Block C: 2 flats per floor for domestic use.
Block D: 2 flats per floor for domestic use.”

6.Accordingly, the Ground Floor consists of, among others, four entrance hallways, air-conditioners for comfort cooling and seating spaces, four lift lobbies, letter boxes, notice boards, transformer room, pump rooms and water tanks, switch rooms, a management office, a swimming pool, a footbath with shower in the recessed areas for the swimming pool, and about 11 car parking spaces. The total area of the Ground Floor is approximately 1,264 square metres, and the area of the Proposed Toilets, being approximately 8.5 square metres, will be about 0.7% of the total area.

7.Further, while the approved plan approved by the Building Authority on 3 June 1985 does not contain any toilet on the Ground Floor, the developer built two toilets (the “Developer-Built Toilets”) of a total area of approximately 10.5 square metres in the recessed area adjacent to and under a part of the First Floor of Block A on the Ground Floor. The Developer-Built Toilets were built for the purpose of obtaining a licence for the swimming pool from the Director of the Food and Environmental Health Department (the “FEHD Director”), and therefore, it was registered on the Ground Floor plan registered with the FEHD Director. The Developer-Built Toilets had been there since 1986.

8.In 2011, the owners of Wisdom Court resolved to renovate Wisdom Court. The renovation works included the demolition of the Developer-Built Toilets and would include the building of the Proposed Toilets. Plans containing the Proposed Toilets were submitted for approval, but the Director of Lands refused on Clause (1). As a result, temporary toilets were built for the purpose of obtaining a licence for the swimming pool. The temporary toilets had been there until 2018.

III. THE PLAINTIFF’S POSITION

9.The Plaintiff’s position for the hearing before me is focused on the construction of Clause (1). Specifically, it relies on the agreement and declaration (the “Declaration”) in the parenthesis of Clause (1), that is:-

“it being agreed and declared that properly accessible car ports under the proposed building or buildings will be permitted in addition to the number of storeys hereinbefore stated and that any storey designed and used solely for such purpose will not be regarded as a storey for the purpose of calculating such coverage limitation”

10.The Declaration consists of two limbs, whereby the parties agree:-

(1) “that properly accessible car ports under the proposed building or buildings will be permitted in addition to the number of storeys hereinbefore stated” (“Limb 1”); and

(2) “that any storey designed and used solely for such purpose will not be regarded as a storey for the purpose of calculating such coverage limitation” (“Limb 2”).

11.In summary, Mr Li Pak Hei, counsel for the Plaintiff, submits that:-

(1) Ground Floor is not regarded as a storey, or is permitted under Limb 1 in addition to the ten storeys above the Ground Floor;

(2) “Such coverage limitation” in Limb 2 refers only to the Roofed-Over Area Limit but not the Ten-Storeys Height Limit. Therefore, the coverage limitation would have no relevance to the addition of the Proposed Toilets to the recessed area under the Ground Floor; and

(3) By virtue of Limb 1, the addition of the Proposed Toilets to the Ground Floor would not render the Ground Floor not “properly accessible car ports” and so would still render the Ground Floor not a storey for the purpose of the Ten-Storeys Height Limit.

IV. THE DEFENDANT’S POSITION

12.The position of the Defendant, represented by Ms Ebony Ling, is that:-

(1) Ground Floor is a storey but is not counted to the Ten-Storey Height Limit only because of the Declaration;

(2) For Limb 1 to apply, the Ground Floor has to be “properly accessible car ports” and any facilities built on the Ground Floor has to be for the car ports;

(3) Further or alternatively, “such coverage limitation” in Limb 2 includes not only the Roofed-Over Area Limit but also the Ten-Storey Height Limit. Therefore, to be excluded from being counted as a storey for the purpose of the Ten-Storey Height Limit, the storey has to be “designed and used solely for [properly accessible car ports]”; and

(4) The Proposed Toilets would not be for, or ancillary to, the properly accessible car ports. Further or alternatively, they would render the Ground Floor not, or not solely for, “properly accessible car ports”. Therefore, the Declaration would not apply to exempt the Ground Floor for the Ten-Storey Height Limit.

V. LEGAL PRINCIPLES IN RELATION TO CONSTRUCTION OF GOVERNMETN LEASES

13.The issue is how to construe the Declaration. The legal principles in relation to the construction of Government Leases are well established. Like construction of any contract, it is a unitary exercise objectively to ascertain the intention of the parties from the natural and ordinary meaning of the words used in the Government Lease, with reference to factual matrix known to both parties, the context and the purposes of the provisions. Pre-contractual negotiations and conduct subsequent to contract are generally irrelevant. While common or commercial sense would be relevant, the Court should guard against re-writing the Government Leases if the intention of the parties is clear. Where there is any ambiguity in the Government Leases, it has to be construed in favour of the Government: see Eastrade Holdings Ltd v Secretary for Justice [2025] 1 HKLRD 400 at §§37-38 per Kwan VP, Au and Godfrey Lam JJA.

VI. ANALYSIS

14.It is convenient to deal with the meaning of “such coverage limitation” first.

15.“Coverage”, in its natural and ordinary meaning, refers to area. In my view, it would stretch the word too much to say that it also refers to height. It also makes sense in the context because clearly, Limb 1 is in relation to the Ten-Storey Height Limit, and thus Limb 2 is in relation to the Roofed-Over Area Limit, so that each Limb is for each Limit. Therefore, “such coverage limitation”, in my view, refers to the Roofed-Over Area Limit only, but not to the Ten-Storey Height Limit. Ms Ling seems to argue that if the phrase refers only to Roofed-Over Area Limit, the phrase would be rendered redundant because so long as the structure is built under the roofed-over area, the “such coverage limitation” would be irrelevant. Such argument is correct with her proviso “so long as the structure is built under the roofed-over area”. However, hypothetically, for example, if the Proposed Toilets or part of it is outside any Blocks, then it would increase the roofed-over area. In other words, the phrase “such coverage limitation” would still serve practical purpose, and would not be redundant. Since the Proposed Toilets in the present case would be in some recessed area completely within the roofed-over area in Block A, it would have no effect on the roofed-over area.

16.To qualify for the exemption from “such coverage limitation” under Limb 2, the storey has to be “designed and used solely for [properly accessible car ports]” (emphasis added). The word “solely” or the like, however, does not appear in Limb 1. Therefore, in my view, to qualify for the exemption from the Ten-Storey Height Limit under Limb 1, the storey (if it is a storey in the first place) has to be “properly accessible car ports”, but not necessarily “solely” “properly accessible car ports”. In my view, what kind of the storey not “solely” for “properly accessible car ports” would still be regarded as “properly accessible car ports” is a question of fact and a matter of degree.

17.Ms Ling, for the Defendant, submits that this would lead to difficulty in ascertaining whether any addition would render the storey “properly accessible car ports” or not. She submits that one may add a very small structure at a time and say that a very small structure would not change the nature of the “properly accessible car ports”, and it would be difficult to see where the limit ends. With respect, it is a question of fact and degree to be assessed objectively. Clear facts are at the two ends of the spectrum, and there is always more room for difficulty towards the middle of the spectrum. The reality is that if it is how the parties intend contractually to define their rights and obligations, the Court should give effect to their intention. Such difficulty, short of the terms being too vague to be enforceable or other vitiating factors, is not a reason not to give effect to the parties’ intention or, even worse, to rewrite the contract.

18.However, Mr Li, for the Plaintiff, makes a more fundamental argument. He argues that Ground Floor is not a storey in the first place. He contends that in Limb 1, the phrase “under the proposed building or buildings” refers to the basements, and because each Block consists of 1-10 Floors above the Ground Floor and because of the Ten-Storey Height Limit, it means that the Ground Floor is part of the building but is not a storey.

19.With respect, I am unable to accept such argument. By the natural and ordinary meaning, Ground Floor is a storey. When one refers to a one-storey building, the building would be a building on the ground, and objectively, no one would say that the building is a zero-storey building. The phrase “under the proposed building or buildings” does not advance Mr Li’s position at all. The proposed building is the ten-storey height building, and the Ground Floor, below the 1-10 Floors, is a storey under the proposed building. It is, in my view, just that the Ground Floor is exempted from being counted by Limb 1. In any event, if there is any ambiguity in the word “storey” as to whether it covers the Ground Floor, I construe it in favour of the Government that it covers the Ground Floor.

20.The real question, hence, is whether the Proposed Toilets would render the Ground Floor not “properly accessible car ports”.

21.Ms Ling submits that only those facilities that are ancillary for the car ports could still maintain the Ground Floor to be “properly accessible car ports”. In the present case, the Proposed Toilets, built for obtaining the licence for the swimming pool and the security guards, have never been intended for the purpose of the car ports. Ms Ling argues, therefore, that the Proposed Toilets would render the Ground Floor not “properly accessible car ports”. With respect, such submissions would effectively mean that the exemption under Limb 1 would apply only in respect of a storey “solely” for “properly accessible car ports”. However, as I have found above, the “solely” requirement does not exist in Limb 1. Therefore, I do not accept Ms Ling’s such submissions.

22.It remains for me to point out that ancillary to her such submissions, Ms Ling submits that any facilities on the Ground Floor not for car ports, like the management office, are facilities built with the approval of the Directors of Land, without which the Ground Floor would not be exempted under Limb 1. Such submissions are made for the first time during the hearing, and in any event, such “approval” is conduct subsequent to contract based on the subjective understanding of the Government Lease, not relevant to the exercise of the construction of the Government Lease.

23.In my view, quantitatively, the Proposed Toilets, only approximately 0.7% of the total area of the Ground Floor, is insignificant. Qualitatively, I do not see how the Proposed Toilets, though not for the car ports in any aspect, would change “properly accessible car ports” to some other things, or render the originally “properly accessible car ports” not being so anymore. In the circumstances, I find that even with the Proposed Toilets, the Ground Floor is still “properly accessible car ports” for the purpose of Limb 1. It follows that even with the Proposed Toilets, the Ground Floor would remain exempted from being counted for the purpose of the Ten-Storey Height Limit.

VII. MY ANSWERS TO THE QUESTIONS POSED IN THE AMENDED ORIGINATING SUMMMONS

24.Upon the above conclusion, my answers to Questions 2 and 3 in the Amended Originating Summons, the only questions the parties ask me to answer, are as follows.

25.For Question 3, my answer is that upon a proper construction of Clause (1), the words “… any building… not exceeding Ten storeys in height” does not apply to treat the Proposed Toilets as “accounting for a storey”.

26.Given my answer to Question 3, it is unnecessary for me to answer Question 2. If necessary, my answer to Question 2(a) is that it is not necessary for the Ground Floor to be a storey “designed and used solely” for the purpose of properly accessible car ports before the Ground Floor would not be counted for the Ten-Storey Height Limit. Given my answer to Question 2(a), Question 2(b) presupposing that the Ground Floor must be “designed and used solely” as such becomes irrelevant.

VIII. REMEDIES AND ORDER

27.In the premises, I order that the Defendant shall permit the Plaintiff to build, without any premium or charges payable to the Defendant, the Proposed Toilets subject to the approval by the Building Authority and other relevant authorities.

28.In none of the written submissions do the parties address me on relief (2), namely, “damages”. I raised this relief during the oral hearing, and it seems that Mr Li had not been prepared for that. For my part, I have doubt on what damages have been particularised in the evidence and what damages could be claimed for the lack of any toilet from 2018 until now. Further, I am not entirely sure how the Plaintiff, as the incorporated owners, has suffered loss and damages as a result of the lack of the toilets and the inability to operate the swimming pool. Be that as it may, since Mr Li is not prepared to make submissions on this and having taken instructions, he told me that the Plaintiff would still like to seek damages, I direct the Plaintiff to file and serve written submissions on damages within 14 days from today. The written submissions shall, with reference only to evidence already filed, include (1) the cause of action; (2) causation, foreseeability and remoteness; (3) loss and damages suffered by the Plaintiff; and (4) how to deal with damages, procedurally and/or substantively (for example, split trial of assessment of damages by Master, or nominal damages on the strength of Born Chief Co (trading as Beijing Restaurant) v George Tsai and Another [1996] 2 HKLR 188 at 191J-192A). The Defendant shall file and serve written submissions in response within 14 days thereafter, and the Plaintiff to file and serve written submissions in reply within 7 days thereafter. The Court shall then give directions on how to further proceed with the matter, and if possible, dispose of this relief on paper.

29.For costs, since the relief of damages is yet to be decided, I think the better course to take is to reserve costs, and to make directions on costs upon the disposal of the relief of damages.

30.Lastly, I thank counsel for their assistance.

Mr Li Pak Hei, instructed by Deacons, for the Plaintiff

Ms Ebony Ling, instructed by Department of Justice, for the Defendant