Lam Kwok-leung and Others v. Attorney General
Read the full judgment text of HCA 1731/1977 on BabelCite. This High Court CFI judgment.
1. The plaintiffs sue the Attorney General under the provisions of the Crown Proceedings Ordinance. The suit concerns a Crown grant of a plot of land, with some houses thereon, situated in Kowloon. The land is part of a lot known as Kowloon Inland Lot 1088. The Crown had let that lot in 1903 to a person called Sassoon for a term of 75 years from the year 1900 with a right of renewal for a further 75 years. Originally the lot was an "island lot" bounded by four streets. There were various assignm
Cited by 2 cases
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HCA001731/1977
----------------- Coram: McMullin, J. Date of Judgment: 22nd December, 1978. ----------------- JUDGMENT ----------------- 1. The plaintiffs sue the Attorney General under the provisions of the Crown Proceedings Ordinance. The suit concerns a Crown grant of a plot of land, with some houses thereon, situated in Kowloon. The land is part of a lot known as Kowloon Inland Lot 1088. The Crown had let that lot in 1903 to a person called Sassoon for a term of 75 years from the year 1900 with a right of renewal for a further 75 years. Originally the lot was an "island lot" bounded by four streets. There were various assignments thereafter and about the year 1931 the then tenant assigned three sub lots with the houses upon them to other persons. In 1946 Mr. LAM Kwan the father of the four plaintiffs became the assignee of the four remaining houses to the north of the original lot by virtue of an assignment dated 21st of July 1946 of what was then known as the remaining portion of Inland Lot 1088. At that date because of the prior assignment the remaining portion was bounded by only three public streets; Man Ming Lane to the north; Arthur Street on the east and on the west by a public road since named Temple Street. The sourthern boundary of the original lot was Hi Lung Lane but that had gone with the 1931 assignment. On the 7th of April 1955 by a deed of gift the proprietor LAM Kwan assigned the plot of land with the four houses to the four plaintiffs. In about the year 1955 the Crown, by its servants, had caused a public latrine to be built in Man Ming Lane along the northern border of the remaining portion of Lot 1088. In 1962 the Crown through the mediacy of the Legislature of Hong Kong introduced Planning Regulations under the Buildings Ordinance Cap. 123 certain provisions of which will explain the emphasis thus far laid on the matter of street boundaries. Regulation 2(1) of the Building (Planning) Regulations establishes certain categories of building site in terms which appear as follows:
The practical importance of this measure consists in the fact that the same regulations establish building specifications for maximum permitted site coverage and plot ratio in respect of these three kinds of property the most generous figures, from the developer's point of view, being allocated to Class C sites and the least generous to Class A (see Regulation 21 and the Schedule to the Regulations). 2. In 1976 the plaintiffs were minded to re-develop their site and on the 13th of February 1976 a letter was sent to the Building Authority notifying that body of their intention and asking a confirmation of the plaintiffs' estimation of their property as a Class C site. The reply to that letter was in effect the first shot in the present engagement for the Building Authority so far from confirming this opinion placed the site in Category A the least advantageous from the re-developers' point of view. For the moment it will suffice to note that the latrine erected on the northern boundary of the plot was the material determinant of this decision. I will return presently to the reasons given for ascribing A Class status to the site but before doing so I will complete this brief account of the progress of the dispute and the nature of the claim. No evidence was led by either side but I was given to understand that although the latrine still stood upon the street at the date of the reply by the Building Authority to the plaintiffs' letter of the 13th of February it has since been demolished and removed though whether that was, in the year 1977 or 1978 counsel could not say. The reason for that removal was that the Crown had granted a lease for 4 years to the Mass Transit Corporation covering certain portions of land in the vicinity of Inland Lot 1088. These included the area covered by the latrine in Man Ming Lane and that area is presently being used by the Corporation to erect a structure connected with a ventilation shaft to serve that portion of the under ground transportation system. The information concerning this is far from clear. Neither side appears to attach much importance to the supplanting of one structure by the other. I understand however that the new structure will be of a permanent character and will be some 20 ft. high when completed and generally, apart from being somewhat taller, that it will constitute an obstruction in the street of comparable alignment and magnitude with the former public convenience. 3. After receiving the opinion of the Building Authority various representations were made on behalf of the plaintiffs concerning compensation both to that authority and to the Mass Transit Corporation. These were based on the alteration of Man Ming Lane firstly by the latrine and then by the workings of the M.T.R. which were regarded as having altered the plot boundaries. When these approaches proved unfruitful the plaintiffs commenced the present action. They claim a declaration to the effect that the Crown as landlord has derogated from the grant originally made to Sassoon, the benefit of which has passed to them, by erecting the latrine in Man Ming Lane the effect of which has been to re-classify the property in a category which permits of development on a scale which will be economically less advantageous than would be the case if, being bounded by three streets instead of two only, the site were to qualify as a Class C site. They claim damages for this alleged breach of the implied covenant not to derogate. Particulars of the estimate of this damage were delivered to the other side wherein a potential loss in the region of $1 ¼ million Hong Kong dollars is suggested. It may be said that while the Crown does not accept this estimate as to quantum it does not deny that the development of the plot as a Class C site would yield substantially higher profit to a developer than would the same plot if buildings were restricted to the prescriptions as to plot ratio and site coverage enjoined upon proprietors in the A Category. Mr. Gittins for the plaintiffs points to provisions of the Crown Grant which, while reserving certain rights to the Crown, do not include any express reservation in respect of alteration of lot boundaries. He emphasizes also a clause in the lease which obliges the grantee his executors, administrators or assigns before the expiration of 24 calendar months of the term granted:
Counsel maintains that the citing of the public latrine in Man Ming Lane constituted a clear act of derogation from the title granted in 1903 to the plaintiffs' predecessor in title but he would maintain that his clients' cause of action did not arise until the receipt by his clients of the letter from the Building Authority proclaiming the category of the site as Class C. His primary argument has been that this notification was in the nature of a mere administrative decision which even now might readily be altered by the Building Authority consenting to re-categorise his clients' property as Class C. His pleadings were thus originally framed and the defence thereto was a simple denial that there had been any wrongful derogation from the grant. At the trial however Mr. Barlow for the Crown sought a late and radical amendment to the defence by adding a plea that the plaintiffs' claim was in any event barred by virtue of the provisions of Section 4 of the Limitation Ordinance. Two other additional pleas of less moment were also put forward. Mr. Gittins proposed an amendment to his original reply at the same time the principal effect of which was to plead the effect of the siting of the latrine in Man Ming Lane as a continuing breach of covenant. These several amendments were allowed, upon terms, and the argument proceeded without the adducing of evidence other than was put forward by way of agreed documents. 4. To these various pleas I will return hereafter but before taking up the argument as it was presented I would like to refer to one aspect of the case which has somewhat puzzled me. I do so with no intention of criticising the labours of counsel who may very well have good practical reasons for leaving unexpressed or unexplored the matters to which I am going to refer. Nevertheless, though I put it tentatively, I cannot help feeling that more may have been conceded to the defendant than was necessary on points touching both the substance of the claim and the principal plea in defence. As to the former the reason given for consigning the plaintiffs' property to Class A viz.: that it had lost its northerly street abutment is in its turn supported by reference to one simple physical fact - the fact that the distance between the northerly plot boundary and the nearest wall of the latrine (which presumably at that date was still in existence) is less than 4.5 metres. This is roughly the equivalent of the figure of 15 feet mentioned in the Building Authority's letter of the 20th of March announcing the classification of the site. The significance of this is that it is provided in Regulation 23 of the same Planning Regulations that a street less than 4.5 metres (or 15 feet) wide shall be deemed not to be a street. This has been interpreted by the Crown to mean that Man Ming Lane which is indubitably a street to either side of Lot 1088 ceases to be such when it reaches that lot because at that point it is forced to negotiate an obstruction which diminishes what I may perhaps refer to as the fair-way by splitting it into two separate channels one of which is, and perhaps both of which are, less than 15 feet wide. I do not doubt that there are practical reasons behind this provision which would be readily apparent to those used to the technicalities of building construction and town planning. Nothing very clear was said in court but I think it was suggested that these provisions were designed to ensure the adequate flow of light and air to such buildings as might be constructed along the street. At all events it is a technical matter and one might have expected that a declaration would have been sought to challenge the propriety of the ruling given by the Building Authority on the basis of technical advice. It is difficult to believe (if the purpose of the provision is as I have surmised) that countervailing opinion would be lacking where a multi-storey building far overtopping the low obstruction in the street is in contemplation. On that approach I would have more readily understood Mr. Gittins' contention that the cause of his clients' difficulty was something in the nature of an arbitrary administrative act. For on that point there may be a measure of room for differing opinions. Moreover there seems something questionable in the very notion of a street which, as it were, disappears on encountering one end of an obstruction only to reappear once more at the other. The words employed in Regulation 23 are easier to apply where a street, over the whole of its length or over a substantial part of its length is less than 4.5 metres wide. The alternative possibility that Man Ming Lane has ceased to be a street in its entirety by virtue of the narrowing of a few yards of its length is scarcely to be considered. However it is not pleaded or argued that the regulations have been misapplied to Man Ming Lane. 5. As to the defence under the Limitation Ordinance, the argument advanced for the plaintiffs moved from the same premiss as that for the defence, in that both sides accept that the Crown's act of derogation (assuming it to exist) persists unchanged to the present time. Now, if one thing is plain on the arguments which actually were advanced it is that Mr. Barlow is right to date the alleged derogation (though of course he does not concede to have been such) from the year 1962. The grantor in this case is the Crown. It differs from the natural person not only as any corporation differs in being potentially deathless but in having what no ordinary corporation has: the office of Legislature which obliges the passing of laws binding upon all its subjects. Nevertheless, it is the same person who treats with the private land purchaser and grants him title and who later obliges him, with all other members of the public, to take heed of such general laws as may affect all private landed interests, including those of the kind which passed with the grant. The building of the latrine was of itself no act of derogation from that grant and could not have become so until the Crown, in its public manifestation, had introduced the law which, as seems to be accepted by both sides, cut down the right of user thus confining the grantees within limits of development which had not previously applied to them. The argument that the act of derogation occurred when the Building Authority notified the plaintiffs of the classification of their site is, to my mind, not sustainable on any view of the facts save the view that the application of the regulations is a matter of administrative decision. Certainly, it cannot be sustained if the regulations are considered to have the effect of reducing the site to Category A. For then there can be no question of an arbitrary administrative act. The public official is, as Mr. Barlow says, merely declaring the effect of the general law. It is not within his power to do otherwise. What seems surprising, however, is that it should be considered that the Crown has done but a single act of derogation whether that be viewed as deriving from the building of the latrine or the passing of the regulations or the combination of the two. For plainly there was an interlude of time in very recent days when the offending latrine no longer encumbered the northern boundary of Man Ming Lane. The ground beyond the northern boundary of the site was again, and for the first time in 40 years, level and bare. It matters not whether at that date the Crown had already engaged to lease that portion of the street to the M.T.R. Corporation or whether this arrangement came later and about this we have no evidence. The fact is there was an interlude during which the material basis for the classification of the site had disappeared. I will assume that by then the Crown was committed contractually to the M.T.R. If prior to that it had derogated from its grant to the successors in title of the original grantee, by a combination of acts intended for the public welfare, it had ceased to do so with the removal of the public convenience. The officers of the Crown who were concerned in the affair then had a choice of leaving the site bare or of erecting something else or permitting something else to be erected in place of it. It does not appear to me to matter whether they were then aware of the possibility that a claim might be made on the basis of derogation or whether they were not. It has been said, rightly in my view, that the fact that the plaintiffs were not aware of the effect of or even of the existence of the regulations of 1962 can give them no relief against the running of time. The citizen in such matters is said to be presumed to know the law. But the same rule binds the servants of the Crown to a knowledge of the legal effects of their acts when confronted with a claim of the present kind. If there was any substance in that claim it ceased with the removal of the latrine and could only spring up again when something else was put on the highway which, combined with the existing legislation, caused the street in the vicinity of Lot 1088 once more to disappear. I am not at all sure that there is any structure at the moment at that place in the street but I was told that the underground portion of the ventilation shaft is complete and that in the end a superstructure will appear which will, in the eye of the Building Authority, equally attract the restrictive operation of the Planning Regulations. I find it difficult to regard this as anything other than an entirely new user by the Crown of its property adjoining Lot 1088. If that be a proper conclusion then clearly there could be no question of invoking the Limitation Ordinance against the plaintiffs. I mention these two points for completeness and because in reflecting upon what was put before me they seemed to obtrude from the common facts insofar as I understood them. It may very well be that there are considerations of a legal, practical or technical nature of which I am unaware which would disarm such considerations as I have put forward. If that be so then I make apology to counsel for this divagation. At all events no such point has been taken before me and I must deal with the case as it has actually been presented, that is to say, on the basis that the regulations have the effect contended for by the Building Authority and that the present works upon the site of the latrine are a mere continuation of the former obstruction. 6. I have in effect already rejected Mr. Gittins' primary contention on the question of limitation. He relies on the principle that time does not begin to run until there is in existence a person who can sue and another who can be sued and when all the material effects have happened which if proved would entitled the plaintiffs to succeed. His clients' cause of action only arose, he says, when they were notified of the classification of their property by the Building Authority. He relied on Welch v. Bank of England(1) and Barton v. North Staffordshire Railway Co.(2). These were cases involving forgeries as a result of which in the one case Bank stock and in the other railway shares were transferred out of the possession of their true owners. On this being discovered more than six years after it occurred the bank in one case and the company in the other refused to re-register the owners as proprietors of the equivalent amounts of stock or shares. The Statute of Limitations was pleaded and in each case it was held that the time did not start to run against the plaintiff until the refusal to re-register. In each case the courts held that the damage to the plaintiffs' rights and consequently their cause of action only arose when upon the refusal to re-register. But the difference is clear between that kind of case and the circumstances here. The refusal of the bank and that of the railway company was held to be wrongful. The refusal of the Building Authority to restore the plaintiffs' site to Class C is, provided the factual basis for it is correct, wholly legal and proper. Indeed if the Building Authority's view of the regulations is correct it would be quite illegal for any officer of the Crown to attempt any such restoration. The injury to their title of which the plaintiffs complain consists in the inhibition of their capacity to exploit their own property to the maximum degree consonant with its size and other physical characteristics and with the available financial and technological resources. The act of the Crown which so inhibits them is the composite act of erecting the latrine and later legislating in a way which affected the plaintiffs' property because of the existence of the latrine. Whether they realised it or not it was upon the date that the regulations came into force that their right of development was cut down. It is the diminution of that right, if anything, which constitutes their right in action. 7. Then it is said that even if the right of action must be held to have arisen in 1962 the breach is a continuing breach of covenant in respect of which time cannot run. But the authority cited for that is no more satisfactory. The case is Spoor v. Green(3). For one thing it is not on all fours with the facts of the present case and, insofar as the judgments of the three judges therein are concerned with breach of covenant, the covenants under consideration are principally those for title and for quiet enjoyment and do not touch the question of derogation from grant. Insofar as the case can be argued to be in pari materia with the present case there is, it must be said, some considerable dissonance in the opinions expressed on the questions of breach and of limitation of time for action. There are complications in the facts of the case which need not concern us. Put simply, in relation to their bearing upon these issues, they went this way: the defendant who was the nominal owner of land held to the benefit of another granted a lease to two persons to work several seams of coal thereunder and to remove the coal. He then conveyed part of this land in fee to another person, Jamieson, who knew of the lease and of its purpose. Jamieson sold part of this land to the plaintiff who was unaware of the lease. At the time when Jamieson bought and entered on the land the coal under that portion of the defendant's original estate had all been removed. The plaintiff built houses on the part of the land conveyed to him and more than 20 years later the land subsided and the houses were damaged. The subsidence was due to the old coal excavations. The plaintiff sued on the covenants for title and quiet enjoyment. The plaintiff however wrongly had pleaded that the extraction of the coal had taken place after the conveyance to him whereas it had taken place even before his grantor had entered on the land. At the time of trial the plaintiff sought to amend and all three judges concurred in the view that this should not at that stage be permitted. As to the breach of covenant they differed greatly. Cleasby, B. held that there had been no breach of covenant and he said: (page107)
Although Bramwell, B. concurred in the judgment of Cleasby, B. he nevertheless thought that there had been a breach of covenant for title. He said at page 110:
He then went on to find that the Statute of Limitations was an answer to that breach and he said (at page 110):
The third judge, Kelly, C.B. alone, and in dissent from his brothers, thought that, mispleadings of fact apart, the plaintiff would have a cause of action for breach of covenant for good title and that the Statute of Limitations did not apply. Having concurred with the opinions of the other judges on the question of refusing an amendment to cure the variance between the facts found by the arbitrator and the facts in the case pleaded he went on to say (at page 115):
I pause there to note that the covenant he was referring to was the covenant for title. Later he said:
Earlier he had said:
It is to be noted that both Cleasby, B. and Bramwell, B. regarded Bonomi v. Backhouse(4) as having no relevance to the facts before them and Bramwell, B. put the matter this way (page 111):
Although Mr. Gittins has relied on the case of Bonomi v. Backhouse(4) as well I am satisfied that it cannot apply in the case of a claim based on breach of covenant when there is no question of a tortious act causing physical damage to the plaintiffs' property. As to the decision in Spoor v. Green(3) I would be hesitant indeed to conclude in Mr. Gittins' favour by applying, by way of analogy, a favourable opinion in a minority judgment concerning a covenant of a quite different nature. Since however some analogical support for his case can be derived from the words of the learned Chief Baron I prefer not to dismiss altogether the possibility that in a clear case of derogation from grant a good argument might not be advanced to show that such a breach of covenant ought to be regarded as a continuing breach so as to prevent the running of time. I do not profess to decide that question and although I incline rather to the view that there has not in this case been a continuing breach of covenant yet I confess I would be somewhat regretful to decide upon against the plaintiffs upon the point not only because of the doubt I have earlier expressed concerning the existence of a temporal bar but also because, even if that doubt be not well founded, I would prefer that the Crown should show greater merits in overcoming the claim than are involved in a complaint as to time since it may be said that, having so much greater store of it than any subject has, the Crown may reasonably be thought in most cases to be less disadvantaged than is the subject by its passage. I prefer therefore not to decide the issue as to time but this is of little benefit to the plaintiffs for in the end it does not seem to me that a good case of derogation has been shown. The doctrine of derogation, as Mr. Barlow aptly puts it, gives rise to a class of restrictive covenants which operate to prevent a grantor of land from using the adjoining land in ways which impair the use and enjoyment of the land granted by his grantee in ways which were within the contemplation of both parties at the time of the grant. That that principle is not restricted to cases where it can be shown that the act of the grantor has totally frustrated the purpose of the grant by rendering the intended user impossible is well established and the courts have consistently followed the principle put by Mr. Justice Parker in Browne v. Flower(5) in the following terms:
Does an act of the Crown which has the effect of making a grant of Crown land materially less profitable to the grantee in using the land for the purpose for which it was granted fall within this principle? I think it does not and the authority which I regard as decisive on the point is that relied on by Mr. Barlow: the case of O'Cedar. Ltd. v. Slough Trading Co. Ltd.(6). The facts are given in the headnote as follows:
In the course of argument counsel relied upon the suggestion that there had been in this way a derogation from the grant and in dealing with that matter Mr. Justice Branson said as follows at page 129:
I emphasize the words in that passage "adding substantially to the expense of carrying on that business" for they make it clear that Mr. Justice Branson was not refusing to find a derogation on the grounds that the disimprovement in the plaintiffs' position was slight or immaterial. It is not suggested in the present case that this site cannot be very extensively and profitably developed but only that the expected profits from its development may be considerably less than they might otherwise have been had the latrine or the ventilation shaft not been built or the regulations not introduced. I think I must refuse to extend the principle into such a region as this and, I think, with even more reason than prompted the refusal of Mr. Justice Branson in the O'Cedar Case(6) since the acts of the grantor which are complained of in the present case were done not out of any motive of private profit, however legitimate that might be, but in pursuance of the Crown's obligation to promote the welfare of the public at large. I must make it plain however that I have based my decision in this case upon that objection solely. I have not dealt with the other arguments advanced against the plaintiffs by Mr. Barlow and in the circumstances I am not proposing to do so though it may be proper for me to add that I would not in any event have thought that they were of such substances as to defeat the plaintiffs' claim. Neither do I propose to deal with the question of damages. For the reasons given the plaintiffs' claim must be dismissed with costs.
Representation: S.V. Gittins, Q.C., and P. Nguyen, instructed by (Sousae & Hoosen) for the Plaintiffs B. Barlow and R. McCallough, for the Defendant (1) (1955) Ch. 508. (2) (1888) 38 Ch. D. 458. (3) (1874) L.R. 9 Exch. 99. (4) 9 H.L.C. 503. (5) (1911) 1 Ch. 219. (6) (1927) 2 K.B. 123. |
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