Melhado Investment Ltd. v. Attorney General
Read the full judgment text of HCMP 1532/1981 on BabelCite. This High Court CFI judgment was delivered on 18 May 1982.
1. I have to bear in mind that I must construe this document as it was in 1905 and not as if it were drafted today, and that is something that I must bear in mind throughout the whole course of this judgment.
Cited by 12 cases
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HCMP001532/1981
BETWEEN:-
______________ Coram: The Hon. Mr. Justice Jackson-Lipkin. Date: 18 May 1982 at 2.55 p.m. ___________ JUDGMENT ___________ CONSTRUCTION SUMMONS
MR. STRAWBRIDGE: No. MR. LITTON: No.
MR. STRAWBRIDGE: No, my Lord. COURT: Mr. Litton? MR. LITTON: No, my Lord.
1. I have to bear in mind that I must construe this document as it was in 1905 and not as if it were drafted today, and that is something that I must bear in mind throughout the whole course of this judgment. 2. However, I cannot shut my eyes to the background of this lease which was granted shortly after the New Territories became, for administrative purposes, part of the Colony of Hong Kong, although I need not go into the political considerations and background to that event. 3. However, it is clear when one looks at the preamble to this lease that it does in fact have, as its principal purpose, the allocation of what in English, and consequently Hong Kong, law are leases, yet to preserve the rights and entitlements of the Chinese inhabitants of the New Territories which His Late Imperial Majesty saw fit, in his Imperial discretion, and, therefore, lawfully and properly, to lease to Her Late Majesty Queen Victoria, Her Heirs and Successors. Indeed it is quite clear from the declaration made by the Viceroy of the Two Kwongs on 4th April 1899 that the Emperor and his advisers were quite well aware that the Lease envisaged giving to the British Crown the right and power to grant leases to the persons already holding land in the New Territories. That is made equally clear by the Government Memorandum on Land in Appendix No. 3 to the Government Gazette of the 15th July, 1899, which has been put before me, and which is Exhibit 3 in this Matter. 4. The opening words of the deed that I have to construe are as follows:-
which indicates the point that I have been making that the Land Court adjudicated upon the rights and entitlements of the inhabitants already in the New Territories, embodied them in findings, and those findings constituted what are described as awards, and, consequent upon awards, indentures of the kind before me, and which the Court of Appeal had to consider in 1978 in the case which I have cited, were executed to contain leases of the kind I have to consider. 5. The document continues: -
6. It is of more than passing interest that that part of the lease appears not to have been considered in detail and possibly not at all, in the Watford Case (supra), to which I have referred. 7. Both counsel have very properly urged upon me that, for certain purposes and in relation to certain phrases in the judgment, I am bound by the Watford decision. I agree that I am so bound. The point that I have just mentioned is to make it abundantly clear to the Court of Appeal, before which this Matter will inevitably go, and to the Lords of the Council, to whom it will thereafter go, that Mr. Litton is in nowise debarred from taking any points before them on the construction of this lease having regard to the habendum and to other parts of the preamble! I think that it is only right that I should include this in the judgment to make it quite clear in case someone other than Mr. Strawbridge should appear for the Crown at a later date. 8. Page 3 of the lease, (which is page 17 of the agreed bundle), relates to rent, and there are certain parts of that which I feel I should read, not only to make clear what I have just said, but in order to assist me when I come to the covenants that I have to consider at page 5 of the lease, (page 19 of the agreed bundle). Page 3 says as follows (page 17 of the bundle) :-
It then continues:-
The Surveyor is of course today the Director of Public Works, or his successor in title; (so many changes occur in the title of public officers in Hongkong that it is singlely difficult for the court to keep pace with them). Then it reads on:-
Then follow what Mr. Litton has described as "postive covenants", in other words, covenants which place an obligation on the lessee to do something, as opposed to refrain from doing something. 9. On page 4 of the lease (which is page 18 of the bundle), there is one of these positive covenants and it reads as follows:-
and then it goes on:-
10. It is to be observed that nowhere in those parts of the lease to which I have referred is there an obligation on the lessee to maintain, to keep or to use the land for any particular purpose. 11. I should like now to revert to what I have said in relation to page 1 of the lease, (page 15 of the bundle), and I will re-read the words:-
12. At pages 22, 23 and 24 of the bundle appears the Schedule. The names are all of persons surnamed Li or of Tongs in the name of Li, together with the trustees of such Tongs who, I add parenthetically, are also surnamed Li. In the fourth column of the Schedule appears "Description of Lot". In the lease which I have to consider, there appear the following descriptions: "padi", "waste", "grave", "dry cultivation", and it is to be noted that there does not appear the word "agricultural" which appeared, apparently, in the schedule considered by the Court of Appeal in the Watford Case (supra), to which I have made reference. That is a matter to which, in view of the powerful submissions made by Mr. Strawbridge, I shall have to revert. 13. On page 5 of the lease, (page 19 of the agreed bundle), there appear what Mr. Litton has described as negative covenants, in other words, covenants prohibitive of certain actions, save in the circumstances prescribed in such covenants. There are only two with which counsel has been concerned in this Matter and with which I am concerned in construction of the lease. The first reads as follows:-
The second reads as follows:-
14. I am not concerned with the second of those two probibitive covenants. It is urged upon me that the first of those prohibitive covenants impliedly is a positive convenant. When I come to the matter of construction I shall deal with that. 15. But I must analyse, first of all, the first one. I am not concerned, I am told by both counsel, with the question of "noisy, noisome or offensive trade or business": I shall disregard that. The prohibition is against "converting" any ground expressed in the lease "to be demised as agricultural or garden ground" into "use for building purposes". There is an exception to that and it is this; that that does not apply to such use if it is "for the proper occupation of the same ground as agricultural or garden ground". It follows therefore I have to consider: First, was this a demise as agricultural or garden ground? Secondly, if it were, was the land converted into use for building purposes? Thirdly, did the sub-lease of this land, which was a lease for a term of two years granted on the 2nd February, 1981 (pages 26 to 33 of the agreed bundle) constitute a breach of such restrictive covenant? 16. Before passing from the sub-lease, I should have observed that there are only two clauses in it which concern me. The first is clause 2(g), which imposes on the lessee an obligation to use the demised premises "for storage of steel only". The second is clause 2(i):
17. I will now deal with the first point. The word "agricultural", as I pointed out, unlike the Watford Case (supra), does not appear in the Schedule, and it is of importance to look at the Schedule to the lease (which is Exhibit 1 in this Matter). It sets out the Lot number, the term, the area, the description, the name of the owner in Chinese characters and in Roman letters, the address in Chinese characters, and, under the heading "Crown Rent", the class of the land and the dollars and cents. 18. Exhibit 3 sets out certain rules made by the Governor-in-Council as to the rent payable for 1st, 2nd and 3rd class land in certain areas of the Colony. It does not help me directly because it deals with the rent for land draining in a southerly direction to the sea between Lyemun Point and a pier in the bay west of Lai Chi Kok per half a mau or portion thereof and land except land draining in a southerly direction between Lyemun on the east and the said pier on the west at a different rate, per mau or portion thereof, and neither of those rates appears to be relevant to the land I have to consider, because the padi land which is classified as "1st"(at page 22 of the bundle), is at 6 cents whereas the rate in the Gazette Notification is either 25 or 15 cents for 1st class land. 19. However, there is a definition clause in the rules there made by the Governor-in-Council, which reads as follows:-
And unless invited by counsel I do not propose to go into any further parts of that Gazette Notification which deals with Chinese title deeds, land measurement, temple and association land, land tax, newly cultivated land, landlord and tenant, etc. 20. So I must now direct myself to the question; was this demised as agricultural land or garden ground? Mr. Strawbridge urges on my two things. First, I am bound by certain expressions of what I will describe as opinion; in the judgment of Mr. Justice Huggins,
at p. 411, and in the judgment of the late Mr. Justice Pickering,
at p. 413 of the Watford Case (supra) and that they bind me to hold that this was a demise of agricultural land. Secondly, and it forms a foundation for the first, he says this; that the greater includes the less and that "agricultural" must include "padi", and, therefore, following the reasoning of the Watford Case (supra), the grant here, save in relation to Lots 502 and 506, must undoubtedly be a grant of "agricultural land" and, although he has not said so in express terms, it follows automatically from what he has said, that he includes in that submission, land granted under the heading of "dry cultivation". 21. That may or may not be so: It would be improper of me to dissent from the Court of Appeal. But what I have to consider is the significance in a negative covenant of a demise as agricultural land, because there is not in this lease and, in my judgment, there cannot be, any obligation on the lessee to keep, to hold and to maintain such land for ever as agricultural land. There are certainly restrictions on the use of it, such as building premises, type, design, lay-out, height, etc. which must, clearly, be governed by the second covenant. If it is to be used for building purposes there is a restriction on that: But nowhere is there a provision that the lessee must use the land for agricultural purposes. 22. That is not only in this case a matter of construction, but in this particular case it is a matter of common sense. Is it seriously to be suggested that His Late Majesty King Edward VII imposed an obligation upon the Li families and Tongs in perpetuity to keep Lot 502 as waste land? That they could not plant upon it a single nasturtium, dahlia or delphinium? That they could not put upon it a trough for pigs, or a birdbath? To me that would be straining construction beyond common sense. 23. In regard to the grave, to suggest that the descendants, whose ancestors are within that grave and who watch them from it day and night, cannot have their ancestors' souls gratified by the building of a garden around it, to me defies not only common sense, but also the customs and beliefs of the persons descended from the persons living in that grave. 24. I accept Mr. Litton's contention, therefore, that there is no positive duty to keep this land for the purposes set out in column 4 of the schedule. 25. That is also illustrated by another example he gave. What, he asked me rhetorically, would be the position if the land were allowed to lie fallow, would that be a breach of covenant entitling the Crown to re-enter? What, he asked me, if the descendants of the owner of those lots were to emigrate to Wardour Street, there to run a restaurant selling what passes for Cantomese food; would that entitle the Crown to re-enter? I cannot believe that that would be a proper interpretation of this grant, or what was intended by it. 26. Before I pass from that point I should deal with certain principle of construction. The principal rule of interpretation of a deed is that I should first and foremost look for its meaning or particular parts of it in the document itself, and, if I could find that meaning, I should not look without it. The second, and I would call it a cardinal rule, is that if there are clear and unambiguous words, they must prevail over the intention, if I am told of the intention, of the parties to the deed. 27. Intention has loomed very large in this case, because Mr. Strawbridge urges upon me with conviction and force, and almost certainly correctly, that the intention in 1905 was the preservation of the agricultural nature of the tenures of the families and Tongs, who had been taken into the British family by the Order-in-Council that put the administration of the New Territories under the Crown. But I am forbidden by the Rules of Construction to look at that intention in the absence of ambiguities. 28. The third matter which is mentioned to me is the question of this having been a Crown grant. That has given rise to certain difficulties in relation to the maxim verba chartarum fortius accipuntur contra proferentem. The first is how far that construction is applicable and, secondly, how far it should be applied in the case. 29. In the 5th edition of Odgers' Construction Deeds and Statutes, it is set out in simple terms thus, at page 98:-
30. That also appears in the second sub-paragraph of paragraph 1473 on page 608 of Volume 12 of the 4th edition of Halsbury's Laws of England. 31. That, however, does not apply if the grant is made in particular circumstances, that is to say, ex special gratia, certa scientia et mero motu regis. 32. For this proposition Mr. Strawbridge relies upon a comparatively modern case of Willion v. Berkley and Ors. (1562) 1 Plowd. 223, and in particular the passages in the judgment of Mr. Justice Weston at page 243. That case is the leading case to this day on this particular point. 33. It was followed in the cases of Feather v. The Queen (1865) R. & S. 257, and R. v. The Mayor and Commonalty of the City of London In the Matter of Mozeley Woolf's fine (1834) 1 Cr. M. & R. 1 and appears in most of the modern text books. 34. In relation to Feather's Case (supra) I should say this; that the judgments in Dixon v. The London Small Arms Company (Limited) (1875) L.R. 10 Q.B. 130 almost without exception urged that the principle in Feather's Case (supra) be not extended. That appears in the judgment of the Chief Justice of the Queen's Bench, Sir Alexander Cockburn, C.J., in the judgment of Mellor, J. and in the judgment of Archibald, J. 35. That Matter went on appeal to the House, and the decision is to be found at (1876) 1 App. Case. 632, and the speeches there contained the same exhortation in relation to Feather's Case (supra), particularly in the speech of Lord O'Hagan at page 656. 36. Mr. Litton points out to me, very properly, that I should look at Feather's Case (supra) in the light of the particular circumstances of that case, which concerned a prerogative grant. He says with force that what I am concerned with here today is not a prerogative grant, but something in the nature of a contract between Crown and subject, or the Crown and protected persons, (depending upon whether the lessees have become British or not), confirming their right to ancestral lands in the New Territories upon certain terms. Instead, for example, of paying the salt monopoly, of paying taxes to the Viceroy of the Two Kwongs, of paying taxes to the District Magistracy and so on, they were to pay rent to the British Crown. 37. In my judgment that is a valid distinction, but it is, I apprehend, of only academic interest because, as Mr. Strawbridge, with his customary fairness, has properly pointed out to me, I should not reach the question of whether the contra proferentem rule applies in this case and, if so, how unless I were driven to it by such ambiguities in the wording that I had no escape therefrom. He is perfectly correct and in my judgment I do not have to go that far. 38. I trust that that summary has fairly described the submissions of both counsel, and I trust I have left nothing of substance out from what both have advanced to me. But it would be wrong of me to leave that last matter without one observation. If the contra proferentem rule is applied in reverse, because this is a Crown grant, then it follows that the Crown has granted something very much less than agricultural land, and has granted only padi land, waste land, a grave and dry cultivation land, and that, if the other submissions of Mr. Strawbridge are correct, the padi land could never be used for horticulture; the waste land for cultivation; the grave land for the growing of a garden surrounding the grave, or the dry cultivation for growing rice. 39. The researches of counsel have not been able to find the definition of "padi", which appears to be a word derived, in Hong Kong, from India, although in fact it has a Malay origin of meaning "rice in the straw". The relevant definitions in the Greater Oxford Dictionary are as follows: "(1) rice in the straw, or (in commerce) in the husk", and its extensions, which I need not go into, are such words as padi-clearing, padi-crop, padi-field, padi-flat, padi-grinding, padi-ground, etc. For purposes of this Matter, I will take it to mean rice. But I apprehend that that is not a matter of contention between the parties. 40. Bound as I am, and with the greatest respect to the very learned judges in that case, I would add, "alas", by the Watford decision (supra), I must accede to the submission of Mr. Strawbridge that, in the negative covenant, I have to consider that the words "demised as agricultural or garden ground", do in fact cover the demise of the "padi" and "dry cultivation" ground. They do not, clearly, cover the waste ground or the grave ground, and it follows therefore that Mr. Litton is entitled to his declarations in relation to Lots 502 and 506. 41. I now pass to the remaining questions in relation to the padi and dry cultivation land. The question is have those "lands" been converted into use for building purposes, when it is accepted by both parties that the land has been used for the storage of building materials? It would have been quite simple for the draftsman to have inserted such words as "for the storage of building materials", or even the words "for storage", which would have prevented the use of the land for the storage of farm trucks, troughs, hay-racks, etc. The words are quite clear to me:- "nor convert any ground hereby expressed to be demised into use for building purposes" (my under-lining)" That means a conversion of the land into a different use. What use? Puilding pURposes? In my judgment that is totally different from using it as storage, even for as long as two years, of anything. 42. I put certain questions to Mr. Strawbridge as to what would or would not constitute a breach. He conceded on behalf of the Crown, that the storage of chassis or vehicles themselves would not be a breach, and, if that were not a breach, and I had to construe these words on the intention of the Crown to preserve this land as agricultural land, then that is an end of his argument. 43. I asked him about breeze blocks and hollow stones for troughs. He felt inclined to submit that that would be a breach, although I am not entirely sure he has been fair to himself because of the following words:- "other than for the proper occupation of the same ground as agricultural or garden ground", and I apprehend that those words would permit building purposes for the proper occupation of the ground as agricultural or garden ground, if his other submissions are correct. 44. I find the word "into" as well as "convert" of great assistance in this analysis. Two reasons: The first is; it implies a degree of permanence. That does not exist in this case, for there is merely a two-year sub-lease for storage of steel. But it must also be read "into use for building purposes", and in my judgment the storage of material, albeit building materials, for purposes not connected with that particular land or for building on that particular land, cannot constitute a breach of this covenant. 45. Originally I thought that I could derive some help from the difference in the wording between the two negative covenants which I have referred to, in that the first one reads "demised as agricultural or garden ground" and that second reads "demised as agricultural or garden ground or otherwise". I am persuaded by Mr. Strawbridge that that view is wrong, because agricultural ground, as I have held, envisages ground concerned with agriculture, which would include padi and dry cultivation. So I must look wholly within this negative covenant itself. 46. All that has been done is to use some padi land and some dry cultivation land for storage for a limited period of time; on the evidence before me, for two years out of seventy-five years, for the storage of steel girders and drums (which appear clearly from the fifteen photographs in Exhibit 2, and particularly in photographs 2 and 4, and less clearly in photographs 1, 3, 5 and 7). Nothing has been drawn to my attention to indicate that the drums have anything to do with buildings, although, as a matter of common sense, the girders are probably there for the purposes of erecting buildings at some point unknown to me. What is clear, however, is that nobody intends to use either the girders or the steel drums for building on the demised land. 47. As I have held that conversion into use for building purposes means the conversion of that land into use for building purposes on that land, it follows, therefore, that the storage of these girders and these drums does not constitute a breach. Mr. Litton is therefore entitled to his declarations, albeit for different reasons, in respect of the padi and the dry cultivation land. 48. This being an extempore judgment without prior research or reservation, if there is any matter I have not covered which either Counsel feels I ought to cover, in the light of my certain knowledge that this is going to the Lords of the Council in due course, I should be obliged if they would indicate to me such further matters they would wish to deal with Mr. Litton?
4.20 p.m. Court adjourns.
Representation:
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