Wong Bei Nei and Another v. Attorney General
Read the full judgment text of HCMP 199/1973 on BabelCite. This High Court CFI judgment.
1. On the 16th November, 1931 a parcel of land of 1,330,000 square feet was sold by auction by the Public Works Department, by order of His Excellency the Governor, subject to certain general Conditions of Sale, and for which land a Crown lease for a term of 75 years was to be executed by the purchaser when called upon so to do by the Land Officer. There were also Special Conditions annexed to the Conditions of Sale of the property including the following:
Cited by 8 cases
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HCMP000199/1973 IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION MISCELLANEOUS PROCEEDINGS NO. 199 OF 1973 -----------------
----------------- Coram: Trainor, J. Date of Judgment: 7th December, 1973. ----------------- JUDGMENT ----------------- 1. On the 16th November, 1931 a parcel of land of 1,330,000 square feet was sold by auction by the Public Works Department, by order of His Excellency the Governor, subject to certain general Conditions of Sale, and for which land a Crown lease for a term of 75 years was to be executed by the purchaser when called upon so to do by the Land Officer. There were also Special Conditions annexed to the Conditions of Sale of the property including the following:
2. By an agreement made the 18th September, 1937 between the Director of Public Works, on behalf of the Government of Hong Kong, and the Purchasers at the auction Special Condition 1 was varied as follows:
3. It was also agreed that the Purchaser or its permitted assigns would execute and take up a Crown Lease for each portion when called upon so to do by the Land Officer. 4. The property was subsequently divided into lots and the plaintiffs are now the owners of two which they acquired on the 18th December, 1968 and the 30th April, 1972 respectively. The plaintiffs by a Deed of Exchange dated the 30th November, 1972 merged the two properties for the purposes of development. 5. It might be helpful to review here the history of the two lots from the time of the acquisition of the first by the first plaintiff. 6. The first plaintiff having acquired his lot, (which I shall hereafter refer to as 28 Braga Circuit) wrote to the Superintendent of Crown Lands and Survey on the 30th July, 1971 a letter headed "Re: No.28 Braga Circuit Kadoorie Avenue, Kowloon" asking if the Government was prepared "to permit modification of the term of the Crown Lease for full development of the property and, if so, what are the terms, height and percentage of area allowed". The Department could scarcely be accused of undue haste in replying but they did eventually on the 28th December, 1971. The reply headed "K.I.L.2657 S.A. s.s.8 28 Braga Circuit" states: "..... no modification to permit more intensive development can be offered"; and continues "The owner was advised in 1952 that there is no objection to the erection of flats on the section subject to the height of the building not exceeding 24 feet above Braga Circuit. This ruling still applies". 7. Acting on this letter tentative drawings with respect to 28 Braga Circuit were prepared by the first plaintiff's architects and submitted to the Building Authority on the 28th January, 1972. A reply dated the 4th April, 1972 was received by the architects and reads as follows:
8. On the 24th April, 1972 the Building Authority again wrote to the architects saying:
a letter which confirms, at the least by implication, the consent to erect a building in flats referred to in the letter of the 28th December, 1971. 9. The second plaintiff, of which the first is one of the principal shareholders, allegedly acting on this correspondence acquired the second lot (which I shall hereafter refer to as 30 Braga Circuit) on the 30th April, 1972 for $1,000,000 and the two plots were considered from the point of view of joint development. 10. In September two sets of plans were submitted to the Building Authority covering the joined properties. On the 31st October, 1972 a permit to erect hoardings, covered walkways or gantries was issued, and on the 2nd November, 1972 a permit authorising the demolition of the buildings on the land was issued. The buildings, from which the plaintiffs say a monthly rent of $10,000 was available, were then demolished in preparation for the development. 11. By a letter dated the 16th January, 1973 the Building Authority rejected the plans submitted; the reason given for doing so was that there were certain errors in the calculations and draughtmanship. The letter further stated "More important than these errors however is the conflict between your proposals and that Lease conditions for K.I.L.2657 which requires, among other things, " ..... detached or semi-detached residential premises of European type ...." to be erected. It is considered that your present proposals do not fulfil this requirement: should you require clarification of this point I suggest you consult the Director of Lands and Survey ....." 12. Two further sets of drawings were submitted to the Building Authority on the 27th February, 1973 by the plaintiff's architect who also wrote to the Director of Crown Lands and Survey on the 29th March, 1973 asking for a clarification of "..... detached and semi-detached ...." and "..... where the proposed scheme does not fulfil the requirements of detached and semi-detached residential premises of European type". To this letter there was a reply from the Director of Crown Lands and Survey saying that the matter was one of legal interpretation and was under consideration. The letter continued: "However, I would point out that if 'detached or semi-detached residential premises of European type' was the only restriction contained in the conditions of sale, your proposals would very likely be considered compatible with this restriction. In the event, there are a number of other restrictions, including the requirement that 'the design of the exterior elevation, plan height and disposition of any building to be erected on the lot shall be subject to the special approval of the Director of Public Works .....' and it is necessary to give consideration to the effect of all these conditions". 13. It might be observed here that it does not appear from that correspondence that the Director foresaw any difficulties in the plaintiff's way save such as might be described as siting and structural. 14. As a result of the last letter and a discussion between the plaintiff's architect, a Mr. Hughes representing the Director of Crown Lands and Survey and a Mr. Flemming the architect wrote to the Director on the 18th May. In that letter he said "If the approval of my clients project as per plans enclosed in my letter of the 27th February is considered as too intensive, my client is prepared to concede by reducing the project to a lesser development", and enclosed an alternative plan. To that letter came what Mr. Chang not inaptly, called "the bombshell letter"; it was dated the 25th May, 1973. In it the Director said:
15. It might be observed here that there is no such reference in the letter of the 6th April. The letter continues:
16. On the 7th July, 1973 the plaintiff took out an originating summons in which the relief claimed is set out baldly:
17. My use of the word "baldly" may be the better appreciated when it is realised that what I have here quoted is the entire claim as drafted; so far as the "said conditions of sale" were concerned no reference whatever was made to any conditions of sale in the summons. 18. No point was taken on the pleadings, and the plaintiffs case was presented on two affirmations: one made by the Managing Director of the second plaintiff on its behalf, and on behalf of the first plaintiff; the other by a Mr. Arnulf John Brandt the present architect for the scheme of redevelopment. 19. Briefly, the contemplated scheme of redevelopment is for the erection of three detached buildings on the joined lots consisting of a total of twenty-four flats with a maximum height of two storeys above Braga Circuit. Mr. Brandt affirms that No. 32 Braga Circuit, which adjoins 30 Braga Circuit (and part of the land sold under the Conditions of Sale) has already been redeveloped by the construction of flats on it some years ago. 20. During the hearing the parties submitted an agreed set of issues to be decided and they read as follows:
21. The first and fourth issues arise from the interpretation of Special Condition No.6 which restricts the type of houses to be built to "detached or semi-detached residential premises of European type or such other buildings of European type as the Director of Public Works may approve of ....." There is express provision there for two types of premises: residential premises of European type; and other buildings of European type as approved of by the Director of Public Works. To the Special Condition is added a proviso Which, so far as it is relevant, reads:
22. It was common case, as I understood it, that "residential premises" and "dwelling house" are interchangeable terms and that "dwelling house" may include a block of flats with a common entrance. What was in dispute however was the meaning of private dwelling house. Kimber v. Admans (1900) 1 Ch.412; Grant v. Langston (1900) A.C.383; Ilford Park Estates v. Jacobs (1903) 2 Ch.522; Barton v. Keeble (1928) Ch.517; Downie v. Turner (1951) 2 K.B.112; In Re Endericks' Conveyance Porter and another v. Fletcher (1973) 1 A.E.R.843; In Re Marshall and Scotts Contract (1938) V.L.R.98 were referred to. 23. I do not propose to make any reference to the first part of the argument Mr. Chang raised when he was making the plaintiff's case i.e. that a "house", "dwelling house", residential premises" could include a flat, it was common ground as I said earlier; but it was his contention that the word "private" is something that must vary with the context in which it is used. In the present context he said it must not be considered as meaning restricted to the exclusive use of a certain individuals but in contrast to "public dwelling house" or lodging house, or public institution. He said it would be a breach of the Special Condition if it were used as a boarding house; it would still be a "dwelling house" but not private. He submitted that private in the context does not mean that the "house" mast be used by one person or one family unit. He contended that if the house consisted of separate, self-contained flats then the privacy of each occupant was such as to comply with the restriction as to privacy of the whole building; and the house in flats would be a private dwelling. 24. Mr. Thompson for the defendant argued that a condition not to use premises other than as a private dwelling house is a restrictive covenant which runs with the land and the word "private" which creates the restriction precludes the building of a block of flats, and would preclude the conversion of a house into flats. 25. In support of his argument he cited the case of Rogers v. Hosegood (1900) 2 Ch. 388. In that case the owner and mortagees of building land joined in a conveyance of a parcel of land to a purchaser who entered into a covenant with the mortgagors not to erect more than one dwelling house on the land and that such dwelling house would be for private residence only. The mortgagors later conveyed an adjoining parcel of land to a purchaser who was unaware of the covenant entered into by the purchaser of the other piece of land. It was held by Farwell J. at first instance that the assignees of the second plot could enforce the covenant against the assigns of the first plot and that "..... a large building which is used as thirty or forty separate residential flats does not answer to the description of a messuage to be used as and for a private residence" and on both points he was affirmed on appeal. 26. Another case in point was that of Day v. Waldron (1919) 88 L.J.K.B.937. In that case a lease contained a condition that the premises concerned would not be used otherwise than as private dwelling house, professioned residence or a private school. The house was converted into flats. In his judgment Avory, J. said "The next question is whether there has been a breach of the covenant to inhabit and use the house as a private dwelling house only. I think that, on the authority of Rogers v. Hosegood this question must be answered in the affirmative. A number of flats occupied by different tenants is not a private dwelling house". An Irish case, Belton v. Nicholl (1941) I.R.230 which held that to convert into flats a house, the lease of which contained a covenant that the house would be used as a private dwelling house only, would be a breach of the covenant was also cited. Mr. Thompson would maintain that the restriction in the last sentence of Special Condition No.6 precludes the erection of flats and would ask the Court to follow the decisions he had cited. 27. The plaintiffs are the successors in title to the purchasers of the parcel of land the subject of the Conditions and Special Conditions of Sale to which I have earlier referred. These conditions formed the basis of an agreement between the vendor and the purchaser some of which were to be incorporated as covenants in the Crown Lease or Leases to be executed as and when required. This case has proceed on the assumption that those pertaining to the restrictions on how the land is to be developed and how it is to be used run with the land and are binding on the plaintiffs. They include the restriction of the use of any premises built to that of a private dwelling house. 28. The first and fourth issues might I think be put: Is redevelopment of the two lots with which this case is concerned confined to single unit houses and, in the context does "house" preclude a flat or a block of flats. In my view the answer to both questions is yes. In my opinion to build a house containing a number of flats would be a breach of the condition which imposes the restriction of privacy. I consider the condition can only be interpreted as having been imposed with the intention of preventing, if I may use the phrase, a warren of people occupying a house. In other words it was intended that a house when built was to be maintained private to the purchaser and his successors in title. To permit the house to be used as of right by several persons in separate tenements would put an end to that privacy and that is what the condition intended to avoid. I find considerable support for my view in those cases cited by Mr. Thompson. 29. However, apart from holding, for the reason I have given that the creation of a block of flats would be a breach of the condition not to use the premises other than as a private dwelling house I would hold that there is another reason why Special Condition No.6 must be construed as prohibiting the building of a house in flats on the lands in question. There is a proviso to the Special Condition which, though Mr. Chang would say it is irrelevant, I consider very important. It reads "Provided that, subject to (certain conditions as to exterior elevations etc.) .... the Purchaser shall be at liberty to erect flats .... fronting to Argyle Street and Waterloo Road on the part of the Lot hatched red on the sale plan ..... " If it had been intended that "a private dwelling house" might include a house in flats wherever built on the parcel of land, then that proviso was superfluous. I think the maxim: expressio unius est exclusio alterius, is apt, and the intention of the vender to preclude the building of flats elsewhere than fronting to Argyle Street and Waterloo Road is clearly indicated. 30. As to the second and third agreed issues. These arise on the interpretation of Special Condition No.5. 31. The plaintiff's contention is that the restriction that "the area of the site and curtilage of each house intended to comprise a separate lot shall not be less than 8,000 square feet" only applied to and controlled the original development of the entire parcel of land; that if the original purchaser built a house and intended to carve out of the original parcel a lot including the house then the lot carved out must be 8,000 square feet but that the position is different now; the original conditions have been complied with, The houses that were on the two lots in question were there in fulfillment of the condition and now that they have been demolished and the site cleared the plaintiffs are relieved of the restriction that for each house to be built there must be 8,000 square feet; that they may now, if they wish build more than one house on such an area. The importance to the plaintiffs of this is that the combined areas of the two lots being less than 24,000 square feet they may not build the three buildings they wish if restricted to 8,000 square feet each. Counsel for the plaintiff argued that the Special Condition should be interpreted as meaning: If the original developer wished to dispose of the parcel in lots then, if a lot had a house on it the lot must be not less than 8,000 square feet; if it had no house it must be of at least 8,000 square feet and if he fulfilled his obligation by disposing of a lot of not less than 8,000 square feet the purchaser was not subject to any restrictions and could build as many houses as he liked. He maintained that the two lots in question were carved out of the parcel in compliance with the conditions and Special Conditions and that now with the buildings demolished, they are free from restrictions, so far as the number of houses are concerned. 32. I must confess that I had the greatest difficulty in following counsel's argument on this and I hope I have expressed it correctly. As I understand it I can see no merit in it. 33. Subject to a possible variation by reason of the agreement of the 10th September, 1937 which does not affect this case, I hold that the Special Condition means that the area of the site and curtilage of any house at any time erected shall not be less than 8,000 square feet; and further, that it was intended that if and when Crown Leases are granted they will ensure that the area for the site and curtilage of each individual house is maintained at not less than 8,000 square feet. 34. I consider that the intention of Special Conditions 5 and 6 was and is that the original parcel of land must not be divided into lots of less than 8,000 square feet; that on each lot one house may be built; and in the context, "house" must be read as being qualified by the words "private dwelling" and does not include a building composed of flats. As to agreed issue No.6 I do not consider that Special Conditions Nos.5 and 6 only applied to the original development of the original lot. The conditions are restrictive and I have been asked to assume that such conditions run with the land; an assumption that can be made with little hesitation. The result is therefore that they apply to the land whether by way of development or redevelopment. 35. I now proceed to deal with the remaining issue No.5. 36. It is the contention of the plaintiff that the Hong Kong Government had in 1952 modified the Special Conditions of sale by consenting to flats being built on at least part of the land involved in these proceedings, and that by the letter of the 28th December, 1971 it confirmed this. That by implication this was confirmed by another letter, that of the 4th April. 1972 - and again, expressly, by the letter of the 24th April. They contend that it must be assumed that the authors of those documents had authority to act as they did - Omnia praesumuntur rite esse acta - with the result that the Government has waived its right to restrict the plaintiffs from building houses in flats, or is estopped from restricting such building. 37. Counsel for the defendant in a written submission contends that the Conditions of Sale as signed by the original purchaser are still applicable to Nos.28 and 30 Braga Circuit. The Conditions of Sale, which were registered in the Land Office by way of a Memorial No.3121, he admits have been amended by various agreements but says none of them have altered the position of the lands in question. He maintains that the Conditions of Sale with the Memorandum signed by the purchaser and the Director of Public Works constitute a contract binding on the assignees of the purchaser which the Government is entitled to enforce; that a variation of the contract must be by mutual agreement and a notification by one party to the other, in the absence of agreement between the parties, cannot constitute a new agreement. Further he wouldmaintain that it is essential that there be consideration for the new agreement which would be the result if the correspondence referred to were considered as producing the results alleged by the plaintiffs. Finally, he contended that although there might be "initially an indication as to a development that might have lead a developer to believe that something different from what is expressly stipulated in the contract might be accepted" the normal contractual rules as to waiver have no application in Hong Kong in the circumstances of this case unless the "well established and formal procedure is undertaken". He conceded that the Director of Public Works and the Director of Lands and Survey are authorised to waive the conditions of or modify a contract such as the present one but that in practice it is the assistant Registrar General, who is similarly authorised, who formally acts. He would submit that there is a procedure for getting the Assistant Registrar General to act which is so well known by architects and developers that it would be "patently unreasonable to suggest that the Government could or should be bound by the letters of the 28th December, 1971 or 24th April, 1973 as waivers of restrictive provisions in the Special Condition of Sale - it is against fundamental procedures accepted and acted upon for generations. If anything, suggestions otherwise are mistakes not binding the Crown". 38. So far as the last point made by counsel is concerned it is not altogether surprising that no authority was cited in support. I considered it devoid of any merit, and Directors of Government Departments must not be left under any illusions as to the position. When the Crown is a party to proceedings it is, with certain very limited qualifications, in exactly the same position as any litigating subject and is as subject to the laws of contract as he is. 39. The remaining issue is in my opinion a simple one that revolves around what is the effect of the letters referred to: are they such as would constitute a new agreement or are they merely a modification or variation of the existing one, the authority and power of the authors of the letters not being in question. The importance of the distinction is that if I were to hold that the effect of the letters was to create a new agreement then the question of consideration arises; if the effect is merely to modify the agreement it does not. 40. Before proceeding to deal with the effect of the correspondence I think, perhaps, I should here dispose of the point made by counsel: that if anything was conceded by the Government it was a unilateral action that could not affect the original agreement. There is no question in my opinion that this was a unilateral action. What was done was obviously, as the result of one party to the agreement making a request to the other with which the other complied. That it was not unilateral is manifest from the fact that what was done by one party is relied on by the other to substantiate their claim in these proceedings. 41. Is there a new agreement which replaces the original? If there is not and the original agreement exists, however extensive the purported change, then it is a variation only. In Morris v. Baron & Co. (1918) A.C.1 Viscount Haldane A.C. at p.19 expressed the position thus: "What is, of course, essential is that there should have been made manifest the intention in any event of a complete extinction of the first and formal contract, and not merely the desire of an alteration, however sweeping, in terms which still leave it subsisting". In British and Beningtons Ltd. v. N.W. Cachar Tea Co. Ltd. and Others (1923) A.C. Lord Sumner at 68 said: "Under these circumstances it is plain that the three original contracts were not made an end of on May 12th, 1920 but were meant at most to be subjected to a variation or alteration as to the manner and measure of performance of the original terms. The change does not go to the very root of the original contract nor is it inconsistent with them". I do not consider that the changes to the original agreement dealt with in the correspondence amount to a manifest intention to depart from the original agreement nor do they go to the very root of the original agreement. In my opinion the intention manifested, and clearly so, is that the original agreement should continue in force with the variation that on the lot the subject of the correspondence a house consisting of flats might be built. 42. To sum up the position then so far as 28 Braga Circuit is concerned, I hold that the agreement constituted by the signed Conditions of Sale has been varied by the letters referred to earlier, which emanated from a person or persons with gazetted authority to make or modify Government agreements, to the extent that a building in flats may be erected on the lot referred to within the limits conceded in that correspondence. 43. So far as the 30 Braga Circuit is concerned I with reluctance hold that it is in a different position. However much the first plaintiff may have been misled by the various officers of the Public Works Department by the correspondence, and, indeed, the block of flats on the adjoining lot, there was nothing in existence whereby the second plaintiff could consider that the original agreement was varied so far as it is concerned. The correspondence to which reference has been made pertained to 28 Braga Circuit alone and was in existence before 30 Braga Circuit was purchased by the second plaintiff. Substantial shareholder though the first plaintiff may be in the second plaintiff company there is nothing in the correspondence to suggest that he was acting on behalf of it or that it was ever in contemplation when the correspondence was written. Indeed the second plaintiff only acquired 30 Braga Circuit on the 30th April, 1972. 44. In conclusion may I say, though the matter is largely academic, that although I hold that the authors of the various letters had express authority to vary the agreement as they did nevertheless had I held their authority to be other than express my decision would probably have been the same. For this I find considerable support in what was said by Denning J. in Robertson v. Minister of Pensions (1948) 2 A.E.R. at 770 G.H.: "In my opinion, if a government department in its dealings with a subject takes it on itself to assume authority on a matter with which it is concerned, he is entitled to rely on it having the authority which it assumes". 45. As to costs I would like to hear counsel on this matter. 46. By agreement, no order as to costs.
Representation: Mr. Chang (Hastings & Co.) for Plaintiffs. Mr. Thompson (A.G.) for Defendant. |
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