Re Attorney General

HCMP000104/1971

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

MISCELLANEOUS PROCEEDINGS NO. 104 OF 1971

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Coram: Full Court (Blair-Kerr, Acting C.J., Briggs and McMullin, JJ.)

Date of Judgment: 4 August 1971

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JUDGMENT

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Blair-Kerr, Acting Chief Justice:

1. In May 1969, the Governor-in-Council decided that 195 lots of land in Survey District II, Kowloon, were required for a public purpose, namely the construction of Stage II of the Lung Cheung Road Extension. In exercise of the powers conferred by s.3 of the Crown Lands Resumption Ordinance Cap. 124, it was ordered that the lots be resumed and revert to the Crown and that compensation be paid in the manner provided by the Ordinance. A notice to this effect was published in the Hong Kong Government Gazette by G.N. 1031 of 23rd May 1969.

2. A Compensation Board (hereinafter referred to as "the Board") was appointed under s.6 of the Ordinance to determine the compensation payable to the former owners of 70 lots which formed part of the whole area comprised in the 195 lots. These 70 lots were held under the terms of a Block Crown Lease dated 18th March 1905 for a term of 75 years from 1st July 1898 with an option to renew for a further term of 24 years.

3. The lots with which we are concerned in these proceedings are the remaining portions of nos. 521, 545, 546 and 550. They form part of the 70 lots and they were demised as agricultural land. They are contiguous and they cover an area of 5,431 square feet. They were purchased in January 1949 by one Madam Tseng Yuen Han (hereinafter referred to as "the claimant"); and in January 1949 she erected certain buildings on the land, including a bungalow in which she has resided since 1949.

4. Before the Board, the claimant submitted that under the provisions of the Crown Lands Resumption Ordinance Cap. 124 she is now entitled to compensation not only in respect of the agricultural land but also in respect of the buildings which she erected on the land. Her claim is for $70,000 i.e. at the rate of $12.88 per square foot.

5. The Crown concede that if the claimant is entitled to compensation in respect of the buildings, $70,000 is a fair figure. But their contention is that the Board had no jurisdiction to award compensation in respect of the buildings which, they allege, were erected in breach of the covenants in the Block Crown Lease. The evidence before the Board was that the market value of the land itself is $1.50 per square foot i.e. $8,146.50 in respect of the 5,431 square feet; and the Crown's submission to the Board was that there should be an award of $8,146.50.

6. The claimant was awarded $70,000 compensation and $4,000 costs. The Board was also asked to record what it would have awarded if it had taken the view that the claimant was not entitled to any compensation in respect of the buildings; but it declined to do so.

7. Section 14(2) of the Crown Lands Resumption Ordinance reads:-

"14(2) Any decision arrived at by the Board shall be final as regards all persons interested."

However, the Crown contend that errors of law appear on the face of the record of the proceedings and that the Board has exceeded its jurisdiction; and this is an application by the Attorney General for an order of certiorari to quash the Board's decision on those grounds.

8. The jurisdiction of this court to correct decisions of statutory tribunals in Hong Kong is co-extensive with that of the King's Bench in relation to statutory tribunals in England; and in this connection I would repeat the words of Singleton L.J. and Denning L.J. in R. v. Northumberland Compensation Appeal Tribunal Ex Parte Shaw⁽¹⁾ Singleton L.J. said (p.125):-

"Error on the face of the proceedings has always been recognised as one of the grounds for the issue of an order of certiorari."

and Denning L.J. said (p.127):-

"No one has ever doubted that the Court of King's Bench can intervene to prevent a statutory tribunal from exceeding the jurisdiction which Parliament has conferred on it, but it is quite another thing to say that the King's Bench can intervene when a tribunal makes a mistake of law. A tribunal may often decide a point of law wrongly while keeping well within its jurisdiction. If it does so, can the King's Bench intervene? There is a formidable argument against any intervention on the part of the King's Bench at all. The statutory tribunals like the one in question here, are often made the judges both of fact and law, with no appeal to the High Court. If, then, the King's Bench should interfere when a tribunal makes a mistake of law, the King's Bench may well be said to be exceeding its own jurisdiction. It would be usurping to itself an appellate jurisdiction which has not been given to it. The answer to this argument, however, is that the Court of King's Bench has an inherent jurisdiction to control all inferior tribunals, not in an appellate capacity, but in a supervisory capacity. This control extends not only to seeing that the inferior tribunals keep within their jurisdiction, but also to seeing that they observe the law. The control is exercised by means of a power to quash any determination by the tribunal which, on the face of it, offends against the law. The King's Bench does not substitute its own views for those of the tribunal, as a court of appeal would do. It leaves it to the tribunal to hear the case again, and in a proper case may command it to do so."

9. It is therefore necessary to examine the record of the proceedings in order to decide whether the Board's determination, on the face of it, offends against the law.

10. On page 3 of the Block Crown Lease, there is a proviso which reads:-

"Provided also that in the event of any building being erected on any premises expressed to be demised as agricultural or garden ground the rent payable in respect of such premises shall be such sum as shall be specified in the licence for the erection of such building to be granted in manner hereinafter appearing."

11. A number of lessees' covenants appear on page 4 of the lease. These include a covenant to repair "the messuage or tenements and all other erections and buildings ...."; and on page 6 there is a proviso to the effect that the Crown shall have full power to resume the premises demised if required for public purposes in which case "full and fair compensation for the said land and the buildings therein" shall be paid.

12. On page 5, each lessee covenants as follows:-

"and Further that the Lessee .... shall not, nor will, during the continuance of this demise, ............. convert any ground hereby expressed to be demised as agricultural or garden ground into use for building purposes other than for the proper occupation of the same ground as agricultural or garden ground without the previous licence of His said Majesty .... signified in writing by the Governor of the said Colony of Hong Kong or other person duly authorised in that behalf: And Further that the Lessee or any other person or persons shall not nor will at any time during the said term erect or construct any building or structure of any description on the said demised premises or any part thereof, whether demised as agricultural or garden ground or otherwise, without first having obtained the approval thereto of the Surveyor to His said Majesty ...... or other person duly authorised by the Governor .........."

13. From a plain reading of those provisions in the lease, it is evident that the Crown contemplated the possibility of buildings being erected on the land demised; but the lessees covenanted not to erect any buildings of any kind (whether the land was demised as agricultural land or not) without first having obtained the approval of the Surveyor; and in the case of agricultural land, the lessees undertook not to convert such land into use for building purposes without previously obtaining a licence in writing from the Governor, or someone authorised by him; and it was agreed that if buildings were to be erected on any agricultural land, the rent of the premises would be revised and that the revised rent would be specified in the licence in writing previously obtained authorising the erection of such buildings.

14. According to the claimant, she purchased the land for $17,568, and the construction of the buildings cost $40,000; but before the Board she also alleged that she had spent some $19,000 on what she described as interior decoration.

15. The Crown rent paid by her has not been revised so as to take account of the buildings; and the evidence before the Board was that since 1949 she has paid 70 cents per year by way of rent to the Crown in respect of the four lots in question. On the other hand, she has let portions of the premises to sub-tenants who have paid her rents totalling $715 per month.

16. The claimant does not suggest that the buildings which she erected were "for the proper occupation of the ...... ground as agricultural ...... ground." Clearly, they could not be so described.

17. Furthermore, the claimant does not allege that before she converted the agricultural land "into use for building purposes" and in fact erected the buildings, she obtained, or endeavoured to obtain, "the previous licence ...... signified in writing" by any public officer, nor does she allege that she obtained, or endeavoured to obtain, the prior "approval" of any public officer. What she said in evidence was this:-

"I was told that it was not necessary to obtain permission to build a house."

The Board accepted this evidence. But this does not really advance her case in any way. For all we know, her informant may well have been a personal friend not connected in any way with the public service.

18. It is a matter of common knowledge that in 1949 a very large number of people came to Hong Kong from Mainland China and a very large number of structures of various kinds were erected on unleased Crown land and also on land leased for agricultural purposes, in breach of the covenants contained in the leases pertaining to such land. Indeed, it is quite apparent from the evidence adduced before the Board that the whole area in which the claimant's bungalow is situated has been built upon. It is no exaggeration to say that a small township has grown up there.

19. There was no evidence before the Board that either before or after the erection of these buildings the Crown had, either by licence in writing or otherwise, authorised the conversion of any part of this agricultural land for use as building land. On the other hand, the Crown did not at any time invoke their powers of forfeiture and re-entry under the lease. Indeed, in the case of the claimant, it is not in dispute that the buildings have been taken into consideration in fixing the rateable value of the premises ($4,160 per annum); and, under the provisions of the Rating Ordinance Cap. 116, the claimant has in fact paid such rates for 11 years, $624 being the figure in respect of the year 1969/70. It is also common ground that under the provisions of s.5 of the Inland Revenue Ordinance Cap.112 the claimant has been assessed, and she has paid, property tax in respect of the buildings, the amount being $499 for the year of assessment 1969/70.

20. Before the Board, the case for the Crown rested mainly on the provisions of s.12(b) of the Crown Lands Resumption Ordinance which reads:-

"(b) no compensation shall be given in respect of any use of the land which is not in accordance with the terms of the Crown lease under which the land is held."

The Crown's argument was that the land was leased for agricultural purposes; that use of the land for building purposes without the previous licence in writing by the Governor or his deputy and approval of "the Surveyor" (all as required by the terms of the lease) is not a "use of the land ...... in accordance with the terms of the Crown lease"; and, therefore, the Board had no jurisdiction to award compensation under the provisions of the Crown Lands Resumption Ordinance in respect of such unauthorised buildings.

21. The claimant's argument was that although the land was demised as agricultural land, there was no absolute prohibition against the erection of buildings; that in fact the lease envisaged the possibility of the Crown granting a licence to erect buildings on the land otherwise than for agricultural purposes; that if such a licence had been granted, either expressly or by necessary implication, the claimant would now be entitled to receive compensation in respect of the buildings as well as the land because, by virtue of such a licence, the user of the land would be user in accordance with the terms of the Crown lease; that the erection of buildings, without a licence so to do, was not an illegal act or a breach of the law but only amounted to a breach of covenant which could be waived, acquiesced in, or approbated at any time; that the Crown, by its conduct, had waived and acquiesced in the breach of covenant; that the Crown was now estopped from denying that it had granted a licence in the proper form for the erection of the buildings in question; and that the Board should imply the grant of a licence to build from the following facts:-

22. The claimant laid great stress on the fact that the Crown had charged, and that she had paid, rates and property tax in respect of the buildings. On the other hand the Crown relied on the decision of Rowlatt J. in Mann v. Nash⁽²⁾. In that case the taxpayer derived income from certain "fruit" machines, the use of which for the purpose of gaming was an offence. It was argued on his behalf that the Income Tax Acts, when they tax the profits of any trade, adventure, manufacture or concern in the nature of trade, impliedly exclude the profits of illegal trades, or to put it in another way, that an illegal trade is not a trade within the meaning of the Income Tax Acts. Rowlatt J. said (p.530):-

"The question really is whether as a matter of construction those words are to be cut down by an overriding consideration that the trade is tainted with illegality. The great mainstay of Mr. Field's argument ......... was the case of Duggan⁽³⁾ decided in the Irish Free State and that decision of the Supreme Court seems to have gone upon this principle, that no construction could be admitted which recognized that the State should come forward and seem to take a profit from what the State prohibited because the State ought to have prevented it; and it was argued, if I may venture to say so, in a somewhat rhetorical style: Does the State keep its revenue eye open and its eye of justice closed? I must say, I do not feel the force of that observation at all. Would it have made any difference, I ventured to ask in the argument, if the State had kept both its eyes open and prosecuted the man for the lottery and taxed him for the profits at the same time? That would at any rate have protected the State from the reflections which were made upon it in the words I have quoted. But, in truth, it seems to me that all that consideration is misconceived. The Revenue representing the State is merely looking at an accomplished fact. It is not condoning it; it has not taken part in it; it merely finds profits made from what appears to be a trade, and the Revenue laws happen to say that the profits made from trades have to be taxed, and they say: 'Give us the tax.' It is not to the purpose in my judgment to say: 'But the same State that you represent has said they are unlawful;' that is immaterial altogether and I do not see that there is any contact between the two propositions .............................. The State is ............... taxing the individual with reference to certain facts .........."

23. The submission of counsel for the claimant in regard to that decision was this:-

No doubt it is true to say that an act done in breach of a covenant in a lease is not necessarily an illegal or unlawful act. But does it matter? The gravamen of the decision in Mann v. Nash⁽²⁾ lies in the words:-

".......... it" (i.e. the State) "merely finds profits made from what appears to be a trade, and the Revenue laws happen to say that the profits made from trades have to be taxed and they say: 'Give us the tax' .................... .......... they are taxing the individual with reference to certain facts."

The Commissioner of Rating and Valuation and the Commissioner of Inland Revenue would have been failing in their public duty if they had not charged rates and property tax in accordance with the provisions of Cap. 116 and Cap. 112 respectively. By so doing, these public officers were not saying: "Government now grants you a licence in writing retrospectively to build a house on your agricultural land and you are released from your covenant not to build without first obtaining a licence so to do, with the result that your use of the land is now deemed always to have been in accordance with the terms of the lease." They were simply saying, in effect: "Whatever breach of covenant may have been committed, it is a fact that those buildings exist and fall to be dealt with under the statute law which it is our public duty to administer."

24. Counsel for the claimant relied on Gibson v. Doeg⁽⁴⁾, Hepworth v. Pickles⁽⁵⁾, and In re Summerson⁽⁶⁾. Gibson v. Doeg⁽⁴⁾ came before the Court of Exchequer in England in 1857. The headnote to the report reads:-

"A lease contained a covenant on the part of the lessee that he would not, without the consent of the lessor, use, exercise or carry on in the demised premises any trade or business whatsoever, nor convert the dwelling-houses into a shop, nor suffer the same to be used for any other purpose than dwelling-houses. One of the dwelling-houses was converted into a public house and a grocery shop and the lessor, with full knowledge of it, for more than 20 years received the rent. The plaintiff having purchased the reversion of the lessor, brought an action of ejectment for the breach of the covenant. Held, that the user of the premises in their altered state for more than 20 years, with the knowledge of the lessor, was evidence from which a jury might presume a licence."

Giving the judgment of the Court of Exchequer, Pollock C.B. said (p.257):-

"...... We are of opinion that when a breach of covenant has continued for upwards of 20 years, and with full knowledge of it, rent has been from time to time received, that fact may be left to the jury to say whether they will not presume a licence. It would be strange if a jury might presume a grant from upwards of 20 years' user, and yet be not at liberty to presume a licence. It is a maxim of the law of England to give effect to everything which appears to have been established for a considerable course of time and to presume that what has been done was done of right and not in wrong. That, practically, has caused a series of trespasses to constitute a right, so that it might be said a right has grown out of proceedings which are wrongful. But, in truth, it is nothing more than giving effect to notorious and avowed acquiescence. No person would have permitted a covenant to be broken for more than 20 years, unless he was aware that it was broken as a matter of right. It is not necessary, in point of form, to send the case to the jury to find the facts which the Judge may tell them they ought to presume."

25. This decision was followed in Hepworth v. Pickles⁽⁵⁾, and In re Summerson⁽⁶⁾. In Hepworth v. Pickles⁽⁵⁾ the headnote reads:-

"...... a certain plot of land was conveyed subject to covenant that no dwelling-house, shop, or other building to be erected on the land should at any time thereafter be used as an inn, tavern, or beerhouse. Shortly after the date of the conveyance, beer and spirits were sold in one of the houses erected on the land, and continued to be openly sold for upwards of 24 years. Held: in an action by a purchaser to rescind a contract for sale of that house on the ground of the existence of this restrictive covenant, that it must be presumed from the uninterrupted use of the premises as a beer-house for 24 years, that there had been a waiver or release of the covenant."

26. Farwell J. (having cited with approval the judgment of Pollock C.B. in Gibson v. Doeg⁽⁴⁾), said:-

".......... if you find a long course of usage, such as in the present case for 24 years, which is wholly inconsistent with the continuance of the covenant relied upon, the Court infers some legal proceeding which has put an end to that covenant, in order to show that this usage has been and is now lawful, and not wrongful."

27. In In re Summerson⁽⁶⁾ the headnote reads:-

Romer J. said (p.112):-

"I need not refer to the fact that the public house was used as a public-house before the date of the lease. From the date of that lease to the present time, a period of over 30 years, that house has been carried on openly and avowedly as a public-house, and that is not controverted; and, in addition to that, the assignment of these premises, which has been registered in the Corporation register, describes the premises as being a public-house; and what was still more important, their licence given to the lessee to assign to the vendors on this occasion has described the premises as being a public-house. Under those circumstances it is perfectly clear that, for a period of 30 years, to the knowledge, and I think I may say with the sanction, of the Corporation, these premises have been used as a public house. What is the conclusion? Inevitably, that there has been a licence, and a binding licence, from the Corporation to the lessees to use their premises as a public-house."

28. In my view, the facts in these cases are not on all fours with the facts in this case; and I find the report of the decision in Gibson v. Doeg⁽⁴⁾ remarkable in several respects. Firstly, the headnote merely says that user of premises, in breach of a covenant, for more than 20 years, with the knowledge of the lessor, is evidence from which a jury might (not must) presume a licence. Secondly, I find it difficult to understand the relevance of the doctrine of the lost grant to the facts in Gibson v. Doeg⁽⁴⁾. Thirdly, Pollock C.B. says:-

"No person would have permitted a covenant to be broken for more than 20 years, unless he was aware that it was broken as a matter of right."

With respect, that seems to me to be a most sweeping statement; and, for myself, I am not prepared to say that in every case in Hong Kong in which the Crown, as lessor, has permitted a covenant to be broken for 20 years, it must necessarily be presumed that the Crown was "aware that it was broken as a matter of right."

29. Gibson v. Doeg⁽⁴⁾ is, of course, frequently cited in support of the principle omnia praesumuntur rite et solemniter esse acta (vide Broom's Legal Maxims 10th Edition p.640); and the learned editors of the 27th Edition of Woodfall's Law of Landlord and Tenant cite the case as authority for the following proposition:-

"If rent be received for twenty years, with full knowledge of breach of covenant, and without any objection, a licence under seal may be presumed and found by the jury."

The words "under seal" do not occur in the judgment of Pollock C.B., but counsel for the applicant cited Dobson v. Espie⁽⁷⁾ for the proposition that a covenant may not be released otherwise than by deed under seal or supported by consideration. At p.35, Bramwell B., citing Byles on Bills, says:-

"It is a general rule of law that a simple contract may, before breach, be waived or discharged, without deed and without consideration; but after breach there can be no discharge except by deed or upon sufficient consideration."

This principle was touched upon in De Busshe v. Alt.⁽⁸⁾. At pp.314/5 Thesiger, L.J. said:-

"If a person having a right, and seeing another commit, or in course of committing, an act infringing upon that right, stands by in such a manner as really to induce the person committing the act, and who might otherwise have abstained from it, to believe that he assents to its being committed, he cannot afterwards be heard to complain of the act. This .......... is the proper sense of the term 'acquiescence' and in that sense may be defined as quiescence under such circumstances as that assent may be reasonably inferred from it, and is no more than an instance of the law of estoppel by words or conduct. But when once the act is completed without any knowledge or assent upon the part of the person whose right is infringed, the matter is to be determined on very different legal considerations. A right of action has then vested in him which, at all events, as a general rule, cannot be divested without accord and satisfaction or release under seal."

30. Counsel for the applicant cited Norman v. Simpson⁽⁹⁾ for the proposition that waiver of a right of forfeiture does not imply waiver of other rights arising on a breach of covenant. At p.165 Morton, L.J. said:-

"By the acceptance of rent the landlord acknowledged the continued existence of the tenancy and waived the common law right of forfeiture which the lessee's breach of a condition in the tenancy agreement had, I think, given her; but she did not thereby acknowledge that the sub-letting was lawful. She has never, in my opinion, so acted as to deprive herself of the right to recover damages against the lessee for his breach of contract."

31. Counsel for the applicant also relied upon a dictum of Williams, J. in Perry v. Davis⁽¹⁰⁾. The learned Judge is reported to have said (p.777):-

"As to the alleged waiver, more lying-by will not do; there must be some positive act of waiver."

Counsel for the applicant also cited Willmot v. Barber⁽¹¹⁾, the following passage from the judgment of Fry J. being relied upon:-

"It has been said that the acquiescence which will deprive a man of his legal rights must amount to fraud, and in my view that is an abbreviated statement of a very true proposition. A man is not to be deprived of his legal rights unless he has acted in such a way as would make it fraudulent for him to set up those rights. What, then, are the elements or requisites necessary to constitute fraud of that description? In the first place the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have expended some money or must have done some act ..................... on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it he is in the same position as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights. Fourthly, the defendant, the possessor of the legal right, must know of the plaintiff's mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert his own rights. Lastly, the defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right. Where all these elements exist, there is fraud of such a nature as will entitle the Court to restrain the possessor of the legal right from exercising it, but, in my judgment, nothing short of this will do."

32. Counsel for the applicant also referred to:-

33. The judgment of Ungoed-Thomas J. in Ward v. Kirkland⁽¹⁸⁾ was relied upon by the claimant - in particular the following passage which appears at p.629:-

"It was suggested before me that there was a distinction between an act which is acquiescing or encouraging a person in such circumstances to expend money and merely standing aside with the knowledge that such money was being expended in reliance on having the right which is claimed. I, ..... fail to see any substance in this distinction. The fundamental principle of the equity is unconscionable behaviour, and unconscionable behaviour can arise where there is knowledge by the legal owner of the circumstances in which the claimant is incurring the expenditure as much as if he himself requesting or inciting that expenditure. It seems to me that abstention as well as a request or incitement can fall within the principle from which the claimant's equity arises."

34. Other cases relied upon by the claimant in her submissions to the Board included Inwards v. Baker⁽¹⁹⁾, and Ives Investment Ltd. v. High⁽²⁰⁾. In the former case, the headnote reads in part:-

"...... where a person expended money on the land of another in the expectation, induced or encouraged by the owner of the land, that he would be allowed to remain in occupation, an equity was created such that the court would protect his occupation of the land, and the court had power to determine in what way the equity so arising could be satisfied."

35. The principle to be extracted from the decisions on estoppel is stated by the learned editor of the 2nd Edition of Spencer Bower's text book on Estoppel by Representation, in these words (p.4):-

"where one person ... has made a representation to another person ... in words or by acts and conduct, or (being under a duty to the representee to speak or act) by silence or inaction, with the intention (actual or presumptive), and with the result, of inducing the representee on the faith of such representation to alter his position to his detriment, the representor, in any litigation which may afterwards take place between him and the representee, is estopped, as against the representee, from making, or attempting to establish by evidence, any averment substantially at variance with his former representation, if the representee at the proper time, and in the proper manner, objects thereto."

36. This Court is not bound by decisions of the English Court of Appeal or by decisions of any English court inferior to the Court of Appeal. Furthermore, it has frequently been said in this Court that when a case decided in some other jurisdiction in some other part of the world is cited, a Hong Kong court should carefully consider the circumstances and conditions prevailing in that other jurisdiction at the time when the case was decided and should compare those with the circumstances and conditions prevailing in Hong Kong today.

37. This applies with particular force to the proceeding now before us. We have had cited to us old English cases decided under circumstances very different from those prevailing in Hong Kong during the last 20 years or so; and in my view this Court should scrutinise those decisions with the greatest care.

38. As I have said, in 1949 large numbers of persons entered Hong Kong from Mainland China; and in many cases, buildings of various kinds were erected on land leased for agricultural purposes, in breach of the covenants against building without a licence. In 1953 the Crown Rights (Re-entry) (Amendment) Ordinance was enacted. This introduced a new provision (now s.6 of Cap.126) which reads:-

"The acceptance of rent by or on behalf of the Crown shall not operate as a waiver by the Crown of any right of re-entry accruing or of any forfeiture incurred by reason of either the breach of any covenant in a Crown lease or the Breach of any condition or stipulation in any tenancy of land held of the Crown."

And by s.4 of the amending ordinance it was enacted that the above provision should:-

"... apply to all tenancies of Crown land whether created before or after the commencement of this Ordinance, and shall apply whether the acceptance of rent occurred before or after the commencement of this Ordinance."

39. In Hong Kong, the Crown is the lessor of all land held under lease, and references in English case law to acceptance of rent after breach of covenant operating as a waiver have no application here in view of the above statutory provisions.

40. There was no evidence that prior to 1958 the Crown was aware that the claimant had erected the buildings in question in this case; but it would appear that the Rating and Valuation Department and the Inland Revenue Department became aware of the existence of those buildings about 1958 because that was when these two departments commenced to charge rates and property tax respectively. The claimant argues that this knowledge on the part of these two departments must be imputed to all other Government departments, including the Director of Public Works and the officer in charge of the Crown Lands and Survey Office - a sub-department of the Public Works Department.

41. In support of this submission, counsel for the claimant cited the judgment of Denning J. in Robertson v. Minister of Pensions⁽²¹⁾. However, counsel for the applicant cited Howell v. Falmouth Boat Construction Co.⁽²²⁾. In the Court of Appeal, Denning L.J., in the course of his judgment, had said:-

"Whenever government officers, in their dealings with a subject, take on themselves to assume authority in a matter with which he is concerned, the subject is entitled to rely on their having the authority which they assume. He does not know and cannot be expected to know the limits of their authority, and he ought not to suffer if they exceed it. That was the principle which I applied in Robertson v. Minister of Pensions⁽²¹⁾ ......"

On appeal to the House of Lords, Lord Simonds referred to this passage from the judgment of Denning L.J. and said:-

"I know of no such principle in our law nor was any authority for it cited."

42. But, even if we assume that at some date subsequent to 1949 the claimant's breach of covenant, and the breaches of covenant on the part of, perhaps, hundred or thousands of others, became notorious so that knowledge of those breaches might reasonably be imputed to the Director of Public Works and his subordinate (the Superintendent of Crown Lands and Surveys) does it necessarily follow that we should say that there has been waiver of the covenant?

43. Having regard to the conditions prevailing here in 1949 and subsequent years, one can well imagine what an outcry there would have been if the Crown had attempted to exercise its powers of forfeiture and re-entry under the lease. There would have been ample justification for allegations of hardship. It was during this period that the Resettlement Department was born! So far as I am aware, there is no counterpart of that Department in England. Be that as it may, even if Government had wished to avail itself of its rights of forfeiture and re-entry (which, clearly, it did not) what a herculean task it would have been to have checked every breach of covenant and to have exercised powers of forfeiture and re-entry in every case! And to what purpose?

44. Looking at the matter in this way, can we say there has been waiver of the breach of covenant? For myself, I would not be prepared to go as far as that. Knowledge of the breach, perhaps. But not waiver in the legal sense.

45. But, even if we assume that there was waiver of the covenant not to build without a licence to a degree which, in a private tenancy, would have precluded the lessor from exercising his right of re-entry, in my view this does not assist the claimant. It was necessary that she should succeed in inducing the Board to rule that the Crown, by its conduct, was estopped from denying that it had in fact granted to the claimant a licence to build in proper form and that the grant of such a licence should be "implied". In other words, according to the claimant, the Board should say (as Pollock C.B. said in Gibson v. Doeg⁽⁴⁾):-

"No person would have permitted a covenant to be broken for more than 20 years unless he was aware that it was broken as a matter of right."

In my view, there was no evidence to support such an inference.

46. One of the most significant features of this case is the fact that the Crown rent has never been revised to take account of the buildings. It is common knowledge that when agricultural land is converted into building land the lessee is required to pay a very substantial premium and a greatly increased rent. There has been no revision of the rent. The claimant has continued to pay a nominal annual rent of 70 cents during the whole period of 20 years since the breach of covenant occurred. Why, then, should this Court presume that the Crown have released the claimant from her covenant and granted a licence in proper form to build when we know that they have been content to accept 70 cents annually by way of rent?

47. The Crown did nothing towards inducing the claimant to act in breach of the covenant or to alter her position in any way to her detriment. There is not a scrap of evidence to suggest "unconscionable" behaviour on the part of the Crown. They do not wish to acquire the buildings. No question of unjust enrichment arises. The claimant has had the use and enjoyment of her buildings for 20 years at no additional rent and no premium. The land is now required for a public purpose; and the buildings will, of course, be demolished. I can see no justification whatsoever for presuming or implying the "grant of a licence to build in proper form".

48. Therefore, in my view, the user of the land by the claimant since 1949 has not been user in accordance with the terms of the Crown lease; and the Board had no jurisdiction to award compensation in respect of the unauthorised buildings on the land.

49. Before the Board, the Crown relied on the decision of this Court in The Queen v. The Board of Arbitrators Ex Parte The Attorney-General⁽²³⁾ a case in which the facts appear to be on all fours with the facts in this case. Certain land in the New Territories was demised as agricultural land under a Block Crown Lease which, it appears, contained the usual prohibitions against the erection of buildings without the prior approval of the official formerly known as "the Surveyor". Buildings had been erected on the land without such approval. The land was subsequently resumed under the provisions of the Crown Lands Resumption Ordinance; and in awarding compensation the Board of Arbitrators took into consideration the fact that there were buildings on the land. Their grounds for doing so were summarised by Gould J. thus (p.48):-

"The grounds of the Board of Arbitrators, roughly summarised from the award, are that the buildings in question had been on the land for a long time and that it was negligence on the part of the Crown to permit them to remain, which amounts to a suggestion of possible acquiescence or waiver on the part of the Crown; and, secondly, hardship upon the particular tenants."

In giving the judgment of this court, Gould J. said (p.48):-

50. Counsel for the applicant submitted that this Court is bound by the 1955 Full Court decision. The submission of counsel for the claimant in regard to this decision may be summarised thus:

51. I do not think it is necessary to decide whether the Full Court is bound by its own decisions in the strict sense. The question has been re-argued fully before this Court; and I am in no doubt at all that the 1955 case was correctly decided although, of course, there is nothing in the judgment to indicate that the question of "implied licence" was argued on that occasion.

52. The applicant complains that there are a number of errors of law on the face of the record. Firstly, at p.7 of his judgment, the Chairman of the Board said:-

"We think that the Full Court in 1955 quashed the award upon the ex parte application of the Attorney General because the Board used words that are not in the Ordinance. As the Board was not legally represented, they sent in to the Full Court a statement of what they considered to be their view of the case, and they used the word 'hardship'. It is most likely that it was because of that word 'hardship' that the court quashed - as apparent error of law."(sic).

53. Clearly, this was not so. The Full Court was principally concerned with the Board's "suggestion of possible acquiescence or waiver on the part of the Crown"; and the Board's decision was quashed because the Full Court took the view that although "in all probability the Crown had waived performance of the covenant not to build without a licence to a degree which in a private tenancy would prevent them from exercising their right of re-entry .......... such a waiver is a waiver of the covenant itself and not a waiver to have compensation assessed as provided in the Ordinance."

54. In stating that it was "most likely" it was because of the use of the word 'hardship' that the Full Court quashed the Board's decision, the Chairman (at any rate at that point in his judgment) appears to have misapprehended the ratio decidendi of the 1955 Full Court decision; and I agree with the applicant that this is an error of law and that it is apparent on the face of the record.

55. However, at page 8 of his judgment, the Chairman said:-

"Now, the main point in this Full Court case of 1955 is that the Crown might have waived the performance of the covenant not to build without a licence, but the Crown did not waive to have (sic) the compensation assessed as provided in the Ordinance ......"

It certainly was the "main point". But the Chairman does not say why he did not regard the 1955 Full Court decision as binding upon him. On the face of it, it was a binding decision which it was his duty to follow.

56. A member of the Board (a Mr. Leung) attempted to distinguish the 1955 case from this case. He said (p.15):-

"I would say that that case can be distinguished. In that case there was no evidence that the Crown accepted rates and property tax and that the question of release of covenant and licence and estoppel had not been considered."

In my view, for the reasons which I have given, the fact that in this case there was evidence that the Crown accepted rates and taxes does not enable the case to be distinguished from the 1955 case; and, as I have said, although expressions such as "release of covenant" and "licence" do not appear in the judgment of Gould J., clearly the learned judge was prepared to go no further than to say that there was "in all probability" a waiver of the covenant itself to a degree which in a private tenancy would have prevented the lessor from exercising his right of re-entry. There was no evidence in the 1955 case which could possibly have warranted the inference, or the presumption, that the Crown had granted a licence to build so that the use of the land for building purposes was a permitted use. Gould J. said in the clearest terms that the probable waiver was not "a waiver of right to have compensation assessed as provided in the Ordinance."

57. The 1955 case was a decision of this Court in which the facts were substantially on all fours with the facts in this case. It was binding upon the Board; and it was the duty of the Board to follow it.

58. The Board (in particular the Chairman) laid great stress on the fact that the claimant had paid rates and property tax in respect of the buildings for the 11 years preceding the resumption. Having considered the relevant provisions in the Rating Ordinance and the Inland Revenue Ordinance under which rates and property tax were charged and assessed, the Chairman said (pp.9 and 10):-

And at pages 12 and 13, the Chairman said:-

"We are of the opinion that there was an equitable right of this claimant to stay, to enjoy in her house for the duration of her lease even for agricultural land purposes only, for as long as she paid the annual charge of property tax and rates and we would, therefore, award compensation for the land and buildings in her case.'

59. In my view, for the reasons which I have given, the Board erred in holding that as long as the claimant paid rates and property tax she had an equitable right to full and peaceful enjoyment of the house, the effect of which was to give her an equitable right to compensation in respect of the value of the houses on resumption of the land. This is clearly an error of law.

60. In his judgment Mr. Leung said:-

".......... the case might also be decided on the ground that since the Crown was aware of a continuing breach of the covenant restricting the user of the land and had acquiesced in it for a long time it could be presumed that the Crown has either released the covenant or granted a licence for the user."

61. There was evidence from which the Board could reasonably infer that the Crown became aware of the breach of covenant at some time after the breach took place. But, in my view, there was no evidence to justify the finding that the Crown acquiesced in the breach. The Crown did not exercise their right of re-entry and permitted the claimant to have the fruits of her breach of covenant by the use and enjoyment of the building for 20 years at the ridiculous rent of 70 cents per annum, a rent which could only be said to be appropriate for agricultural land. There was no evidence whatsoever to justify the inference or presumption that the Crown had released the claimant from the covenant or granted to her a licence to build.

62. It appears that the original Block Crown Lease was not before the Board. A copy was tendered in evidence; and on page 3 there appears the following provision:-

".......... it is hereby agreed and declared that on the expiration of the first ten years of the term hereby granted the rent hereby reserved shall cease and thereafter such rent shall be paid and become payable in respect of the said premises for the residue of the term hereby granted as shall be fairly and impartially fixed by the Surveyor to His said Majesty, His Heirs, Successors or Assigns (now the Director of Public Works)."

63. At page 6 of his decision, the Chairman of the Board says this:-

"In the case of the Full Court of 1955 ........ Gould J. raised the question who this gentleman called the Surveyor to the Crown could be, and he asked this question:

But that was 1955. Presumably, these words 'now the Director of Public Works' must have been inserted into the lease after 1955. We are not told when it was so inserted nor why it was not the Superintendent of Crown Lands and Surveys instead. Whether it is just added or not, we don't know. So it hints that in 1949 - anyway prior to 1955 - this claimant could not know where to obtain a permit. Even the Full Court did not know who this 'Surveyor' was, what his function was, and where to be found."

64. Obviously, the words 'now the Director of Public Works' did not from part of the original lease; and it may be that they were inserted somehow in the course of preparing the papers in this case for the hearing before the Board. It is also agreed that in 1949 there was no public officer in Hong Kong called "the Surveyor"; and counsel's researches have failed to unearth any "change-of-style" Ordinance, or other public announcement, indicating which public officer now exercises the functions which were exercised by the Surveyor in 1905.

65. But I do not agree with the Chairman that as a result of this the applicant "could not know where to obtain a permit." The lease is perfectly clear. A lessee may not convert any agricultural land into use for building purposes "without the previous licence of His said Majesty ...... signified in writing by the Governor ...... or other person duly authorised in that behalf"; and the prior approval of a public officer then called the Surveyor was also necessary before any building could be erected on the land.

66. The applicant did not obtain a licence in writing or the prior approval of any public officer; and, in my view, it matters not that the office of 'Surveyor' has, since 1905, been abolished and that his functions are now exercised by some other public officer - presumably the Director of Public Works, or the Superintendent of Crown Lands and Surveys.

67. If, in stating that the claimant "could not know where to obtain a permit", the Chairman of the Board was saying in effect that because the office of 'Surveyor' had been abolished at some time between 1905 and 1949, or that because there had been no public announcement to indicate which public officer now exercised the functions performed in 1905 by the Surveyor, therefore, despite the covenants in the lease, the claimant was free to erect a building without first obtaining a licence in writing and prior approval, then I agree with the applicant that this would also be an error of law. But I doubt whether this can be read into the Chairman's words; and I am not prepared to say that such an error is apparent on the face of the record.

68. At page 11 of his judgment, the Chairman of the Board indicated that in his view the decision in Mann v. Nash⁽²⁾ could be distinguished in that in Mann⁽²⁾ the use of the "fruit" machines was illegal, whereas in this case no question of illegality arises - only breach of covenant.

69. For the reasons which I have given, in my view the Chairman misapprehended the ratio decidendi of Mann v. Nash⁽²⁾.

70. As I have said, if it is correct to say that there was no evidence on which the Board could have inferred or presumed the grant of a licence to build with the result that use of the land for building purposes was not a use in accordance with the terms of the Crown lease, the Board had no jurisdiction to award compensation in respect of the buildings.

71. I think the application for an order of certiorari to quash the determination of the Board should issue.

Mr. Justice Briggs has asked me to say that he concurs.

4th August, 1971.

Representation:

Penlington, S.C.C., for Applicant/Crown.

Mills-Owens (Ho & Wong) for Respondent/Claimant.

(1) (1952) 1 A.E.R. p.122.

(2) 16 Tax Cases p.523.

(3) (1929) I.R. p.406.

(4) 2 H and N 616; 157 E.R. 253

(5) (1900) 1 Ch. 108

(6) (1900) 1 Ch. 112

(4) 157 E.R. 253

(7) 157 E.R. 33

(8) (1878) 8 Ch. Div. at 314/5

(9) (1946) K.B. 158

(10) (1858) 3 Common Bench Reports p.769

(11) (1880) 15 Ch. Div. at p.105

(12) (1914) 2 Ch. p.516

(13) (1887) 36 Ch. p.740

(14) (1865) 14 Weekly Reporter p.926

(15) 22 T.L.R. p.54

(16) 71 C.L.R. p.531

(17) 36 C.L.R. p.41

(18) (1966) 1 W.L.R. p.601

(19) (1965) 2 W.L.R. 213

(20) (1967) 2 W.L.R. 789

(21) (1949) 1 K.B. p.227

(22) (1951) A.C. p.837

(4) 157 E.R. at p.257.

(23) (1955) H.K.L.R. p.47

(2) 16 T.C. p.523

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IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

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MISCELLANEOUS PROCEEDINGS NO. 104 OF 1971

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Coram: Full Court. (Blair-Kerr, Briggs & McMullin JJ.)

Date of Judgment:

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JUDGMENT

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McMullin J.: I am in full agreement with the conclusions reached by the learned President in his very full and thorough examination of the many arguments and authorities placed before us, and if I do not refer to them in detail it is because I do not believe there is anything which I could usefully add to what he had said. I will restrict myself to a narrower ground of decision.

Of all the arguments put forward on behalf of the claimant, it appears to me that the one which comes closest to establishing her contention is the argument as to the existence of an implied licence to erect the buildings for which compensation is now claimed by her. In this connection Mr. Mills-Owens urged upon us the authority of certain old English cases in particular the decisions in: Gibson v. Doeg 157 E.R. 253; Hepworth v. Pickles, 190 1 Ch. D. 108; Downie v. Summerson, (reported at page 112 of the 190 1 Ch. D.). Apart from the substantial difference between the facts in those cases and the facts in the present case, however, there is one special feature in the present case which makes it difficult to apply to principles enunciated in those decisions. In those cases the documents of title which were being considered by the court did not contain any specific provision, such as exists in the Crown lease here, for the granting of a licence by a designated person in a designated form. It was counsel's contention on this appeal not only that a licence to erect these buildings must be implied but that the issue of a licence in the proper form, i.e. in the form envisaged by the express terms of the lease, must be implied from the conduct of the Crown and its officers. To my mind that contention exceeds the cover of the decisions cited in support of it. But more than that, it appears to me to fly in the face of common sense where, as here, the tenant who has been in possession continuously since the assignment of the Crown lease to her, is the only person now connected with that lease who could certainly state whether or not a licence in the proper form had ever been sought or granted in respect of the buildings which she herself put up. I will not pursue this observation further and I would not make it the basis of my decision because it appears to me that there is a more simple and fundamental reason why the claimant's contention should be rejected. In coming to this point, there is one further distinction to be made, between the cases cited and the present case, which forms a useful pointer towards what I believe the proper decision should be. In the cases cited by counsel, to which I have just referred, the court was being asked to consider the argument as to implied licence in so far as such a licence might serve to frustrate a forfeiture. Although the circumstances of the cases were various, it might be said that in each of them the alleged licence was being used by somebody as a shield against forfeiture of the premises. In our case the Crown is not seeking a forfeiture, it is exercising its quite separate power to resume the land in question and it is sought upon the other side to use the alleged licence not, as a shield by way of defence against the resumption, but as an implement to extract additional money compensation from the Crown in circumstances where the clear terms of the contract between the Crown and its subject, coupled with the relevant provisions of the law, would seem to disentitle the subject to any such payment.

The case for compensation was argued mainly on the footing that the respondent was entitled to compensation for her buildings because those buildings must be presumed to have been erected under some form of licence from the Crown and that the putting up of such buildings upon the land was not a user which was adverse to the terms of the Crown lease within the meaning of section 12(b) of the Crown Lands Resumption Ordinance Cap.124. It was the claimant's case that in those circumstances paragraph (a) of section 10 of the Ordinance applies and that she is therefore entitled to have the value of the buildings assessed, for compensation purposes, in addition to the other matters mentioned in that section. But what section 12(b) of the Ordinance says is that compensation shall not be given in respect of any use of the land which is "not in accordance with the terms of the Crown lease under which the land is held". These words supply to those who have to enforce the law a perfectly objective test for the assessment of compensation. The advantage of that test is its certainty. The express terms of the agreement between the Crown and its subject become a yardstick for measuring the limits of compensatable user. The need for choosing such a yardstick is not far to seek. In the special conditions of Hong Kong the "fait acconpli" has a notorious attraction for all manner of persons, from the squarter whose desperate circumstances impel him to seek a sanctioned status through the familiar and tenacious drift from trespass through sufference into tenancy, up to the successful entrepreneur who prefers the flexible resources of the verbal contract above the certainties of the written. I find it very difficult to believe that the legislature chose this yardstick with any other end in view than the protection of the Crown from just that kind of claim which it here seeks to resist. I do not believe that the reference in section 12 to the "terms of the Crown lease" was ever intended to embrace such terms as might by lawyer's ingenuity be pieced together from a patchwork of negative reactions and ambiguous reticences on the part of the servants of the Crown. On the contrary I believe that those words can only refer to the express terms as they are to be found in the lease itself or as they may have been modified by subsequent express agreement between the contracting parties in the manner provided by the lease. The Ordinance deals with the obligation of the Crown to pay compensation. It was no doubt the intention of the legislature to provide the necessary machinery for establishing simply and with certainty the limits of the Crown's liability. In my view, it cannot have been intended, in choosing the terms of the lease as the measure of what must be paid, to leave those terms at the mercy of inference. If those words in the section are interpreted as wide enough to include terms which may be implied from curcumstances including such matters as silence, inactivity and equivocal behaviour, such as the circumstances we have been considering in this case, the plain sense of the language chosen will be so greatly diluted that its value as a test will virtually be lost. The legislature of a territory in which the Crown frequently finds itself under the necessity of making a delicate choice between enforcing its strict rights and causing widespread disaffection on the one hand and overlooking the letter of the law in an effort to meet the immediate needs of its subjects on the other must I think, in this context, be presumed to have intended to safeguard the Crown from suffering a double loss through such expedient leniency.

If, as I have suggested, the chosen test was the lease in its express terms then I think that all questions as to breach of individual covenants, lying by, acquiescence etc. may be permitted to recede into the background. The Crown's objection to paying compensation for these buildings is not simply based upon the fact that they were put there without written licence from the Governor or his agent and that this constitutes a breach of covenant. No doubt any breach of the building covenant, even such as would not constitute a change in the user of the land, would on its own, be a user of the land which was not in accordance with the terms of the lease. Where that had occurred, and where the Crown was refusing the payment of compensation for a building the putting up of which did not constitute a change in the user of the premises, it might be that acquienscence in the erection and maintaining of such a building would leave the Crown under the necessity of paying compensation for its destruction on the basis that, although put up without express permission, its erection and use did not constitute a fundamental contravention of the terms of the lease. That might be so, but the primary objection of the Crown in this case is that the present user is not in accordance with the terms of the lease because it is fundamentally different from that which was stipulated between the contracting parties and it is the Crown's case that that user (i.e. the agricultural user) and only that constitutes the basis for compensation upon the resumption of the land. It need hardly be said that, although the claimant was not one of the original contracting parties, she, nevertheless, as assignee of the lease, is fixed with notice of all the terms contained in it and is bound by those terms. Whatever may have been the position in 1949 when she first acquired the land, and whatever may have been the position immediately after these buildings were erected, one thing is abundantly clear, and that is that, at the time of resumption, the user of the land in dispute, and indeed of the many contiguous plot in the area, whether or not it had ever been a user for agricultural purposes, had by then and for a long time ceased to be such. Agricultural user constituted the fundamental purposes of the lease and it has never been argued that the land was being used for this purpose by the claimant, or any of her neighbours, at the time of the commencement of the resumption proceedings. Any inactivity, therefore, on the part of the Crown and any apparent acceptance of the situation which might conceivably be inferred from the levying of revenue become irrelevant. While such behaviour might have afforded a good ground for resisting a forfeiture for breach of covenant, it never even began to be a relevant reason for revising what was, in effect, the agreed basis for compensation.

I think it was considerations of this kind which underlay the dictum of Gould J. in the Reg. v. The Board of Arbitrators Ex Parte the Attorney General (1955 H.K.L.R. 47) where, in substance, he said (p.48) that although the Crown might, by its conduct, be said to have waived the covenant against building without a licence, that waiver was a waiver of the covenant itself and not a waiver of the right to have compensation assessed as provided in the Ordinance. When first that decision was cited to us I confess that I thought that the respondent might reasonably argue that this formula, although succinct, had nevertheless begged the question because it might be said that the Crown's right to have compensation determined in accordance with the Ordinance depended upon the interpretation of the relevant terms of the lease since section 12(b) limits the right to compensation to user which is in accordance with those terms. If it could be said that what transpired between the Crown and its subject had had the effect of modifying the terms of the lease so that, for the fundamental term as to user, another and different term had been substituted, then it could be said that the Crown, in waiving its objections to what had been done, had waived, as a consequence, its right to have the assistance of the Ordinance in restricting the scope of compensation payable. I think, however, that the Full Court in that case, although it did not expressly say so, must have come unhesitatingly to the conclusion that the Ordinance insisted upon the express terms of the lease, since if section 12(b) is interpreted in any other sense that decision would seem to involve a circular argument. I take the view that the Full Court was right in coming to that conclusion and that the Board should have found themselves bound by that decision.

Thus far I have dealt with what appears to me to be one straightforward answer upon the purely legal aspects of this case. As I have said I am in full agreement with the reasons of the learned President on the wider aspects of the argument presented to us. In conclusion, however, and in view of the public importance of what has been decided and its likely impact upon a sizeable body of landholders in the same area, I feel I should comment upon what might called the claimant's moral claim. From the outset, behind the claimant's demand, there was to be discerned something in the nature of an appeal to Natural Justice. The Claimant's grievance might be thus expressed:-

"I develop this land enhancing its value with good buildings and spending a great deal of money in doing so; you observe this and make no complaint of it at the time or later; later still you derive benefit from my buildings by way of revenue; then you resume the land, as you are entitled to do, but you refuse to pay me due compensation for my buildings because of the lack of certain purely formal evidence of that consent which, by clear indication from your conduct, you have given to the putting up of this building. I have thus been encouraged to act to my own detriment."

Leaving aside those purely legal aspects with which I have been concerned above, how real in fact is this grievance? For twenty years at an annual rent as nearly nominal as it well could be, the claimant has occupied land given to her for farming purposes and has not merely not farmed it, but has used the land as a rental machine deriving from it an income greatly exceeding anything that she might have expected it to have realized as a result of the agreed user. In that period the Crown has received a rent which, in view of this user, can only be described as derisory; for a little over half of that period the Crown has collected revenue from these buildings amounting to a fraction of the private profits derived from them by the claimant (on my reckoning, a comparison of the current figures of rent received by the claimant as against property tax and rates paid by her indicates that the amount is in the region of about 10%) and as Mr. Penlington points out, the Crown in this period has supplied the usual essential services in return for its mulct. When the Crown resumes the land it does not acquire these buildings for its own use and, so far from acquiring an unconscionable pecuniary benefit from them, the Crown is put to the trouble and expense of having them demolished. I put the matter in this way because I wish to emphasise that I do not believe that the claimant's moral claim, on a fair appraisal of all the relevant considerations, will be seen to stand on any better footing than do her strictly legal and equitable representations. For these reasons I would say that the applicant has established his case to have the Board's finding quashed on the ground that the Board was in error in concluding that the decision in the Queen v. The Board of Arbitrators Ex Parte the Attorney General (1955 H.K.L.R. 47) was not binding upon it and further that it exceeded its jurisdiction in awarding compensation to the claimant for these buildings under section 10 without having due regard to the limitation placed upon its power by the provisions of section 12(b). The effect therefore is that the matter will be remitted to the Board for rehearing and for the assessment of compensation in the light of what has been said, in the judgments delivered herein.

Representation: