Kung Wai-ying v. Attorney General
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1. In this action the plaintiff claims a declaration that she is entitled in equity to be relieved against the forfeiture by the Crown of her interest in Castle Peak Town Lot No. 12 and an order vacating the Memorial of Re-entry registered in the District Office in relation to the said lot. It was common case that, under an agreement dated the 2nd April, 1970, the Crown agreed to grant to the plaintiff the lot No. 12 for the residue of 99 years less three days commencing from the 1st July 1898,
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HCA003327A/1973 IN THE SUPREME COURT OF HONG KONG (ORIGINAL JURISDICTION) ACTION NO. 3327 OF 1973 -----------------
----------------- Coram: Leonard J. in Court. Date of Judgment: 15th July, 1974. ----------------- JUDGMENT ----------------- 1. In this action the plaintiff claims a declaration that she is entitled in equity to be relieved against the forfeiture by the Crown of her interest in Castle Peak Town Lot No. 12 and an order vacating the Memorial of Re-entry registered in the District Office in relation to the said lot. It was common case that, under an agreement dated the 2nd April, 1970, the Crown agreed to grant to the plaintiff the lot No. 12 for the residue of 99 years less three days commencing from the 1st July 1898, and that possession of the land was given to the plaintiff on the same date. This agreement, although in common form, is somewhat a strange document and it is fortunate that nothing turned on its interpretation because of the manner in which it has been drafted. It is entitled "Agreement And Conditions Of Grant Of Castle Peak Town Lot No. 12". Throughout it the plaintiff is referred to as the "grantee" but it is not clear from its terms what precisely is granted to the plaintiff. It visualizes the grant at some time in the future of a Crown Lease in respect of the lot but the area over which the Crown Lease is to be granted is indefinite as are its boundaries. Thus, paragraph 3 requires the plaintiff to apply to the District Commissioner. New Territories for the lot to be "set out on the ground" and prohibits her from commencing operations for building until it has been set out. Clause 5(a) of the General Conditions obliges the District Commissioner, New Territories to determine the boundaries of the lot before the issue of the Crown Lease and makes his decision as to these boundaries final. There is a reference in Clause 2 of the General Conditions to "The Particulars Of The Lot" but the only particulars I can find are contained in a map headed "Proposed Lease Castle Peak Town Lot No. 12". In this map the lot is shown coloured red bounded on the south side by a pedestrian way on the west side by road "D4" and on the east side by road "12A". The area is given as "4,800 sq. ft (about)". Although it does not expressly so state this document is apparently intended to create something in the nature of a defeasible tenancy for Clause 8 of the General Conditions states inter alia that :
but the property over which the tenancy is to be enjoyed is ill-defined as is the interest of the grantee so long as the "conditions precedent", presumably to the grant of a tenancy remain unfulfilled. In this case nothing turns on these questions because of the pleadings. I mention my difficulties in construing the document merely in case my doing so may be of assistance in future alienations of Crown land in the New Territories. 2. Clause 4(a) of the General Conditions of Grant lays down that the :
Clause 8 having made fulfilment by the plaintiff of her obligations a condition precedent goes on to state that :
Clause 9 of the agreement empowers the Crown to re-enter for breach and goes on to provide that :
The plaintiff failed to comply with the Building Covenant set out in Clause 4 of these General Conditions and by notification G.N. 1506 published in the Hong Kong Government Gazette on the 15th June, 1973 the Crown :
This admission is made in paragraph 15 of the plaintiff's Statement of Claim. The plaintiff's explanation for her failure as adumbrated in the Statement of Claim was that some time after the 2nd April 1970 the plaintiff through her daughter, TONG Siu-ping, approached the Hongkong Chinese Bank Ltd. with a view to financing the construction of a two-storeyed factory building; that when she did so the officers of the bank represented to her that they would be prepared to finance the entire construction cost for an eight-storeyed factory building on condition that upon completion the bank or its business associates would be assigned the top six floors; that she thereupon gave instructions to her architect to draw up plans for an eight-storeyed factory building; that these plans were not approved until August 1971 and that, "the said officers of the bank after deliberating on the matter for a few months withdrew from the said arrangement". The plaintiff was, according to her Statement of Claim, unable to finance the construction of the eight-storeyed building although she was in a position to finance a two-storeyed factory which would accord with the Building Covenant and so indicated to Mr. Dixon, Estate Surveyor of Yuen Long District, at a meeting in April 1972. The Statement of Claim went on to allege that at a further meeting in July 1972 Mr. Dixon suggested to the plaintiff's daughter that the plaintiff's original intention for the construction of a two-storeyed building should be pursued in substitution for the eight-storeyed development: that the plaintiff's daughter told Mr. Dixon that this would entail further delay, but that Mr. Dixon said that if the plans for two-storeyed factory building were submitted these would be approved within twenty-eight days as required by law. I should state at this stage that having heard the evidence of the plaintiff's daughter, TONG Siu-ping and the evidence of an official of the Hongkong Chinese Bank Ltd. and that of Mr. Dixon and having perused the agreed bundle of documents, I am quite satisfied that no representation was ever made by the officers of the Hongkong Chinese Bank Ltd. to the effect that they would be prepared to finance the entire construction cost for an eight-storeyed factory building; that the bank was in no way interested in the acquisition of the top six floors of any building to be erected on the site and that no arrangement for financing the construction of the building having been agreed to or entered into by the bank there was no question of the bank's withdrawing from any such arrangement. A Mr. Chow, the Deputy Managing Director of the bank, gave evidence which I accepted without reservation, to the effect that no such arrangement had ever been contemplated or proposed. Again while I am prepared to accept that Miss TONG Siu-ping informed Mr. Dixon of her difficulties in arranging financial support I am quite satisfied that Mr. Dixon never advised Miss Tong that if plans for a two-storeyed factory building were submitted these would be approved within twenty-eight days. 3. The admitted facts and agreed bundle of documents show that the plaintiff contemplated the erection of an eight-storeyed factory on the site in June 1970 plans for which were submitted in that month. By August 1971 certain plans relating to this proposed erection had been approved. The District Commissioner of the New Territories was concerned about the development of this site in February 1972 and on the 14th of March 1972 Mr. Dixon informed the District Commissioner, New Territories that :
The "Company" to which reference is made is the Pak Kut Milk & Noodle Production Company, a firm of which the plaintiff was at all material times the sole proprietor. On the 30th March, 1972, Mr. Dixon wrote to the plaintiff under the title of that firm drawing to her attention the fact that the Building Covenant had only twelve months to run before it expired. The final paragraph of his letter reads :
On the 8th May 1972 the plaintiff's daughter in her letter to the District Office, Yuen Long referring to the above quoted letter stated :
On the 6th July, 1972 Mr. Dixon addressed the plaintiff's daughter in the following terms :
Mr. Dixon, when questioned on this letter and in particular the final paragraph of it, indicated and I was satisfied that at the time in question the District Office, Yuen Long was primarily concerned with seeing that Castle Peak Town was developed in an orderly manner so that industrial development should keep pace with commercial and residential development. In fact this purpose was not being achieved and a large number of grantees of land intended for industrial development were slow to develop their land and to comply with Building Covenants. Mr. Dixon desired discussion in order to bring home to the plaintiff's daughter the necessity for development for it was immediate development and not forfeiture that the Crown sought at that stage. It was alleged by the plaintiff's daughter that in the course of this interview (held in July 1972) she outlined the attempts which she had made to obtain financial support to Mr. Dixon whereupon he suggested that the plaintiff should revert to her original intention for the construction of a two-storeyed building; that she told Mr. Dixon that this would entail further delay having regard to the necessity of having plans approved; and that thereupon Mr. Dixon said that if plans were submitted they would be approved within twenty-eight days. Mr. Dixon could not remember having held this conversation but was adamant that if a conversation had been held in July 1972 he would not have informed the plaintiff that plans would be approved within twenty-eight days. Section 15(1) of the Building Ordinance lays down that where an application is made for the Building Authority to approve plans, he shall be deemed to have given his approval unless within twenty-eight days he has notified the applicant of this refusal to give approval. In July 1972, however, the operation of this section had been suspended by the Buildings (Amendment) Ordinance 1972. The provisions of the Buildings Ordinance never required the Building Authority to give his approval to plans within twenty-eight days; plans were deemed to be approved if he failed to indicate his disapproval of them within that period - a very different matter. Having heard Mr. Dixon, I am quite satisfied that he could not have indicated to the plaintiff's daughter that plans would be approved within twenty-eight days. The suspension of the relevant provisions of the Buildings Ordinance is therefore to a large extent immaterial. Plans for a two-storeyed factory were submitted on 25th September 1972 and these were not approved until the 9th April 1973. By the 15th June 1973 when by Gazette Notification 1506 the Crown published its Memorial of Re-entry no building had been started. 4. The plaintiff's daughter was cross-examined at length on her evidence as to her conversation with Mr. Dixon. I found her to be an uncandid witness and where her evidence conflicted with that of Mr. Dixon I accepted that of the latter. Certainly the case for the appellant was not proved on any balance of probabilities. On the facts therefore I do not consider that the plaintiff has made out any case for relief against forfeiture. Indeed the sole factor of which she can make any complaint with a scintilla of justification is the delay of 6 ½ months in approving the plans for the two-storeyed development. 5. It is therefore unnecessary for me to go at any great length into the authorities on the question as to whether or not there is jurisdiction to grant relief where the breach of covenant alleged is other than to pay rent or due to accident, surprise or mistake. In Cheung So Yin-kay v. Cheung Biu Briggs, J. (as he then was) held that :
This case was, of course, decided before that of Shiloh Spinners Ltd. v. Harding(1) where the cases of Sanders v. Pope(2); Hill v. Barclay(3) and Barrow v. Isaac & Son(4) were exhaustively examined and explained by the House of Lords. There the breaches leading to re-entry were failure to fence boundaries, failure to keep in repair, breaking up openings into a retained roadway and diminishing support and protection of retained premises. The Law Lords held that the case was one which fell within the class of case in which a court of equity could intervene and grant relief against forfeiture. They refused so to do since the evidence established a case of clear and wilful breaches of more than one covenant, a case of continuous disregard by the respondent of the appellant's rights over a period of time coupled with lack of evidence as to the respondent's ability speedily and easily to make good the consequences of his default. 6. Shiloh Spinners Ltd. v. Harding(1) was considered at length by Mr. Justice Li in interlocutory proceedings in the present case. He concluded that this, too, was a case in which a court of equity could intervene and grant relief. With this I agree; I do not however consider this is a case in which I should intervene in the exercise of my equitable jurisdiction. I have arrived at this conclusion because I do not believe the evidence of the plaintiff's daughter who was the plaintiff's agent throughout in this transaction. I do not believe that any officers of the Hongkong Chinese Bank Ltd. represented to her that they would be prepared to finance the construction cost for an eight-storeyed factory on condition that upon completion the bank or its business associates would be assigned the top six floors. I accepted the evidence of Mr. Chow, that the bank does not deal in property; that it was not interested in acquisition of any part of a building and that at no stage did the plaintiff's daughter indicate to the bank the finance she required. Equally, I do not believe that Mr. Dixon had told her that if plans for two-storeyed factory building were submitted these would be approved within twenty-eight days. Admittedly the Buildings (Amendment) Ordinance 1972 was in force at the time the plans for the two-storeyed factory were submitted but before that Ordinance came into force the Building Authority was not obliged to approve plans within twenty-eight days. This the plaintiff's daughter well knew from her previous experience with the plans for the eight-storeyed building. Again it is true that before that amendment came into force plans which had not been refused were deemed to have been approved after twenty-eight days. That this is a very different thing from suggesting that the Building Authority were required to approve plans within twenty-eight days is self-evident. The approval of the plans for the two-storeyed factory was undoubtedly delayed but by the time of their submission for approval almost 5/6ths of the time given for completion of the building had already passed and while the evidence was that the plaintiff had funds to erect a two-storeyed factory there was no evidence that she could have wholly or substantially completed the construction by the 2nd of April, 1973 even if approval had not been delayed. In the circumstances I cannot see that the plaintiff has established any equity which would entitle me to grant relief against forfeiture. 7. The primary object of the condition in question was to secure development of the property within a reasonable period. Well in advance of the completion of that period the plaintiff received ample warning as to what would happen if the property was not duly developed. That the plaintiff realised her position is amply demonstrated by her letter of the 29th of May 1973 to the District Commissioner, New Territories in which she stated that she acknowledged without reservation that a breach of the General Conditions did occur; that the process of submission of plans is of necessity time-consuming; that the implications of non-fulfilment of the Building Covenant were clearly explained to her at an interview on the 14th April, 1972. It is particularly noteworthy that in this letter she did not suggest that Mr. Dixon had told her in July 1972 that plans for the two-storeyed building would be approved within twenty-eight days. 8. Had the plaintiff come before me on the basis of the various representations contained in that letter I might well have felt sympathy for her. She has instead chosen to put forward a case which I cannot accept and her attitude as shown by the evidence which her daughter gave persuades me that the delay in complying with the Building Covenant was a wilful one. That she considered it necessary to fabricate excuses seems to me to indicate that the true reason for delay was one she felt would be detrimental to her case. Be that as it may I am quite satisfied that in giving evidence the plaintiff's daughter, who acted throughout as the plaintiff's agent, lied consistently and deliberately. This alone would prevent me from granting equitable relief. 9. When the case came on before me, the Statement of Claim was amended to include an averment that on or about the 16th March 1974 the Crown had demanded payment of the sum of $3,136.00 from the plaintiff, being the 5th instalment of the premium due under the Agreement of the 2nd April, 1970 and this sum was paid on the 25th March 1974. In the amendment of the Statement of Claim, the plaintiff suggested that the demand for and payment of this sum would make it inequitable if the plaintiff's interest were forfeited or alternatively that the agreement must be deemed to have been revived; or that the right to forfeiture was waived; and that the plaintiff should be granted relief. This argument ignores the provisions of the Crown Rights (Re-entry & Vesting Remedies) Ordinance, Section 4(2) of which lays down that immediately on the registration of a Memorial of Re-entry the Crown shall be deemed to have re-entered and the land and tenements shall thereby become re-vested in the Crown. I was assured by Crown Counsel and I accept the assurance, that the demand note for the sum of $3,136.00 was issued in error and that the amount paid would be refunded. The conditions themselves indicate that the acceptance of any-sum due under the agreement or payable under the agreement shall not amount to a waiver or relinquishment or otherwise prejudice the enforcement of the Crown's right of re-entry. The plaintiff can have been in no way deceived by the demand. Had she been she would have raised the matter at the outset not by way of a belated amendment to the Statement of Claim. The land had already re-vested in the Crown by virtue of the publication of the Gazette Notification and the issue of the demand note and the consequent payment could not revive the plaintiff's interest. Accordingly I do not consider that the demand and receipt by the Crown of the sum of $3,136.00 from the plaintiff affects the matter. It was clearly a mistake arising from bad liaison between the departments concerned. This case must accordingly be dismissed with costs.
Representation: Mr. Litton Q.C. and Mr. Bokhary (Woo, Kwan, Lee & Lo.) for plaintiff. Mrs. Jackson-Lipkin, C.C. for defendant/Attorney General. (1) (1973) 1 All E.R. 90. (2) (1906) 12 Ves. 282. (3) (1803-13) All E.R. Reprint Reports 379. (4) (1891) 1 Q.B.D. 417. |