Shun Shing Hing Investment Co Ltd v. Attorney General
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1. This case raises issues of some importance because it puts in question the effectiveness of Hong Kong Government's building covenant policy in its capacity as landlord.
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HCA003384A/1982
BETWEEN
______ Coram: Hon. Hunter, J. in court Date: 1st October 1983 . ___________ JUDGMENT ___________ 1. This case raises issues of some importance because it puts in question the effectiveness of Hong Kong Government's building covenant policy in its capacity as landlord. 2. Building covenants have been a central feature of life in Hong Kong since the present administration started. I can say that because a copy of the very first lease of maritime lot No. 1 dated Christmas Eve, the 24th December, 1843 was put in. That set the pattern which has been followed ever since. 3. A peculiar, if not unique, feature of life in Hong Kong, it is that the Government is the sole ground landlord. It is the provider of land and can combine the functions of landlord and planning authority. Thus Hong Kong Government can do what many planning officers in the U.K. would give their eye-teeth to be able to do. They can charge developers a premium for the benefit of the permission they are giving them. 4. It seems to me that there are really four features behind this particular policy. 5. The first is the practice of charging premia at the time of an initial development grant based upon the value of the land with the benefit of the terms and permissions then granted. The same practice is followed if thereafter those terms are altered to the benefit of the developer. 6. The second feature which applies particularly to virgin land is the practice of requiring a developer to develop within a fixed period. The principle is that building land in Hong Kong is in short supply. As and when it is released by Government, it must be used expeditiously. 7. Thirdly, the developer is automatically required to develop the land in a particular way and in all probability to expend no less than a particular sum of money upon it. 8. And fourthly, each agreement, each grant contains a proviso for forfeiture, a proviso for re-entry, which enables the landlord to enforce the fore-going provisions. 9. All this is done quite simply by including in, as I understand it, all development leases two conditions substantially to the same effect. The first is Special Condition Sin the relevant agreement before me, which is to be found at page 34 of the correspondence, which requires the grantee to develop the land in a particular way by a particular date and to expend not less than a particular sum of money upon it. That is the building covenant clause itself. The second is General Condition 7 (a) and (b) which is a wide ranging proviso for re-entry. 10. That being the policy embodied in those two provisions, it became necessary for the Government as landlord to determine how to give effect to the re-entry provision. Because if there was a breach, the landlord was put to an election to choose whether he should re-enter or not, and if he did not re-enter, upon what terms. There has developed a policy in the form of guidelines issued to Government servants in respect of that. The policy can best be taken from a recent letter addressed by the Secretary for Lands and Works to the President of the Hong Kong Real Estate Developers Association of Hong Kong because it is common ground that it sets out what is not simply the present, but as far as memory goes, has always been the Governments policy in respect to premia on granting extensions of time as an alternative to re-entering in the event of breach of a building covenant. What is said amongst other things in this letter, which is dated the 15th of February, 1982 is this:
11. There are then two prongs to the practice. First, there should be a disincentive to people from creating a land bank; and secondly, if by reason of the extended time they have taken, they are selling in a market which has risen so that the premium originally charged has become unrealistic, a further premium which reflects the increase in the price of land can likewise be charged. 12. Now since the War it has been possible to set out what the Government's guidelines have been and they can be stated with some precision. Throughout this time there had been three parts to the Government's policy. Part one can be labelled "Misfortune, individual or national." This meant that if the time had been exceeded by reason of misfortune and without any fault of the individual, an extension would be granted without payment at all. The second part to the policy is that which arises when there has been a simple breach of the building covenant and here there has been operated a sliding premia scale. The third part which might be labelled "Last Resort or "Serious Breach" defines the circumstances in which Government will enforce their rights of re-entry and take the land back. 13. Now parts one and three are essential parts to the policy as a whole. The importance of them for present consequences is that these parts can readily be defined in terms of discretion, but they are very difficult to define in terms of obligation. 14. Part two, the sliding premia scale, was described in detail to me by Mr. Todd, the Director of Lands in his evidence. The story went like this. Immediately after the war, and in particular from 1947 to 1963 the pre-war scale was followed which was based upon rateable value. In the first year a single rate was raised; in the second year a double rate; and in the third year a triple rate. That worked in the urban area which was rated. It did not work in the New Territories where a very complicated and rather different scale was adopted which I need not go into. 15. That all changed in 1963 with the adoption of another scale which covered both urban territories and the New Territories. That scale went like this. In Year 1 the charge was 2.4% of the purchase price. In Year 2 it was 4.8% of the purchase price. In Year 3 it was 4.8% of the purchase price plus 2.4% of the re-assessed value of the land. So that in the third year an element of present value was introduced. And in Year 4 this was taken further because it was a total of 4.8% of the price and 4.8% of the re-assessed value. That scale only lasted for two years because between 1965 and 1968, for general economic reasons, there was a general moratorium. 16. In 1968 the 1963 scale was picked up again with this difference, as far as existing grants were concerned, that the starting point for those was not the purchase price but a re-assessed value of that land as at 1968. That scale continued to operate until 1975. 17. And then in 1975 for administrative convenience (it is understandable that the 1963 scale looked excessively and unnecessarily complicated), a new scale was introduced which was much simpler and went like this: Year 1 - 2% of the purchase price Year 2 - 4% Year 3 - 8% Year 4 - 14% Year 5 - 22% Year 6 - 32% 18. That was the scale in fact in force when the contract in this case was entered into on the 6th November 1976. 19. The next change came on the 1st January 1981. This change was to apply the 1975 percentages to the then current value of the land. 20. The reason for that change was this: Between 1976 and 1980 there had been very considerable increases in land value. There had been considerable, public pressure brought upon the Government to alter its practice upon the basis that the premia they were then charging based upon the original purchase price were wholly derisory and were totally ineffective to implement the apparent policy of the Government itself. The alteration was brought about to recognize that simple fact. That it was plainly applicable to this particular site 1 will show hereafter. 21. The final change was brought about on the 1st July 1983 when again by reason of general economic conditions the Government have effectively granted all developers a moratorium in the Year 1 because the 1983 scale now only starts to operate at Year 2. 22. Now this case concerns the effect of those guidelines, that premia scale. The crucial paragraphs in the Amended Statement of Claim are, first, paragraph 10 which asserts the existence of a policy applicable to all developers. The policy is not wholly correctly stated. That there was a policy, and it was applicable to all is correct. The crucial words which follow in paragraph 11 are these: "by laying down and consistently following such policy the Crown" then effectively lost its rights to enforce the re-entry provisions in General Condition 7. The issue which I have to determine is whether that is correct, and whether, by their attempts to deal fairly and evenly with all developers, the Crown has in fact cut its own throat and emasculated its own policy. 23. Now before considering the facts of this case, I set out my finding as to this policy itself. 24. First, as I have said, it consists of three parts; and parts one and three are as essential as the sliding scales which I have described as constituting part two. 25. Two, this policy was never publicly expressed. It was never gazetted and never circularized. 26. Three, it became known to developers only from their own experience and the shared experience of others. 27. Four, it was an internal policy. It constituted directions or guidelines to District Officers as to how, in the interests of fairness and consistency, they should deal with developers who exceeded the time limits stated in building covenant. It was a direction as to what was the proper approach to what was in fact an act of grace. 28. Five, each alteration to the premia scale that I have mentioned was made without publicity and without any notice to developers. Indeed, there was a lapse of time in each case before the developers collectively became aware of the change. 29. Six, each alteration was brought about as a matter of policy in what was taken to be the public interest at the time and owed nothing whatever to any particular case. 30. Seven, the policy was applied equally to all. 31. It follows, in my judgment, that any experienced developer dealing with Hong Kong Government in relation to land knew: one, that he had to accept provisions like General Condition 7 and Special Condition 5. 32. Two, that if he exceeded the time limited in his building covenant, he would have to deal with the extension policy existing when he dame to apply for an extension. 33. Three, he knew that although the premium policy might be something when he entered into his contract, that the policy history itself showed that Government changed, and exercised its right to change that policy, without notice. 34. Four, so no contractor, looking at this policy history, or claiming to rely on the policy history, could reasonably assert, nor could he have any grounds for asserting, any belief that the policy could not be changed against him during the pendency of his contract, or that the reservation of a right to change was not an in-built feature of the policy itself. 35. Five, if such a change took place, it would be idle for him to urge unfairness to him, if the Government thought that the conduct was in the public interest generally. 36. With that introduction I now turn to the facts of the case itself and particularly to the pre-contract position. 37. I can start early in 1974 with the letter of the 13th March of that year when District Office, Sai Kung, offered two lots to the company which eventually purchased them; namely, Fester Corporation Limited. It is sufficient to point out that the offer was based upon a building covenant with an obligation to complete in three years and to expend a total of seven hundred and eighty thousand dollars, and upon the payment of a premium which was plainly calculated for this purpose at 1974 values: in other words, on the usual Hong Kong Government terms. 38. Fester's response was to argue that the premium was excessive, an argument which seems then to have been unsuccessful. 39. In 1973 a new professional team came on the scene. I should explain that Fester is a company in what is called the Chinachem Group which is controlled by Mr. T.H., or Teddy Wang. He then introduced the services of two new professionals to advise the Group generally. 40. The first was Mr. K.K. Wong who was an engineer and an authorized person. He started work for the Group on the 1st of January and says that on the 2nd of January he inspected the particular site and concluded that the site formation work would be difficult, and would take possibly more than eighteen months, and that it would be much longer if the rock proved to be volcanic rock. He said a later site inspection in March or April of the same year revealed volcanic rock and he concluded that the site formation would then take much longer than eighteen months. 41. He seems to have discussed the first conclusion with Mr. Wong. There was no evidence before me as to any discussion of the second. 42. Equally at the same time Mr. Wong started to take advice from a Mr. F. Y. Kan, a chartered surveyor and a former Government employee. He was at that time in private practice On the 7th of January of 1976 Mr. Kan wrote to the District office at Sai Kung again arguing that the premium being charged was excessive and should be reduced by reason of the difficulties of site formation. 43. On the 26th of February that produced not simply a negative response, but a warning that unless the deal was accepted in principle within fourteen days, it would assume that the application was withdrawn. 44. That was plainly intended to concentrate minds on the plaintiff's side and did because there were then discussions between Mr. Wong and Mr. Kan about the future. They concluded three things: first, that there was no further point in arguing for a reduction in premium; secondly, that it was a waste of time to ask for an extension of the three-year building contract period because it would inevitably be refused. Thirdly, as far as the extension, position was concerned, the position, as they saw it, was: one, that they knew the existing policy, and in particular the scale which had been applied or introduced in 1975; two, they recognized that the risk of a change of policy existed; three, they thought this risk was slight; and four, therefore, the over-run risk which would probably involve the payment of a modest premium was acceptable. 45. That to my mind is the simple and plain effect of the evidence which both Mr. Wong and Mr. Kan gave me. 46. So that the pre-contract position, as I see it, was this: Mr. Wong was a very experienced contractor who knew the policy ingredients as I have already described them and the advantages and disadvantages of it. He recognized that Government could and might alter its policy. He thought that the chances of this were minimal. He thought that the policy gave him a reasonable expectation of renewal, but it never occurred to him that it gave him any right to renewal. 47. The Crown's view was identical. It never occurred to the Crown that the circulation of these guidelines gave rise to any obligations upon it at all. 48. In short, neither party had remotely treated, in their own minds, these policy practices as contractual. 49. Mr. Wong's state of mind, I think, is apparent from his evidence and from his conduct. 50. And as far as the conduct is concerned, I point to: one, the fact that no attempt was made to extend the three-year period because asking the direct question was a waste of time and was assumed to produce a negative answer. Two, equally no attempt was made to ask the same question indirectly, "Will you in any event grant me an extension?", as I infer, for the same obvious and probably stronger reason, that it would produce a negative answer. Thirdly, no attempt was made to bind Government to its then present policy in relation to this site at all or in relation to the proposed purchaser. 51. I am satisfied that an answer which Mr. Wong gave to a question I asked was in fact then based upon a misunderstanding. That question was not asked, again, because it would have been a complete waste of time. Indeed, if an attempt had been made to ask any of these questions, I am quite satisfied that the answers would have been totally negative and they would probably have been dusty. To the question, "Will you grant me an extension in any event?" the answer I am quite certain would have been, "No, it will depend on what you do." "Will you grant me an extension on any given terms?" "We will have to see." "Will you promise not to change the present policy?" "No." Those I think would have been the inevitable sort of answers that would have been given, if any such conversation had taken place at all. 52. The result, in my judgment, was that Fester Corporation entered into this contract on the 6th November 1976 and expressly accepted General Condition 7 and Special Condition 5 on the basis that an alteration of policy in respect of this premia scale was on the cards but was an acceptable risk. The question that I have to decide in this case is whether this acceptable risk can be elevated into binding obligations by the route either of implied covenant or estoppel. 53. I now turn to the post-contract facts. The first fact which I must notice is that on the 30th March 1978 the purchaser Fester assigned to the present plaintiffs for a nominal consideration. 54. Now this raises a question of some technicality and nicety. 55. Both these companies are members of the Chinachem Group. Now the Chinachem Group, I have already held in another case, is really Mr. Teddy Wong and I have heard nothing in the course of this case to make me think that that conclusion was wrong - (I think it is under appeal, so I will say no more about it). It seems to me apparent in this case that Mr. Teddy Wong uses various companies in his Group for his own convenience. The question, as I see it, is really whether Mr. Wong, having used this corporate veil in his daily affairs, can now shed it for the purposes of this Action and say that the whole, this Group and all these companies can be treated as one. I have, frankly, the gravest doubts whether he can do this. I have equal doubts whether the very curious agency pleaded in paragraph 1 of the Statement of Claim, albeit admitted on the facts, is one which is known to the law. But I am not going to base any decision upon this technicality. I shall make all the assumptions that it is necessary to make in the plaintiffs' favour to deal with the point of principle. 56. Now the present plaintiffs having entered the saddle, site formation work started in October of 1978, that is nearly two years after the contract was signed. That work, I was told, went on for no less than three years and four months and for the whole of that time there were men and machines on the site. I am afraid 1 view that evidence with the gravest circumspection. It does not matter because it is an agreed fact that on the 11th December 1982 the occupation permit was eventually granted and the development was completed nearly six years after the contract. 57. In the interim, the expiry of the first contractual period, which was 31st December 1979, duly approached. The District Office warned the then owners that the time was approaching and it was perfectly obvious that development was not going to be completed in time. Eventually on the 7th November it in fact offered an extension for one year, at a premium calculated on the 1975 scale. 58. This did not happen because a rather curious event took place. Because the plaintiffs wanted to get permission to pre-sell the flats, they made that application to the local District Office and supported it by a certificate from Mr. K.K. Wong which said that development would be completed in six months. 59. How that certificate ever came to be given, I know not. 60. The District Office regarded it as rubbish and rightly so, and took no notice of this application. But it meant that the extension that they were offered then became an extension not for twelve months but for six. This extension was granted with a covering letter which in fact set out the unqualified position as it would be in law under General Condition 7 and Special Condition 5 and warned that unless work was proceeded with expeditiously, those rights would be exercised. 61. It is perhaps a matter of comment that there was no dissent from that statement at the time. 62. So time was then extended in this way to the 30th June 1980. Again, very little happened by that date and on the 30th July 1980 another extension was granted, this time for a year again on the 1975 premia scale, the balance of the first year being charged at the Year 1 rate and the first six months of the second Year at the Year 2 rate. 63. This brings me to the lst January 1981 when I have already said the policy was changed. The policy was changed because the premia were then deemed to be derisory and as I said then this is strikingly illustrated by the facts of this case. 64. This site had an area of fifty-two thousand square feet. The premium originally charged was 1.456 million and that was based upon a valuation of thirty dollars a square foot. 65. On the 30th June 1981 on the plaintiffs' surveyor's value the site was worth two hundred and ten dollars a square foot. That is a sevenfold increase in value, and puts a total value of nearly eleven million dollars on the site. 66. The crown's figure for value on the same date was 323 dollars a square foot, a tenfold increase, putting a value of over sixteen and a half million on the site. 67. It is quite unnecessary for me to resolve that difference in value. It is simply sufficient to point out the very considerable increase upon the plaintiffs' own figure. 68. In the light of its own valuation, the Crown asked a new premium for the year's extension of just over a million dollars. 69. It was being suggested, I thought, at one time that the size of that, by comparison with the original premium, was sufficient to show that that charge was unconscionable. But the matter developed on a slightly different way. I need only say this: It by no means follows, in my judgment, that that charge was unconscionable. Certainly there was a doubling of the initial premium by reason of this charge with the prospect of further premia; but when that is set against the sevenfold increase, at least, in value of the site, it puts the matter in its context. It is sufficient for me to say that it is quite impossible, in my judgment, to prove that this new charge was unconscionable without revealing what the figures were on both sides of the equation, and no attempt was made by the plaintiffs to do that. 70. Coming back to the story, when the year end, namely, 30th June 1981, passed, the local District Office invited the plaintiffs to put an explanation forward. On the well-known military principle that attack is the best means of defence, the plaintiffs came back by asking for a free extension saying that it was all the District Office's fault because of the delay over the plans. That rather diverted attention to plans for the following months. It was not in fact until February 1982 that the plaintiffs, who by now had learned of the change of Government policy, knew the worst in respect of this site, and that they were being offered an extension on payment of a new premium of just over a million dollars. Arrangements were then made, pending the determination of the plaintiff's rights on the matter, for this premium to be paid. 71. Turning now to the law, it is common ground that unless some qualification has to be placed upon General Condition 7 and Special Condition 5, the Crown is entitled to charge a premium for the price of an extension and the amount of that premium cannot be challenged. This is the effect of the decision of the Privy Council in, a case called Hang Wah Chong v A.G. (1), which was followed by the Hong Kong Court of Appeal in the Lok On case (unreported) Civil Appeal No. 154 of 1982. In that case the Court of Appeal pointed out that there was no way that this figure could be challenged by the tenant. All he could do was either pay or refuse to pay and then seek to exercise his right to claim relief under the Crown Rights (Re-entry and Vesting Remedies) Ordinance, Cap. 126. 72. So that the question here is whether or not the plaintiffs can make good their claim for a declaration which is a claim to be "entitled" to an extension of time until the 30th June 1982 (that is the third extension), on payment of a premium calculated on what I have been describing as the 1975 scale. 73. The operative and crucial word there is "entitled". They advance that claim upon two bases. Firstly, they have said that they are entitled to it ass matter of contract by reason of an implied term in the conditions; and secondly, they say they are entitled to it because the defendants are estopped from denying that right. 74. So the first issue is "implied term" and this is advanced upon three bases by the plaintiffs-custom, course of dealing and necessity. 75. In the course of argument 1 observed to counsel that it seemed to me that phrases like "custom" or "course of dealing" have no real meaning in this context where you have simply got a general Government policy being applied to everybody. In the end it was agreed by counsel on both sides that I was bound to apply the formulation of law enunciated by Lord Simon in the Privy Council in a case called B. P. Refinery (Westernport) Pty. Ltd. v President, Councillors and Ratepayers of Shire of Hastings.(2) This decision was followed by the Court of Appeal in Hong Kong in a decision called the Attorney General v Melhado Investment Limited (unreported), Appeal No. 79 of 1982. 76. Now what Lord Simon said, delivering the majority opinion in that case at page 26, is this:
77. Now I am going to deal in turn with those five elements, except that I am going to pass over the first for the moment. I start then with the second, and before dealing with it note the position of Lord Wilberforce. He gave expression to a dissenting minority view in this decision, but it is clear that he did not dissent from this statement of principle, because it is almost identical with the statement of principle which he himself expressed in a case called Liverpool City Council v Irwin(3), the passage being at page 254f. In effect he said that the test was necessity, and that the law implied no more and no less than was necessary. 78. Now it seems to me apparent that when one reads condition 2 that there is no necessity in this case. This contract is wholly effective without any implication. The implication would have to have taken the form of a proviso to General Condition 7. General Condition 7 operates clearly and simply without any proviso, and unlike the facts either of the B .P. case or the Liverpool Corporation case, nothing has been left out of the contract which is before me. 79. Indeed one is in a rather curious position here. If I were to adopt the plaintiff's suggestion and treat the scale at rigid and binding, then the introduction of this implied term would defeat the intention, because the guidelines themselves are clearly indications as to the exercise of discretion, whereas to treat it as a contractual term would be to introduce rigidity and to exclude discretion. 80. If on the other hand one introduces the term with the necessary built-in proviso that it contains a provision for variation itself, then the implication is totally meaningless and totally ineffective. 81. Mr. Alexander who said everything that could possibly be said with his usual considerable skill in this case sought to overcome his difficulties here by founding upon what he invited me to hold was the presumed intention of the parties. For reasons that I have already given, on the facts that request wholly fails. 82. So that in my judgment, requirement No. 2 is plainly not satisfied. This is equally true of requirement No. 3. This is in effect the adoption of Lord Justice McKinnon's classic phrase. For reasons that I have already given, I think that the interfering bystander if he had asked this question "Will he get an extension?" would have simply got the answer "Well, it depends on what happens when he asks for it and what the situation then is." 83. As far as 4 is concerned, again, I do not think that this is satisfied. No one has attempted or successfully attempted in my judgment to formulate as a matter of obligation, Parts 1 or 3 of the Government policy, for the very good reason, that it would be exceedingly difficult to do so. 84. So that 2, 3 and 4 are not satisfied in this case, 5 may be because it can be written as a proviso. It is in that context that I come back to l, because 1 is a novel proposition to me. I believe it was first expressed in these terms in this decision, I am a little uncertain as to its true extent. But if, as I suspect, it is intended to apply to both parties, then it seems to me that this likewise is not satisfied. It would not, I think, be reasonable or equitable in the context of this case to imply a term which excludes all change, and introduces rigidity, and excludes the possibility of Government policy, qua landlord changing in this context in the public interest. 85. But I am frankly a little uncertain about that. I hang my decision upon the grounds that conditions 2, 3 and 4 are not satisfied in my judgment, and accordingly there is no justification for implying any term into this contract. 86. I now turn to the claim based upon estoppel, which is rather more complex because, unfortunately, estoppel cannot be reduced to 5 simple propositions as the implied term can be. I start with the observation that it does seem to me at the outset to be a somewhat curious estoppel in this case. 87. First, no express representation is relied upon at all, nor any direct statement relating to the Chinachem Group or this particular plaintiff. What is relied upon is the propounding of policy by the government to its own staff, and the discovery inevitably of that policy by developers. 88. Secondly, the estoppel is said to arise independently of any implied term of the contract, but it is also said to operate in almost an identical way. This is said to be nothing unusual. 89. A similar position in my judgment was before the court in Woodhouse A. C. Isreal Cocoa Ltd. v Nigerian Produce Marketing Co. Ltd. (4) where at page 757, Lord Hailsham expressed his concurrence, with Lord Denning's comments in the Court of Appeal. He had expressed his astonishment at the extraordinary consequences which would follow if a letter which is not sufficient to vary a contract is, nevertheless, sufficient to work an estoppel which will have the same effect as variation. I cannot see any substantive difference between that circumstance and this case. 90. Thirdly, an implied term, if it was to be properly implied, would clearly give rise, to a cause of action which will justify a claim for a declaration. But it is said that independently of implied term, the estoppel has the same effect, but this is not using the estoppel to found a cause of action. I regret to say I do not readily follow those mental gymnastics. 91. Fourthly, it said that the detriment here, the unconscionable conduct, is not founded on quantum. What is unconscionable is the denial of the Crown of the right to an extension and the taking of the stance that the extension is an act of grace; i.e. if this was an implied term, the simple breach would operate as an estoppel. This seems to me implying a term by estoppel which I have never understood to be a possible in law. So I approach this matter frankly with some circumspection. 92. Now Mr. Alexander in the end founded upon two propositions and two authorities. First he said that the estoppel is made out if (i) the plaintiff had a genuine expectation of an extension at the time and (ii) that genuine expectation was created by the conduct of the Government. He sought to establish that by reference to the Texas Bank case which is Amalgamated Investment and Property Co. Ltd. v Texas Commercial International Bank, in the U.K. Court of Appeal (5). 93. That was his first proposition and his first authority. 94. The second proposition that he relied upon was what he called a concept of broad unconscionability arising from the Crown's conduct in granting the first and second extensions on the 1975 scale from which they could not thereafter resile, upon the authority of the decision in Panchaud Freres S.A. v General Grain Co.(6) at page 53. 95. I can deal very shortly with the second proposition. Panchaud I regard as a rather special case on its own facts. It gives rise to peculiar difficulty because the three members of the Court of Appeal all founded their judgments on different principles. It may be possible to distil a ratio from the decisions of the Master of Rolls, Lord Denning and Lord Justice Winn to the effect that on the facts of that case, there was an implied obligation to deal consistently. This in that case arose from a single breach of contract. I can see no sort of basis whatever for extending that principle to successive independent breaches of a contract. I know of no authority which requires a party who has dealt with breach 1 in a particular way, necessarily to deal with a second and subsequent breach in that same way. 96. So I come back to the first proposition and the Texas Bank case where Mr. Alexander founded first upon a statement of Lord Denning at page 575, where the Master of Rolls said this: -
97. Mr. Alexander seeks to use that in his favour upon the basis, I think, that the contract was entered into upon the underlying assumption of come-what-may and in all circumstances, the plaintiff company would inevitably be granted an extension of time. In my judgment, that is simply not borne out on the facts. There was no common assumption at all. 98. Mr. Wong did not even make that assumption. He had an expectation; that is the highest the matter can be put. As far as the defendant is concerned, there was no such assumption at all. 99. Alternatively, Mr. Alexander relies upon the approval by Lord Brandon and Lord Justice Eveleigh of the statement on estoppel by convention in Spencer Bower on estoppel by representation, 3rd edition, 1977, at page 157, Lord Brandon approved this statement:-
100. Again, as I see it, there is no such agreed statement of facts in this case. This type of estoppel is likened to a recital in a deed. It can simply be tested upon that basis. Assume that this deed contained some recital as to the then Government policy in respect of extensions at the time, the recital would have to contain words like this:- The present Government policy on extensions is so and so but such policy is subject to change without notice. A recital in those terms would again be totally valueless. 101. In my judgment this authority does not help the plaintiff. It is simply inapplicable to the present facts, and does not in fact support the propositions upon which Mr. Alexander relied. This would, be sufficient to decide the issue of estoppel, but since it has been fully canvassed, I would add these observations. 102. First, I have the gravest doubts whether a formulation of policy such as I have described can be said to constitute any representation to any developer in Hong Kong by conduct or otherwise or any sufficiently clear or unequivocal representation such as the law of estoppel requires. 103. Secondly, if I am wrong on that, it seems to me that this is a very long way from any promissory estoppel, which it seems to me that a plaintiff in this position must rely upon. 104. One is not concerned here with a statement of present fact as at 1976, but with a promise as to future conduct. Now that seems to me, to put the matter firmly in the role of promissory estoppel, not convention estoppel. This in turn involves, and I am simply citing from the classic definition of Mr. Justice Denning, as he then was, in Central London Property Trust v Hightrees House(7) at page 134 where he uses the phrase that the promise or representation "was intended to create legal relation. 105. One thing that is as plain as a pikestaff in this case is that nothing that Government did was ever intended to create legal relations. Thirdly, it seems to me that if someone wants to raise an estoppel in these sort of circumstances, they have got to point to something very much more specific: A specific statement to them, in particular that the policy will not be altered, and altered for some discernible or fixed period of time in relation to the contract in question. 106. Of course, if that statement were made, one might well be in a totally different position in relation to implying a term in that contract. That is the proper place, as I see it, to find some sort of promise of this nature. 107. Fourthly, I have never really understood the plaintiff's case on reliance which changed several times in the course of the case. Throughout it seemed to be totally contrived and artificial. The plain facts of the matter are that no developer in Hong Kong can deal other than on the basis of these two conditions and other than on the basis of the Government's policy for the time being whatever it is. 108. It seems to me therefore totally artificial to say that I rely on that policy, or to find anything which the law can recognise as reliance in the absence of some specific representation to which the representee can attach himself. 109. Finally, it seems to me in this context that "unconscionable" does not have the technical meaning of being in breach of contract or of being equivalent to a breach of contract. It means harsh, excessive, inordinate, and you only prove that something like a premium is unconscionable by showing that the amount is unconscionable. 110. I therefore conclude that there is no estoppel here that can be raised against Hong Kong Government and that the Government has not defeated its own policy by the steps it has taken to ensure that its servants deal fairly and evenly with all developers. 111. Save only that I would like to express my appreciation to counsel on both sides for the very considerable assistance they have given me in this case, I desire to say nothing more. In my judgment, the claim fails and must be dismissed with costs.
(1) 1981 1 Weekly Law deports 1141 (2) 1978 "A.L.J.R." 20 (3) 1977 A .C. 239 (4) (1972) A.C. 741 (5) 1981 3 WLR 565 (6) (1971) Lloyd's Law Report (7) 1947 1 K.B. 130 Representation: Mr. Robert S. Alexander, Q.C., Mr. Kemal Bokhary, Q.C., & Mr. Antony Ismail instructed by Messrs F. Zimmern & Co. for Plaintiff Mr. Barlow, Mr. Strawbridge, Crown Counsel for Defendant |