Secretary for Justice v. River Trade Terminal Co Ltd
Read the full judgment text of HCMP 4974/2002 on BabelCite. This High Court CFI judgment was delivered on 29 May 2003.
1. What do you mean by : "... vessels regularly employed in trading or going within the Pearl River region"?
Cited by 2 cases · Cites 1 case
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HCMP004974/2002 HCMP4974/2002 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO.4974 OF 2002 ---------------------
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---------------------- Coram: Hon Yam J in Court Dates of Hearing: 20, 22, 23 and 29 May 2003 Date of Judgment: 29 May 2003 Date of Hand Down Written Judgment: 11 June 2003 ------------------------- J U D G M E N T ------------------------- The problem 1.What do you mean by : "... vessels regularly employed in trading or going within the Pearl River region"? This is the question of construction before the court in this case. A little bit of the background is required in understanding the aforesaid question. Background 2.In December 1995, the Hong Kong Government invited tenders for the grant of Tuen Mun Town Lot No.393 at area 38, Tuen Mun for a term of years expiring on 30 June 2047 subject to the General and Special Conditions of Sale. The use of the aforesaid lot was specified in Special Condition 16 ("SC16"). SC16 provided as follows :
In conjunction with SC16, SC47(c) is also important and it provided that :
3.In February 1996, the defendant River Trade Terminal Co. Ltd, formed by a consortium of investors, put in a tender offering a premium of $1,141,110,000. In March 1996, the Government accepted the defendant's tender. 4.In April 1996, New Grant Number 3200 was issued to the defendant. The parties executed the Memorandum of Agreement and the terms of the Tender including the aforesaid SC16 were incorporated in the Agreement. 5.In October 1998, the defendant commenced operations at the River Trade Terminal ("RTT"). About a year after the commencement of operation, in September 1999, the defendant intimated its wish to the Government that it would commence berthing Intra-Asia feeder vessels which it said would enable it to provide a better service where containers and cargos carried or intended for carriage by sea in connection with trade and freight industries within the Pearl River region. 6.The Hong Kong Government at first through the Lands Department by a letter dated 28 September 1999 replied that they would accept the legal advice the defendant have obtained on the lease conditions that berthing of small feeder vessels would not be precluded by the terms of the land grant. However, one month later by a letter dated 21 October 1999, the Director of Lands said he had taken detail legal advice and he was then advised and accepted that the berthing of feeder vessels at the RTT was never envisaged in their detail proposals and SC16 did not allow feeder vessels to be berthed at the RTT. 7.Thereafter, the defendant RTT, obtained advice from both London Queen's Counsel and Hong Kong senior counsel that berthing of Intra-Asia feeder vessels would not be in breach of SC16. Accordingly since September 2001, the defendant allowed Intra-Asia feeder vessels to berth at the RTT. 8.The Government considered otherwise, and hence instituted the present proceedings in November 2002 for the declaration that 23 vessels, being Intra-Asia vessels, berthing at the RTT were in breach of SC16. The Hong Kong Government also contended that the defendant is not permitted to use the terminal for the berthing of any vessel other than one which is employed in trading or going within, that is to say between ports within, the Pearl River region or one which trades solely within Hong Kong waters. 9.The plaintiff is also seeking an injunction to restrain the defendant from allowing or permitting the berthing of the aforesaid type of vessel with damages for breach of covenant to be assessed. The plaintiff's case 10.The plaintiff's case is that RTT is not permitted to use the terminal for the berthing of any vessel other than the one which is regularly employed in trading or going within, that is to say between ports within, the Pearl River region or one which trades solely within Hong Kong waters. In other words, such feeder vessels can berth at RTT provided they are regularly employed in trading or going within, that is to say between ports within, the Pearl River region or alternatively if they are trading solely within Hong Kong waters. 11.However, the defendant submitted that the ordinary and plain meaning of SC16 does not mean boat trading or going between ports "within the Pearl River region". If it had been intended that the RTT could only berth river craft, or vessels that trade or go only between ports or places in the Pearl River region, and not sea-going vessels, then the defendant submitted that :
12.I accept the defendant's aforesaid submissions. What is the meaning of these twelve words then? The defendant submitted otherwise. The defendant's case 13.The defendant submitted that the Pearl River region is ordinarily understood to mean an area that includes Hong Kong and Hong Kong waters, as well as various places and ports in and of the Pearl River. There is no statutory definition of Pearl River region. However, under the Shipping and Port Control Ordinance, Cap.313, there is a definition of "river trade limits" (內河航限) which means :
14."Waters of Hong Kong" (香港水域) means waters of Hong Kong within the meaning of section 3 of the Interpretation and General Clauses Ordinance, Cap.1. In Cap.1, "waters of Hong Kong" is defined as :
15.Thus, from the geographical limits of river trade limits, the east, west and south boundaries are basically the Pearl River Delta region which is also called the mouth of Pearl River (珠江口) up to the northern boundary of the province of Kwangtung together with all inland waterways within the provinces of Kwangtung and Kwangsi in the mainland of China. This will include the "waters of Hong Kong" but will exclude the coastal region of Kwangtung on the east and west sides of the mouth of Pearl River unless the ports along the coastal region are also accessible through the inland waterways in the Mainland instead of by sea. Thus this will exclude places like Yangjiang City (陽江市) on the west coast or Shantao City (汕頭市) on the east. 16.The defendant submitted that since Pearl River region included the waters of Hong Kong there could be no question but that when vessels came to berth at the RTT in Hong Kong waters to load or to unload cargo, these vessels were both "trading within the Pearl River region", and also "going within the Pearl River region" on the plain and ordinary meaning of those words. 17.However, if the defendant's aforesaid submission is accepted at its face value, then any vessel coming into Hong Kong waters for the purpose of trading would be "trading within the Pearl River region" and even when it was not for the purpose of trading, it would be "going within the Pearl River region". In that case, any ocean liner coming into Kwai Chung Terminal to unload its thousands of containers would be "trading or going within the Pearl River region". In that case, Kwai Chung Terminal could also be called a river trade terminal! One would therefore wonder where the word "river" would come in when all these containers have nothing to do with river trade, as for example they were just for transhipment to other parts of the world. 18.What is therefore the true meaning of these twelve words in the context of the Agreement between the two parties. I shall consider the legal position of construction of a term of agreement first before I venture into the construction of these twelve words. The law 19.In respect of the principles of construction, the "cardinal presumption is that the parties have intended what they in fact said, so that their words must be construed as they stand. That is to say, the meaning of the document or a particular part is to be sought in the document itself" (Chitty on Contracts, 28th Ed., Vol.1, para.12-043) (per Nazareth NPJ in Bewise Motors Co. Ltd v. Hoi Kong Container Services Ltd, [1998] 2 HKLRD 645 at 662 (Li CJ and Sir Edward Somers NPJ agreeing). Paragraph 12-043 went on to say :
20.In the case of words embodied in a serious legal document, this would be particularly so as Lord Hoffmann said in Jumbo King Ltd v. Faithful Properties Ltd [1999] 2 HKCFAR 279 at 296D :
21.The aforesaid speech of Lord Hoffmann dealing with the inter-relationship between the importance of the language used and the factual matrix is best understood in the dictum of Sir Thomas Bingham MR in the unreported case of Arbuthnott v. Fagan (30 July 1993) and quoted by Neill LJ in The Fina Samco [1995] 2 Lloyd's Report 344 at 350 :
22.First, I accept the plaintiff's submission that, whilst words must be construed in the context and the court may look at the factual matrix or objective factual background which ought to have been reasonably known to the parties at or before the date of the contract, it is appropriate to start with an analysis of the words used in SC16 and 47, bearing in mind that these words have to be construed in the context of the factual matrix. 23.The defence however submitted that if the words used are free from any ambiguity, effect must be given to the strict, plain, common meaning of the words themselves. It is not necessary to go to the factual matrix or surrounding documents unless there are something strikingly odd or unclear about the language the parties have agreed upon or otherwise certain mistake was found in the language used. However as demonstrated at the beginning, the ordinary and plain meaning of the clause is not that clear. The words did not say "between two ports within the Pearl River Region". On the other hand, if the words used would cover the wider meanings as put forward by the defence that any vessel trading or going within Hong Kong waters being a port of the Pearl River Region, then RTT would be a free-for-all terminal for whatever activities of any vessel which has nothing to do with the river trade. 24.The approach to the value of surrounding material is provided by the dicta of Lord Wilberforce in two cases as quoted in Chitty at paras.12-116 and 12-117 :
The ambit of the "Background" 25.In adopting the aforesaid approach, the factual matrix would include economic, statistical or historical material to show why there was thought to be a need for a commercially operated river trade terminal of the kind envisaged by the Hong Kong Government, and the terms of the Government's invitation to tender would be relevant as well. In particular, in deciding the ambits of the factual matrix, a line will have to be drawn between what are relevant materials and what are irrelevant and inadmissible materials. 26.In this respect I agree with the defence that the Prospectus of April 1992 is not a document that disclosed the genesis or aim of the relevant transaction (the land grants, that was the subject of the Tender Notice) because it preceded the Tender Notice by more than three years and it did not involve RTT and might not have been seen by it. It was anyhow superseded in important respects (no doubt as a result of the consultation process that followed it) by a revised concept of the terminal for which interested parties were invited to tender in 1995. 27.The exclusion of the Prospectus from being either as a contract document or document forming the matrix of facts for the purpose of construction could be illustrated by the difference between the Prospectus and the Tender Notice in respect of the depth of water at the terminal. In SC10(a) of the Tender Notice, it allowed for a depth at the terminal of up to 9 metres as compared to 6 metres proposed in the 1992 Prospectus. This permitted far more water than was needed for berthing of only river-craft vessels. The fact that some Intra-Asia vessels required the depth of 11 metres is neither here nor there. The fact remains that most Intra-Asia vessels can berth at the quay phase or pier of RTT. RTT in the performance of the contract invested in a shore-based quay crane capable of handling ships drawing up to 9 metres and designed for berths to accommodate vessels larger than river craft. 28.In addition, there was no special condition that prohibited "loading or unloading of containers to or from ocean-going vessels across the quay phase or pier phase by shore-based container handling equipment", which the 1992 Prospectus provided that that would not be allowed. These were two clear indications that the aim and the object of the Tender Notice or SC16(a) therein, was not to restrict RTT to berthing river craft only. In any event the Government herself, in paragraph 13 of her Tender Notice, appeared to rule out reference to, or reliance upon, antecedent or collateral statements by the Government. 29.Further, the detailed proposals of RTT supplied pursuant to the Tender Notice as were required by it, could not be admissible, like any evidence of the party's subjective intention, even if they were evidence of RTT's understanding of the intention of SC16(a). The forecasts of what possible traffic are clearly not the same as a statement of what RTT understood to be (or "envisaged") the scope of permitted uses prescribed by SC16(a). In any event, SC16(a) existed as part of the Tender Notice long before the forecasts were made. Its meaning cannot change according to the user proposed by RTT for the terminal which was descriptive instead of being prescriptive. Otherwise by extrapolation the Government can change the descriptive into prescriptive and, eventually, restrictive of its users. The purposes of RTT 30.From the materials before me, apparently both sides could at least agree that this Agreement would have the following commercial purpose, genesis, background and context as dictated by the Tender Notice in respect of the purposes of building the RTT at the western tip of Tuen Mun outside the Hong Kong harbour proper, namely :
31.In short, River Trade Terminal, as its name suggests, is to enhance river trade for the benefit of Hong Kong shipping industry and the word "river" means Pearl River. I intend to construe the SC16(a) in light of these primary objectives of establishing River Trade Terminal. The true meaning of SC16(a) 32.The defendant, in making its primary submission that SC16(a) permitted any vessel calling Hong Kong, being a Pearl River region, would be within the definition of "vessel" regularly trading or going within the Pearl River region, also submitted that the lot may be used for the purpose of berthing ocean-going vessel calling the Pearl River region (including Hong Kong waters) to discharge or load cargos sourced from or consigned to the Pearl River region. The defendant submitted that there could also be no doubt that those vessels were there to load and unload cargos "carried by sea in connection with trade and freight industries within the Pearl River region", thus the relevant user was plainly within the scope of SC16(a). 33.This is in line with the basic matrix of facts in respect of the 5 aforesaid purposes of establishing the River Trade Terminal, i.e. to promote more economical and expeditious way of river trade activities. 34.If those vessels berthing at the RTT would be in breach of SC16(a), the alternatives for such vessels to unload their cargoes for onward shipment to a river draft vessel going between ports of the Pearl River Delta region or loading cargos therefrom would be by three other means. First, they would have to berth at the Kwai Chung Terminal and unload its containers onto container trucks. Secondly, they would have to make use of one of the 8 available Public Cargos Working Areas ("PCWAs") and again container trucks would have to be employed for onward delivery through the Tuen Mun Highway to RTT. Alternatively, they would have to be unloaded onto shuttle lighter under the Marine Shuttle Lighter System ("MSLS") some of which would have to go through the Ma Wan Channel and in any event the same would have to be re-loaded onto river craft at the RTT. This would definitely defeat all the aforesaid 5 stated purposes of having the RTT. Thirdly, Intra-Asia vessels would have to make use of the "mid-stream operations" by which the containers would be unloaded onto lighters or barges at buoys or anchorages in the middle of the harbour and reloaded onto river crafts. The aforesaid alternative operations are called "the Terminal Operation Mode", "the PCWA Operation Mode", and "the Mid-Stream Operation Mode" respectively. But they would again defeat the purposes of existence of this River Trade Terminal. 35.Instead of the 3 aforesaid redundant ways of unloading containers from Intra-Asia vessels onto the river vessels, the Government is now complaining that the RTT is using a direct and efficient way of allowing them to berth at the RTT. It is quite clear that during the site visit by the court, an Intra-Asia vessel called "Kuo Chia" from Kaoshiang berthed at Quay 1 was unloading containers by shore-based quay crane. Two containers discharged were seen taken to berth at Quay 2, by container vehicles and loaded onto two river vessels for transhipment to another port in the Pearl River Delta. The court was informed that the next port of call of "Kuo Chia" would be Taiwan and Japan and then it would return to Hong Kong. Some containers might be taken by container vehicles to other berths of the River Trade Terminal and loaded onto other river vessels for transhipment. Such an operation was called Berth Transhipment Arrangement. This was direct, efficient and very expeditious. The unloading and reloading only took about a few minutes. This was in line with all the stated purposes of River Trade Terminal and would achieve the main objectives of establishing River Trade Terminal, i.e. promoting river trade and minimising heavy land and sea traffic on the Tuen Mun Highway and the Ma Wan Channel. Thus, it does not matter whether these Intra-Asia vessels came from other parts of Asia and not a port within the river trade limit, e.g. Taiwan, Korea, Japan, Vietnam, Thailand, Singapore, Philippines or ports on the eastern coast of the Mainland like Shanghai, Xiamen. It does not matter either that this Intra-Asia feeder vessels will call at those ports after loading or unloading at the RTT, as long as the loading or unloading is connected with the river trade activities to or from a port of the Pearl River Delta. 36.However, the defendant admitted that some containers might not be loaded onto other vessels immediately and might have to be stored at RTT for several days pending client's instruction for shipment to other countries which might be Europe or the US. In other words, some containers might not be unloaded at RTT for the purposes of river trade. I think this is how the word "regularly" would come in. "Regularly" 37.The plaintiff submitted that the word "regularly" described the "vessel". Thus the vessel berthing at the RTT must be used regularly between two ports of the Pearl River Delta. On the other hand, the defence submitted that these vessels would call back at Hong Kong "regularly" and periodically. However, one would wonder why the special condition would restrict the usage of RTT for vessels regularly going between two ports within the Pearl River Delta region but not a vessel used for the same purpose but only once between two such ports. Why should the Government or both parties be so concerned with the vessel and in particular its past history and its future port of call instead of the main purpose of its presence at the RTT? This is not in line with the purposes of establishing RTT. What is so special for vessels to be used regularly for such purpose than a vessel which has been used only once or twice? It is also quite odd to use an adverb "regularly" to describe a noun "vessel". 38.Both sides agree that this word "regularly" and the other word "solely" could be found in the Shipping and Port Control Ordinance, Cap.313, section 25 which provided as follows : " PART IV LICENSED VESSELS
39.The two words "regularly" and "solely" were used in a different context and that is those vessels as described in section 25(1a) and (1d), inter alia, should be licensed in accordance with the regulations made under Part IV of Cap.313. In that context, the word "regularly" simply means frequently. 40.Mr Michael Thomas SC, counsel for the defendant who appeared with Mr Anderson Chow, submitted further that this section might have originated from the UK Merchant Shipping Act 1894 where it is found in mutually exclusive definitions of "home trade ship" and "foreign-going ship". The phrase was intended there to be all-embracing, enforcing safety standards and pilotage requirements for both trading voyages and non-trading voyages. That is a very different context from the present one. This probably is the origin of the ambiguity imposed by this word "regularly" which was used in opposition to the word "solely" but in a different context. This probably is also the origin of the problem when the word "regularly" was borrowed together with the word "solely" from another statutory provision in the area of shipping but in a different context. 41.In the context of the background matrix of facts and in particular the purposes of establishing the RTT, I think the word "regularly" described the words "employed in the trading" instead of the noun "vessel". In other words, it must be a regular trading within the Pearl River region. This word "regularly" was used as opposed to the word "solely". Thus, the trading needs not be solely for the trading within the Pearl River region but it must be substantially for that purpose. For example, an Intra-Asia vessel coming to berth at RTT and discharged all its good simply for the purpose of storage and onward shipment to other countries but not the Pearl River region, say for Europe or the US, would not be vessels regularly employed in trading within the Pearl River region, but would be a vessel solely employed in trading within a region other than the Pearl River region. That would be in breach of SC16(a). 42.In other words, on the contrary if the bulk of the Berth Transhipment Arrangement was for the purpose of river trade activities, then it would be within the ambit of SC16(a). By the word bulk it must be a substantial part of all the containers. Thus if one or two or a few of the containers, due to various reasons, were eventually not involved in the river trade activities, but as long as the other 900 odd containers were for such a purpose, it would be within SC16(a). This is in line with all the purposes of the establishment of RTT as aforesaid. The aforesaid construction would fit in squarely against the matrix of facts of establishing the RTT and also in the context of in opposition to the word "solely", which was called by counsel for the plaintiff as the second limb of SC16(a). 43.Otherwise, if a new Intra-Asia vessel coming up straight from the dockyard, say from Shanghai, and was chartered from Shanghai to Hong Kong to load goods for Macau would come within the definition of between two ports of the Pearl River Delta according to the plaintiff's primary submission. However if by the charter agreement, the same vessel would not call back at Hong Kong or any other ports of the Pearl River region ever again, it would not come within the definition of regularly employed in trading within the Pearl River Delta as contended by the plaintiff. The plaintiff submitted that this example is just an example created by pedantic lawyer. However, such an example was given only to illustrate the word "regularly" could not mean the vessel which has to be employed regularly for trading or going within the Pearl River Delta. As aforesaid, it only described the trading activities employed by the vessel as opposed to "solely", i.e. not solely but substantially. I understand this is not the dictionary meaning of this word "regularly". But in the context of the factual matrix of this case when this word "regularly" is used in opposition to the word "solely", it should be construed as not solely but substantially. 44.This construction of the word "regularly" is also in line with the later provision in SC16(a) which stipulated that "the loading, unloading and storage of break-bulk or container cargoes and containers carried or intended for carriage by sea in connection with trade and freight industries within the Pearl River region". This also fits in squarely into the other provision in SC16(b) that "the lot shall also be used for the purpose of a container freight station but only to such extent and in such manner as in the opinion of the Director will not interfere with or inhibit the use of the lot for the purpose specified in sub-clause (a)..." The Director would and should not consider a very small amount of containers handled at the RTT not connected with trade and freight industries within the Pearl River region would interfere with or inhibit the use of the lot for the aforesaid specified purpose. Conclusion 45.In conclusion, I accept the defendant's submission that the plaintiff has failed to prove that those 23 Intra-Asia vessels berthing at the River Trade Terminal during 2002 were not for the purpose of river trade and therefore constituted breaches of SC16 of the Condition of Sale of the said Agreement. A fortiori, it goes without saying that the berthing of those 23 vessels per se would not have constituted breaches of SC16. 46.Accordingly, the plaintiff is not entitled to a further declaration that upon the true and proper construction of the said Agreement, the defendant is not permitted to use the terminal for the berthing of any vessel other than one which is employed in trading or going within, that is to say between ports within, the Pearl River region, or one which trades solely within Hong Kong waters. 47.The plaintiff's claim for a prohibitory injunction relief, for the same reason, should also be refused. 48.For the aforesaid reasons, this court gave judgment for the defendant and dismissed the plaintiff's claims in the originating summons herein together with costs to the defendant, to be taxed if not agreed, with a certificate for two counsel.
Representation: Mr Benjamin Yu, SC instructed by the Department of Justice, for the Plaintiff Mr Michael Thomas, SC leading Mr Anderson Chow, instructed by Messrs Kao, Lee & Yip, for the Defendant Remarks: |
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