Shun Shing Hing Investment Co Ltd v. Attorney General

HCA003384/1982

IN THE HIGH COURT OF JUSTICE

BETWEEN

Coram: Hon. Liu J.

Date: 18th July, 1983

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JUDGMENT

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1. The plaintiff is the present owner of Lot No.1502 in Demarcation District 243, Silverstrand, Clearwater Bay, New Territories holding under a New Grant No.6020.

2. The said New Grant was made by the Crown to the plaintiff's predecessor-in-title in Novembe 1976.  Pursuant to an enabling Special Condition of the said New Grant, Lot No.1502 was assigned to the plaintiff.

3. Under Special Condition 5 of the said New Grant, the plaintiff is required to complete certain building works within a time limit therein prescribed.

4. Delay has been caused. In effect, two extensions have been granted by the Crown upon payment by the plaintiff of premia demanded. As pleaded in paragraph 10 of the Statement of Claim, the demands for these premia were allegedly made "in conformity with and, pursuant to the Crown's policy since about 1975 and in any event prior to the date of the said Grant".  It is further al alleged in the same paragraph that "such policy has been to grant developers extensions of time for complying with building covenants on payment of premia and to calculate such premia by charging a percentage of the value of the land concerned at the time of the grant thereof". Particulars, as given under paragraph 10 of the Statement of Claim, specify "the percentage which has been charged" and such percentage allegedly "increases with the extent of the delay as follows:-

5. Completion date prescribed by the said Special Condition 5 in the said New Grant fell on the 31st December 1979.  When the plaintiff sought yet another extension in 1982, the Crown demanded a premium of slightly over $1,000,000. The Crown has, so the court As informed, also threatened to re-enter.

6. The writ indorsed with a Statement of Claim was issued on the 29th April 1982, and a Defence was filed on the 23rd June 1982. Pleadings have been closed The action has been set down for trial, and the hearing is fixed for a date sometime in September.

7. On the 16th May 1983, the defendant applied to have the Statement of Claim struck out under 0.18 r.19 of the Rules of the Supreme Court on the ground that the same discloses no reasonable cause of action.  The defendant's summons came before the learned Master on the 25th may, and it was adjourned for hearing before this court on the 11th July. The cardinal rule is that the court's power for striking out pleadings should not be invoked except where the cause of action is obviously and almost incontestably bad. Application under 0.18 r.19 should be made promptly, and there seems to be inordinate delay. No explanation has been offered by or on behalf of the defendant.

8. The defendant made a concession in terms of an observation made in the speech delivered In the Privy Council in Hang Wah Chong Investment Co. Ltd. v. Attorney General of Hon Kong, viz.:(1)

"No difference relevant to the present appeal can be drawn between a lease granted by a public body, or indeed the Crown, and a private lease."

9. On that general statement, the defendant further agreed that the Crown here in these proceedings was a private landlord. Whatever implications those concessions import, it is common ground that the court should have no regard to public law considerations.

10. The defendant readily admitted that "there was a policy as alleged in paragraph 10 of the Statement of Claim".  A qualification was sought to be introduced by Mr. Barlow in his reply to the effect that counsel knew not whether the formula for calculation set out in paragraph 10 of the Statement of Claim was "invariably used". That vague qualification took the defendant's stance no further.

11. In addition to his reliance on the inordinate delay, counsel for the plaintiff submitted that the acknowledged policy for calculating premia solicited for extensions at a fixed specified rate was a notorious custom which nut a constraint on the Crown's discretion to exact premia for granting extensions for completion of buildinn works. The plaintiff claimed that the said policy as incorporated into the said New Grant with its specified rates was binding upon the Crown in any grant containing such a building covenapt until its fulfilment. It was alleged that the Crown had sought to demand, contrary to such notorious custom as an incorporated term in the said New Grant, a premium for the third year's extension in an amount over 10 times the usual rate.

12. It was further argued by counsel for the plaintiff that if the acknowledged policy should, for any reason, lack the attributes of a notorious custom for its incorporation into a like Crown grant, the communication of the said policy to the plaintiff and his predecessor-in-title by the Crown would estop the Crown. from acting contrary to it when the plaintiff had acted on such communication to its prejudice.

13. It was finally submitted on behalf of the plaintiff that. if ever the acknowledged policy failed to qualify as a custom capable of being incorporated into the said New Grant, in all the circumstances a term to the same effect would have been implied.

14. There is room for full particularity in the plaintiff's allegations, but it cannot be denied that each of them is a very triable issue.

15. For all these reasons, the defendant's application to have prayer (1) and the relevant portions of the plaintiff's Statement of Claim struck out ought not be entertained and, if entertainer, ought not be granted.

16. As for prayer (2) and paragraph 21 of the statement of Claim which deal with the plaintiff's "right" to claim relief against forfeiture in the eventuality of a Crown re-entry, the defendant sought to strike out the same on the ground that no court should be called upon to adjudicate on hypothetical issues. Hence, so Mr. Barlow argued, the court has no jurisdiction to entertain. prayer (2).

17. It is connon ground that the plaintiff's "right" to claim relief against forfeiture is wholly statutory. Such right would only arise after a Crown reentry. In Lok On Company Limited v. The Attorney General ⁽²⁾ the time prescribed for completion of building works under the Demolished Buildings (Re-development of Sites) Ordinance was stathtorily given the force of a Crown Lease covenant. After several extensions on payment of premia, a further extension was there offered but on an exorbitant demand. The plaintiff paid under protest and challenged the quantum in court. Matters relevant to the Crown lessee's right to apply for relief against forfeiture were said to be hypothetical and held not to be a justiciable issue in a, court of few.

18. The Crown has threatened to re-enter, but no court begins to be endowed with jurisdiction to consider or grant relief against forfeiture under the Crown Rights (Re-entry and Vesting Remedies) Ordinance unless and until the Crown has actually re-entered. A threat to re-enter would not confer upon the court any such jurisdiction. In another words, before an actual Crown re-entry, no right to seek a statutory relief against forfeiture is vested in the plaintiff.  Thus, it is obvious that the plaintiff has acquired no leqal right to any relief against forfeiture capable of being disturbed or threatened.

19. This court was also faced with delay in the defendant's application for striking out prayer (2) and paragraph 21 of the plaintiff's Statement of Claim.   The rule of practice for a prompt application made under 0.18 r.19 has never been said to be inflexible, and such rule of practice does not deprive the court's jurisdiction to exercise its discretion for striking out "at any stage of the proceedings". That prayer (2) is founded on a hypothetical right cannot be doubted.  In addition, the very point at issue has the sanction of a Court of Appeal. It is an allegation not merely in law incontestably bad but plainly untenable. Balancing the evil of a late application against the futile exercise of an attempted introduction of hopeless controversies with incidental unnecessary costs, it is highly desirable that the parties be spared from making any preparation in support of or in opposition to this unarguable issue. Driven by all the practical advantages with no foreseeable adverse repercussions, I was impelled to take the view that there was no warrant for prayer (2) and paragraph 21 of the plaintiff's Statement of Claim to remain in the court records merely by reason of the inexplicable delay of the defendant. In the circumstances, I acceded to the request of the defendant for striking out prayer (2) and paragraph 21 of the plaintiff's Statement of Claim,

20. At a conclusion of the proceedings, my conclusions were conveyed to the parties and an order was accordingly made, but with the pressing of time, I intimated to the parties that written reasons would be forthcoming at a later stage.  The court was invited to order, by consent, that costs of these proceedings be costs in the cause.

(1)    [1981] 1 W.L.R. 1141 at p. 1145 F/G

(2)    Civil Appeal No. 154 of 1982, the judgments of which were delivered on the 24th March, 1983.

Representation:

Mr. Bokhary, Q.C. with Mr. A. Ismail instructed by Messrs. F. Zimmern & Co.  for the Plaintiff.

Mr. Barlcw, Crown Counsel for the Defendant.