Re Tsang Shiu Tim

HCMP000005/1971

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

MISCELLANEOUS PROCEEDINGS NO. 5 OF 1971

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Coram: Full Court (Blair-Kerr, Mills-Owens, and Pickering, JJ.)

Date of Judgment:

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JUDGMENT

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Mills-Owens J.: This is an application for certiorari to quash the decision of a tribunal established under the Public Reclamations and Works Ordinance (Cap.113), whereby the applicants were held not to be entitled to compensation under the provisions of the Ordinance, and for mandamus directing the tribunal to assess and award compensation.

1. The 1st applicants are the registered owners of a certain godown, being lessees of the Crown under a Crown lease, the unexpired residue whereof is 5 years. The 2nd applicants are tenants in occupation of the godown, holding the same as monthly tenants of the 1st applicants but being entitled to the protection of the Landlord and Tenant Ordinance (Cap. 255) by reason of the premises being a pre-war building.

2. The subject-matter of the claims for compensation, made by the 1st applicants as owners and by the 2nd applicants as tenants, is the extinguishment of a right of access to the sea. Prior to the works of reclamation giving rise to the claims for compensation under the Ordinance, the godown, which is a three-storeyed building, immediately adjoined - was, in fact, contiguous to - the Yau Ma Tei typhoon anchorage. This was of considerable financial advantage to the business of the godown in that delivery of goods to and from the godown might be effected directly from and to the sea, whether by means of barges or other craft or by means of a pier, of which the applicants had the use, extending from the premises seawards. The fact that the godown had such direct access to the sea obviated the need to transport goods partly by sea and partly by land. Thus the 2nd applicants as tenants of the godown premises were able to charge more than their competitors, it being to the advantage of depositors to pay somewhat higher godown charges than to incur normal godown charges but have to pay for transport by land in addition. On the face of it, this 'marine right', as it has been termed, was a valuable proprietory right - a private riparian right, interference with which would be actionable without proof of special damage (vide A.G. of Straits Settlement v. Wemyss⁽¹⁾). In Lyon v. Fishmongers' Company⁽²⁾, Lord Selborne referred to such a right in the following terms -

"Such a right of access is his only, and is his by virtue, and in respect of, his riparian property; it is wholly distinct from the public right of navigation."

But this aspect of the case need not be pursued, nor is it necessary to refer to the circumstances in which the pier came to be constructed, as an adjunct to the godown. Before us the Crown concedes that, immediately prior to the material time, the marine right existed and was a proprietory right incident to and enjoyed with the ownership and occupation of the godown. The material time is, of course, the date upon which the right was extinguished by virtue of section 5 of the Ordinance. The section reads -

"5. Upon publication of the authorization of an undertaking, all public and private rights of navigation or fishing and all public and private rights of access, user, possession or occupation, and all other public or private rights (if any) in, upon or over the Crown foreshore, seabed and land occupied by the undertaking shall be extinguished and cease to exist."

Section 6 provides that no action may be maintained in respect of the extinguishment of a private right under section 5 but that any claim in respect thereof shall be referred to a tribunal. In the present case the date of publication of the authorisation was the 13th March 1970, following which the tribunal, comprising a District Judge and two assessors, sat to hear and determine the claims of the applicants. In determining the claim of the 1st applicants, the tribunal found that their property, the godown, had a greater rental value by reason of the marine right being appurtenant thereto than it would have had without that right. The tribunal particularised this finding in terms of the monthly rental value of the premises, together with the marine right, being $8,137, and without it $6,509. But the tribunal went on to hold that the 1st applicants' claim was entirely defeated by the betterment which would accrue to them as a result of works intended to form part of the reclamation undertaking. This was on the basis that the Government intended, as part of the undertaking, to construct a new public road over the reclaimed land, with the result that the site of the godown would then abut on two public roads, that is would have two road frontages, not one as hitherto, and thus the site would be capable of more intensive building development under the relevant building regulations. We have no need to examine this aspect of the case inasmuch as the contention for the 1st applicants - to the effect that such betterment was entirely speculative being contingent on the construction of the new road, which might never be built - was abandoned by Mr. Litton, counsel for both applicants, who concedes that such betterment was properly offset against the 1st applicants' claim for compensation.

3. With regard to the claim of the 2nd applicants, the tribunal found that, but for betterment, the value of the marine right to the 2nd applicants as protected monthly tenants was to be assessed on the basis of a probable 5 year occupancy at the present rental; that measure of occupancy being derived from the unexpired residue of the Crown lease held by their landlords, the 1st applicants, upon the expiration of which the interests of both applicants would, of course, determine. As the tribunal found; but for betterment, this would have resulted in an assessment of compensation in favour of the 2nd applicants in the sum of $72,283. The calculations made by the tribunal are as follows -

Summary

4. On the hearing before us, Mr. Keil, Crown counsel, made two points. First, he argued, the 2nd applicants were statutory tenants - as that expression is used in the English Rent Acts - wherefore they had no proprietory interest in the godown but merely a personal right of retaining occupation; he referred to the case of Sutton v. Dorf⁽³⁾ where it was held that a statutory tenancy under the Rent Restrictions Acts is not 'property' within the meaning of the bankruptcy law and therefore does not pass to the trustee in bankruptcy of the statutory tenant. This argument must fail, if only for the reason that there is no evidence on the face of the record that the 2nd applicants have ceased to be contractual tenants.

5. Secondly, Mr. Keil argued that, where a claim is made for injurious affection, not only must the private right interfered with by the undertaking be a right which the owners or occupiers of property are by law entitled to make use of in connection with such property and, further, a right which must give an additional value to that property - which I accept - but also the additional value must arise apart from the uses to which any particular owner or occupier might put it. Crown counsel derives this proposition from a passage in the speech of the Lord Chancellor (Lord Cairns) in the case of Metropolitan Board of Works v. McCarthy⁽⁴⁾ where he said -

"My Lords, in his very able argument at your Lordships' Bar, Mr. Thesiger stated what he would rely upon as a definition of the right to compensation, and having considered this case very fully, I myself should not be disposed to find fault with any part of that definition, although definitions are always matters of very considerable difficulty. Mr. Thesiger stated that the test which he would submit as one which he thought would explain and reconcile the various cases upon this subject, was this, that where by the construction of works there is a physical interference with any right, public or private, which the owners or occupiers of property are by law entitled to make use of, in connection with such property, and which right gives an additional market value to such property, apart from the uses to which any particular owner or occupier might put it, there is a title to compensation, if, by reason of such interference, the property, as a property, is lessened in value."

The qualification 'apart from the uses to which any particular owner or occupier might put it', according to the argument of Crown counsel, puts the 2nd applicants out of court; the marine right in question is merely a right which gives the particular godown business of these particular applicants an added value, and therefore is not a subject of compensation. Thus it is argued.

6. It is not entirely clear to me that the analogy with claims for compensation arising out of injurious affection, under the English legislation concerning compulsory acquisition, is correct. The claim under the Ordinance is 'in respect of the extinguishment ............. of any ........... private right' (section 6). This appears to conceive of the 'taking' of the private right by the Crown, not of injurious affection to property to which the right is appurtenant or in connection with which it is enjoyed. If it is a 'taking' of the right then, as is well known, different considerations apply. The Uthwatt Committee on Compensation and Betterment, in para. 206 of its Report published in 1942 (Cmd. 6386), summarised the position as follows -

The reference in the second paragraph to 'caused by the construction ...... user' must now be read in the light of more recent cases (vide, e.g., Re Simeon and the Isle of Wight R.D.C.⁽⁵⁾). However, according to the English practice, notice to treat is not usually given with respect to easements or servitudes over land acquired; the destruction of such interests is generally regarded as giving rise to a claim for injurious affection by the owners of such easements or servitudes. On the other hand the concept of 'injurious affection' is one which arose from the wording of section 68 of the Lands Clauses Act 1845, whereas the Ordinance contains no reference to 'injurious affection'. I would conclude that the extinguishment, by virtue of the Ordinance, of a right such as the marine right in question in the present case, is intended by the Ordinance to be the subject of compensation, regardless of any such qualification as it is now sought to introduce. But if I am wrong in reaching that conclusion, then I have no doubt that the argument for the Crown is otherwise misconceived. The marine right is a valuable right capable of being exercised by any person carrying on a godown business at the premises to which it is attached, not merely by the 2nd applicants: it enures to the advantage of any such person and gives added value to the godown premises, not merely the particular business of the 2nd applicants. As was pointed out by my brother Pickering, in the course of the argument, Lord Cairns, in the case of McCarthy (supra)⁽⁴⁾, had earlier said (p.253) -

"It appears to me that it is impossible to doubt that the destruction of the highway by water ...... is otherwise than a permanent injury to the property in question, by whomsoever, or for whatsoever purpose, that property may be occupied."

Lord Chelmsford, in the same case, at p.256, said -

The meaning of the words 'apart from the uses to which any particular owner or occupier might put it' is further clarified in the case of Caledonian Railway Co. v. Walkers' Trustees⁽⁶⁾ where Lord Selborne L.C. said -

The other speeches in the House of Lords were to the same effect. The words on which Crown counsel relies are to be understood in the light of the foregoing statement by Lord Selborne, in particular his item 3. The judgments in Eagle v. Charing Cross Railway Co.⁽⁷⁾ are also clear authority against Crown counsel's contention.

7. In the case before us, as it appears to me, the tribunal found as a fact that the marine right gave added value to the godown property and I would hold that to be entirely right. The tribunal went on to hold however that, equally as in the case of the 1st applicants, the claim of the 2nd applicants must fail by reason by the enhancement in value of the godown site by reason of its greater potential as a building site owing to the proposed construction of an additional road, on which the site would abut. In case they were wrong in this the tribunal proceeded to assess the compensation due to the 2nd applicants in the sum of $72,283, as in the calculations appearing above. Mr. Litton contended that such greater potential was of value solely to the 1st applicant; it was a betterment in which the 2nd applicants would not partake in that even if they were to become tenants of redeveloped premises it would obviously be at an enhanced and uncontrolled rent. Faced with this argument, Mr. Keil abandoned any reliance on betterment in respect of the claim of the 2nd applicants and conceded that if compensation were due it should be in the sum provisionally assessed, namely the $72,283.

8. In the result, in my judgment, the applications of the 1st applicants must be dismissed with costs, and the applications of the 2nd applicants allowed with costs.

9. It is, perhaps, desirable to mention two points. First, it is not entirely clear to me that any claim by the Crown to offset - or for that matter to claim - betterment may validly be allowed. In my understanding, betterment is a creature of statute. Ths history of the subject is given in Chapter IX of the Uthwatt Report. At para.265 the Committee notes that the Act of 1845 contains no provision for betterment and in a footnote refers to the case of Senior v. Metropolitan Railway Co.⁽⁸⁾ where Wilde B. said it was 'the first time such an idea has been brought forward, and I see no reason for giving countenance to it.' (See also Eagle v. Charing Cross Railway (supra)⁽⁷⁾.

10. The second point arises from the nature of the proceedings in the present case, that is to say proceedings by way of prerogative orders. At one stage in the course of the proceedings Crown counsel was inclined to support the decision of the tribunal on grounds other than those relied on by the tribunal. In an appeal proper that would have been the subject of a respondent's notice, giving advance information to the appellant of what he might have to meet. The prerogative procedure may possibly be disadvantageous in other respects also in compensation cases. It appears desirable that the Ordinance should be examined on both points - betterment, and possibly the provision of appeal provisions, whether by case stated or otherwise. With regard to betterment, it is for consideration also whether provision should be made for empowering the tribunal to embody in its award, and take account of, any undertaking by the Government to construct works, such as a proposed new road as in the present case.

Representation:

(1) [1888] 13 App. Cas. 192, 196

(2) [1876] 1 App. Cas 662, 684.

(3) [1932] 2 K.B. 304

(4) [1874] L.R. 7 H.L. 243, 253.

(5) [1937] 1 Ch. 525.

(6) [1882] 6 App. Cas. 259, 276.

(7) [1867] L.R. 2 C.P. 638

(8) [1863] 2 H. & C.258; 32 L.J. Ex.225.