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Hofei Estates Ltd v. Attorney General

Read the full judgment text of HCMP 386/1981 on BabelCite. This High Court CFI judgment.

1. This Matter comes before me by way of Originating Summons, very properly and correctly ordered by the Registrar on the First Hearing, to be heard in open Court, because, unless the Rules provide to the contrary, which some do, Originating Summonses should be heard in open Court: There are provisions also for hearing Originating Summonses in camera as, for example, in the case of minors. And Directions to that effect are customarily given on the First Hearing, unless, of course, the Matter can

Case No.HCMP 386/1981
Court
High Court CFI
Date—
Judge—
Case Document
100%Judiciary

HCMP000386/1981

MR. CHANG: We are grateful for the time given us. We have now got a declaration which we will ask the Court to make. In form, it is not made by consent because declarations are never made by consent. And this declaration reads as follows:-
It says: "A declaration that a building development to a maximum coverage of 66.6% is permitted on the land, the subject of the proceedings, by the Conditions of Sale so long as there remains a garden after compliance with with other applicable restrictions, if any."
APPEAL COMMITTEEd> Could you just help me on one point? Can you give the shorthand-writer some indication of how long you will be?
MR. CHANG: I would be certainly less than three quarters of an hour, hopefully half an hour.

(3.30 p.m. Court Reporters leave Court.)

(4.00 p.m. Court Reporters return to Court.)

IN THE HIGH COURT OF JUSTICE MP No. 386/1981

IN THE MATTER of Lot 796 in Demarcation District 131
and
IN THE MATTER of the construction of a Memorandum of Agreement by the Purchaser dated 30th December 1931 and made between Yin Nin Loan and Land Investment Company Limited (the Plaintiff's predecessor in title) and the District Office, North, acting on behalf of the Crown

BETWEEN:-
HOFEI ESTATES LIMITED Plaintiff
- and -
THE ATTORNEY GENERAL Defendant

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Coram: Jackson-Lipkin, J. in Court

Date of Judgment: 23rd October, 1981 at 3.25 p.m.

Mr. Dennis CHANG, Q.C. and Mr. Robert TANG for the Plaintiff.

Mr. Peter GRAHAM for the defendant.

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JUDGMENT

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1. This Matter comes before me by way of Originating Summons, very properly and correctly ordered by the Registrar on the First Hearing, to be heard in open Court, because, unless the Rules provide to the contrary, which some do, Originating Summonses should be heard in open Court: There are provisions also for hearing Originating Summonses in camera as, for example, in the case of minors. And Directions to that effect are customarily given on the First Hearing, unless, of course, the Matter can then and there be disposed of [0.28 r. 5(2)]

2. This Originating Summons came originally under Order 15 rule 16 of our Rules. By common consent of the parties it has, very sensibly, been treated by both of them, and I am asked to treat it also, as an Originating Summons under Order 5 rule 4(2) (a). In other words, I must look on it as a Construction Summons as well as an application for declarations.

3. At the outset, the Crown conceded that the proposed declarations 1 and 3 were true as facts, and agreed them as facts. In relation to proposed declaration 2, the Crown agreed that as a fact, with the exception of the words "change the status of the plot from that of building land or" in the sixth and seventh lines.

4. Originally, there was a challenge to the jurisdiction on the basis that there was nothing justiciable, and reliance was placed on passages at pages 325, 331 and 335 of Fred Jackson (suing on behalf of himself and other members of the Hong Kong Fire Services Department Expatriate Officers Association) v. The Attorney General, [1980] H.K.L.R. 323. I also considered the cases of Russian Commercial & Industrial Bank v. British Bank for foreign Trade, Ltd. [1921] 2 A.C. 438, and Barwick & Ors. v. South Eastern & Chatham Rly. Cos., [1921] 1 K.B. 187. I put them in that order because that in Appeal Cases was decided on 1st July and the other, in the King's Bench Division and the Court of Appeal, was decided on 9th and 29th July, and, therefore, the Lords Justices ought to have had in mind what the Law Lords had decided nearly a month earlier.

5. I was also invited, should I rule against that, to exercise my discretion against making any declarations under this Originating Summons on the grounds set out in page 16 of an unreported judgment of Bewley, J. in the cases In the Matter of the Rating Ordinance, and entituled Hong Kong United Dockyards Limited v. The Attorney General, and Yiu Lian Machinery Repairing Works Limited v. The Attorney General, and Euroasia Shipyard Company Limited v. The Attorney General which was delivered on the 23rd July 1981, under the reference M.P. 179 of 1980.

6. I have considered carefully those considerations, and in my judgment, what I am asked to do is not to give a mere advisory opinion. I am not asked to refer to moral, social or political rights or liabilities that are not justiciable. I am asked not to make any declaration of a hypothetical or academic nature. I am asked to construe a contract between Crown and Subject, (I say "Subject" advisedly because this was a limited company incorporated under the laws of the Colony), which is not clear on its face. And its clarity is of some considerable importance. It is of more importance now than it was when the Originating Summons was issued on the 16th of March.

7. I am entirely in agreement with Mr. Graham when he urges upon me that, if I were being asked to make these declarations for the sole purpose of bringing the applicants within the entirely discretionary compensation rights under the Ex-Gratia Compensation Rates provisions of the New Territories Administration, I ought not to proceed any further with it.

8. But at the date of the issue of this Originating Summons, the land had not been resumed, and it was perfectly right and proper for the Plaintiffs at that time to seek a declaration as to the legal status of their land, in case, for example, they wished quickly to dispose of it before resumption, in case, for example, they wished to go to the Lands Tribunal; and so on. In other words, there is sufficient here to justify me in hearing and determining this Originating Summons.

9. There appears to have been some confusion about the nature of it because a lot of play was made at the beginning with the reliefs sought, but it is not the reliefs sought that I must look at to determine the nature of the Summons, and whether or not I should hear it, it is what the Summons seeks: And what the Summons seeks is this:-

" The determination of the Court on the legal status of Lot 796 in Demarcation District 131 having regard to its description in a Gazette Notice for Sale dated 19th December 1931 as a Building and Garden Lot and the terms of the aforesaid Memorandum of Agreement by the Purchaser dated 30th December 1931 and the General Conditions and Special Conditions No.1(b) and (c) as contained in Gazette Notice No. 570 of 1924 which were incorporated thereto."

I think that means "therein".

10. No oral evidence, has been adduced before me, and, therefore, an Appellate Court will be in just as good a position to decide whether I am right or wrong on the documents, and in those circumstances, I do not intend to elaborate further my reasons for hearing and determining this summons.

11. I can pass now to the matters directly in issue. On the 19th of December 1931, Her Majesty's Government issued a notice that a sale of Crown land by public auction would be held on 30th December 1931. They did so by a Gazette Notice issued out of the District Office in Tai Po, being No. S495. It is page 11 in the agreed bundle. (That being illegible, I was supplied with a typewritten copy). The terms of that document are important. For that reason, I shall read the whole of the relevant part into this judgment:-

" The Lots are sold for the Term of 75 years from the 1st day of July, 1898, with the right of renewal for a further term of 24 years less 3 days at a re-assessed Crown Rent. Lots Nos. 1 and 2 as Building Lots. Lots 3 and 4 as Garden Lots and Lots 5 to 7 as Building and Garden Lots, subject to the General Conditions of Sale published in Government Notification No. 570 of 1924 ..",

that appears on page 13 in the bundle, Exhibit 2,

"as amended by Government Notification No. 470 of 1931 ...", that appears on page 20 of the bundle, Exhibit 2 and makes a very minor alteration to General Condition 5: And it reas on:-

" Lots Nos. 1 and 2 are further subject to Special Condition No. 2(a) and (b), and Special Conditions hereunder specified. Lots Nos. 3 to 7 are further subject to Special Condition No. 1(b) and (c) in the above Government Notification."

It then goes on to read:-

" The amounts to be spent on each building lot in rateable improvements under the General Condition No. 5 are $5,000 and $4,000 respectively."

12. What is noteworthy is that "Lots Nos. 1 and 2", described in the 4th line as "Building Lots", are subject to Special Conditions 2(a) and 2(b). Those appear on page 19 of the bundle Exhibit 2 and they relate specifically to Building Lots with reference to "street or open space in the front", "area" to be built on, "scavenging lanes", "depths", "heights", "windows", "storeys", etc.

13. Whereas, there being no reference, of course, to gardens of any kind, Lots 3 to 7 are subject to different Special Conditions. The Special Conditions are the second and third paragraphs of Special Condition 1; Conditions 1(b) and 1(c); 1(b) deals with cultivation, 1(c) deals with rent.

14. This land was purchased, but, unfortunately, due to the war or passage of time, an important part of the documents of sale is missing. All that is left is a copy of the Memorandum of Agreement signed by the purchaser, which is page 22 in the bundle Exhibit 2, which reads as follows:-

" Yiu Nin Loan & Land Investment Company Limited ...... has this day (been) declared the highest bidder for the Lot described in the attached Particulars of Sale ..... and does hereby agree to become the Lessee .... subject to the General and Special Conditions of Sale of such Lot, and on his part to perform and abide by the said Conditions.".

That is dated 30th December 1931. Both parties ask me, in the absence of the attached Particulars of Sale, to have regard to page 11 of Exhibit 2 instead (that is to say, the typewritten document handed up to me).

15. The General Conditions of Sale apply to all the Lots 3 to 7 and that is Garden Lots 3 to 7 and that is Garden Lots and Building and Garden lots. I say that because, on page 11 of Exhibit 2, there is a full-stop after "Lots Nos. 1 and 2 as Building Lots". Among the General Conditions of Sale is General Condition 5, and this appears in the Gazette Notice 570 issued out of the Land Office on 7th October 1924, and contains General Condition 5 on which Mr. CHANG places considerable reliance. It starts:-

" The Purchaser of each lot shall where such lot is sold as a building lot, build and finish ....." etc.,

dealing with what he should build,

" and shall expend thereon in rateable improvements not less than the amount specified in the Particulars and Conditions of Sale."

If one looks back to the Particulars and Conditions of Sale, one finds the words I read before:-

" The amounts to be spent on each building lot in rateable improvements under the General Condition No. 5 are $5,000 and $4,000 respectively."

But according to the document, that relates to Garden Lots and to Building and Garden Lots, so I have to decide what to make of it.

" Land" in the Crown Lands Resumptions Ordinance:-
" means Crown land of whatever description (whether held under Crown lease or other title recognized by the Crown), or any part of (any) section thereof, in Hong Kong and the New Territories, and includes buildings erected thereon."

Mr. CHANG urges upon me this -- it matters not what label is attached by the Crown because in essence there is no difference: If it is a Building and Garden Lot, it is common ground that one can build on it only to the extent of two-thirds! If it is a Building Lot, one can build on it only to the extent of two-thirds: Therefore, says Mr. CHANG, there is no difference, and he invited my attention to Watford Construction Co. v. Secretary for New Territories [1978] H.K.L.R. 410.

16. What then is the legal status of the land? It must be determined by something. One can say that the "legal status" of the land is that it does not belong to the land owner, it remains the property of the Crown. But I am sure that is not what is intended by the use of the words "legal status" in the Originating Summons, and it is not the question that both parties wish me to determin today, so I must look beyond that. And when I do look beyond it, I must look for the purpose for which the land was sold, and the use to which it could be put.

17. In my judgment, the descriptions on page 11 of Exhibit 2 are not just "labels"; they are a statement by the Crown of how the land is to be held, for what purposes it is to be held, how it is to be used and what its status will be, should any question of resumption arise under the Crown Lands Resumption Act, (the first one of which was passed in 1910), should the parties resort to the remedies for resumption in money.

18. A very clear distinction is drawn between a Building Lot and a Building and Garden Lot, not merely in the "full-stop" that separates them. The fact is that three different types of lots are specified as being available for sale. It is a notice to every purchaser that the Crown is going to release from its reserve of land, Lots of different standing; and different standing is different status.

19. Mr. CHANG asked me, suppose he was selling before resumption, how would it affect the value? If he offered it for sale as a Building Lot, he would find himself possibly at the receiving end of an action in misrepresentation because Building Lot it never was. In my judgment, however, the mere fact that it had to be built on, does not convert it into a Building Lot.

20. In my judgment, those are not descriptions; they are notifications to the public of the legal status of the land to be sold, before the sale takes place, so that the prospective purchaser should know what it is he is bidding for. That is the true purpose.

21. The fact that the purchaser has to build on a Building and Garden Lot is irrelevant to its status. To give an example, Lots 1 and 2 are sold as Building Lots there is no provision in relation to Lots 1 and 2 concerning the cultivation of the remaining part of the land. In relation to Building and Garden Lots and to Garden Lots, there is such a provision it appears in Special Condition 1(b). That to me illustrates a difference in the legal status of the land. An example that I gave in the course of argument was the position of a woman: A woman remains a woman when she passes from 20 to 21 in Hong Kong, or from 17 to 18 in England, but her legal status changes. This land remains land, it remains the Queen's land, it remains land upon which a building must be erected, it remains land upon which building must be erected to not less than a certain amount but its legal status is governed by something quite different, that is, the purpose and use for which it was sold.

22. As I have said, I have come to the conclusion, and I hope somebody will take this further so that I may know whether I am right or wrong, I have come to the conclusion that the legal status of this Lot is that of Building and Garden land.

23. Without regard to the lateness of the hour, I feel there is no need for me to give further reasons unless called upon by counsel so to do, because the Appellate Court will be in just as good a position as I, in the absence of oral evidence, to examine these documents and see whether I have come to the right or to the wrong conclusion. So, unless either of you gentlemen want further reasons, I do not propose to give any.

24. I propose now to turn to the declarations. You wish me to make a declaration in the terms of 1 and 3?

MR. CHANG: Yes.
COURT: Very well, I make a declaration in the terms of 1 and 3 of the relief. Have you in writing, Mr. CHANG, the new declaration that you drew for me to look at. May I borrow it for a moment?
MR. CHANG: Yes.
MR. GRAHAM: My Lord, sorry.
COURT: Yes.
MR. GRAHAM: It was 3 which was put in by consent. It's 1, as I think it is.
COURT: 1and 3?
MR. GRAHAM: Yes, 1 is in some contention as far as - well, my Lord, I can't object to you making a declaration ...
COURT: You have agreed that it is a fact, and you told me it would help you.
MR. GRAHAM: It would help on 3, that's what I menat to say, it would help on 3. As for 1, I'll leave that to your Lordship.
COURT: I misunderstood you. Mr. CHANG, do you still want a declaration on 1?
MR. CHANG: Yes.
COURT: Very well, let me have a look. It is agreed as a fact, and I can see no reason why I should not declare it, so that the New Territories Administration may know where they are. It is not saying for one moment anything different from my finding that it is a Building and Garden Lot, but it does say that you can use it for building purposes so long, as after development, there is a garden. Now, let me have a look at this other one, if I can read it.
MR. CHANG: I did make some corrections as to the grammar, the tense.
COURT: A declaration that building development of the lot to a maximum coverage of 66.6% is permitted by the conditions of sale so long as there remains a garden after compliance with the appropriate restrictions on development if any." Is that any different from 3?
MR. CHANG: My Lord, a lot of thought has gone into this declaration just to ensure that all the essential points are there. There are some differences but not great.
COURT: And you would like it as a declaration as well, in the light of the judgment?
MR. GRAHAM: Yes.
COURT: Very well, I will make a further declaration that "building development of the site to a maximum coverage of 66% (66.6%?) was permitted by the Conditions of Sale so long as there remains a garden after compliance with other applicable restrictions on development (at the date of resumption) if any.".
MR. CHANG: My Lord, we did say perhaps it would be better to say "was permitted at the date of the resumption" rather than "is".
COURT: I did use the past tense, but I am quite prepared to put that in: The development at the date of resumption. (To Court Reporters) Will you insert "at the date of resumption" after the word "development"?
MR. CHANG: My Lord, you did ask whether your Lordship might give further reasons. I have no invitation to make, but I just wonder whether it's recorded that this Lot is as good as a building land in terms of coverage ...
COURT: Is that a matter for me?
MR. CHANG: It may have been recorded in the course of the argument, anyway.
COURT: Yes. When you have somebody of Mr. GRAHAM's standing, I do not think you need any more.
I am not prepared to make a declaration in terms of 4.
5 is very properly not being pursued.
Is there anything under 6 that you require?
MR. GRAHAM: My learned friend says no order for costs. Your Lordship, I would ask ...
COURT: I will come to costs in a minute. No. 6 is "such other directions or orders as may seem just." Is there anything that either of you need? Mr. CHANG, do you need any?
MR. CHANG: No, my Lord.
COURT: Do you need any, Mr. GRAHAM?
MR. GRAHAM: No.
COURT: There is one further matter that I have not mentioned, and which I feel ought to go into the judgment, and it is this: There was put before me a document, which is Exhibit 3, dated the 20th of March 1981. And that was a document to which objection was taken on the ground of irrelevance. I decided that it was relevant because it helped me in my consideration of whether or not it was proper to hear this Originating Summons, and although it was not the ratio for my decision to hear it, I did take into account that the Crown had committed itself to permitting me to resolve the issues in this very Originating Summons by the undertaking contained in that letter.
I will now hear counsel on costs.
MR. CHANG: My Lord, if costs follow the event, I should get the costs.
COURT: What event?
MR. CHANG: This is the point, I would suggest that the fairest order is each side should bear its own costs. Here is a matter which was properly brought before the Court for a determination of the status which would be of help to both sides. There was a denial of two-third and one-third originally and it was quite proper to come to court and to determine that.
COURT: So far as yesterday was concerned, if you had not come yesterday, you would not have got the agreements on 1 and 3 so that brought you to court. You failed basically on 2, 4 and 5, didn't you?
MR. CHANG: Yes, basically on 2. I succeeded on the other declarations and on the issue of justiciality. We succeeded on just these few issues. A lot of time was spent.
COURT: On which a lot of time was spent?
MR. CHANG: A lot of time was spent.
COURT: Mr. GRAHAM, the suggestion is that each side should bear its own costs, you having succeeded on some issues and he having succeeded on others.
MR. GRAHAM: Well, my Lord, I would not consent to that. In so far as I am being consulted, or so far as Your Lordship will hear me on the question of costs, my Lord, what this case was about was the Plaintiff wanting his land treated wholly as building land for the purposes of compensation; instead he has got a declaration - it was the money, it was about money, he wanted the money you get for wholly building land, but instead he has got a declaration on a matter which was agreed that it can be treated effectively as two-thirds building land.
COURT: Do not mince words. He failed on that aspect.
MR. GRAHAM: He failed on the main issue. As for spending time, my Lord, on the justiciable matter, I am sorry it took so long. I didn't really intend to take so long. It was the way the arguments had to be developed.
COURT: It is an interesting and important point.
MR GRAHAM: I think it was, my Lord, yes.
COURT: On which you failed?
MR. GRAHAM: On which I failed, my Lord, that was a preliminary point.
COURT: How would a taxing master sort this out? You failed on something that took X hours, Mr. CHANG failed on something that took Y hours, and the difference between X and Y is very little.
MR. GRAHAM: My Lord, I would say I won overall, in that sense, costs should follow the event.
COURT: I think the fairest order in this case would be to order that each party bears its own costs.
COURT: Yes, that will be my Order, "each party will bear its own costs".
          I am grateful to you both for interesting and well presented arguments and for your forbearance in the face of a multitude of interruptions.

4.45 p.m. Court adjourns.

(M.H. Jackson-Lipkin)
Judgment of the High Court

Representation:

Mr. Dennis CHANG, Q.C. and Mr. Robert TANG for the Plaintiff.

Mr. Peter GRAHAM for the defendant.

Solicitors: Johnson, Stokes & Master. Crown Solicitor.

APPEAL COMMITTEEd> "Was at the date of resumption" would be the best. (To Court Reporter) will you put in "was at the date of resumption". Thank you!
MR. CHANG: That is the declaration. And I ask Your Lordship to make it. I would like now to address the Court briefly on the question of the status of the land.
APPEAL COMMITTEEd> Yes.
MR. CHANG: Your Lordship might think that instead of saying "is permitted", it would be better to say "was at the date of resumption permitted".
APPEAL COMMITTEEd> Those "restrictions": should they not be defined as those that "were in the General and Special Conditions of Sale"?
MR. CHANG: No, "if any" in other words, we want to leave it open.
APPEAL COMMITTEEd> You want to leave it open.
MR. CHANG: To leave it open. And of course, we use the words "is permitted", but that declaration would go back to the date of resumption although we use the present tense.