Waybill Development Limited v. Chung Luen Dyeing Factory Limited

HCMP000488/1987

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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BETWEEN

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Coram: Hon. Barnes, J. in Chambers

Date of Hearing: 8th June 1987

Date of Delivery of Jadgment: 8th July 1987

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JUDGMENT

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1. The issue raised by this Originating Summons issued pursuant to s. 12 of the Conveyancing and Property Ordinance (Cap. 219) is whether the Plaintiff purchaser has effectively recinded an agreement dated 26 January 1987 for the sale and purchase of land at 21-27 Sha Tsui Road, Ts Tsuen Wan.

2. Clause 24 of the agreement reads as follows :-

"The Vendor hereby declares that he has not received any notice under the Crown Lands Resumption Ordinance, Cap. 124 or the Mass Transit Railway (Land Resumption and Related Provisions) Ordinance, Cap. 276 or any other form of notice of similar nature [under any other Ordinance] affecting the said Premises and has no knowledge whatsoever whether the said Premises are included in any lay-out plans (draft or approved) under the Town Planning Ordinance, Cap. 131. The Purchaser acknowledges that he has been advised by Messrs. Woo & Woo that he should satisfy himself through independent professional advice whether the said Premises are affected by the said Ordinance [s] or any of them. If it shall be ascertained before completion of the purchase that the said Premises are affected by any of the said Ordinances, the Purchaser may by notice in writing to the Vendor rescind this Agreement .......... and in the event of the Vendor not having received such notice prior to the date of completion the Purchaser shall be deemed to have agreed to purchase with full knowledge that the said Premises are so affected by the said Ordinances or any of them. The Vendor hereby undertakes to notify the Purchaser forthwith upon receipt of any of the aforesaid notices."

3. The words and letter in square brackets do not appear in the document exhibited but counsel agree that the Clause should be read as set out above.

4. The date for completion was 12 March 1987.

5. On 6 February 1987 a notice dated 3 February 1987 under section 8(2) of the Roads (Works, Use and Compensation) Ordinance Cap. 370 ("the RO") was published in the Government Gazette.

6. On 18 February 1987 the agent who introduced the parties to each other in connection with the sale wrote informing the Plaintiff that the plan containing the proposal referred to in the notice indicated that the premises were to be resumed "to facilitate construction of a new road junction".

7. On 20 February 1987 the Plaintiff through its solicitors gave notice to the Defendant recinding the agreement. On 26 February 1987 the Defendants solicitors replied contending that the Plaintiff had no "right to give notice to rescind ...... as the Notice published in the ....... Gazette [was] not within the purview of Clause 24 of the ..... Agreement".

8. Whether the Plaintiff had the right to rescind depends upon whether the parties ascertained, as a result of publication of that notice, that the premises were then affected by one or more "of the said Ordinances". The answer depends upon whether the RO is one "of the said Ordinances" and, if so, whether the notice indicated that the premises are "affected" within the meaning of Clause 24.

9. The RO is one of the relevant Ordinances only if it provides for the issue of a notice which is of a similar nature to notices affecting premises issuable under the Crown Lands Resumption Ordinance ("the CLRO") or the Mass Transit Railway (Land Resumption and Related Provisions) Ordinance ("the MTRO").

10. S. 3 of the CLRO empowers the Governor to order the resumption of land whenever the Governor in Council decides that the resumption is required for a public purpose. When resumption is ordered s. 4 requires publication in the Gazette, service on the owner and affixing to the land of a notice stating it will be resumed on a certain date. On that date all rights and interests in the land revert to the Crown. There is no provision enabling anyone to object to the resumption and the notice itself, provided it states that the land is required for a public purpose (without any need to specify the intended public user), becomes by virtue of s. 19 conclusive evidence that the resumption is for a public purpose. There is no other form of notice affecting land issuable under the CLRO.

11. The MTRO contains a number of provisions dealing with notices relating to premises. S. 3 requires the Director of Buildings and Lands ("the Director") to prepare plans and maps to delineate the area within which land may be resumed, or in respect of which easements or rights in, under or over land may be created, for railway purposes. S. 3(4) requires him to deposit such plans and maps in the Land Office and to publish, by a notice in the Gazette, the fact of such deposit, a general description of the plans and maps deposited and particulars of the times and places at which copies may be inspected by the public. S. 3(5) provides that no one shall have a right of objection to the delineation and that the fact of delineation is conclusive evidence that the area delineated may be resumed, or have rights created in respect of it, for railway purposes. S. 4 gives the Governor poster to order the resumption of any such land and provides that when the power is exercised the land reverts to the Crown. S. 5 provides that notice of a resumption order must be given to every person having any estate, right, share or interest in the land affected by the order. S. 6 gives the Governor power to create easements, etc., over delineated land and s. 7 requires notice to be given to every person having any estate, etc., in any land so affected. S. 10 empowers the Governor to alter or close streets, reclaim land, extinguish, modify or restrict public and private rights in respect of any street, Crown foreshore or seabed for railway purposes. S. 11 requires notice to be given to every person having any estate, etc., in any area so affected. S. 12 gives the Director power to onter land contiguous to the delineated area for certain railway purposes and requires that notice of intention to enter be given to the owner and occupier of the land affected. S. 14 empowers the Director to give the owner of any building in the delineated area notice requiring him to remove any projection or obstruction from the building and authorizes the Director to enter the building to effect the removal if the owner fails to comply with the notice.

12. S. 5 of the RO is similar to s. 3 of the MTRO in that it requires the Secretary for Transport ("the Secretary"), whenever he proposes to execute any works similar to those advertised in the Gazette on 6 February 1987, to prepare a plan delineating the area within which land may be resumed, or in respect of which easements or rights in, under or over land may be created, for the purposes of the works. S. 8 is similar to s. 3(4) of the MTRO in that by sub- sections (1) and (2) it requires the Secretary to deposit any such plan in the Land Office and to publish a description of the general nature of the works and particulars of the times and places at which a copy of the plan may be inspected by the public. By s. 13 of the RO the Governor has power to order resumptions having the same effect as orders made under s. 3 of the CLAO and s. 4 of the MTRO and by s. 15 to create easements and other rights in respect of land in the delineated area. But, whereas under the CLRO the Governor's power to resume exists from the moment the Governor in Council decides that resumption is required for a public purpose, and under the MTRO the power to resume and/or create easements, etc. exists from the moment of delineation, the equivalent powers under the RO are not available either at the time of delineation or at the time of publication of a notice under s. 8(2). S. 10 of the RO gives everyone a right to object to the works described in the notice irrespective of whether or not he has any interest in delineated land. That right subsists for 60 days after publication. If no one objects within that time the Secretary may proceed with the works as planned (s. 11(1)). If anyone objects the Governor in Council must then consider the plan and the objection and decide whether to authorize the works as planned, authorize them with amendments to the plan or decline to authorize any works at all (s. 11(2)). The Governor's powers under ss. 13 and 15 of the RO do not arise until the works are authorized either by the Secretary's decision to proceed where there is no objection, or following approval by the Governor in Council after considering the plan and objections (s. 12). When the powers do arise they must be exercised subject to any modification of the plan or condition imposed by the Governor in Council (s. 12).  It is only when the Governor exercises his powers under ss. 13 or 15 that notice must be served under s. 14 if resumption is ordered, or s. 16 in other cases, "on every person .... having any estate, right, chars or interest in the land mentioned in the order".

13. A notice under s. 4 of the CLRO tells anyone with an estate, etc. in the land that an unchallengeable decision has been made empowering the Governor to extinguish all his rights in the land. A notice under s. 3 of the MTRO tells the world that a decision, not open to challenge even by persons with proprietary interests in delineated land, has been made empowering the Governor to resume and/ or create rights in, under or over that land. A notice under s. 8(2) of the RO does not tell anyone that the Governor has been empowered to resume or create rights in respect of any land at all. At the time it is published the Governor has no power under either s. 13 or s. 15 in respect of any of the delineated land and may never become seined of such poser. There is, therefore, considerable force in the submission made by Mr. Swaine, Q.C., on behalf of the Defendant vendor to the effect that a notice under s. 8(2) of the RO is not of a similar nature to either a notice under the CLRO or any notice under ss. 3, 5 or 7 of the MTRO.

14. Mr. Sakhrani, Q.C., submitted on behalf of the Plaintiff that, since notices required to be given by so. 11, 12 and 14 of the MTRO affected premises without mentioning resumption or the creation of easements or other rights, a s. 8(2) notice was "a form of notice of similar nature" to them.

15. Although notices under s. 14 do not mention resumptions or the creation of rights in land, they cannot be issued in respect of any land not within the "railway area", that is, they cannot be issued in respect of any land over which the Governor is not already empowered to order resumption or create easements or other rights. Notices under ss. 11 and 12 can, however, issue and affect land beyond the railway area. It is Mr. Swaine's submission that even those notices are not of a similar nature. In each case the notice issues pursuant to an unchallengeable decision affecting the land and has to be given, if it issues under s. 10, "to every person having any estate, right, share or interest in the land affected by the order", or, if it issues under s. 12, to the owner and occupier of the affected land. According to his submission those two features, namely, the finality of the decision and the requirement that notice be given to persons with rights in the land affected by that decision, must be present before a notice can be said to be "similar in nature" within the meaning of Clause 24.

16. Finality is a feature of all the decisions which give rise to the issue of notices under both the CLRO and the MTRO and the Clause itself highlights the second feature. The first sentence of the Clause distinguishes between "receiving notice" and "acquiring knowledge" and the last sentence illustrates that the notices which the parties had in mind were notices required to be given to persons with rights in the land as distinct from notices published for the information of the community.

17. I therefore agree with Mr. Swaine's submission that a notice under s. 8(2) of the RO is not a notice of similar nature within the meaning of Clause 24. It does not follow, however, that, because that type of notice is not of a similar nature to notices under the CLRO or the MTRO, the Plaintiff had no right to rescind if the premises were affected by a decision made under the RO. The Defendant's solicitors' contention in their latter dated 26 February 1987 overlooks the provision in Clause 24 giving the Plaintiff the right to rescind whenever the parties learn, within the stipulated time, that a decision affecting the pr premises has been made under a relevant Ordinance. The relevant Ordinances, apart from the CLRO, the MTRO and the Town Planning Ordinance ("the TPO") are those under which notices are issuable which are of a similar nature to those issuable under the CLRO and the MTRO.

18. Under the RO the Governor is empowered, from the moment statutory authority to proceed is given, to order resumption and create rights in land for the purpose of carrying out the authorized works. When those powers are exercised the notices which must then be given under ss. 14 or 16 of the RO are unquestionably of a similar nature to those given under the CLRO and the MTRO both as regards finality of the decision which founds the issue and method of service. The RO must therefore, be one of "the said Ordinances". Consequently, the real issue as regards the s. 8(2) notice is not whether it is a notice similar in nature to notices under the CLRO or the MTRO but whether it indicates that a decision affection the premises has been taken under the RO.

19. Counsel agree that the plans deposited in the Land Office show that the promises will have to be resumed if the works are authorised without amendment to those plans.

20. In order to understand what the parties had in mind when they referred to the premises being "affected" by relevant Ordinances it is necessary to examine the provisions of the Ordinances referred to expressly.

21. Under the CLRO and the MTRO premises are affected when an unchallengeable decision has been made to earmark them as liable to resumption. Must this element of finality, be present in order for them to be "affected"?

22. The other Ordinance referred to expressly is the TPO. It was enacted "to promote the health, safety, convenience and general welfare of the community by making Provision for the systematic preparation and approval of plans for the future lay-out of existing and potential urban areas ...." The Town Planning Board set up by the TPO to prepare draft plans for those purposes is specifically empowered to make provision for, inter alia, "streets, railways and other main communications" (s. 4(1)(a)). When any such draft plan is made available for public inspection everyone "affected by that draft plan" has a right to object to the proposals it contains. Once an objection has been lodged the draft may be withdrawn or approved with or without amendment. Even an approved plan lacks the element of finality because the Governor in Council is empowered to revoke it in whole or in part at any time (s. 12). The use to which approved plans are to be put is spelt out as follows :

"Approved plans shall be used by all public officers and bodies as standards for guidance in the exercise of any powers vested in then" (s. 13).

23. Mr. Swaine submitted that although s.13 suggests that the TPO "has no teeth of its own" it is given "a biting ability" by certain provisions in the Buildings Ordinance which enable the Building, Authority under that Ordinance to refuse to give approval of plans of building works which "would contravene any approved or draft plan under the TM (s. 16). It was possibly for that reason, he submitted, that Clause 24 specifically referred to the TPO.

24. Be that as it may, the parties have indicated in Clause 24 that the premises can be affected by the TPO if the premises are included in a draft plan. Thus, the parties must have envisaged that the premises could be affected so as to trigger a right to rescind notwithstanding the fact that no unchallengeable decision had been made in respect of the premises and notwithstanding the fact that the Governor might never be empowered to order resumption of them.

25. S. 13A of the TPO provides :

"Any works or use authorized under the [ the RO ] shall be deemed to be approved under this Ordinance, whether or not those works or that use form part of [ an approved plan ]".

26. S. 11 of the RO provides that a plan which has attracted an objection may be referred to the Town Planning Board under the TPO and it empowers the Board to do certain things in respect of the plan and the objection "whether or not the works are shown on any draft plan under [the TPO]".

27. There can, therefore, be proposals which appear in both a draft plan under the TPO and a plan prepared by the Secretary under the RO.

28. The works under the RO which, if authorized and executed, will lead to resumption of the premises are set out in a plan making provision for, inter alia, a flvoyer, that is, a type of work within the meaning of s. 4(1) (a) of the TPO. If provision had been made for that work in a draft plan prepared under the TPO then, if before completion of the agreement, the parties carne to know of the existence of the draft and of what it foreshadowed in respect of the premises, the Plaintiff would have had the right to rescind.

29. Given the relationship between the RO and the TPO disclosed by the provisions just cited it would be rather odd if the Plaintiff had the right to rescind if the premises were affected by a plan prepared pursuant to the TPO but no such right if affected in exactly the same manner by an identical plan prepared pursuant to the RO.

30. For the reasons given earlier I think that the RO is one of "the said Ordinances" within the meaning of Clause 24. I find that the parties, through the publication of the notice under s. 8(2) of the RO on 6 February 1987, ascertained before completion of the agreement that the premises were affected by that Ordinance. The Plaintiff therefore had the right to rescind and effectively exercised that right by the notice given on 20 February 1987.

Representation:

Mr. A. Sakhrani, Q.C. with Mr. B. Yu (Woo & Woo) for the Plaintiff.

Mr. J. Swaine, Q.C. with Mr. P. Woo and Mr. J. Kwong (William Sin & So) for the Defendant.