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Baynard Ltd And Another v Secretary For Justice And Others

Judgment Cited authorities 20 Cited in 1 Precedent Map Related
Vincent
Judgment Date11 April 2019
Neutral Citation[2019] HKCFI 852
Year2019
Judgement NumberHCA4073/2002
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA4073A/2002 BAYNARD LTD AND ANOTHER v. SECRETARY FOR JUSTICE AND OTHERS

HCA 4073/2002

[2019] HKCFI 852

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 4073 OF 2002

____________

BETWEEN
BAYNARD LIMITED 1st Plaintiff
GOLDEN ORGANISE LIMITED 2nd Plaintiff
and
SECRETARY FOR JUSTICE 1st Defendant
MA WAI FONG 2nd Defendant
CHU HON CHOW 3rd Defendant

(the 2nd and 3rd defendants representing themselves

and all owners of Tuen Mun Town Lot 238 other than

the plaintiffs and Commercial Ace Limited)

____________

Before: Deputy High Court Judge Paul Lam SC in Chambers
Dates of Hearing: 19 – 20 February 2019
Date of Judgment: 11 April 2019

_______________

JUDGMENT

_______________

A. Introduction

1. The 1stplaintiff (“Baynard”) is the developer (“the Developer”) of the Hong Kong Gold Coast development (“the Development”), situated on Tuen Mun Town Lot No 238 (“the Lot”). The Lot was granted by the Government to Baynard by New Grant No 2607 dated 23 May 1983 (“the New Grant”). The Lot was subsequently partitioned into different sections. By two modification letters executed in 1996 and 1997, the Government agreed to vary the terms of the New Grant in relation to some of the sections by increasing the gross floor areas for residential development which the Developer may build thereon. Pursuant to the additional rights given under the modification letters, the Developer intended to build threemore residential blocks on those sections. However, the plan was met with strong objections from individual owners of units in the residential blocks built on other sections in the Development. They complained that they had not been notified or consulted before the execution of the modification letters. They complained that, if the Developer’s plan is implemented, it would result in the loss of sea view, the loss of a playground as well as otherproblems caused by an increase of population in the Development. Hence, there is a dispute among the Developer, the Government (represented by the 1stdefendant (“SJ”)), and the Individual Owners (represented by the 2nddefendant (“Ma”) and the 3rddefendant pursuant to the decision of Deputy Judge L Chan (as he then was) made on 24 September 2010). For the present purpose, the Individual Owners are taken to include all co-owners of the Lot other than the plaintiffs and Commercial Ace Ltd. The 3rddefendant, however, had not taken part in these proceedings.

2. For reasons that I need not go into, the dispute among the parties is now narrowed down to two ultimate issues: first, whether the modification letters are legally valid; and second, if so, whether the Developer is entitled to amend the Master Plans in relation to the Development without the consent of the Individual Owners.

3. For the purpose of resolving these issues, by a Summons dated 11 August 2017, SJ applied for an order that the following issues be determined under Order 14A of the Rules of the High Court (Cap 4A):

(a) Whether, by the time of the 1996 Modification Letter and the 1997 Modification Letter (“the Modification Letters”), separate Government leases were deemed to have been issued in respect of the sections in which the Individual Owners are interested (ie Sections A1, A2 and B1), such that the Individual Owners held legal estates different from the legal estates of the sections affected by the Modification Letters (ie Sections A3, B2 and B4). (“Issue 1”)

b) Whether SC 7(e) of the New Grant had been severed such thatany amendment to the Master Plans in relation to Sections A3, B2 and B4 does not require the certificate in writing or the consent or the authority of the Individual Owners. (“Issue 2”)

(c) Whether the Individual Owners fall within the meaning of “Purchaser” in SC 7(e) and 22 of the New Grant. (“Issue 3”)

d) Whether, by Section III clauses 1(d), (e) and 3 of the Deed of Mutual Covenant dated 17 August 1990, the Individual Owners have conferred on Baynard the authority to consent, on their behalf, to the Modification Letters, and any amendment of the Master Plans following thereon, or are otherwise precluded from objecting to the Modification Letters or any amendment of the Master Plans following thereon. (“Issue 4”)

(e) Whether there is any “derogation from grant” by the Government by reason of the Modification Letters. (“Issue 5”)

(f) Whether the Individual Owners may properly object to the Modification Letters under the terms of the New Grant on the basis that the additional GFA or the potential GFA could or should have been allocated to the Lot as a whole and should enure to the benefit of, among others, the Individual Owners. (“Issue 6”)

g) Whether the Modification Letters are valid and effective in the sense that the Individual Owners are not entitled to object under the terms of the New Grant. (“Issue 7”)

4. I am satisfied that the determination of the issues in the Order 14A Summons will resolve these proceedings conclusively.

5. Baynard and the 2nd plaintiff, which is its associated company,have advanced two alternative positions in their pleadings. They have now elected to ask the Court to uphold the validity of the Modification Letters, and the Developer’s right to amend the Master Plans without the consent of the Individual Owners. This position is in line with the stance of the Government. In contrast, the Individual Owners, represented by Ma,maintain that the Modification Letters are invalid, and that the Developer is not entitled to amend the Master Plans without their consent.

6. Baynard and the Government need not succeed on all seven issues in the Order 14A Summons. The interplay between the seven issues will become clear when I analyse the individual issues below.

B. Background

7. As mentioned, the Lot was granted by the Government to Baynard by the New Grant. The New Grant contained certain General Conditions (“GC”) and Special Conditions (“SC”). What is in issue is clause 7 of the SC (“SC 7”).

8. SC 7(a) required the grantee, within six months from the date of the grant, to submit, for the approval of the Director of Lands (“the Director”), Master Plans detailing its final proposals for the development of the Lot. The Master Plans had to include, amongst other things, detailed reference to the positions and nature of the buildings proposed, the landscaping proposals for the Lot, and the maximum gross floor area (“GFA”) of each type of building or buildings erected or to be erected. SC 7(b) required the grantee to submit, again for the approval of the Director, Landscape Plans prepared by a qualified landscape architect.

9. Both SC7(a) and (b) required the Master Plans and Landscape Plans to be signed by both the Director and the “Purchaser”; and a signed copy had to be deposited at the District Lands Office, Tuen Mun (“DLO”).

10. Importantly for the present purpose, SC 7(e) states:

“ Except with the prior written consent of the Director, no amendment, alteration or variation will be made to the Master Plans or the Landscape Plans once they have been so depositedin manner hereinbefore mentioned in sub-clauses (a) and (b) ofthis Special Condition provided always that in the case of minoralterations such consent will not be unreasonably withheld. No amendment alteration or variation of the Master Plans or the Landscape Plans shall be valid or binding on the Government or Purchaser unless the same shall have been recorded on the Master Plans or the Landscape Plans deposited in the District Land Office, Tuen Mun and certified in writing thereon by the Director and the Purchaser provided that minor alterations shall be valid and binding on the Government and the Purchaser as soon as they have been approved by the Director. For the purpose of this Special Condition, the opinion of the Director asto what constitutes a ‘minor alteration’ shall be final and binding on the Purchaser.”

11. One of the issues is the meaning of the word “Purchaser” in SC 7(e). It should be noted that the expression “Purchaser” is stated in GC 9 to:

“ … include the person entering and executing this Agreement and where the context so admits or requires his executors, administrators and assigns and in the case of a corporation its successors and assigns”.

12. SC 8(a) requires the grantee to develop and maintain the Lot in accordance with the Conditions, Master Plans, and Landscape Plans.

13. SC 9 provides that the Lot should not be developed or redeveloped except in accordance with the Master Plans and Landscape Plans. It also fixes the density of the residential development by reference to the permitted GFA and site coverage.

14. By SC 21, the grantee was obliged to submit, to the Registrar General for his written approval, a Deed of Mutual Covenant and Management Agreement in respect of the Lot (“DMC”), which is to be entered into between the grantee and its assignees or underlessees. By SC 22, the grantee was obliged to maintain the Lot, its buildings, and structures:

“ The Purchaser to the intent that this obligation shall be binding upon him personally during the whole of the term of the lease hereby agreed to be granted as well as on his successors and assigns, shall … well and sufficiently manage, repair, uphold, support, maintain, pave, purge, scour, cleanse, empty, amend and keep the Lot and all buildings and structures erected or to be erected thereon … in, by and with all and all manner of needful and necessary reparations, cleansings and amendments whatsoever the whole to be done to the satisfaction of the Director.”

15. By SC 23(a)(iv), all assignments or other disposals were required to be made subject to and with the benefit of the DMC.

16. In early 1988, the Master Plans were approved by the Director...

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