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Fully Profit (Asia) Ltd v The Secretary For Justice For And On Behalf Of The Director Of Lands

Judgment Cited authorities 6 Cited in Precedent Map Related
Vincent
Judgment Date20 April 2011
Year2011
Citation[2011] 3 HKLRD 434
Judgement NumberHCMP82/2010
Subject MatterMiscellaneous Proceedings
CourtHigh Court (Hong Kong)
HCMP82/2010 FULLY PROFIT (ASIA) LTD v. THE SECRETARY FOR JUSTICE for and on behalf of the DIRECTOR OF LANDS

HCMP 82/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 82 OF 2010

____________

IN THE MATTER OF Crown leases for five adjoining lots situated at New Kowloon Inland Lot Number 4036 to 4039 and 3665
and
IN THE MATTER OF the application for re-development on 11th October, 2006 on the New Kowloon Inland Lot Number 4036 to 4039 and 3665

____________

BETWEEN

FULLY PROFIT (ASIA) LIMITED Plaintiff
and
THE SECRETARY FOR JUSTICE
for and on behalf of the DIRECTOR OF LANDS		 Defendant

____________

Before: Deputy High Court Judge Pow, SC in Court

Date of Hearing: 8 March 2011

Date of Judgment: 20 April 2011

______________

J U D G M E N T

______________

Agreed Facts

1. By a memorandum of agreement dated 4 January 1952, the Government agreed to grant New Kowloon Inland Lots Nos. 3665 and 3666 to one Wong Kam Kwong. The terms of the agreement were embodied in a document called “Conditions of Exchange”.

2. Under General condition No. 6(b) of the Conditions of Exchange it was provided that:

“(b) The lessee of the new lots shall execute and take up Crown Leases for the new lots when called upon to do so by the Land Officer. … In the event of more than one building being erected on the said lots the lessee may be required to take up separate leases for the site of each separate building and shall pay the Land Officer the prescribed fee for every additional leases so required to be taken up.”

3. Further, under Special Condition No. 6 of Conditions of Exchange it was provided that:

“(6) Not more than 20 houses shall be erected on N.K.I.L. No. 3665 ...”

4. Building plans for the proposed buildings on N.K.I.L. No. 3665 were subsequently submitted to the Building Authority. On 1 May 1952, the Building Authority approved building plans of “8 dwelling houses” at Nam Kok Road on N.K.I.L. No. 3665. On 9 July 1952, the Building Authority approved building plans of “12 tenement houses” on N.K.I.L. No. 3665 at Nam Kok Road.

5. In about October 1952, 20 “Chinese type houses” were erected on N.K.I.L. No. 3665. This was evidenced by 2 occupation permits dated 2 October 1952 and 10 October 1952 granting permission to occupy “eight Chinese type houses at Nos. 59-73 Nam Kok Road on N.K.I.L. 3665” and “twelve Chinese type houses at Nam Kok Road on N.K.I.L. 3665” respectively.

6. According to the approved building plans, the 20 “Chinese type houses” then erected were a row of town houses, each house or building had 5 storeys, viz. the ground floor, cockloft, 1st, 2nd and 3rd floor and a flat roof on top of the 3rd floor. Access to the ground floor was directly from Nam Kok Road, with a back door opening into the service land running behind the row of town houses. Access to the upper floors (including the cocklofts) was via a flight of staircases running from Nam Kok Road right through to the roof which was to be shared by 2 adjacent town houses. With the exception of the cockloft, each floor would have its own bathroom so that each floor could be used as a separate dwelling.

7. By a memo dated 17 October 1952, the Director of Public Works certified that the “B.C.” (i.e. the building covenant, General Condition No. 7(a) of the Conditions of Exchange) of N.K.I.L. No. 3665 had been fulfilled.

8. A certificate of compliance in respect of N.K.I.L. No. 3665 was issued by the Director of Public Works on 9 June 1959. As seen from the certificate of compliance, the original N.K.I.L. No. 3665 had already been sub-divided into 20 smaller lots, viz. the new N.K.I.L. No. 3665 and N.K.I.L. Nos. 4032 to 4050.

9. Between 1 March 1960 and 2 October 1969, the owner of each of the 20 sub-divided lots was granted a formal Government lease. Inthe present proceedings, the Court is to consider the Government leases of N.K.I.L. Nos. 4036, 4037, 4038, 4039 and 3665 only (“the Land”). The Crown leases of N.K.I.L. Nos. 4036, 4037, 4038, 4039 and 3665 were granted on 14 October 1965, 2 October 1969, 2 February 1966, 9 August 1965 and 11 September 1965 respectively.

10. In April 2000, the Director of Lands issued Practice Note Issue No. 3/2000 “to assist the developers and concerned parties in preparing building plan submissions for developments which are subject to a restriction in the government lease or land grant on the number of houses which may be erected on the affected land.”

11. Since about 2006, the owner of the Land has intended to redevelop the 5 houses erected on the Land. By a letter of appointment dated 1 October 2006, Sino Plan Corporation Limited (“Sino Plan”) duly appointed Fully Profit (Asia) Limited (“Fully Profit”) as the authorised developer for and on behalf of Sino Plan in the proposed redevelopment of the Land.

12. Building plans for the redevelopment of the Land (“the Redevelopment Plans”) were submitted by A & B Design Consultants Limited (“A & B”) through the “Centralised Processing System” in about October 2006. The Redevelopment Plans were received by the Buildings Department (“BD”) and the District Lands Office/Kowloon East of the Lands Department (“DLO/KE”)on 11 October 2006 and 18 October 2006 respectively.

13. As revealed from the Redevelopment Plans, Fully Profit intends to replace the 5 existing houses by one composite multi-storey building with some 26 storeys. The composite building will straddle across all 5 lots of the Land. The ground floor of the building is to be occupied by 2 shops each having direct entrance from Nam Kok Road and another small back door opening to the service lane. Entrance to the upper residential floors is gained from Nam Kok Road through a separate entrance and a corridor leading to the lift hall and staircases on ground floor. There is also another flight of back staircases serving all the upper floors opening into the service lane. The said corridor separates the 2 shops so that there is no direct access from one shop to the other without passing through Nam Kok Road or the service lane.

14. On 6 December 2006, BD approved the Redevelopment Plans.

15. By a letter dated 12 June 2007 from DLO/KE to A & B, DLO/KE rejected the Redevelopment Plans on the grounds that there would be breached of 3 covenants in the Government leases of the Land.

16. Correspondence between the representatives of Fully Profit on one part and DLO/KE on the other part ensued. In the correspondence parties exchanged their views on the proper interpretation of the 3 covenants of the Government leases in question. Ultimately, the only outstanding issue is whether the proposed development as envisaged under the Redevelopment Plans would be in breach of the following covenant of the Government leases of the Land:

“AND will not erect or allow to be erected more than one house on the demised premises …” (for N.K.I.L. Nos. 4036, 4038, 4039 and 3665)

“AND will not erect or allow to be erected more than one house on the said piece or parcel of ground …” (for N.K.I.L. No. 4037)

17. The position of DLO/KE is that the proposed development under the Redevelopment Plans would be in breach of the said covenants of the Government leases of the Land. “DLO/KE has taken such stance for two reasons. First, it is the contention of DLO/KE that upon proper construction, the covenants only allow the erection of one house on each of the 5 lots comprising the Land, no more and no less, and a proposed development straddling across all 5 lots is not permissible. Secondly, it is the contention of DLO/KE that the composite multi-storey building proposed to be developed by the Plaintiff does not fall within the meaning of a “house”.” DLO/KE contends that lease modification of the Government leases is required to implement the proposed development. The position of Fully Profit is that the proposed development would not be in breach of the said covenants and that no lease modification is required.

18. The facts set out in paragraphs 1 to 17 above are taken from a Statement of Agreed Facts filed by the parties. At the hearing, the Defendant filed and sought to rely on a Supplemental Affirmation of Leung Kam Wing. This was not opposed by the Plaintiff. The purport of this Supplemental Affirmation was to show that the Land was subject to height restrictions due to the presence of the Kai Tak Airport. The said height restrictions were imposed according to the Hong Kong Airport (Control of Obstructions) Order of 1957 (“the Airport Order”). The Chinese type houses sitting on the Land were within the said height restrictions. However, the proposed building intended to be erected on the Land by the Plaintiff would clearly exceed the height limit. The Defendant argued that although the said height restrictions were subsequently lifted following the removal of the airport, the existence of such restrictions as from 1957 was part of the factual matrix that the court may wish to take into account in the construction of the relevant Crown leases.

19. It can be noted that the Airport Order was promulgated in 1957. It therefore sits between the period when the Director of Public Works first certified that the “B.C.” of N.K.I.L. No. 3665 had been fulfilled and the time when a certificate of compliance in respect of N.K.I.L. No. 3665 was issued. Certainly, by the time the relevant Crown leases were executed and granted, these height restrictions were there. The Plaintiff did not seek to dispute that, it simply questioned the relevance of this factor in the construction exercise.

The Originating Summons

20. In the Originating Summons filed on 12th January 2010, the Plaintiff sought a declaration in the following terms:-

“Declaration that the covenants in the Crown leases of...

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