CAVENDISH PROPERTY DEVELOPMENT LTD v. ATTORNEY GENERAL

1987 M.P. No. 762

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. In early 1979, the plaintiff obtained a Crown grant of an Aberdeen lot. Some five years later in 1984, a 26-storeyed building, the Cavendish Centre, was completed on the site. In July the same year, six Lower Ground Floors LG2 - LG7 of approximately 115,289 square feet together with the flat roof and 16 car parking spaces on Lower Ground Floor LG1 were let to Bank of America National Trust & Savings Association by the plaintiff for 20 years.

2. In essence, the District Lands Officer, Hong Kong South complains of the use by the plaintiff's tenant (hereinafter referred to as "Bank of America") of the said leased premises as a data processing centre for banking in contravention of Special Conditions Nos. (8)(a) and (9)(a) of the Conditions of Sale of the plaintiff's said Crown grant. Action has been threatened against the plaintiff.

3. Special Condition (9)(a) specifies the type of building to be erected. It is only Special Condition (8)(a) which regulates user. In fact, upon completion of Cavendish Centre in 1984, the Director of Lands certified that all the positive Crown covenants to be performed or observed by the plaintiff in respect to the said Aberdeen site had been wholly complied with.

4. The complaint of the District Lands Officer is therfore one of alleged contravention of the permitted user with reference to Special Condition (8)(a) and, insofar as it is relevant, also Special Condition (9)(a). The complaint may be shortly stated thus : the plaintiff's tenant, the Bank of America has been and still is using the leased premises for a purpose "other than for industrial or godown purposes or both".

5. By the instant Originating Summons the plaintiff seeks declarations to the effect that there has been no such contravention in the use of LG2 to LG7 of Cavendish Centre. But to all intents and purposes, the declarations sought encompass the entire leased premises of Bank of America. These two declarations in the prayer relate, one specifically to user and the other to purposes. In effect, the plaintiff wishes to have declared lawful the use to which the premises let to Bank of America in Cavendish Centre has been put or the purposes for which the same premises have been used.

6. The two declaration are couched in these terms : the use of those premises "as a data processing centre for banking is not a contravention of the said Conditions" and/or that the use of them "for the purposes of record and data storage, data processing and ancillary offices is not a contravention of the said Conditions. "

7. With reference to Special Condition (8)(a) evidently these proceedings fall to be decided by the purposes for which the Bank of America premises have been used. In the course of these proceedings, "purposes" and "use" have been used interchangeably more or less as synonyms. They are not and should not be so regarded for Special Condition (8)(a) which is concerned with "purposes" as reflected by, inter alia, user.

8. Even on the plaintiff's contention, it is reasonably clear that the purpose for which the Bank of America premises have been used is one of "a data processing centre for banking" and that the specific uses to which the same premises have been put are "record and data storage, data processing" together with "ancillary offices" and facilities.

9. Bank of America as an international institution formerly ran nine Data Processing Centres throughout Asia and one small centre in the Bank of America Tower, Hong Kong. All these have now been replaced by the Regional Centre in the premises of Bank of America at Aberdeen. It would be unworthy of Bank of' America to have laid claim to ten miniature godowns all over Asia in the not too distant past. Such a claim could hardly be sustainable by the ordinary concept or meaning of "godown". However, the law is not always a logical creature, and I should endeavour to be receptive to Counsel's submissions with at least suppressed bias.

10. Apart from ancillary offices and other facilities, the data processing centre as a Regional Centre at Aberdeen carries out the following functions and provides the following services as described in the affidavit of Mr David Lee filed herein on the 20th May 1988 :

11. The purpose for which the premises of Bank of America have been used is that of a Regional Data Procesing Centre for Banking. Information and items are stored, some of which are retained or housed so that they may be consently recalled for instant use. Some, like unused old data and files are being stored away In the true sense of the word "storage". In the Regional Centre, vital processing activities continue on a 4-shifts, round-the-clock basis. Messages temporarily received are kept on discs to be ultimately transferred onto tapes for permanent retention. After such reception and processing of record and data, the same are tiredlessly revised and updated ready for use. Computer printer-out services are also provided on the premises. There are other operations of various types being carried on at the Aberdeen premises, ancillary or subsidiary to the running of such a Regional Centre. I so formally find. I cannot accept that the overall user of these premises is one of information storage as suggested by Mr Tang.

12. The various functions and services as described in Mr David Lee's said affidavit are said to be for or ordinarily incidental to "a data processing centre for banking". I need merely to ascertain, having regard to these functions and services, whether the purpose of such a Regional Centre falls within the "industrial or godown purposes" of Special Condition (8)(a) read in conjunction with Special Condition (9)(a).

13. I will first deal with "godown purposes". Special Condition (8)(a) requires the Cavendish Centre to be used for the purposes of a godown. As a starting point, it would be convenient to refer to the dictionary definition. But, as an American judge, Judge Hand stated the obvious in Cabell v. Markham [1945] 148F.(2nd)737/739; S.CT.193 at page 195 : "One ought not to make a fortress out of the dictionary. " The Shorter Oxford Dictionary defines the word "godown" as "a warehouse or store for goods in the East. " Mr Hinchen for the Attorney General suggested that whilst "warehouse" is given as a word bearing an analogous meaning to that of "godown", the remainder of the definition merely describes its general function as "a store for goods". Mr Hinchen contended that the latter descriptive meaning is largely explanatory : whilst every godown is a store for goods, the reverse is not true because not every store for goods is necessarily a godown. The Concise Oxford Dictionary seems to lend support to Mr Hinchen's suggestion. It defines "godown" as a "warehouse in parts of East Asia, especially in India. [from Portugal, gudao, from Malay godong, gadong, perh. from Telugu gidangi, place where goods lie (kidu lie)]." A "place where goods lie" lacks precision and is clearly only descriptive.

14. Mr Tang invited this Court to attribute to "godown" these two meanings, as given by the Shorter Oxford Dictionary, in equal prominence. Mere storage of goods, so Counsel maintained, would be a user for godown purposes.

15. When one turns to the definition given in the Oxford English Dictionary, "godown" is defined also as "a warehouse or store for goods in India and other parts of Eastern Asia." Some of the sources for reference given are : "1615 R. Cocks Diary (Hakl. Soc.)I. 15 We delivered: 500 sackes of wheat .. 440 out of our gedong ....... 1816 Bp. G. Smith Ten Weeks Japan xviii. 254 The streets of Yokuhama are wide ....... containing on either side merchants' godowns and offices. 1978 J.H. Gray China II. xix 69 There are khans which are depots or godwons for the goods of travelling merchants". In the Oxford English Dictionary, "godown" is thus described as "a store for goods" with emphasis on merchandise to highlight a more transient nature of the deposit.

16. In this part of the world, we all know what a godown is when we see one. It is like Lord Justice Lawton's elephant, having "the elephantine quality of being easy to recognise" but not very easy to define. See Maxwell v. Department of Trade, [1974]1 Qb 523, 539 Letters D/E. Having regard to the dictionary definitions and judged by its ordinary meaning, a godown is a place where at least movement of the stored items would be expected. The Regional Centre at Aberdeen serves as the memory of the bank, here and overseas; information retained may be lost or put to use externally but it never leaves. One would also not find in a godown processing activities such as those conducted in the suit premises : reception of impulses, recording of them on discs, transformation of them into a storable form on tapes, revision and updating of the retained information, constant recalls for immediate use, print-outs etc. I need go no further than to give a running commentary on the cited authorities in deference to the counsel's detailed submissions.

17. I whole-heartedly adopted the sentiments of Deputy High Court Judge Cruden in Mexx Consolidated (Far East) Ltd. v. Attorney General [1987] H.K.L.R. 1210 at page 1215 I - J : Authorities on words are "helpful in varying degrees but each suffered from the disadvantage that the courts were generally concerned with the statutory meaning of those words in relation to the particular legislation of which they formed part. " Counsel were content to be guided by the "purposes" for which any premises under consideration have been used, and I need express no concluded view on the "primary user" test adopted in Mexx. Moreover, the purpose of "a data processing centre for banking" here is readily ascertainable on affidavit evidence without having to resort to any particular test.

18. I was taken through Calcaria Construction Companies (York) Ltd. v. Secretary of State for the Enviornment (1974) 72 L.G.R. 398 for the meaning of a "warehouse". In his judgment, O'Connor, J. commented :

"The ordinary meaning of 'warehouse' which I quoted from the dictionary is supported in cases, at which I need not look, under the Workman's Compensation Acts; these all tend to show that where the word 'warehouse' is used, the main function of the building is intended to be for storage, and, of course, distribution from the building. The building is not intended to be a store where goods stay for ever : they come in and they go out. There is a distinction between the word 'repository,' ...... and 'warehouse', a repository really being where someone else's goods are stored and the sole purpose of the activity is the storage of goods, whereas a warehouse may or may not involve storing somebody else's goods; certainly 'warehouse' is wide enough in everyday use for the storage of the owner's own goods and the distribution of goods from that warehouse."

19. In Green v. Britten & Gilson [1904]1 K.B. 350, acknowledging there being no definition of "warehouse either in the Workmen's Compensation Act or in the Factory Act, counsel conceded at page 352 : "It must, therefore, be construed in its ordinary and popular signification". At page 354 Collins M.R. had this to say :

"It is exceedingly difficult, having regard to the various decisions, to draw the line between what is a warehouse and what is not. The decisions of this Court have gone a long way, and have excluded certain lines of definition. It cannot be contended that the word 'warehouse' is limited to a place which is physically connected with a dock or with water, nor to a place where the public have a right to have their goods stored upon payment of rent; the word has been applied to places where by a particular owner for the storage of his own goods only and having no connection with water or with water transit. "

20. Mr Tang invited the Court to deduce from the last observation that storage is the only true touchstone of a warehouse or godown.

21. Green v. Britten & Gillson laid stress on the nature of the storage and associated a warehouse with storage for wholesale trade. Ownership of the stored goods was held irrelevant. The decision cast away the public and dock element in a warehouse. Whilst the Master of the Rolls took the view that if the place was "ancillary to wholesale business, it (was) a warehouse" and if it was "ancillary to the retail business, it was not", the ratio decidendi was that "as far as the wholesale trade was concerned, (the place) fulfilled all the ordinary purposes of a warehouse". (Emphasis added) ibid p. 355 and p. 354. At page 356, Collins M.R. embraced an outline given of such ordinary purposes : "It involves the idea of a place normally of considerable size, mainly used for the storage of goods in bulk or in large quantities, and in which consequently the dangers incident to the handling of goods in bulk or in large quantities might naturally arise".

22. At page 357, Mathew L.J. was drawn to the significance in the exit of goods which were, in the course of a godown business, "delivered out as required for conveyance to purchasers". It is of interest to note that Cozens-Hardy L.J. harboured some doubt but not enough for a dissent.

23. These three judges came face to face with the same word in less than two years in Buckingham v. Mayor, 6 C., of Fulham (1905)53 W.R. 628 (a fuller report appears in 21 TLR 511.) At p. 512, the Master of the Rolls reminded us that storing of goods for sale is an ordinary incident of a warehouse :

"It was a short question of fact, and they were told upon the highest authority that the words in this Act were to be construed in the ordinary sense in which the man in the street would be disposed to understand them ..... prima facie, misdirection arose from the passage in the judgment when the judge said that 'the yard was not used for the purpose of storing goods for sale.' That, however, was only a general description, in which he negatived one element which might make a place a 'warehouse'. It was negativing one of the ordinary incidents of a warehouse, and it helped to assist the Judge in coming to the decision, but it was never intended to be in any sense an exhaustive definition."

24. Lord Justice Mathew called attention to the notion of "the man in the street" and storage "for the purpose of sale".

25. To Lord Justice Cozens-Hardy, the word "warehouse" seemed "to involve the idea of a place where goods were stored for sale or at least for some other commercial purpose. "

26. Indeed, as Judge Wightman Wood summed up in Hunt v. Grantham Co-operative Society [1902] L.T. 364 :

"I think it is necessary to draw a distinction between a building the main purpose of which is the warehousing of goods, and a room, cellar, or loft used for storing goods where such storage is ancillary only to the business carried on in the main portion of the premises. In ordinary parlance the former is spoken of as a warehouse, and the latter as a store-room."

27. No exhaustive list of the ordinary purposes or incidents of a warehouse was attempted to be given in these cases. But storage of goods in a godown has attendant consequences, e.g. transient deposit, storage for the purpose of sale or delivery or for some other commercial purpose, of goods either of your own on your customer's. It is quite unnecessary to examine all these ordinary incidents. What seems reasonably clear is that mere storage cannot be the test for a warehouse.

28. Mr Tang argued that the information stored in the computers is frequently transmitted out of the premises, but as a matter of fact such data never leave the Cavendish Centre. It is only that use is continually made of them outside the Bank of America premises by transmission. The items and information kept in Cavendish Centre are meant for self-use and are not marketable materials.

29. The meaning of "warehouse" does not really take the matter any further. I also do not derive much assistance from the authorities on "repository" see Horwitz v. Rowson [1960] 1 W.L.R. 803 at page 810 per Havers, J.; G. Percy Trentham Ltd. v. Gloucestershire County Council [1966]1 W.L.R. 506 at page 512 per Lord Denning M.R.; Newbury District Council v. Environment Secretary [1981] A.C. 578 at p. 584 Letter A and p. 596 Letters C - D.

30. In my view, storage without more is not user for godown or warehouse purposes. Furthermore, the various operations conducted in the Regional Data Processing Centre at Aberdeen do not seem to be consistent with the ordinary incidents of a godown. No one would speak of this Regional Centre as a godown; nor can it be said to be used for godown purposes.

31. Mr Tang, Counsel for the plaintiff, further contended that the premises in these proceedings have been and are still being used for industrial purposes. Counsel relied on the last sentence in paragarph 11(b) of Mr David Lee's said affadavit :

"Besides teaching the branch personnel how to use their computerswhich are linked to the computers at the premises, they also interpret the branch personnel's requirements and try out new programmes on the computers at the premises."

32. I accept as the correct view the one shared by Deputy High Court Judge Cruden, in Mexx Consolidated (Far East) Ltd. v. Attorney General [1987] H.K.L.R. 1210 at page 1218 G. and Mr Justice Havers in Horwitz v. Rowson [1960] 1 W.L.R. 803 at the bottom of page 809: "industrial purposes ........ involves a manufacturing process"; "the main test, really, for considering whether building is an industrial building is whether there is any process carried on therein for or incidental to the making of any article or part of an article. "

33. Mr Tang leaned heavily on the proposition of Graham, J. in Burroughs Coporation (Perkins') [1974] R.P.C. 147 that a new computer programme could be a manufactured product. However, at page 158 lines 25-30, the learned Judge distinguished "a method ... purely as the conception of an idea .... (thus) is merely intellectual information" and a "method results in a new machine or process or an old machine giving a new and improved result". Only the latter was regarded by Graham, J. as a manufactured product capable of being patented.

34. Even assuming that an analogy may properly be drawn from the meaning of a manufactured product in patent law, information given in paragraph 11(b) of Mr Lee's said affadavit lacks particulars. It refers merely to the trying out of new programmes without describing what these efforts are. It is not known how frequently new programmes are being attempted or tested, whether it is a laboratory where designs of new programmes are being experimented with or a work-place where new programmes are in fact being created, what the success rate of "manufacture" is, how much is being produced, what purpose or functions they serve, what improvement they bring about or whether and to what extent these claimed manufactured products form an integral part of the operations of Bank of America at Cavendish Centre.

35. Counsel referred to the Schedule of Areas, exhibited as "LCVD-12" to the supplemental affidavit of Mr David Lee. It shows 9,634 square feet out of the total LG6 floor area of 19,415 square feet as being used for these activities. It does not state how much, by way of percentage, of this 9,634 square feet is being used for trying out these new programmes. The area of LG2 to LG7 alone is 115,289 square feet. For all these reasons, the claimed industrial use or use for industrial purposes also fails.

36. Consequently, I refuse the prayer for the declarations in the plaintiff's Originating Summons with costs to the defendant.