YAU FOOK HONG CO LTD AND ANOTHER v. ATTORNEY GENERAL

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. By their Originating Summons issued on 18th July, the Plaintiffs, who, incidentally, were the Applicants in an application for judicial review, the subject of a judgment of mine of 16th July, seek as against the Attorney General a declaration as to the true construction and meaning of the term "registered owners of land exchange entitlements" in two documents - an Application Notice, as appears at pp. 15 and 16 of the Bundle before me, and an Application Form which, standing alone, appears at pp. 17 and 18 of the Bundle before me, (both of which are agreed to be Hong Kong Government documents relating to Sha Tin Town Lot 244) and a declaration as to whether or not the term "registered owners" used in the Application Notice at pp. 15 and 16 to which I have referred, means anything other than absolute owners with title absolute They further seek a declaration that they fell within the true meaning in respect of the Application Form at pp. 17 and 18, and I assume that that true meaning, being governed by the word "said", means the true meaning of registered owners of land exchange entitlements referred to in Prayer 1. I am not concerned with Prayer 4, to which the Crown assents. I shall come to Prayers 5, 6 and 7 in due course.

2. On a date now at long last revealed to me as the 24th February 1984, the Crown invited tenders for Sha Tin Town Lot 244 in the manner set out in my judgment of 16th July, and I do not propose to go over all that history and background again to-day.

3. The Application Notice commenced with these words:-

"Applicants are invited from registered owners of land exchange entitlements giving the owner the right to a grant of building land for the grant in lieu of cash compensation of a lot in Area 24A, Sha Tin, New Territories, ……",

and the Lot is particularised. One of the issues between the parties to-day is this. Does "registered owners of land exchange entitlements" mean only "registered legal owners of land exchange entitlements with an absolute title to the Letters B", or does it, or can it, mean "registered equitable/ legal owners of land exchange entitlements"? It is accepted between the parties that an apparent conflict between paragraphs 2 and 3 of that notice is, in truth, not a conflict, and does not exist. Paragraph 3 reads:-

"The lot will be awarded to the applicant who submits entitlements producing the highest aggregate age of entitlement which will be calculated by multiplying the area by the age of the entitlement calculated in days from the date on which the offer of the land exchange entitlements was made or the operative date as the case may be to 23rd March, 1984.".

That date is of considerable significance. Paragraph 5 reads as follows:-

                "Applications must be:-

Paragraph 6 obliges each applicant to send a cheque for $100,000 with his, her or its application, such cheque to be good for payment up to 1st June, and there follow these words:-

"All cheques will be retained uncashed until the Director of Lands has made a decision on the applications submitted. If an application is accepted the cheque submitted therewith will be treated as a deposit. All other cheques will be returned to the unsuccessful applicants within a period of 21 days from the date specified in paragraph 9 of this Notice.".

A question which has arisen on this Summons is: Is an applicant a person who timeously puts his tender into the box in the entry lobby on the ground floor of Murray Building, and thereupon goes into limbo until. the Director reaches his decision, or does he remain an applicant until one tenderer becomes the Grantee? I use that word advisedly, because paragraph 9 of the Notice reads as follows:-

"         If an application is accepted the successful applicant shall be the Grantee and he will be notified of the acceptance of his application by a letter posted to him .............. not later than the 1st of June.",

and I stress this point; the words are: "the successful applicant shall become the Grantee". Anybody who wishes to tender must fill in an Application Form, that is the document to which I have referred: It is addressed to the Director of Lands. The applicant must identify himself, herself or itself or themselves and it continues:-

"Having read the foregoing Application Notice and the General and Special Conditions of Grant annexed hereto," (now that annexure  is only the General and Special Conditions of Grant, not the Notice)" .......... hereby offer to surrender the following land exchange entitlements giving the owner the right to a grant of building land for the grant of Sha Tin Lot No. 244.";

and what is submitted to me is that that is a clear offer to surrender entitlements for a grant which can only be prospective, and can not freeze at the date when the document is signed; and it is submitted that that must mean that the offer remains open until accepted,and, if there is something in the offer which is capable of perfection before acceptance, it is urged upon me that I must look to the date of acceptance to see whether the offerer holds what in fact he says he holds, namely that which is set out in the columns below. Both columns are also set out in my other judgment, and I do not intend to read them into this judgment.

4. Paragraph 2 of that Form reads as follows:-

"         If my/our Application is accepted, then until the Memorandum of Agreement referred to in paragraph 9 of the Application Notice hereto is singed or executed, this Application together with the written acceptance thereof shall constitute a binding agreement between me/us and the crown.".

There are three notes at page 2, that is page 18 of the Bundle. The third notie, I shall have to repeat here, reads as follows:-

"The applicant must be the registered owner of the land exchange entitlements offered. A beneficial title under a sale and purchase agreement or such other document that does not give an absolute title will not be acceptable as a tender.",

and Mr. Griffiths has laid considerable stress on the word "acceptable" and on the phrase "as a tender", and seeks to equate them timeously with acceptance which, as I know in this case, was 24th May 1984.

5. The first, and possibly, vital submission, because it is a vital step in the change of entitlement, is whether or not in Hong Kong a sale and purchase agreement bestows an equitable title on the proposed purchaser. Mr. Griffiths urges upon me that it does, Mr. Strawbridge that it does not, and that is a point which I shall deal with later in this judgment.

6. The matter is of very considerable importance also in the general construction of the opening words of  the Notice: "registered owners of land exchange entitlement's", because, if those words can be read to include equitable as well as legal ownership, then the entitlement to the Letters B can be made absolute up to the time of the acceptance of the tender by the Director.

7. If I start at the beginning, that would seem to be an appropriate place. To tender, the applicants had to fill up an Application Form, the opening words of which included this phrase "having read the foregoing the Application Notice", which indicates to me that, not only was the Application Notice sent with the Application Form, but that the Applicant was obliged, and was expected, to read it before completing the Form: ......... "having read the foregoing Application Notice": And the opening words of the Application Notice are these: "Applications are invited from registered owners of land exchange entitlements". Those are the words at the beginning, and that is the beginning of this decision. I have to decide whether those words are susceptible of more than one meaning, or whether, on a natural ordinary reading of them in the context of the entire document, those words are confined to ownership in the strict legal sense of the of the word. They are words of general application, set out in a document which does not contain any phrase that indicates to me that they are confined to legal owners as opposed to equitable owners. I am not sitting in The Strands, as on many occasions I have found it necessary to repeat, and I must bear in mind that in matters relating to land, we are over a century behind the rest of the Commonwealth, and that most of the 1925 Law of Property Act does not apply: I keep that in the background and I do not forget it. If the Crown had wished to use restrictive words, it could easily have done so. It did not. It is not as if there were no provision for registration of equitable title, because if there were not, different considerations might apply, and I would be entitled in those circumstances to look outside the document to see if a restrictive meaning were justified; for example, by the absence of such registration. But there is. And in this particular case, the Applicants were the registered owners of an equitable title. The only hint that there may be forece in the Crown's argument to the contrary, lies in paragraph 5(d); but 5(d) relates to the situation after the tender has been proffered, and not to the status of the tenderer at the time of tendering. It is noteworthy in this respect also, that the Application Form itself contains no restrictive words, and there is merely the fifth column in the details of land exchange entitlements which reads: "Office at which land exchange entitlement is registered". That; in my judgment, is merely to assist the Crown in identifying the Letters B, because it is possible, I have been told, to register them in a number of District Offices.

8. That brings me to the second question, which, it is obvious from what I have said, I have decided in favour of the applicants, namely, whether a sale and purchase agreement, which, on its face, and in its essence, is enforceable by specific performance, bestows upon the beneficiary thereunder, an equitable title in that which is the subject of the agreement. In my judgment, such agreement does give to the beneficiary an equitable title in the Letters B. It is clear from the authorities and the textbooks cited to me by Mr. Griffiths that that is so. I shall recite, as an annexure to this judgment, those authorities with the relevant page references, and those textbooks with their relevant pages, but it behoves me I believe to read one short passage from Conveyancing in Hong Kong by Bramwell, at page 231:-

"Letters A and B are legally choses in action and are freely  transferable,",

and the law relating to choses in action is, in my judgment, quite clear. The way I put it to Mr. Griffiths, in the form of the question was this: If there is any beneficial interest at all in these applicants, the Letters B being choses in action, when an enforceable sale and purchase agreement is registered, is the Director of Land, then registering an equitable ownership? His submission was, yes: And all his arguments were woven around that, and I accept them as being correct.

9. The answer to paragraph l of the Originating Summons, therefore, is: "Persons who have a legal or an equitable ownership of land exchange entitlements, which legal or equitable title is duly registered on a form approved by the Director of Lands in the appropriate District Office.".

10. I now pass to the arguments advanced before me on paragraph 2. The case for the Crown is simple and straightforward. It is this: "We have made is quite clear in the Explanatory Statement and the Application Notice that we are not going to consider as part of the tender any title other than an absolute title in law". and the argument goes, "The time to test that was, in this instance, 12.00 noon on the 23rd day of March 1984, by which time, applications had to be placed in the Public Works Tender Box in the entrance lobby on the ground floor of Murray Building, Garden Road.". To look at any other time, urges Mr. Strawbridge, produces uncertainty, and he gave me a number of hair-raising examples of what could happen if there were not certainty at a certain date and a certain time. I do not accept that possible uncertainty is the test. I must look at the whole of the Notice and the Application Form. Paragraph 3 says,

"         The lot will be awarded to the applicant who submits entitlements producing the highest aggregate………………………………………….".

Paragraph 5(d) recites that:-

"Applications must be form persons who are registered owners of Letters B in continuance. Applications from any other person or persons will not be considered. A beneficial title by way of a sale and purchase agreement or such other document that does not give an absolute title will not be acceptable as a tender.".

"Acceptable" relates to acceptance, and acceptance relates to the offer to surrender contained in the Application Form on page 17."Acceptance" appears a little later. Paragraph 6 says:-

"          Applicants must forward with their applications a cheque for $100,000 good for payment up to the 1st day of June, 1984.".

It continues:-

"All cheques will be retained uncashed until the Director of Lands has made a decision on the applications submitted. If an application is accepted the cheque submitted therewith will be treated as a deposit.".

And it continues:-

"All other cheques will be returned to the unsuccessful applicants within a period of 21 days from the date specified in paragraph 9.",

which, again, is the 1st of June, the date also given in paragraph 6. (I do not understand why it does not say "from the date specified above", but that is as may be).

11. The points that I have made on paragraph 5(d) have identical application to Note (3) on the second page of the Application Form.

12. Paragraph 2 says:-

"         If my Application is accepted, then until the Memorandum of Agreement referred to in paragraph 9 of. the Application Notice hereto is signed or executed, this Application together with the written acceptance thereof shall constitute a binding agreement between me and the Crown.".

Paragraph 9 reads:-

"         If an application is accepted the successful applicant shall be the Grantee and he will be notified of his acceptance of his application by a letter posted to him not later than 1st June, 1984.".

What that means, in my judgment, is that, up to the time of the decision referred to in paragraph 6, all tenderers remain "applicants", and the documents they have submitted remain "applications submitted", to use the words of paragraph 6, and "acceptability as a tender" [to take the words from paragraph 5(d)], can mean, in my judgment, only acceptability on the date that the Director of Lands makes "a decision on the applications submitted.". My belief is fortified by the wording of paragraph 9, because that makes it clear beyond peradventure that, at the moment of the decision, at that very moment in time, the successful applicant, ipso facto, becomes "the Grantee", and every other tenderer becomes an "unsuccessful applicant", and their cheques will be dealt with under paragraph 6 in accordance with the sentence I have previously read. In this instance, the matter with which I am dealing is a very useful example. At the moment of putting the tender into the Public Works Tender Box, the applicants were the registered owners of an equitable title in certain Letters B. At that moment in time, they were the unregistered owners of the absolute legal title in those self-same Letters B - that is at the moment of placing the tender into the Box. The assignment was registered on 7th May, whereupon the Plaintiffs here, who were the applicants so far as the Director is concerned, became the registered owners of the legal title in those Letters B and they were possessed of a document that did give an absolute title. It is quite clear from the correspondence that, at the 7th May, the Director had not reached a decision. It is clear from the correspondence that there had been conversations between the Plaintiffs and the Director of Lands, because, at page 57, that appears, albeit in relation to Lot 189 at Sha Tin, (the same date applied to 244), a letter which reads:-

"With reference to the telephone conversation between your G.J. Ongley and the undersigned regarding the difficulties in confirming the titles for various Letters B and we enclose copies of a reassignment and assignment to show the Letters B in question are in fact free of incumbrances and with titles vested properly in the tenderors' names.".

On 14th May, which is page 58, 7 days after the registration of the assignment, the same Mr. Ongley, writing to the Holding Company of these Plaintiffs, said:-

"         I acknowledge receipt of your letter dated 8th May 1984 .and confirm that I am consulting the Registrar General for confirmation of the registered owner(s) of the land exchange entitlements detailed therein as at the closing date for the submission of tenders for the captioned lot.".

What that means is the Director of Land had not reached the decision referred to in paragraph 6 of the Application Notice, and that, therefore, when that letter was sent out, these Plaintiffs were still "applicants", and their application was before the Director, and, as their legal title had been registered on 7th May, the documents to be put before the Director for his decision were not excluded by paragraph 5(d) - because they did not contain "such other document that does not give absolute title". All their documents, therefore, were, and remained at that moment, "acceptable as a tender". The decision, in fact, was reached on 24th May.

13. The answer, then, to paragraph 2 of the Originating Summons is, yes, and there will be a Declaration accordingly.

14. Paragraph 3 poses certain difficulties. As I have said under paragraph 1, "registered owners" in the heading to the Application Notice includes registered owners of equitable titles. That is at the time of submitting the document. In paragraph 5(d), however, where "acceptability as a tender" is concerned, there is no clear-cut yes or no. Note (3) on page 2 of the Application Form itself, that is page 18 of the Bundle, is substantially similar to paragraph 5(d) of the Application Notice. The omission, if it be significant, is of the following words:-

"Applications from any other person or persons will not be considered.".

I must, therefore, answer the question posed in paragraph 3 thus: It does not mean absolute owners with titles absolute at the time when the applicants submit their tender, or for that period of time during which they remain applicants, but it must, and does, mean absolute owners with title absolute at the time when the Director comes to his decision.

15. As I have said paragraph 4 does not require any further comment but I shall certainly record the Crown's acceptance in relation to paragraph 4 when the formal order comes to be drawn.

16. I am left, therefore, with paragraph 5, 6 and 7, on which I will hear Mr. Griffiths.

17. By consent, I will stand over paragraphs 5 and 6 of the originating Summons with liberty to either side to restore on 14 days' notice in writing.

18. There will be an order that the Defendant do nay the Plaintiffs' costs to be taxed if not agreed.

19. If any Taxing Master takes the view that a certificate is needed for two Counsel in open Court, in my opinion, he is wrong. What I think, you may be thinking of, Mr. Griffiths, is where you have two Leaders, then a certificate for three Counsel is an indication to the Taxing Master that he should accede to request to have, for example, a Hong Kong Silk as First Junior to an English Silk.

20. Here, because this is a case where I have a Hong Kong Leader (and not a visiting Leader) and with a Hong Kong Junior, no certificate is needed.