MEMORIAL PARK HONG KONG LTD v. SECRETARY FOR JUSTICE

HCMP 2609/2010

[2018] HKCFI 2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2609 OF 2010

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J U D G M E N T

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I.  INTRODUCTION

1.  The dispute in the present proceedings is (a) whether the owner/operator of a private columbarium on leased government land lots in the New Territories is in breach of the lease conditions (which essentially turned on whether unauthorised deposit of human ashes resulting from cremation on such leased government land lots is prohibited), and (b) whether the government has abandoned the lease conditions that prohibited the deposit of human ashes.

2.  The plaintiff (“P”) is the registered owner of Lot No 640 in DD 176 (“Lot 640”) and the Remaining Portion of Lot No 646 in DD 176 (“Lot 644RP”), Sha Tin, New Territories, Hong Kong (“Subject Lots”).

3.  The government sold Lot 640 as a building lot by public auction on 21 October 1941 subject to inter alia General Conditions in Gazette Notice No 364 of 1934 (“GN 364”) and Special Conditions (“SCs”) 2(a), 2(b) and 3. The government sold Lot 644 in DD 176 (“Lot 644”) as a garden lot by public auction on 9 September 1949 subject to inter alia GN 364 as amended by Gazette Notice No 50 of 1940 and SC 1(a). Lots 640 and 644 were respectively demised pursuant to New Grants 7632 and 7816 (“New Grants”), but the New Grants cannot be located by either the government or P.

4.  When P acquired the Subject Lots together with some other land lots from their respective predecessor-in-title in 2006, a building straddling the Subject Lots (“Building”) already existed. In 2008, P carried out certain works to the Building[1] and installed about 3,300 niches therein. Since 2009 or thereabouts, the government and P began to have dispute as to whether P has acted in breach of the lease conditions in respect of the Subject Lots.

5.  On 29 December 2010, P commenced the present proceedings by originating summons against the Secretary for Justice (“D”). On 24 June 2011, Sakhrani J ordered the present proceedings be continued as if begun by writ with directions for filing of pleadings. On 13 June 2017, Registrar K W Lung granted leave to set the present proceedings down for trial. A number of matters are agreed:

(a)  no expert evidence shall be adduced at trial;[2]

(b)  there shall be no discovery of documents;[3]

(c)  the affidavits/affirmations filed by the parties shall stand as witness statements as to fact, and (subject to any order of the court) the deponents/affirmants shall not be subject to cross- examination and need not attend trial;[4] and

(d)  the facts and matters in paragraphs 2-4 above are undisputed and agreed.[5]

II.  RELEVANT LEASE CONDITIONS

6.  General condition (“GN”) 8 of GN 364 (“GN 8”) provides that when the conditions of grant are complied with to the satisfaction of the District Officer, the purchaser is entitled to a lease incorporating the terms contained in Schedule B. Clause 7(5) of Schedule B of GN 364 (“Clause 7(5)”) provides that:

“That without the consent of His said Majesty signified in writing by the Governor of the said Colony or other person duly authorized in that behalf, no grave shall be made on, nor shall any human remains be interred in, or deposited on the said premises.”

7.  GN 15 of GN 364 (“GN15”) provides as follows:

“Without the consent of the District Officer, no grave shall be made on, nor shall any human remains be interred in, or deposited on the lot sold either in earthenware jars or otherwise.”

8.  GC 16 of GN364 (“GN 16”) provides as follows:

“The Purchaser, his executors, administrators or permitted assigns shall not, except by way of mortgage, assign, underlet or part with the possession of or otherwise dispose of the lot or any part thereof or any interest therein nor enter into any agreement so to do, without the previous consent in writing of the District Officer, unless and until the District Officer shall have issued a certificate to the effect that the building condition, if any, has been fulfilled to his satisfaction or if there is no building condition, that the lot has been developed to his satisfaction.”

9.  SC 1(a) provides as follows:

“No buildings of any description shall be erected on the lot.”

10.  SC 3 provides as follows:

“No addition or alteration to any building erected on the lot in accordance with these conditions shall be made until plans which comply with Special Condition 2 hereof have been submitted and approved by the District Officer but such plans need not be prepared by an authorized architect unless the alteration or addition is such as to render the whole building a new building with the definitions contained in Section 6(39) of the Public health and Buildings Ordinance, 1903, or unless such addition or alteration involves the use of reinforced concrete.”

III.  P’s AND D’s RESPECTIVE STANCE

11.  The present dispute arose in 2008 when there were complaints and enquiries from the public as to the intended operation of a columbarium on the Subject Lots.

12.  D claimed that since about 2008 P has used the Subject Lots and has allowed them to be used as a private commercial columbarium operating under the name of “Memorial Park” (“孝思園”) for placing of urns containing human ashes, and P has offered niches for “sale” and has sold them individually to the general public for the placing of articles of their ancestors or deceased family members, in particular the ashes of such deceased persons after cremation.

13.  P by the affirmation of its director Leung Kam Ho Gilbert (“Leung”) filed on 25 January 2011 (“Leung Aff”) has admitted as much. Leung has confirmed that the installed niches of the renovated Building were offered for sale individually to the general public for the placing of articles of their ancestors or deceased family members. These articles may be ashes of such deceased persons after cremation, clothing and/or personal belongings of such deceased persons for memorial purpose. Thus, the items which a customer may place in the niches may or may not include ashes after cremation of the customer’s ancestors or deceased family members. Provided that the customers place lawful items in memory of their ancestors or deceased family members, P will not impose any restriction on its customers as to what to store in the niches (as reflected in P’s standard form contract with its customers for their use and/or “rental” of the niches, and in P’s advertisement of “Memorial Park” as a columbarium with price list for niches).

14.  P claims that upon a true and proper construction, GN 15 does not prohibit the deposit of ashes resulting from cremation of human remains on the Subject Lots.

15.  D disputes P’s claim, and avers that on the true and proper construction of GC 15 and/or Clause 7(5), “human remains” encompass ashes resulting from human cremation. D further pleads P has acted and is still acting in breach of (a) GC 15 and/or Clause 7(5) and also GC 16 in respect of the Subject Lots, (b) SC 1(a) in respect of Lot 644RP, and (c) SC 3 in respect of Lot 640.

16.  By its Amended Statement of Claim, P seeks a declaration to the effect in paragraph 14 above. Alternatively, if upon a true and proper construction, GN 15 prohibits the deposit of ashes resulting from human cremation on the Subject Lots, P seeks a declaration that it is entitled to deposit such ashes on the Subject Lots because the government has in the past abandoned (a) the enforcement of GC 15 insofar as the prohibition of interment or deposit of ashes resulting from human cremation is concerned, and (b) the enforcement of similar lease conditions for land lots in the New Territories insofar as prohibition of interment or deposit of ashes resulting from human cremation is concerned.

17.  By her counterclaim, D seeks (a) declarations that (i) P has acted and is acting in breach of GC 15 and/or Clause 7(5) in respect of the Subject Lots, (ii) P has acted and is acting in breach of GC 16 in respect of the Subject Lots, (iii) P is in breach of SC 1(a) in respect of Lot 644RP and (iv) P is in breach of SC 3 in respect of Lot 640, (b) an order that P do forthwith remove from the Subject Lots all human remains, including all cremated ashes, and take all necessary steps to refund all monies to its customers, and (c) an order that P do forthwith cease the sale or advertisement of the sale of niches whether for the storage of cremated ashes on the Subject Lots or otherwise.

IV.  GC 15 AND CLAUSE 7(5)

18.  In Regal Shining Ltd v Secretary for Justice (on behalf of the Director of the Lands Department and the Town Planning Board) (“Regal Shining (CA)”),[6] the Court of Appeal squarely addressed the question of whether “human remains” in GC 15 and Clause 7(5) cover ashes resulting from cremation. Here, Mr Yip, counsel for P, accepted Regal Shining (CA) is “binding on this Court” subject to qualification by reference to section 3 of the Cremation and Gardens of Remembrance Regulations Cap 132M (“Cap 132M”) (see paragraph 21 below), but at the trial Mr Yip has withdrawn such qualification and has unequivocally accepted Regal Shining (CA) is binding on this court.

19.  In Regal Shining (CA), a piece of New Territories land was used as a columbarium with niches for storage of human ashes after cremation. GC 15 was incorporated into the relevant government lease, and Clause 7(5) was similarly applicable. At first instance, Anthony Chan J held that such use of the land was in breach of GC 15 and Clause 7(5) as “human remains” included ashes resulting from cremation (“Regal Shining (CFI)”).[7] Such decision was upheld by the Court of Appeal in Regal Shining (CA).

20.  The following analysis and findings in Regal Shining (CA) are of note:

(a)  in ordinary parlance, “human remains” is wide enough to include ashes of cremated bodies or skeletons (see also meaning of “ashes” in New Shorter Oxford English Dictionary which includes “that which remains of a human body after cremation”);

(b)  CG 15 was incorporated into the relevant government lease in 1953, and the relevant context for construction of GC 15 should be the prevalent circumstances when the government lease was issued in 1953;

(c)  Hong Kong being a small territory, there is no reasonable basis to suggest the possibility of cremation being practised in the New Territories can be ruled out completely, and it cannot be said a reasonable person with knowledge of the background in 1953 will have understood “human remains” in GC 15 as excluding cremated ashes;

(d)  the second limb of GC 15 (ie “nor shall any human remains be interred in, or deposited”) refers to situations other than graves, and there is no reason why “human remains” in such limb should be confined to human bodies or bones which are usually found in graves; and

(e)  whilst the immediate concern of the government in 1911 (ie when GC 15 was initially drafted) was not a columbarium, the adverse impact to the neighbourhood due to the presence of a resting place for the dead is beyond dispute and there is no substantial difference between a columbarium and a grave, so there is no qualitative distinction in terms of the adverse effect on the neighbourhood from a social and land-use control point of view.

21.  The only point made by Mr Yip in his written submissions is that Regal Shining (CA) does not refer to the definition of “human remains” in Section 3 of Cap 132M, ie “the dead body of any human being or any still-born child, but does not include ashes resulting from the cremation thereof”. Mr Yip suggests that had the Court of Appeal been referred to such definition of “human remains”, the conclusion in Regal Shining (CA) would have been different as there is no reason why “human remains” in CG 15 should be different from the definition in the statutory context that regulates cremation and gardens of remembrance.

22.  Mr Yip’s written submissions suggests that on such basis the approach/construction adopted by the Court of Appeal in Regal Shining (CA) is flawed, and it is desirable if this court “could have another opportunity to re-consider the issue with the assistance of having in mind the definition of “human remains” as define in statute” and conclude P has not been acting in breach of GC15 and Clause 7(5).

23.  Upon query by this court at trial, Mr Yip eventually concedes that even if the Court of Appeal’s decision in Regal Shining (CA) were flawed for the reason he has suggested, the ratio in such Court of Appeal decision is still binding on this court, and it is not for this court, who must remain loyal to such ratio, to say it has been made per incuriam. For good measure, Mr Chan SC,[8] counsel for D, who is junior counsel for the defendant in Regal Shining (CFI), has confirmed that the definition of “human remains” in Cap 132M has been canvassed at trial before Anthony Chan J,[9] but such definition has not dissuaded the learned judge from concluding “human remains” include ashes resulting from human cremation for the purpose of GC 15, and Regal Shining (CA) shows that the plaintiff/appellant has not raised this point again on appeal.

24.  In light of Mr Yip’s concession on P’s behalf in the above paragraph, it is unnecessary for this court to go further to consider the definition of “human remains” in Cap 132M. However, I can see the force of the countervailing arguments by Mr Chan SC which I summarise below:

(a)  the Court cannot derive any (or at best limited) assistance by comparing provisions made at different times and for different purposes, especially in comparing a lease provision (which is contractual in nature) and a statutory provision due to the plainly different contexts in which the words are used;

(b)  Cap 132M was enacted in 1974 pursuant to the Public Health and Municipal Services Ordinance Cap 132, which makes provision for public health and municipal services, including the disposal of the dead,[10] so Cap 132M, which substantially post-dates GC 15, cannot be taken as part of the interpretative context against which to consider GC 15 (see paragraph 20(b) above),[11] and cannot be used to ascertain the true intention prevailing at the time when the sale was concluded as to meaning and scope of GC 15;

(c)  Cap 132M specifically provides for regulation of cremation and crematoria,[12] which explains why distinction was drawn between “human remains” (defined as “the dead body of any human being or any still-born child, but does not include ashes resulting from the cremation thereof”) and “ashes” (defined as “ashes resulting from the cremation of human remains”) to differentiate between what was before and what is after the process of cremation;

(d)  the substantive context in which the words “human remains” are used in Cap 132M is therefore wholly different from that in GC 15 under a government lease, and hence the former is of no value to the proper construction of the latter; and

(e)  Anthony Chan J at p 847 of Regal Shining (CFI) has also rejected a similar line of argument by the plaintiff in that case, ie under the Cremation Ordinance 1914 and its Regulations “ashes” and “human remains” are two separate and distinct concepts, on the basis it is necessary in such legislation to distinguish between “ashes” and “human remains” because of the need to deal with different stages where human remains turn to ashes, and the learned judge also does not consider sections 91-92 of the Public Health and Buildings Ordinance 1923 to be of assistance as they concern public health issues relating to the disposal of human bodies or their remains and has no similar issue concerning human ashes, which reasoning has not been disturbed on appeal.

25.  Thus, notwithstanding P’s reservation of the possibility of re-opening its stance on any appeal to the Court of Appeal, given Mr Yip’s concession that Regal Shining (CA) is binding on this court, the words “human remains” in GC 15 plainly include human ashes resulting from cremation, and by the deposit of human ashes pursuant to the operation of a private commercial columbarium on the Subject Lots with niches for storing inter alia cremated human ashes, P’s use of the Subject Lots has been in breach of and remains in continuing breach of GC 15.

26.  In light of paragraphs 18 and 25 above, Mr Yip has also confirmed P would not rely on the following at trial (subject to reservation of P’s position on any appeal to the Court of Appeal): (a) GC 5 of GN 364, and (b) the affirmations of Lau Man Sang, Man Hon Sun and Tsang Kwun all filed on 25 January 2011.

V.  ISSUES

27.  In light of Parts III and IV above, the remaining issues are as follows:

(a)  whether or not the government has abandoned enforcement of GC 15 and similar lease conditions that prohibited the interment or deposit of human ashes;

(b)  whether or not P has acted and is acting in breach of (i) GC 16 in respect of the Subject Lots, (ii) SC 1(a) in respect of Lot 644RP, and (iii) SC 3 in respect of Lot 640;

(c)  whether or not the government has abandoned enforcement of GC16 in relation to the Subject Lots; and

(d)  whether or not the government is estopped from taking any lease enforcement action in relation to Lot 644RP for any alleged contravention of SC 1(a).

28.  Mr Yip also confirms P will not rely on the contention that the government has abandoned or is estopped from taking lease enforcement action in relation to Lot 640 for alleged contravention of SC 3.

VI.  GC 16

29.  Is P also in breach of GC 16? The government records do not reveal any certificate or consent in writing as referred to in GC 16 having been issued by the District Officer or District Land Officer, and P does not suggest otherwise. In light of P’s operation of a private commercial columbarium on the Subject Lots and related activities as outlined in paragraphs 12-13 above, it is clear P has been offering niches for sale individually to the general public for the placing of inter alia cremated human ashes of their ancestors or deceased family members. Further, as referred to in the Leung Aff, P’s standard form contract with its customers was for rental of niches for which the customers are to pay rent until 30 June 2047. I have no hesitation in concluding that such arrangements amount to “underletting”[13] and/or “parting with possession of” parts of the Subject Lots in breach of GC16.

VII.  ABANDONMENT OF GC 15?

30.  Although Mr Yip’s written submissions hint that P no longer contends the government has abandoned enforcement of GC 15 (and similar lease conditions that prohibit the interment nor deposit of human ashes),[14] Mr Yip in his oral submissions clarifies P maintains such argument against both GC 15 and GC 16.

31.  Mr Yip accepts the burden is on P to establish the government has abandoned enforcement of GC 15. In paragraph 18(b) of its Amended Statement of Claim, P avers the government has abandoned enforcement of GC 15 and similar lease conditions for land lots in the New Territories insofar as prohibition of the interment or deposit of human ashes resulting from cremation is concerned because (a) “[there] are instances where organizations/entities have for at least 20 years or more deposited ashes resulting from cremation of human remains on land lots in the New Territories which are subject to GC 15 or similar lease conditions, and the Government has for at least 20 years or more taken no lease enforcement actions against these land lots”, (b) “[many] of the above organizations/entities are monasteries, nunneries and temples”, and (c) “[the] Government has at least since the 1980’s or thereabouts encouraged the public to deposit ashes resulting from the cremation of human remains in monasteries, nunneries and temples”.

32.  D in its Defence and Counterclaim pleads (and I agree) P’s assertion in paragraph 31(b) above is irrelevant as there is nothing to suggest its columbarium amounts to a monastery, nunnery or temple. D does not admit the assertion in paragraph 31(c) above. I am unable to see how the allegation in paragraph 31(c) above will aid P’s case, and Mr Yip wisely has not referred to it in his written/oral submissions.

33.  For the allegation in paragraph 31(a) above, P relies on the following evidence from the Leung Aff:

“27. To the best of my knowledge, information and belief, there are at least several instances where organizations/entities have for at least several decades placed ashes resulting from cremation of deceased persons on land lots which are subject to lease conditions in similar terms to GC 15, and the Government has for these several decades taken no lease enforcement actions against the owners of these land lots. These organizations/entities are:

(a) 半春園 (Pun Chun Yuen) (Lot Nos. 1119 R.P., 1180, 1253, 1254, 1260 R.P. and 1270 R.P. in D.D. 6);

(b) 西林寺 (Sai Lam Temple) (Lot Nos. 63 and 296 in D.D. 185).

28. These are now produced and shown to me marked ‘LKHG-10’ and ‘LKHG-11’ a true copy of the land search information relating to the land lots referred to in paragraph 27 above.”

34.  According to the Defence and Counterclaim, D has denied the government has ever abandoned enforcement of GC 15 or any applicable lease conditions in respect of the Subject Lots or either of them. D further pleads that in any event lease enforcement actions (ie warning letters with reference to columbarium use) have been issued and have remained in effect against inter alia 半春園 and 西林寺.

35.  In the affirmation of Kong Tat Ming filed by D on 22 February 2011, the affirmant asserts “半春園” and “西林寺” do not concern the Subject Lots, and there is no discernible basis for extending the effect of any alleged action or inaction on the part of the government in those cases (which are listed in Part B of a document known as Information on Private Columbaria published by the Development Bureau)[15] to the present proceedings.

36.  Mr Yip submits that all along private columbaria have been unregulated (possibly for decades or even for a century) notwithstanding GC 15 that has been initially drafted in 1911, and no enforcement action has been taken by the government against private columbaria on land lots in the New Territories similarly subject to GC 15. Mr Yip suggests the government’s present attempt to revive enforcement of GC 15 against P in respect of the Subject Lots is ancillary to her belated effort in June 2017 to regulate private columbaria under the Private Columbaria Ordinance Cap 630 (“Cap 630”) and to “disallowing” P to make use of the Subject Lots to place cremated ashes outwith the regulatory scheme in Cap 630.

37.  P has never pleaded the above contention based on Cap 630, which argument also does not feature in Mr Yip’s written submissions, and Cap 630 is not found in Mr Yip’s list of authorities. Such submission is plainly an afterthought argument, and I can understand Mr Chan SC’s consternation that D has been kept in the dark about this. As a result of P’s reticence, D has not been able to appreciate and/or probe the fullness of P’s contentions. Such forensic detriment cannot be overcome by Mr Yip’s assurance that he will not refer to the contents of the provisions in Cap 630 when he intends to make the point that Cap 630 is a regulatory regime introduced to fill the lacuna left by the government’s abandonment of enforcement of GC 15 as a leasing condition. More importantly, D is left in the unhappy position of being quite unready to address such contention as she has not had the opportunity to investigate into (and to assist the court on) the genesis, legislative intent and scope/limitations of Cap 630.

38.  In my view, it is inappropriate to allow P to introduce such unpleaded assertion by way of submissions at trial, especially when it will cause forensic prejudice to D. I need only refer to the guidance by the Court of Final Appeal in Sinoearn International Ltd v Hyundai-CCECC Joint Venture[16] and Kwok Chin Wing v 21 Holdings Ltd[17] that the court should set its face against late introduction of unpleaded case. Indeed, Ribeiro PJ at 646 of Sinoearn International Ltd has said as follows:

“31. Where a late attempt is made to introduce a new case, it is doubly important that the other side should have a clearly pleaded draft amendment so that proper consideration can be given as to whether objections should properly be made to such amendment and whether an adjournment should be sought.

……

34. Pleadings are not mere formalities. They impose a necessary discipline and are fundamental to enabling every procedural facet of the adversarial system to operate fairly.”

Ma CJ at pp 672-673 in Kwok Chin Wing has expanded further as follows:

“21. …… The basic objective [of pleadings] is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues …… It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way around. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced. ……

22. …… Issues, I would reiterate, must be properly pleaded unless for some reason the pleadings have assumed a less significant role in the proceedings.

23. The purpose of pleadings, in clearly and unambiguously setting out the true extent and nature of a dispute not just for the benefit of the parties but also for the Court in managing and trying cases, remains important under our system of civil justice. The retention of the old rules as to pleading as well as the introduction of new provisions over our years ago under the Civil Justice Reform, reinforce this.”

Here, the present proceedings have been continued by writ with directions for pleadings, so pleadings take on particular significance, especially when the parties have proceeded to trial with certain undisputed and agreed facts and no cross-examination of witnesses. Given Mr Chan SC’s objections and all the above considerations, I have declined to allow P to put forward oral submissions in relation to the purpose/intent of Cap 630.

39.  P is therefore left with the contention that for decades or even for a century the government has failed to enforce CG 15 in respect of private columbaria on land lots in the New Territories other than the Subject Lots, which means such defence contention concerns alleged abandonment of enforcement of GC 15 generally and not merely vis-à-vis the Subject Lots.

40.  With P conceding it carries the burden of proof in establishing abandonment of enforcement of CG 15, Mr Chan SC submits P has to meet a stringent threshold, ie that only strikingly long periods of inaction after knowledge of a continuing breach would suffice to found an allegation of abandonment/waiver.[18] In Attorney General on Hong Kong v Fairfax Ltd,[19] in 1862 the Crown demised an area of land by a lease for 999 years with a covenant by the lessee to erect one or more villa residences only. Later the land was subdivided, and terraced houses and high rise apartment blocks were successively erected in various sub-plots. In 1992-1993, the plaintiff acquired the leasehold interest in 2 sub-plots and proposed to erect thereon a multi-storey residential building. The Crown claimed the proposed development was a breach of covenant. The plaintiff issued proceedings seeking a declaration that the Crown was no longer entitled to enforce the covenant.

41.  The Privy Council held the covenant applied to the whole area, and the only possible inference from the fact that over a period of 40 years multi-storey apartment blocks had been built over almost all of that land was that the Crown must have been aware that the land was not to be used for villa residences, and, in the absence of evidence to rebut that inference, the plaintiff had discharged the burden of proving the Crown had knowledge of the developments which had taken place in breach of covenant.

42.  Lord Browne-Wilkinson at pp 151-152 said as follows:

“The Court of Appeal held that, in these circumstances, the Crown must be presumed to have released or abandoned the covenant They relied, in their Lordships’ view correctly, on the principles established in Gibson v. Doeg (1857) 1 H. & N. 615, In re Summerson; Downie v. Summerson (Note) [1900] 1 Ch. 112 and Hepworth v. Pickles [1900] 1 Ch. 108. In the last of those cases Farwell J. stated the applicable principles as follows, at p. 110:

‘if you find a long course of usage, such as in the present case for 24 years, which is wholly inconsistent with the continuance of the covenant relied upon, the court infers some legal proceedings which has put an end to that covenant, in order to show that the usage has been and is now lawful, and not wrongful.’

The Court of Appeal held that this was the clearest possible case of a course of conduct wholly inconsistent with the continuance of the covenant contained in the lease of 1862.

Before their Lordships, the Crown contended that the plaintiff had to prove that the Crown had knowledge of the developments in breach of covenant before any question of abandonment by the Crown can be presumed. A man cannot acquiesce in conduct of which he is ignorant. Whilst their Lordships accept that proof of such knowledge is essential, there is here overwhelming proof. ……” (my emphasis)

43.  In Pak Wai Ching v The Secretary for Justice,[20] the plaintiff applied for declaratory relief inter alia that user of the property in question was not in breach of certain condition of the relevant conditions of sale, and that the government had by conduct waived the right to enforce the special condition of sale. Barma J (as he then was) referred to Fairfax and accepted it was not necessary for the plaintiff to adduce concrete proof of knowledge on the part of the government in the sense that some particular government official or department was aware of breach of the relevant condition of sale as it was open to infer such knowledge in a suitable case even in the absence of such direct proof of knowledge. But the learned judge went on to say at paragraph 22 as follows:

“If, however, Ms Hui [counsel for the plaintiff] was suggesting that the Plaintiff could succeed on its case of waiver or acquiescence without establishing (whether by direct evidence or by inferences which could properly be drawn from the facts proven) knowledge on the part of the Government of the breach of the relevant condition of sale, then I disagree. It is clear from the speech of Lord Browne-Wilkinson in the Fairfax case (at p. 245J) that proof of knowledge (however it may be established) is essential, since a person cannot be held to have acquiesced in conduct of which he is ignorant.”

44.  From the above authorities, it is quite clear the requisite knowledge (irrespective of how this is to be proved) for the alleged abandonment of enforcement must be specific knowledge of the particular breach of the leasing condition or special condition of sale.

45.  Here, as evident from the Leung Aff, in 2008 P carried out certain internal renovation works to the Building and installed about 3,300 niches therein. On 9 April 2008, the District Land Office (“DLO”) of the Lands Department has written to P being the owner of Lot 640 to advise they have received numerous complaints about intended operation of a columbarium at the village house erected on Lot 640 (ie the Building), and any such operation of a columbarium on Lot 640 would be in breach of GC 15 for which the government is entitled to take lease enforcement action against P, including re-entry of Lot 640.

46.  By such letter the DLO also notes P has refused access for their staff to inspect Lot 640, and requests access for inspection of the Building on 16 April 2008 or at another suitable time to be arranged. As evident from the correspondence between P and/or its solicitors on the one hand and the DLO on the other hand between April and January 2009, the latter has made a number of requests for inspection of the Subject Lots, but P has declined such requests.

47.  By further letters dated, say, 28 November 2008, 19 August 2009, 10 September 2009, 12 October 2009 and 7 January 2010, the DLO has reiterated that P by its operation of the private columbarium on the Subject Lots for deposit/storage of cremated human ashes is in breach of GC 15, that P should forthwith cease all further activities which are in breach of GC 15 with proposal to rectify existing breach, and that the government is entitled to and will take lease enforcement action against such lease breach.

48.  In light of the above chronology, it is plain the government has taken prompt action quite shortly after P has made internal renovations to the Building and install 3,300 niches therein to assert (a) P’s breach of GC 15 and (b) the government’s entitlement to take enforcement action for breach of leasing condition, and such stance has been maintained throughout 2008-2010 and even up to the filing of the affirmation of Kong Tat Ming in opposition (on 22 February 2011) and the filing of the Defence and Counterclaim (on 23 September 2011) in the present proceedings. There is nothing of “long course of usage …… which is wholly inconsistent with the continuance of the covenant relied upon” as envisaged in Fairfax. On this basis, it is difficult to see how it can be said the government has abandoned enforcement action for breach of GC 15 in respect of the Subject Lots.

49.  As regards P’s assertion that abandonment of enforcement of GC 15 vis-à-vis the Subject Lots can be demonstrated by the absence of lease enforcement action against “半春園” and “西林寺” on land lots that are allegedly subject to GC 15 or other similar lease conditions. But there is no evidence to show such land lots are in the vicinity of the Subject Lots and/or they bear any relevant connection with the Subject Lots or P to enable this court to draw any meaningful comparison and/or to come to any view as to commonality between these land lots and the Subject Lots. More importantly, Fairfax and Pak Wai Ching have made clear requisite knowledge on the part of the government (irrespective of how such knowledge is to be proved) of the specific breach of the specific leasing condition in respect of the specific land lot is essential for establishing abandonment, acquiescence or waiver, and reference to what has occurred in other land lots is, to put it bluntly, neither here nor there.

50.  In my view (and as Mr Yip concedes), if P’s contention is taken to its logical conclusion, sufficient inaction by the government over breach of GC 15 or similar leasing condition in respect of any parcel of land means the government has abandoned enforcement of GC 15 generally such that the government can no longer enforce against any other land lot for existing/future breach of GC 15 no matter how promptly the government takes lease enforcement action in respect of such other land lot upon awareness of such breach. In my view, this must be wrong in principle given the essential criterion of relevant knowledge of particular breach. The logical conclusion of the above contention also puts owners of such other land lots that are also subject to GC 15 in the unhappy position of not knowing whether or not they need to comply with GC 15. After all, they will not necessarily know that over a number of years the government may have failed to take lease enforcement action for possible breach of such leasing condition in, say, a small land lot in some obscure part of the New Territories. This flies against the rationale/purpose for imposing leasing conditions which is to facilitate land-use control by the government.

51.  Mr Yip tries to draw assistance from Fairfax. But Fairfax cannot aid P’s proposition because the relevant leasing condition in that case covered the whole of the land in question despite subdivision into sub-plots. There was no reference to other land lots. Mr Yip has not cited any other authority to support his proposition. I agree with Mr Chan SC that as a matter of law the government’s knowledge/actions in relation to other land lots is irrelevant.

52.  I am not persuaded there has been any abandonment of enforcement of GC 15 in respect of the Subject Lots by the government. Given P’s breach of GC 15 which is still continuing, P’s claim must fail and D must succeed on her counterclaim. However, for the sake of completeness, I shall briefly deal with the other issues.

VIII.  ABANDONMENT OF GC 16?

53.  For the reasons set out in Part VII above applied mutatis mutandis, I find there has not been any abandonment of enforcement of GC 16 in respect of the Subject Lots on the part of the government.

54.  For the avoidance of doubt, it is useful for me to record that even though Mr Yip’s written submissions assert “[there] is also nothing in the evidence filed by the parties in this action which shows that the Government has not abandoned enforcement action in relation to GC 16 ……”, Mr Yip accepts at trial that the burden is on P to establish the government has abandoned enforcement of GC 16 rather than for D to show the government has not so abandoned enforcement of GC 16.

IX.  SC 3

55.  There is no dispute at all material times the Building has been erected on and straddles the Subject Lots. According to the Leung Aff, P has carried out “certain internal renovation works to the said building and installed about 3,300 niches therein” (my emphasis). P’s Reply and Defence to Counterclaim avers that “certain internal renovation works to the said building and installed about 3,300 niches therein” (my emphasis) are not “addition or alteration to …… building erected on the lot ……” under SC 3. I disagree. Given P’s admission that the internal renovation works are to the Building, they clearly constitute “addition or alteration to …… building erected on the lot ……” in the plain and ordinary meaning of such phrase in SC 3.

56.  I therefore disagree with Mr Yip’s written submissions that there is nothing to show the “renovation of the Building” constitutes any contravention of SC 3 on the basis that “there was no evidence showing such renovation or installations were made to the extent that those renovation / installations would amount to “addition or alteration” or structural change to the Building”.

57.  As regards the former contention that the admitted renovations/installations do not amount to “addition or alteration” of the Building, even though the burden of proof rests on D who alleges contravention of SC 3, D has raised a prima facie case of breach as explained in paragraph 55 above. Mr Yip in his oral submissions suggests the niches could have been placed on storage facilities rather than on the Building itself, but there is no legal/evidential basis to say the renovation/installation works concern mere storage facilities and not involve additions and/or installations to the Building.

58.  As regards the latter contention that the admitted renovations/installations are not structural in nature, I am unable to read down SC 3 to imply or infer a narrow construction that “additions or alternations” are confined to structural changes. The only rationale Mr Yip puts forward is that absent such implication/inference SC 3 will be impossibly wide and too onerous on the land owner and/or the DLO. I am unable to accede to such contention.

59.  First, as Mr Chan SC submits, it is a well-established principle that, if the wording in a government lease is obscure or equivocal, the court must lean towards the construction most favourable to the government, unless satisfied that another interpretation of the relevant words in their context is the true one.[21]

60.  Secondly, as explained by Court of Appeal at pp 302-303 of Regal Shining (CA), the insertion of GC 15 was to “serve the purpose of the government as landlord in respect of land-use control against the background that it also held all the land in the neighbourhood, and the lease was a long term lease, we do not see any justification for cutting down the meaning of a general provision by reference to the specific practice at the time when the lease was made”.

61.  Thirdly, SC 3 cannot be said to be too wide because such provision contains proviso that the plans to be submitted and approved by the District Officer do not have to be prepared by an authorised architect unless the alteration or addition is such as to render the whole building a new building or unless it involves the use of reinforced concrete. In my view, the very existence of and the need for the proviso recognises the general width of the primary provision.

62.  Fourthly, the fact that plans in respect of the “additions or alterations” envisaged in SC 3 are to be submitted by the District Officer who is concerned with leasing matters rather than to any public official with technical/engineering expertise, and the further fact that plans for certain “additions or alterations” need not be prepared by an authorised architect suggest such “additions or alterations” are not necessarily structural in nature.

63.  Fifthly, the allegation that SC 3 refers to “structural” and not other “alterations or additions” to the Building has not been pleaded.[22] Even paragraph 25 of Mr Yip’s written submissions does not unequivocally assert that “alterations or additions” as referred to in SC 3 must necessarily be “structural”. The absence of such plea plainly limits what countervailing evidence D adduces in response to P’s pleaded claim, and D can hardly be blamed for not adducing evidence to rebut this point. Further, there is no merit in P’s complaint that D has failed to adduce evidence as to the precise nature of the renovations P has made to the Building when despite various requests by the DLO since April 2008, P has not allowed inspection of the Subject Lots and the Building.

64.  In my view, P’s renovations to the Building in 2008 are prohibited by SC 3 unless plans that comply with SC 2 have been submitted and approved by the District Officer. There is no evidence such plans had been submitted and/or approved. In the circumstances, P has been and is still in breach of SC 3 in respect of Lot 640.

X.  SC 1(a)

65.  When P acquired the Subject Lots, there was already a Building erected thereon that straddled the Subject Lots. In my view, the existence of the Building itself contravenes SC 1(a) insofar as Lot 644RP is concerned.

XI.  ABANDONMENT OR ESTOPPEL FOR SC 1(a)

66.  I reiterate the legal principles on abandonment discussed in paragraphs 40-44 above. As submitted by Mr Chan SC, P has not identified what kind of estoppel it purports to rely on.

67.  P complains the government has never taken enforcement action in relation to the Building until 2009/2010 when dispute arose between P and the government, and there is no evidence to show the government has not abandoned enforcement action in relation to SC 1(a). It is said that but for the dispute between P and the government over issues as to use of Lot 644RP to place cremated human ashes, there is nothing to show the government will enforce SC 1(a) even though the Building has existed for decades. On such basis, it is said the government has effectively abandoned enforcement of SC 1(a) as a standalone provision in GC 364 in respect of Lot 644RP.

68.  Mr Chan SC submits (and I accept) that none of the matters to which P alluded in its Reply and Defence to Counterclaim or in Mr Yip’s written submissions support the operation of any doctrine of estoppel. Even assuming (as P suggests) the government has for a certain period before the present proceedings not taken enforcement action based on specific breach of SC 1(a), it still does not amount to any representation or promise on the part of the government to forgo its rights to enforce SC 1(a), especially when P’s renovations to the Building and installation of 3,300 niches therein have been carried out and have only come to the government’s knowledge in 2008. It is also telling that in the correspondence following the government’s discovery of P’s columbarium operation,[23] P by its solicitors did not allege it has been led into believing the government acceded to its activities by reason of any alleged lack of enforcement, and instead P seeks only to contend for a narrow interpretation of GC 15 which presupposes that, subject to P’s narrow reading of GC 15, the other lease conditions remain fully enforceable as against the Subject Lots.

XII.  RELIEFS

69.  In the premises, I dismiss P’s claim. In respect of D’s counterclaim, I grant the following reliefs:

(a)  a declaration that P has acted and is acting in breach of GC 15 and/or Clause 7(5) in respect of the Subject Lots;

(b)  a declaration that P has acted and is acting in breach of GC 16 in respect of the Subject Lots;

(c)  a declaration that P is in breach of SC 1(a) in respect of Lot 644RP;

(d)  a declaration that P is in breach of SC 3 in respect of Lot 640;

(e)  an order that P do forthwith remove from the Subject Lots all human remains, including any cremated ashes, taking all necessary steps to refund all monies to its customers; and

(f)  an order that P do forthwith cease the sale or advertisement of the sale of niches whether for the storage of cremated ashes on the Subject Lots or otherwise.

70.  In respect of the relief in paragraph 70(e) above for the refund of monies to P’s customers, I note P’s solicitors wrote to the Lands Department on 14 December 2009 to confirm P is “prepared to refund all monies paid [by] the tenants of the spaces in the event of a final court adjudication that the Government’s interpretation of the disputed condition [ie GC 15] be upheld”. Mr Yip accepts P has made such promise, but suggests this should not be made subject to a court order as it is a matter between P and its customers. I disagree. Given that P has been and is still in breach of the leasing conditions in respect of the Subject Lots, there is no reason why the court cannot impose appropriate conditions for rectification of the breach. Plainly, the refund of monies to the “tenants of the spaces” is a necessary consequence of the mandatory order against P to remove from the Subject Lots all human remains. Mr Yip has not taken any issue over the relief in paragraph 70(f) above.

71.  Mr Yip asks for time to comply with the relief in paragraph 70(e) above. But he is unable to say how much time is required, and given P’s refusal to let the government inspect the Building and Subject Lots, and further given the lack of information from P as to the state of the Building, there is simply no relevant evidence before this court to form any view as to whether or not any stay is justified.

XIII.  COSTS ORDER NISI

72.  There is no reason why costs should not follow event. Mr Chan SC submits (and I agree) that in view of Regal Shining (CFI) handed down in October 2014 and Regal Shining (CA) handed down in November 2015, there is no reason for P to persist in its construction of GC 15. This is particularly so when the plaintiff in Splendid Resources Inc v Secretary for Justice (which was handed down on 10 March 2017)[24] wisely conceded that the placing or storing of human ashes in jars or containers on the land in question (sold by public auction in 1932 which was earlier than the sale of the Subject Lots by public auction in 1941 and 1949) contravened GC 15.[25]

73.  Mr Chan SC argues there is simply no basis for P to persist on its interpretation and construction of GC15 in face of Regal Shining (CFI), Regal Shining (CA) and Splendid Resources Inc, and to only make concession that Regal Shining (CA) is binding on this court at trial, especially when P has been legally represented all along. It is said that such stance in face of binding legal authority is contrary to the underlying objectives of reasonable proportionality in the conduct of court proceedings. In my view, there is force in such argument, and certainly the efforts by D and her legal team in preparing her defence on such issue (including preparing written skeleton submissions for trial) have been wasted.

74.  I therefore grant a costs order nisi as follows:

(a)  subject to (b) below, P shall pay D costs of the action (including costs of the counterclaim and all costs reserved, if any) to be taxed if not agreed with certificate for two counsel; and

(b)  P shall pay D costs for the period after 31 December 2015[26] in respect of the issues of (i) whether or not the words “human remains” in GC 15 include human ashes and hence the deposit of ashes on the Subject Lots, and (ii) whether or not P has acted and still acts in breach of G15 and/or Clause 7(5) in respect of the Subject Lots on indemnity basis.