CHAN SIK-CHEUNG and Others v. DIRECTOR OF LANDS

IN THE LANDS TRIBUNAL OF HONG KONG

Miscellaneous Reference No.5 of 1995

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HEADNOTE

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Property law - Foreshore and Sea-bed (Reclamations) Ordinance, Cap,127 - alleged destruction of oyster beds by reclamation of land at Black Point, Tuen Mun -application by five oyster farmers to enlarge time for delivery of written claim for $3.5 million compensation to the Director of Lands - whether Lands Tribunal has power to enlarge time - if so whether applicants had established good cause for the discretion to enlarge time to be exercised in their favour - observations on mariculture ex-gratia payments -

Held: 1. In addition to the s.13(6), FS(R)O power to extend time for applications to Tribunal, there is also power under s.10(2)(d) Lands Tribunal Ordinance to enlarge time for good cause for delivery of prior claims to the Director - Tai Tung Industrial Equipment Ltd v. Director of Lands Civil Appeal No.43/95 (18.5.95) distinguished;

2. On the evidence Applicants had failed to establish good cause; enlargement refused;

3. Claimants are obliged to have had a legal interest, right or easement in or over the foreshore or sea-bed reclaimed;

4. Observations on whether compensation for injurious affection may be awarded where claimant does not own any adjacent land but is merely the holder of a right in gross.

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JUDGMENT

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1. In this summons the Applicants apply for an extension of time to serve a notice of claim on the Director of Lands under the Foreshore and Sea-bed (Reclamations) Ordinance, Cap. 127 ("FS(R)O"). The intended claim is in respect of losses alleged to have suffered because of the destruction of oyster beds during reclamation of land at Yung Long, Black Point, Tuen Mun, New Territories, Hong Kong.

2. The reclamation of the foreshore and sea-bed, specified in the relevant FS(R)O notices, has long been completed. The reclaimed land was on 12th May 1993 assigned to the Castle Peak Power Co. Ltd., under a private treaty grant, for the construction of an electricity generating station. The construction of the station, known as the Black Point Power Station, is now well advanced.

3. Under Section 9 of the FS(R)O, claimants are required to deliver a written claim, including the prescribed particulars, before the expiry of the time specified in the notice served and published by the Director under Section 9(1). The earlier Notice, pursuant to Section 5, calling for objections to the proposed reclamation, was published in the Hong Kong Government Gazette No.46 Volume CXXXIII as GN 4038, on 15th November 1991. The more important, for present purposes, Section 9(1) notice, was published on 15th January, 1993 in the Gazette No.2 Volume CXXXV as GN.115. Under the later Section 9(1) notice, compensation claims for injurious affection were required to be served on the Director, before the expiration of 1 year from the date of the notice. All notices were in English and Chinese.

4. I find that following similar procedure to the prior Section 5 notice, copies of the Section 9(1) notice were posted on the fence of the store of Mr Cheng Yeung at Yung Long, Black Point, Tuen Mun being a building in the vicinity of the reclamation. A copy was also displayed in the public office of the District Officer, Tuen Mun. Further copies were published in the Hong Kong Standard and Wah Kiu Yat Po newspapers on 15th January 1993.

5. None of the Applicants delivered any written claim claim before the expiration of the published 1 year limitation period. I record that there was evidence that a Mr.Lau Chi-ping, an oyster bed cultivator of Lung Tau Tan Village, situate further to the south along the coast from Yung Long, had on 21st May 1993, accepted an ex- gratia payment of $77,425.88, from the Hong Kong Government. This was a Government ex-gratia clearance scheduled payment, in respect of an oyster bed at Yung Long. It was not a compensation payment under the FS(R)O.

6. Ex-gratia payments of this nature are entirely voluntary payments by the Government. Their grant or refusal are not matters within the jurisdiction of the Tribunal nor are they generally judicially reviewable. In these proceedings, the Tribunal is solely concerned with the parties statutory rights and liabilities. The Applicants combined claim was estimated by Mr. Chan Cheuk-tong to be in the region of $3.5 million. As the Applicants were unrepresented, the Tribunal invited them to consider instructing solicitors and adjourned to allow them time to review their position. When the Tribunal resumed, it was emphatically informed that the Applicants did not wish to instruct solicitors but were anxious to proceed forthwith with the hearing.

7. On that basis the hearing continued. The Tribunal was first concerned whether it had jurisdiction, to enlarge the time for delivering to the Director, a Section 12(1) claim. The time limitations imposed by Section 13, reflect a statutory twofold claim procedure. In summary, a claim must first be served on the Director and only if agreement is not reached, may either party refer the claim to the Lands Tribunal.

8. Section 13(6) requires any later reference to the Tribunal, to be made before the expiry of one year from the Section 13(1) notice. The Director is obliged after receipt of a claim, to serve such a notice on a claimant, either rejecting the claim or admitting it in whole or in part. Section 13(6) gives the Tribunal a discretion to extend the 1 year period but the total period of extension, including the initial 1 year period, must not exceed 6 years. There are no statutory specified considerations for the Tribunal to take into account in judicially exercising its Section 13(6) discretion.

9. However, in the present case the Tribunal is concerned with the earlier Section 12(2) time limit, within which a claimant must deliver the initial written claim to the Director. There are no express provisions in the FS(R)O, empowering the Director, the Tribunal or any other person or body, to enlarge the Section 12(2) time limit. Therefore, so far as the express provisions of the FS(R)O are concerned, there appears to be a significant difference, between the comparative severity of the Section 12(2) and Section 13(6) time limits.

10. In the recent Court of Appeal judgment of Tai Tung Industrial Equipment Ltd v. Director of Lands Civil Appeal No.43/95, delivered on 18th May 1995, the relatively complex claims procedure under the FS(R)O was considered. In that case the appellant had unsuccessfully applied to the High Court for judicial review of the refusal of the Director to consider a compensation claim under Section 12. It is necessary to consider that judgment in some detail, particularly in view of the fact that the present Applicants are all unrepresented.

11. The appellant was the owner of land at Tsing Yi Island with limited road access, which enjoyed marine access. The appellant's factory manufactured and assembled heavy machinery. The marine access was important because it was extensively used for the delivery and collection of heavy machinery. Under the FS(R)O, the Director had taken the appropriate procedural steps, to proceed with a reclamation adjacent to the appellant's land, to enable Container Terminal 9 to be constructed. As a consequence the appellant's marine access was extinguished.

12. The Director on 20th November 1992, published a Section 9 notice, inviting compensation claims. The appellant's chartered surveyors had much earlier, on 2nd January 1992, commenced correspondence with the Director, setting out the adverse affect of the reclamation to its client's business. This correspondence, while purporting expressly to reserve the appellant's compensation rights, was principally concerned with advancing a non-monetary alternative proposal, limited to modification, if on favourable terms, of its Crown lease.

13. Time for delivering a claim to the Director expired on 19th November 1993. The previous correspondence also continued after that date. In a letter of 13th January 1994, the surveyors still pursued the alternative modification proposal but again also purported to reserve its clients's compensation rights for loss of marine access. The Director replied to on 24th January 1994, pointing out that the statutory period to apply for compensation had expired, he regretted he could not accede to the surveyors request.

14. The issues before the Court of Appeal were whether the surveyors's letters amounted to a compensation claim. If so, was it a claim sufficently particularised to comply with the requirements of Section 12? On the first issue the appellant failed. The Court of Appeal held that the correspondence did not constitute a claim but merely amounted to an intimation of a possible claim.

15. On the second issue, the Court of Appeal held that the letters, even if they cumulatively could have amounted to a claim, would still have failed to comply with Section 12. This was because, the Court of Appeal held, they did not state the sum of money the claimant was willing to accept, in full and final settlement of the claim. In view of these holdings, it was strictly unnecessary for the Court of Appeal to determine whether there was power to enlarge the Section 12(2) time limits.

16. Godfrey, JA, at page 5 of his judgment, pointed out that where there is already a valid timeous claim to the Director, the Tribunal could under Section 13(6), extend time to enable it to hear, any disputed claim. However, in respect of the different Section 12(2) time limit, at page 14 of the judgment, he held:

"...I am satisfied that the whole scheme of the Ordinance, the relevant sections of which I have set out or referred to above, require the time limit for claims to be treated as imperative."

17. It may be desirable to emphasise that the judicial review application considered by the Court of Appeal was concerned with the refusal of the Director, to consider a Section 12 claim, on the ground that it was out of time. Where negotiations between a Crown lessee, conducted before the expiration of a Section 12(2)time limit, do not amount to a valid claim, it is abundantly clear that the Director has no power to extend time.

18. However, it does not necessarily follow, that the Section 12(2) time limits, may not otherwise be extended. In reaching a contrary conclusion, Godfrey, JA., comprehensively considered all the provisions of the FS(R)O. Unfortunately, it appears that the Court of Appeal were not referred to the relevant statutory provision dealing with enlargement of time, contained in Section 10(2)(d) of the Lands Tribunal Ordinance, Cap.17, which is in these terms:

"10.(2)...the Tribunal may -

(d) for good cause, enlarge the time, whether or not that time has already expired, fixed by any Ordinance -

(i) for the giving of any notice, either before or after any proceedings have commenced;

(ii) for the taking of any step in any proceedings; or

(iii) for the filing or lodging of any document in any proceedings."

19. The latter clauses (ii) and (iii) are unexceptional and are to some extent reflected in the provisions of Rule 32, Lands Tribunal Rules. However, Rule 32 also includes the power to abridge. These provisions are similar to the enlargement and abridgment powers, possessed by other courts, such as those contained in Order 3 Rule 5 RSC, Cap.4.

20. However, Clause (i) is an exceptional and extremely wide power. First, it extends not merely to the Lands Tribunal Ordinance but to "any Ordinance." Secondly, it extends beyond pleadings and proceedings, to the giving of notices under any Ordinance, even before any proceedings have commenced.

21. Perhaps it is arguable that the enlargement of any pre-proceedings notices, is impliedly limited to those Ordinances, for which the Tribunal has express jurisdiction. This restricted approach would not exclude Ordinances where the Tribunal is given express jurisdiction. Section 8 of the Lands Tribunal Ordinance is the general jurisdictional provision while the majority of the relevant Ordinances are listed in its Schedule. The FS(R)O is one of the scheduled Ordinances.

22. For these reasons, I am satisfied that although the Director has no power to extend time under Section 12(2) of the FS(R)O, the Tribunal does have the power of enlarging those time limits under Section 10(2)(d) of its own Ordinance. It may be that the Director recognised this position in his letter of 8th February 1995 to the Applicants, when he stated that he had no power to extend time but that if they wished to pursue their claim, they "may apply to the Lands Tribunal".

23. The important Section 10(2)(d) power of enlargement is discretionary. Unlike Section 13(6) of the FS(R)O, it places an initial burden on a party seeking enlargement, for the discretion may only be exercised for "good cause." After the Tribunal had explained these matters to the Applicants, it took a short adjournment for them to consider whether, on the limited issue of delay, they wished to give evidence in an attempt to establish good cause. When the hearing resumed the Applicant, Mr. Chan Cheuk-tong, indicated he wished to give evidence.

24. Mr. Chan Cheuk-tong during his evidence quantified the Applicants total claim at $3.5 million which is equivalent to $700,000 for each of the five Applicants. Mr. Chan stated that it was not until August 1994, that he was the first Applicant to become aware of the reclamation. He had not seen the initial Section 5 notices displayed at two portions of the foreshore nor on a fence outside Mr. Cheng Yeung's store nor had he otherwise become aware of that notice. Similarly, he had not seen the more important, for present purposes, Section 9 notice, displayed from 15th January 1993, on that same fence. He had also not seen the publication of both notices in the Gazette or the English and Chinese newspapers in 1991 and 1993, or in the District Office, Tuen Mun.

25. In these circumtsances it was not surprising that he had not, pursuant to Section 6, objected to the 1991 reclamation proposal. Accordingly, the Respondent was not obliged to serve the later Section 9 notice personally on Mr. Chan. When Mr. Chan gave evidence he stated that the Applicants ancestors had fished and also farmed oysters, within the reclamation area, since the Ming Dynasty. He explained that both traditional and more modern oyster farming methods, involved not merely breeding oysters in the sea but also anchoring equipment on the seabed.

26. Mr. Chan explained that the reason the Applicants had not seen the notices displayed on the shore was that they all lived at Lau Fau Shan and only travelled to the oyster beds at Yung Long by sea. The Tribunal was also referred to other oyster beds at another location along the coast, which had been removed in 1978, for an earlier reclamation. Mr. Chan stated that he was then assured by two elders, that they would immediately inform him if they learned from District Officers of any proposal to reclaim land at Yung Long. He said that although the Applicants thereafter relied on that assurance, they were never personally warned by those elders of the present reclamation.

27. Later in Mr. Chan's evidence he disclosed other facts relevant to the Applicants ignorance of the reclamation proposal. Mr. Chan stated that during 1982 and 1983 the sea in the vicinity of Yung Long had become increasingly polluted. This pollution had forced all the Applicants, during that period, to give up oyster farming. At that stage the two elder Applicants retired while Mr. Chan Cheuk-tong and the two younger Applicants found alternative full-time employment.

28. Until he first heard of the reclamation in August 1994, Mr. Chan Cheuk-tong had not visted Yung Long since 1985. After Mr. Chan Cheuk-tong gave evidence, each of the remaining four Applicants, informed the Tribunal that they agreed with his evidence and did not themselves wish to give any further evidence. Mr. Chan Cheuk-tong was an intelligent, honest and reliable witness. He gave his evidence very clearly and throughout appeared to have an excellent recollection of past events.

29. I find that none of the Applicants were entitled to personal service of the Section 9(1) notices inviting them to deliver claims for compensation to the Director. I further find that the Director had also fully complied with the remaining notice requirements of Section 9. Indeed, he went beyond the statutory requirements, by displaying a copy of the notice, on a fence outside the store at Yung Long. I also record that where these statutory requirements are complied with, Section 9(3) deems notice to have been given to all persons entitled to claim compensation.

30. Against that background, I go on to determine whether good cause has been shown for the statutory time limit to be enlarged. The time limit for claims to be delivered to the Director expired on 14th January 1994.

The present summons was filed on 29th March 1995, more than 1 year 2 months after time had expired. I accept that the Applicants had approached a District Officer on 6th September 1994, orally intimating that they wished to claim compensation, which they also confirmed by letter.

31. On 15th September 1994, the District Lands Officer, Tuen Mun, wrote to the Applicants rejecting the claims on the ground that they were out of time. It may also be observed that none of the Applicants had at that stage, as required by Section 12(1), stated the amount of money they were willing to accept in full and final settlement. I confirm that the Court of Appeal in Tai Tung Industral Equipment Ltd v. Director of Lands (supra) held that the obligation for a claimant to quantify a claim, within the time limit, was an imperative statutory requirement.

32. In fact the first indication of the sum sought to be claimed, occurred on 20th July 1995, during Mr. Chan Cheuk-tong's evidence. This was more than 1 year 6 months after time had expired. In cases where a claimant has at least informally notified the Director of a claim within the time limit, it may factually be easier for him to establish good cause. In the present case, even the earliest informal notification of a claim, was made 8 months after time had expired. The first quantification of the claim was orally made more than 1 year 6 months after time had expired.

33. The two main reasons advanced by the Applicants, in an attempt to explain their delay, was that they lived at Lau Fau Shan and that they had unsuccessfully relied on two local elders, to inform them of any reclamation notices. I am not satisfied that those reasons establish good cause. I find that the main reason why they remained unaware of the notices, for so long after time had expired, was that many years earlier, going back so far as 1982 to 1983, they had abandoned oyster farming at Yung Long and no longer even visited that locality.

34. When I take all these relevant circumstances into account, I find that the Applicants have not established good cause why time should be enlarged. The Tribunal is therefore unable to exercise its discretion to enlarge time. The Tribunal was not informed of the circumstances in which another oyster farmer, Mr. Lau Chi-ping received an ex-gratia payment. Ex-gratia payments are, of course, made on an entirely different legal basis to statutory compensation. Indeed, they are often made where there is no legal liability to pay compensation.

35. The Tribunal is aware that the Government does, in certain circumstances, make ex-gratia payments in accordance with established administrative guidelines, to oyster farmers and other mariculture operators, on the relocation or termination of their businesses. However, the Tribunal expressly refrains from commenting on the policy, eligibility or otherwise for such claims. Those are matters wholly outside its jurisdiction. If the Applicants wish to make representations to the Director, for any ex gratia payment, that is entirely a matter for them and does not concern this Tribunal.

36. The unrepresented Applicants, whose conduct at the hearing was impeccable, were no doubt disapppointed at failing to satisfy the Tribunal that time should be enlarged. I confirm the Tribunal's observation at the hearing, that even if the claim had been made in time, it would still have had to overcome one factual and at least one and possibly two substantial legal obstacles. The factual difficulty would have been to establish that, at the relevant date, namely on 15th January 1993, the Applicants were still carrying on oyster farming at Yung Long. All the evdence at the hearing was to the contrary. The legal obstacles concern the limited classes of persons who may make statutory claims under the FS(R)O and the peculiar nature of such claims which are limited to losses caused by injurious affection.

37. Dealing with the first of these two legal considerations, Section 12(1) specifies the persons who are entitled to claim compensation, in these terms:

" Any person who claims that his interest, right or easement in or over such foreshore and sea-bed will be injuriously affected by the reclamation..."

Claimants are therefore limited, to persons having an interest, right or easement, over the area later reclaimed. Clearly those rights must be legal rights. So far as any rights granted by the Hong Kong Government were concerned, Mr. Chan Cheung-tong was only able to produce documents issued by the Marine Department, in relation to sampans and other craft. None of those documents created any Section 12 rights.

38. When further questioned Mr.Chan stated that from at least the 1960s until the 1970s, some of the Applicants paid a local Tong sums of $80 per annum, for the right to farm oysters in that locality. He explained that the payments were made on the basis, that the Tong had owned the sea-bed since the Ming Dynasty. He produced a receipt dated 12th August 1976 for $80 paid to the Tong by the Applicant, Mr. Chan Chan-wo.

39. Mr. Chan Cheung-tong stated he ceased paying fees to the Tong in 1972. This seemed to have resulted from the combined effect of a visit by the Royal Hong Kong Police Force to the area and the death of the then head of the Tong. After the latter event the deceased's son, on behalf of another Tong, for a few years, claimed by way of fee a share of the oyster harvest. I am satisfied that whether those payments in cash or kind, were in accord with earlier custom or pre-1898 Convention of Peking powers, they do not create any of the rights referred to in Section 12(1). Accordingly, at least on the evidence before the Tribunal, the Applicants would not have qualified as claimants, under Section 12(1).

40. Secondly, compensation for injurious affection, only arises in limited circumstances. The FS(R)O does not expressly define injurious affection. However, the term is usually employed to describe the loss of value to unresumed land, caused by the loss of adjacent resumed land or the loss of rights appurtenant to the unresumed land. The latter species of loss would include the extinguishment by reclamation of marine rights.

The evidence was that none of the Applicants owned any estate or interest in any land at Yung Long.

41. The inclusion of the use of the word "easement" in Section 12(1) is an indication that a claimant under that category is the owner of other land; it implies the existence of a dominant and a servient tenement. In some countries legislation has provided for the creation of easements in gross not requiring the existence of a dominant tenement. However, easements in gross are unknown to the common law and do not exist in Hong Kong.

42. Further, as a matter of statutory construction, the fact that "easement" follows in sequence the words "interest, right or" points to those terms being listed in descending order of importance. On that construction, "interest" and "right" would refer to ownership of land or estates or interests larger than mere easements. It was undisputed that the Applicants did not own any interest, right or easement in or over the foreshore or sea-bed either separately or related to any adjacent land.

43. If time were enlarged it would not, on the facts, have been open to the Applicants to have argued that the word "right" in Section 12(1), extended to another form of an incorporeal hereditament, namely profits. Profits, unlike easements, can exist in gross and could include the right to fish or farm oysters. However, the was no evidence that any of the Applicants were even the holder of this species of an incorporeal hereditament. If there were such evidence, the Applicants would also have had to argue that the absence in the FS(R)O of a definition of "injurious affection" entitled the holder of a right in gross, to deliver a claim for compensation.

44. Although not decisive as a matter of law, I also record that as matter of fact, all reported cases concerning the FS(R)O and its predecessors, involved claims by owners of land who sought compensation on a common ground. The claims alleged that because of various reclamations, the value of the owners retained land, had been injuriously affected, as a consequence of the loss of marine or related access rights - In the matter of an award of compensation made by His Excellency the Governor to the Owners of Kowloon Marine Lots 29,30,31 [1912] HKLR 110; Li Ling Shi v. The Government of Hong Kong [1963] HKLR 595; and Re Trustees of the Estate of Tsang Hung-tin Deceased [1971] HKLR 68. The purported claim in Tai Tung Industrial Equipment Ltd v. Director of Lands (supra) similarly concerned loss of marine access.

Finally, the Tribunal confirms that in reaching its decision on the summons for enlargement, it was solely concerned with the issue of good cause. It did not take take into account if time were enlarged, whether the Applicants would have had the status of claimants under Section 12(1), or whether the limitation of compensation to injurious affection would have restricted their claims. These matters were not relevant to the issue of good cause. They were only adverted to later by the Tribunal, in its attempt to discharge both the spirit and the letter of it obligation to unrepresented parties, contained in Lands Tribunal Direction No.1.

45. In the result the summons for enlargement of time was dismissed with no order as to costs.

Dated this 26th day of July 1995.