LINTOCK COMPANY LIMITED v. THE ATTORNEY GENERAL

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

___________

BETWEEN

____________

JUDGMENT

____________

1. In the final analysis this case resolved itself into a single question; what does Lot 482 in Demarcation District 451 consist of? Is it, as the plaintiffs contend, a country lot covering some 1.27 acres, being nearly 200 metres long and something over 20 metres wide, stretching up the hillside above Tsuen Wan where the ground rises about 60 metres, producing a gradient in the order of one in three? Is it that sort of country lot, or is the Crown right in contending that it is not a country lot at all; it is simply a house lot comprising in the order of 0.01 of an acre. It was suggested to me in argument that this case is unique. I containly hope that that description is right, because it is unfortunate to put it mildly, that a dispute of this nature arises not 40 but 80 years on.

2. The Block Crown Lease of Demarcation District 451 is dated 24th January 1905. It took a usual form. What was demised was "all that piece or parcel of grounds situate, lying and being in Survey District 451 in the New Territories, in the Colony of Hong Kong, set out and described in the Schedule hereto, opposite to the name of such Lessee, and which such piece or parcel of ground is more particularly delineated and described on the plan or plans of Survey District 451 attached hereto according to the lot number set out in the Schedule hereto opposite to the name of such Lessee and marked on the said plan together with ..... any buildings thereon". The Lease contained the usual convenants, the most important of which was that the Lessee shall "not convert any ground hereby expressed to be demised as agricultural or garden ground into use for building purposes other than for the proper occupation of the said ground as agricultural or garden ground without previous Licence."

3. When one comes on to the crucial words in the Schedule, one finds this : under the column Lot No., "482"; under the column Area, ".127", but just in front of the '2' there is something which looks suspiciously, like a second decimal point; then under the heading 'Description of Lot' one finds 'House (In ruins)'; then comes the name of the owner in Chinese and in English, the first tenant was Tang Hon San; then under the heading 'Class' one finds ditto marks indicating '2nd', and then 'Rent', '50¢'. If ones looks at the plan one finds this : The figures 482 are set out in the middle of an area marked on the plan which, it is common ground, when scaled up on a modern plan is about 1.27 acres in extent On the right hand boundary of that apparent plot there is marked a small house or but and what appears to be a foot-path leading to it.

4. In respect of those entries the plaintiffs in summary say this: This .127 is an obvious mistake. You ignore the first decimal point and act on the second, first because that is what the plan shows, and secondly because the practice at this time was to work two places of decimals, not three. You then have the grant of an area of land 1.27 acres in extent described as house in ruins. You thus have the grant of land "not expressed to be demised" in the words of the convenant as agricultural or garden ground. Therefore this is a grant of 1.27 acres, in effect for housing purposes.

5. The defendant advances an equally extreme view the other way. It says : No, the one thing that is completely wrong about this entry is the area. Everything else is right, the rent, the classification, the description house all point here to a house lot. The delineation on the plan which matters is the delineation of the house. You should ignore this area measurement of 1.27, and treat this as the demise of a house lot which, in almost every case, was .01 of an acre. I am invited to construe this in the same way as the demise of Lot 621 should now be construed, where the relevant area measurement has in fact at some time, contemporaneously or later, been struck out,  in what the Crown suggest is identical circumstances.

6. So I am faced here with two widely different contentions on the meaning of this demise. The first question that arises is to what documents, to what evidence do I look now in an attempt to resolve this matter. The plaintiffs argue that I should not look beyond the four corners of the Deed. They argue, I think, correctly that the documents of title here are the Lease, the Schedule and the plan. They say that I should construe this document by reference only to those documents. I cannot agree for two reasons. First, it seems to me that in any event I would be entitled to look at what Lord Wilberforce calls "the matrix" of surrounding fact, particularly in his opinion in Reardon Smith v. Hansen (1976) 1 W. L. R. 989.

7. Secondly and more particularly, in this case I have got a document which is very far from clear within its four corners. The first problem which arises is the problem of the decimal point. If this stood alone I think I would be minded to resolve it, in the way for which the plaintiff contends because the draftsman of this particular Schedule seems to have been a little careless with decimal points. Having looked through the whole Schedule I can only find three other entries of a grant of an area greater than an acre. For the record, those were Lots 25,555 and 1153. In respect of those three, the first two score two decimal points, in the same way as does this Lot; and only the last one was in fact properly drawn with one decimal point. So that I think there would be little difficulty about reading that as 1.27 acres. At the same time it is bound to raise some doubts as to the care with which this whole entry was made.

8. The second problem is a much more serious one. Because adopting that reading of 1.27 acres there seems to me to be a direct conflict between that and the description which follows, "house in ruins". The descriptions in these Block Crown Leases were important. They are plainly intended to relate to the existing conditions. It is to these existing conditions that the non-building convenants attach, because the Court of Appeal in Watford v. The Secretary of the New Territories (1978) H. K. L. R. 410 construed this phrase "demise as" as meaning "demised as being land which is or is described as". In other words the phrase was construed by direct reference to the description in this particular column. Secondly, in a later decision, The Attorney General v. Melhardo (1983) H. K. L. R. 327, Huggins, J. A. pointed out that

"The draftsman of these Leases never imagined that the land in the New Territories will be wanted otherwise than for cultivation or building".

In other words, he simply had two uses in mind. So that the description in these documents is of great significance.

9. It seems to me apparent here that something is wrong if one has "1.27 acres" and "house in ruins". No house can cover 1.27 acres, and still less could a house cover 1.27 acres on this particular site. It seems to me that something has to give. Either the acreage has to be adjusted to the house, or the description has to be adjusted to the acreage; unless one can find some middle course a middle course for which neither party in fact contends.

10. The third problem in the document arises from the rent. All the evidence which has been led before me in this case leads to the conclusion that there was established at this time a single scale of rent. Agricultural land was divided into three categories : first, second and third, the rentals for which were $3, $2 and $1 per acre per annum. Houses were similarly divided into first, second and third, although as the third category seems to have been confined only to latrines, I put it on one side. The first-class house was a house which was of .02 of an acre or more, and commanded a rental of $1 a year. The second-class house or but was of .01 of an acre or less and commanded a rental of 50¢. If you look at the Schedule to this Lease one can see many examples of this scale. The existence of this scale also suggests an obvious explanation for the format of the document as to why it appears, when properly drawn, to show separate acreages for separate bits of the demise which attracted different rentals. I was almost as though the instructions of the draftsman were "Show your working. Show how the rent figure in the last column is derived". What the Groom suggests here is that this rental figure of 50¢ is, if not conclusive, indeed very significant.

11. In those circumstances it seems to me impossible to extract the parties' intention with any sort of clarity from the four corners of this documents. I have got to go outside it. I have got to look at all the surrounding circumstances. But this is a process of construction, not rectification. It is a process of contraction even though it leads me to adopt one or other of the parties' extreme contentions, which I have already indicated, which lead to the rejection of some part or other of the document. I would also note in passing that it seems to me that this argument is open on the existing pleadings. In its Statement of Claim the plaintiff argued for its construction of the Lease, including the construction that this constituted a grant of 1.27 acres of building land. The defendant simply put the plaintiff to strict proof of that and there is a general denial. It seems to me that in the context of an argument about the construction of the document, this course is open to parties, and particularly to defendants on pleadings. There may be a case for saying that this practice should be changed, and that parties who are going to invite the Court to look at a surrounding matrix of facts should plead that matrix. I can see arguments both ways. But at the present moment I do not think that the practice requires that to be done.

12. The surrounding circumstances here are largely documentary. First, there are the field area statements prepared by the original surveyors. Secondly, there are the surviving A Books prepared by the District Office. Thirdly, there is another group of contemporary documents which have been laid before me. Of particular interest there was a report on the New Territories 1899-1912, prepared by Mr. G. M. Orme, a District Officer, and laid before the Legislative Council by command of the Governor on 22nd August 1912. I also had produced to me a book which seems to have been compiled at the instigation of Mr. Hayes, one of the witnesses from the New Territories Administration, in 1959 when he was District Officer, Shatin. It contains the originals and copies of a lot of contemporary documents going back in history in relation to the affairs of the New Territories.

13. I also had oral evidence in respect of these matters from three persons. The first was from Mr. Hayes himself, who is now the Regional Secretary New Territories in the New Territories Administration. He was called by the plaintiff because he had written a letter upon which the , plaintiff particularly relied, when he was occupying a different position, as Town Manager, Tsuen Wan. He is a man who has made a particular study of the history of the New Territories, and the way in which these matters were handled at the turn of the century. Secondly, the plaintiff called a much younger surveyor, a Mr. Toh. But he basically agreed with much of the evidence that was, given to me by Mr. Hayes and Mr. Tam, the defendant is sole witness. He has worked in the New Territories Administration for something like 25 years, and in the process become very familiar with the sort of documentation which has been put before me in this case. He also had roots in the New Territories. His father farmed there. He used to spend his weekends there as a boy, he said, finding out what was going on in the farm and talking to the village elders.

14. Mr. Hayes and Mr. Tam, particularly, both told me how they thought that their predecessors had dealt with these matters in the New Territories. Much of what they told me was based upon inference from the documents. Much was, no doubt, supported by what they had been told over the years, what they had read in the documents before me, and in other reading. It was obviously impossible for them to dissect now the various sources of information upon which the various things they told me were based. I think the parties very sensibly led this evidence and allowed this evidence to be led without objection. It relates to matters of considerable public interest of wide importance when you consider that so many of the Block Crown Leases in the New Territories were written and put together in the same way. The issues which were raised before me were matters of a general public importance going to general rights and public rights in the New Territories. The actors themselves are long since dead. Many of the documents were lost during the War. The law would, I think, look even more foolish than some already so regard it, if evidence of this nature was not received and evaluated by the Court as best it can.

15. I now turn to some of that evidence. The first relates to the survey of the New Territories which, we are told, was undertaken by surveyors loaned by the Indian Government between 1899 and 1903. The first thing those surveyors did was to draw the D.D. plans themselves. One only has to look at those documents, to see that they could only have drawn the boundary lines of the lots shown on those plans if the alleged boundaries were pointed out to them by those in occupation on the site.  This must have been their primary, if not their only, source of information in respect of many of the boundaries.

16. At the same time they prepared what are called their field area statements. What they did in these statements was simply to describe every lot which they marked or the plan. The first thing that the column shows is the Lot No. I must say the documents are all "Survey of India" documents. They are totally unadapted Indian Government common forms. The headings of the columns bear no relation or very little relation to what appears underneath them. But one can see what one is meant to read without difficulty. The first column is in fact the Lot No. The second column describes the land itself and particularly gives its category, first, second or third, as agricultural or housing land. That is significant to the rent that was going to be applied thereafter to it. The third column gives the acreage, and the fourth column a description of the ground itself.

17. In respect of '482' one finds a double entry written on two lines. The top line simply gives you the word 'hut' in the classification column and 'hut' again in the description column. That is bracketed with the entry underneath which starts off '3rd', i.e. it was third-class land, "1.27 acres waste". I think it is quite obvious from that, that what the surveyors saw on this ground was a lot, the boundaries of which were given to them by somebody, which produced an area of 1.27 acres in all, upon which there was a hut marked in the place shown on their plan. They did not, in this case, give a separate acreage for the hut itself, and the 1.27 acres plainly covers both the hut and the waste. Very often in these cases they gave a separate figure for the hut and a separate figure for the other land. I have no doubt that if they done that in this case, they would have shown .01 or thereabouts for the hut and a corresponding figure of 1.26 for the waste. But plainly what the surveyors thought '482' was, was a hut plus waste.

18. The other significant feature in the survey I think is this. There were a lot of other lots marked on the D.D. Plan alongside or near '482'. Some of them are of a quite considerable size, of an acre or more; '483', '484', '485', '487', '488', '489'; and then what I suspect is across the valley '466' and '467'. So much for the survey.

19. I then turn to the evidence that has been put before me in relation to the occupants at that time. I start with this. In the course of his judgment in the Wing Fat case, at first instance, (1983) H.K.L.R. 211, Kempster, J. included in extenso passages from an affidavit of Mr. Anthony Dicks about Chinese land law which was put before him, without any dispute, in that case. In the course of this Mr. Dicks says:

"The cultivation of unoccupied or waste land was encouraged by the Authorities and a valid title to such land could be acquired by following a statutory procedure for registration. Land tax did not become payable for some years".

So that immediately before 1899 the position was that the Chinese Government were encouraging the cultivation of unoccupied or waste land. Secondly, it is fairly plain that the rentals that the Chinese occupants were paying for such land were either low or perhaps nothing at all. The rent collectors seemed to work on commission, if I can use that euphemism in the circumstances. They were apparently not paid for their services, and they picked up what they could on the way. Mr. Orme in paragraph 89 of his report says that the Crown rents were very much higher than the old Chinese rents, and also that a number of the tenants were able to occupy for some years without paying any rent. The Crown rents, as I indicated, were fixed at the figures that I have already given. These figures appear at paragraph 16 of Mr. Orme's report. I have also been referred to the proclamation of Governor Nathan of 28th June 1905 when rents were set out at those figures.

20. Another perhaps instructive reference can be obtained from what appears to be the first published report of the Land Court for the year 1900 which was published by command on the 11th May 1901, and written by Mr. Gompertz. He says this:

"Where land is and has been, for any considerable time, under cultivation, or where there are inhabited buildings on the land, I take it that Government will, as a rule, confirm the occupiers in their possession even though they have no real title whatever. But where the land is unoccupied and consists of foreshore or waste hill land, the titles will need careful scrutiny. Taking as general the axiom that the Chinese Government recognized no ownership not authorized by a registered instrument, it is unlikely that many persons would have been at the expense of paying taxes and registration fees for land which, under Chinese rule, was practically valueless".

21. Following the completion of the survey, it seems plain that the results were published, and objections invited, which were then dealt with and ruled upon by the Land Court. As far as this particular piece of land is concerned there is simply no direct evidence as to whether the matter ever went before the Land Court or not. I certainly cannot see any justification for inferring that the Land Court as it were, handed down a special decree in favour of the original Lessee.

22. It was then that  the Block Crown Leases came to be drawn. The first difference to be noted between the Schedule to the Block Crown Lease and the field area statements, is the very considerable difference between the number of lots shown on the area statements and on the plan and the number of lots recorded in the Schedule itself. I have already drawn attention to the fact that there was a substantial number of large lots in the vicinity of '482' and gave a number of numbers, none of which, are to be found in the Schedule. The same thing is true if you look at lot '461', the other Lot which the Crown particularly relies upon. All the lots surrounding that do not appear in the Schedule.

23. In his evidence, Mr. Tam suggested two reasons for that. First, he said that the persons who may have claimed the Lot in the course of the survey were unable to produce any documents of title, any red Deeds, and may have had their claim disallowed by the Land Court. That suggestion is at least in line with the passage I have just read from the first report. The second possible explanation he suggested was this: Look at the figures. This waste was categorized as third-class agricultural lands. It would therefore attract a rent of $1 an acre per year, and for 1.26 acres, the balance of the site, the rent would have been $1.26. That was a sum which was worth a great deal more than its modern equivalent. Consider the land itself. It was on a hillside,  gradient of one in three, with no apparent value for housing in those. days beyond the construction of a perhaps isolated hut. It had no apparent value for agriculture. In all probability. I suspect, this land has never been cultivated at all. Photographs had been put before me showing its existing state. It is much overgrown with high and low shrub. I am not satisfied that the banana trees which Mr. Toh thinks he saw on the site were in fact on it. I think there is at least a distinct possibility that the original tenant, if asked to pay a rental of $1.26 a year for very marginal land, said that it simply was not worth it.

24. The second point which emerges very clearly from the field area statement and the Block Crown Lease is the explanation of the format of the Lease. The description in the Block Crown Lease was plainly taken from the field area statement, and I have already alluded to its importance. Secondly, the area figures are likewise taken from the field area statement. The difference of rentals explained why various areas attracting different rentals were normally shown separately. The same can be said of the class. That must also have been taken from the field area statements. The rent itself was either shown separately for the various different areas or as a global figure covering them all. That becomes plainly the explanation of the layout of the Schedules to these Block Croon Leases.

25. The next category of documents is the A Books. Mr. Orme's report tells us that these, which were the Crown Rent Rolls, were made up at the same time as the Block Crown Leases. There were two types of entries here. The first type of entry which I have on page 6 of the Bundle shows the various owners of this Lot. It is a history of the ownership of the Lot, and is set out under the heading, Lot No. 482. It shows the original tenant. He was then succeeded by various members of the Tsang family, first in 1911, then in 1928 and in 1931. Then quite recently one has the first assignment outside the family to Mr. Kwok who was the original plaintiff. He paid quite a substantial sum for this site, in an anticipation, no doubt that it was building land. He in turn assigned to the present plaintiff, Lintock Co. Ltd., who took the assignment in the course of these proceedings.

26. The second sort of entry is one categorized under owners. The owners of various lots were listed and each list contains the record of that person's holdings. This record seems precisely to coincide with what Mr. Orme tells us about, the "chap-chiu". He says that "to each land owner a "chap-chiu" or certified extract of his holdings" was issued, and that "from May 1905 to September 1906 Mr. Clementi was engaged in the issue of these to all holders in the Northern District, and incidentally he was able to make many necessary corrections and additions to the original Schedules attached to the Crown Leases". It does seem that there were a lot of mistakes made in the original Schedules to these Block Crown Leases which, considering the enormity of the task, was perhaps not suprising.

27. The. earliest surviving A Book we have is headed with the names of the Tsang family who succeeded in July 1928. That entry is in these terms; under Lot No. "482"; under area ".01"; under class "H 2nd", under annual rent "50¢". At least on the face of it, it appears to me that Lot 482 was then thought to comprise an area of .01 of an acre, the category was house or hut, 2nd class, and the rental was that appropriate to that category of 50¢. An entry in identical terms can then be seen in relation to that group of family members' successors in title; then to the gentlemen who took in 1940; and then again to Mr. Kwok. I think it is probable that there was originally drawn an A Book containing an identical entry with the name of the first tenant. But I think one has got to be careful about this because it may very well beg the question I have to answer. I cannot tell whether that entry was made by someone who deliberately entered something different from the Schedule of the Lease because he knew that was what the tenant had taken, or whether he simply inserted the figure of .01 because he was faced with a 2nd class housing rental of 50¢.

28. That is the evidence which has been led. I now have to return to the Schedule of the Lease and try to put it together. The first point which, I think, emerges is this. The parties are right when they say that there can be no middle course here. A possible middle course is to re-read the document in the light of the field area statement as constituting house plus waste, a total of 1.27 acres. But you cannot simply do that by reading waste into the description column. One would have to read in something else in the class column to show that the waste was 3rd class land. More significantly, one would then have to read in a very big alteration in the rental column to arrive at a rental of at least $1.27 for the rental of the whole. That files in the face of fixed reality, because we know that from the outset, and throughout and, as far as I know, at the moment, the rent paid for this holding has been 50¢.

29. I think I am forced to choose between one of the two extremes put before me by the party. What are the dominant features there? I think the first dominant feature is the one I have just alluded to, the rent. One knows that this has been paid throughout. One knows that this is a rent appropriate to the 2nd class house which is the class description one finds in all the entries. The second dominant feature, to my mind, is the nature of this land. It was plainly very marginal land indeed. It still is. It was of very limited use or value in 1905. It has probably never been cultivated. To my mind, there is a very strong probability that it came into the same category as the other lots which were never taken up; the other lots shown on the plan, shown on the field area statements but which never appear in any Schedule, either because the claimants originally were able to produce nothing by way of title, or because they all said "No, it is not worth paying a rental of $1 an acre for waste land".

30. As I indicated earlier, something has to give in the Schedule. I think that the figure that has to give is the 1.27 acres. In my judgment, the only way of construing this grant is as a grant of a house site which probably consisted only of .01 of an acre. In my judgment, therefore, the defence to this suit succeeds, save for a declaration which, I think, the plaintiff may be entitled to have, (if he wants it) that the .01 of an acre in this Lot is in fact housing land. The declarations sought by the Statement of Claim cannot be granted, and the subsidiary relief which is asked for simply does not arise. I would have thought that the proper order here is that this claim fails and should be dismissed.