Tai Tung Industrial Equipment Ltd v. The Director of Lands

IN THE COURT OF APPEAL

1995, No. 43
(Civil)

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J U D G M E N T

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Godfrey, J.A.:

1. This is an appeal from an order of Mayo, J., made on 7 December 1994, whereby he dismissed the application of Tai Tung Industrial Equipment Ltd ("the claimant") for judicial review of a refusal by the Director of Lands ("the Director") to consider a claim for compensation for injurious affection which the claimant said it had made under the Foreshore and Sea-bed (Reclamations) Ordinance, Cap. 127 ("the Ordinance").

2. The claimant is the lessee of certain land in the New Territories off Tsing Yi Island, Lot no. TYTL 68, having a frontage to the sea, part of which was available for marine access. Condition 9 of the Conditions of Grant provided as follows:-

"9 (a) The Grantee shall have no right of access to the sea from the lot except between the points B and C shown and marked on the plan annexed hereto.

(b) The Government reserves the right to reclaim the foreshore to seaward of the lot except between the points B and C shown and marked on the said plan at any time and the grantee shall make no objection to, and shall have no right to any compensation in respect of, any such reclamation."

3. It follows that, as regards the marine access between the points B and C marked on the plan mentioned, the claimant did have a right to compensation on a reclamation by the Government of the foreshore.

4. The right of a claimant to such compensation is governed by a fasciculus of sections contained in the Ordinance, to which it will be convenient now to refer.

5. S.3 provides for the preparation by the Director of plans relating to the reclamation, delineating and describing the proposed reclamation and the foreshore and sea-bed intended to be affected thereby.

6. S.4 provides that such a plan is to be made available for public inspection.

7. S.5 provides for publication of the plan by notice in the Gazette. (In the instant case, that notice was published on 21 February 1992.)

8. S.6 provides for objections. Any person who considers that he has an interest, right or easement in or over the foreshore and sea-bed described in a notice published under s.5 may, by notice in writing delivered to the Director, object to the proposed reclamation.

9. S.7 provides for an authorisation procedure if no objection is made and s.8 provides for an authorisation procedure if objection is made. In particular, where, at the expiry of the time for the making of objections under s.6 in respect of a proposed reclamation, any objection has been delivered under that section, the Governor in Council has to consider the proposed reclamation and every objection and may, among other things, authorise the whole of the reclamation. (That is what happened here.)

10. S.9 provides, that in such a case, notice shall, at any time before the commencement of the reclamation, be served by the Director on every objector; published in the Gazette; and made available for inspection by the public. The notice is required to describe the foreshore and sea-bed affected thereby; to be served in the manner prescribed by the section; and to:

"state that any person who considers that he has an interest, right or easement in or over such foreshore and sea-bed that will be injuriously affected by the reclamation may deliver a written claim for compensation under section 12 for the injurious affection to the Director, before the expiry of such time being not less than 1 year from the date when it is published in the Gazette, as shall be specified in the notice."

(In the instant case, the s.9 notice was published on 20 November 1992.)

11. S.10 provides for the extinguishment of all public and private rights in relation to the foreshore and sea-bed upon publication of notice of authorisation.

12. S.11 provides as follows:

"11. No person shall have any right against the Crown or any other person to claim any money in respect of anything authorised under section 7, 8(1)(b) or 8(1)(c) except to the extent of the entitlement to claim compensation under section 12."

13. S.12 provides (so far as is material) as follows:

"12. Claims for compensation

(1) 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 may deliver to the Director a written claim stating the sum of money which he is willing to accept in full and final settlement of his claim together with such particulars as he may possess to substantiate the claim and shall furnish to the Director such accounts, documents and further particulars as the Director may request him to furnish, in support of the claim.

(2) A claim under subsection (1) shall be made before the expiry of the time specified in the notice served by the Director and published under section 9(1) in respect of the reclamation."

(I need not read further from s.12.)

14. S.13 provides (so far as is material) as follows:

"13. Settlement of claim

(1) In relation to every reclamation the Director shall before the expiry of 6 months from the date when the written claim is delivered to him or, if he has requested further particulars under section 12(1), before the expiry of 6 months from the date when they are furnished under that section, consider whether or not the claimant is a person having an interest, right or easement in or over any foreshore and sea-bed that will be injuriously affected by the reclamation and shall serve notice on the claimant in writing stating that he -

(a) admits the whole claim; or

(b) rejects the whole claim; or

(c) admits a specified part and rejects the remainder, and shall where he rejects the whole claim, or admits a specified part and rejects the remainder, as the case may be, give an adequate statement of his reasons for the rejection.

(2) If the Director admits the whole claim, or admits a specified part and rejects the remainder, he may agree with the claimant as to the amount of compensation to be paid to the claimant in full and final settlement of the whole claim or a specified part, as the case may be.

(3) Where -

(a) the Director rejects the claim in whole or in part; or

(b) after the expiry of 7 months from the date when the written claim is delivered to the Director or, if he has requested further particulars under section 12(1), after the expiry of 7 months from the date when they are furnished under that section, the Director and the claimant do not agree as to the amount of compensation, the Director or the claimant may refer the claim to the Lands Tribunal to determine in accordance with this Ordinance and the Lands Tribunal Ordinance (Cap. 17), the amount of compensation to be paid.

(4) In determining a claim referred to it under subsection (3) in respect of a reclamation, the Lands Tribunal shall -

(a) hear any evidence which the Director or the claimant may wish to tender and, if so requested, hear counsel or a solicitor on behalf of the party making the request; and

(b) determine the amount of compensation payable by the Government to the claimant in respect of any interest, right or easement of the claimant in or over any foreshore or sea-bed injuriously affected by the reclamation in full and final settlement of the claim."

15. S.13 goes on to provide, among other things, that the claim shall not be referred to the Lands Tribunal unless it is referred before the expiry of 1 year from the date of the notice served under ss.1 or within such longer period as the Lands Tribunal may at any case allow; but the total period is not to exceed 6 years from that date. (There is, then, still time for this in our case if the claimant is otherwise right.)

16. Sections 14, 15 and 16 relate to the payment of compensation; s.17 saves rights of the Crown; s.18 refers to service of notices by the Director; and s.20 contains transitional provisions.

17. It is against this statutory background that this case falls to be considered.

18. The factual background is conveniently summarised in a letter dated 2 January 1992 sent by the claimant's agents, Brooke Hillier Parker, to the District Lands Office, Kwai Tsing, Tsuen Wan. The letter refers to TYTL no. 68 and says this:

"Our Clients, Tai Tung Industrial Equipment Ltd., are the lessees of the above lot on which, since the original grant in 1977, they have established a very successful business focusing primarily on the manufacture and assembly of heavy machinery, machine tools and equipment, the production of which is housed in an eight storey building extending to 23,468 sq. metres gross floor area. The Company currently builds some 900 to 1,000 machines per year, employs 455 people and has a gross annual turnover in excess of HK$250M.

As a consequence of the proposal to reclaim the area immediately adjacent to our Clients' lot for purpose of construction of Terminal 9, on which a formal announcement is anticipated very shortly, our Clients' interests and business are likely to be adversely affected. In particular, the loss of marine access will necessitate a re-planning of the Company's operations, in that many of the large items of machinery are delivered or collected by sea and as a result of being deprived of this facility the Company will be faced with substantially increased costs especially in the manufacture of heavy and super-size machinery. Indeed, it may be necessary to consider relocating that part of the business to another location, if it is found that the alternative of road access is impractical, or at worst, unviable, and eventually the Company may have to give up the manufacture of such machines, having lost its competitive edge in the market.

As you will be aware, we are involved with a similar case immediately to the south of TYTL No.68 where Government has indicated a willingness to compensate for the inconvenience and loss of marine rights through relaxation of the existing lease conditions and by permitting further development on the site upon payment of the appropriate premium. In this case also, our Clients would be interested to discuss a similar formula, but would wish Government to be aware that the alternative of monetary compensation is still a serious option so far as the Company is concerned and has not been ruled out." (Emphasis added.)

19. As will appear, the emphasised words are important to the claimant's case.

20. The letter went on as follows:

"We would therefore like to propose to Government that the parties enter into early discussion and that the negotiations be framed around the following parameters which our Clients believe are not unreasonable, given the potential impact on their business interests."

21. The letter went on to state the parameters. These involved, first, an extension of the existing Crown lease; secondly, an increase in the plot ratio to be permitted on the site; thirdly, a relaxation of the use of provisions in the current lease; and, fourthly, a relaxation of the restrictions on assignment etc. contained in the current lease. The details are immaterial.

22. The letter went on:

"We would anticipate that there may be other issues which flow from this application, but we believe that if Government was able to see its way to meeting our Clients requirements in regard to the four main heads outlined above and the level of premium took due cognisance of the compensation that would otherwise have to be paid for the loss of marine rights, then there is every chance of reaching a negotiated settlement, acceptable to both sides.

We would welcome the opportunity to meet with you to discuss the matter further when you have had a chance to review the contents of this letter."

23. As I have already said, the publication of the plan of the proposed reclamation, to which the letter makes reference, did not take place until 21 February 1992, so the letter of 2 January 1992 to which I have referred was anticipatory in nature. It could not itself have been a claim pursuant to the statutory provisions which I have set out above, because, at that stage, nothing had happened to trigger the operation of those provisions.

24. By another letter, dated 14 October 1992 (and so after publication of the plan but before publication of the s.9 notice on 20 November 1992), the claimant's agents wrote another letter to the District Lands Office, Kwai Tsing identical in its terms with the letter of 2 January 1992 (and so including the words in that letter which I have emphasised), save for the last two paragraphs. In the letter of 14 October 1992 these last two paragraphs read a little differently, as follows:

"Our Clients would still wish to reserve their position in regard to the alternative of being compensated financially for the loss of marine rights but we believe that if Government was able to see its way to meeting our Clients requirements in regard to the four main heads outlined above and the level of premium took due cognisance of the compensation that would otherwise have to be paid for the loss of marine rights, then there is every chance of reaching a negotiated settlement, acceptable to both sides.

We would be grateful if you could advise us as soon as possible as to the terms upon which Government would agree to modify the original Conditions of Grant and the premium payable in respect of such modification."

25. On 20 November 1992, as I have said, the Director published the s.9 notice, limiting a period of one year from the date of the notice for claims to be made.

26. On 19 March 1993, the claimant's agents (Mr. Brooke) wrote to the District Lands Office (Miss Daisy Wong) in the following terms:

"I refer to your letter of 8th March 1993 and subsequent telephone conversations regarding the traffic study being carried out by Maunsells Asia Limited in relation to the proposed modification of the Crown Lease at the above Lot.

I now attach five copies of the completed traffic study as requested. As you will see it concludes that any further development on TYTL 68 will not have a significant impact on the road network in both 1996 and 2001 and in the view of the traffic consultant the proposed development is considered acceptable in road traffic terms.

I trust that this is satisfactory for your current purposes, however, should you require any further information please do not hesitate to contact me."

27. On 13 January 1994 (by which date the 1 year period limited by the s.9 notice had expired), Mr. Brooke wrote again to Miss Wong stating as follows:

"We refer to your letter of July 9th, 1993 requesting that our client, Tai Tung Industrial Equipment Ltd submit a revised Traffic Impact Study to demonstrate the capability of the adjacent road system to accommodate additional industrial development at Tsing Yi Town Lot No.68.

We apologise for the delay but we are pleased to advise you that the traffic consultant advising Tai Tung has now completed this revised study and we enclose two copies for your consideration. You will see that the study confirms that additional development upon the site will not have an adverse effect upon the traffic system in the vicinity of the property.

We trust that the modification of the Crown Lease to allow additional development for industrial purposes can now be pursued, subject to the approval of the study by the relevant Government Departments."

28. The letter continued as follows:

"We also would like to re-iterate that our client reserves his position with regard to compensation for loss of marine rights until the issue of the lease modification has been resolved." (Emphasis added.)

29. Again, the emphasised words are important to the claimant's case.

30. On 24 January 1994, Miss Wong wrote to Mr. Brooke stating as follows:

"I refer to your letter dated 13 January 1994 and note that you have prepared a revised Traffic Impact Study. The Study is being considered and I shall let you know the outcome when I am in a position to do so.

With respect to your client's intention to reserve his right to compensation for loss of marine right, I must advise that the statutory period for submission of claim has already expired. As such I regret that your request cannot be acceded to."

31. On 2 March 1994, Mr. Brooke wrote to Miss Wong as follows:

"We refer to your letter of the 24th January and would appreciate some indication when our Client can expect to receive Government's reaction to the revised Traffic Impact Study enclosed with our letter of the 13th January 1994.

As regards your statement that Government cannot accede to our Clients intention to reserve the right to compensation for loss of marine rights, we made it clear at the outset of these negotiations in October 1992 that our Clients were considering the modification of the Crown Lease as an alternative to claiming monetary compensation for the loss of their marine rights and we specifically reserved their position in regard to the alternative of being compensated financially for the loss of marine rights. We further made it clear that in the event that acceptable terms could not be agreed in regard to the lease modification, then our clients would claim compensation. Having clearly reserved our Clients position from the outset in regard to compensation, we fail to see how Government can treat the reiteration of our clients position as if it were a new issue and as such contend that it cannot be considered as the statutory period for the submission of any claim has expired. At no stage in the past as Government challenged our clients right to compensation for loss of marine rights and we intend strongly to resist any attempt so to do at this late stage.

In the above circumstances I would suggest that you might like to reconsider the statement contained in the final paragraph of your letter of the 24th January 1994."

32. On 18 May 1994, Miss Wong communicated by a letter to the claimant's agents the decision of the Director which the claimant now seeks to have judicially reviewed. The letter states the Government's position as follows:

"I refer to your letter of 2 March 1994.

The points raised have been considered and the position regarding the extinguishment of rights and the claiming of compensation under the Foreshore and Seabed (Reclamations) Ordinance, Cap. 127, is as follows :-

Upon publication of a notice or authorization in the Gazette, all rights in relation to the affected foreshore and sea-bed are extinguished in terms of S.10 of the Ordinance. On the statutory extinguishment of any such public or private rights, Section 11 of the Ordinance provides that the sole remedy for affected persons is to claim for compensation under Section 12 of the Ordinance.

The provisions of section 12 are summarised as follows :

(1) Claims must be made in writing before the expiry of the time specified in the published notice of authorization (In this case the statutory period expired on 20.11.93);

(2) The claim should state the sum of money the claimant is willing to accept in full and final settlement of his claim together with such particulars as he may possess to substantiate the claim;

(3) The claimant is required to furnish to the Director such accounts documents and further particulars in support of the claim as the Director may request; and

(4) The claim may include any costs or remuneration reasonably incurred or paid by a claimant in employing persons to act in a professional capacity in connection with the claim.

The requirement under s.12 is that the claimant must make an application for compensation in writing and within the statutory period. The Ordinance however makes no reference to reservation as to right to claim compensation nor extension of time to make a claim. Notwithstanding that the Grantee may have reserved his right, such right should have been exercised within the statutory period of 12 months as stated in the notice of authorization in the Gazette. It would therefore appear in this case that the Grantee's right to claim compensation has expired under the Ordinance, and your request for reservation of such right cannot be acceded to."

33. The claimant having challenged the decision of the Director, and Mayo, J. having upheld the Director's decision, it now falls to us to consider whether Mayo, J. was right in rejecting the claimant's application for a judicial review of that decision.

34. On a proper analysis of the problem, there are two questions which this court has to consider. First, did the claimant make a claim of any sort at all for compensation before 19 November 1993? Secondly, if the claimant did make such a claim, was that claim sufficient to satisfy the requirements of s.12?

35. As to the first question, if the claimant made no claim at all before 20 November 1993, that is the end of its case.

36. As to the second question, even if the claimant made some sort of a claim before 20 November 1993, it is accepted that (despite the provisions of s.12(1) in that behalf) it never made a claim which stated the sum of money which it was willing to accept in full and final settlement of its claim, so, if the requirement that such a statement should be made was imperative in nature, then that again is the end of the claimant's case. If, however, (1) the claimant did make a claim before 20 November 1993; and (2) that claim, although it did not contain the statement to which I referred, was sufficient, because the requirement that it should do so was merely directory, not imperative, in nature, then the claimant is entitled to the relief which it has sought.

37. I turn to the first question. Did the claimant make any sort of claim at all, before 20 November 1993, sufficient to satisfy the requirements of s.12? In his argument before us, Sir John Swaine, Q.C., for the claimant, placed reliance on the letter of 14 October 1992 to which I have referred above (buttressed by reference to the earlier letter of 2 January 1992 and the later letter of 19 March 1993 to which I have also referred). It is necessary therefore to look again at the terminology employed by the claimant's agents in the letter of 14 October 1992. It will be recalled that the claimant's agents stated in it (as they had stated in the letter of 2 January 1992) that they "would wish Government to be aware that the alternative of monetary compensation is still a serious option so far as the Company is concerned and has not been ruled out." And it will be recalled that in the letter of 14 October 1992, there is, in addition, the following:

"Our Clients would still wish to reserve their position in regard to the alternative of being compensated financially for the loss of marine rights but we believe that if Government was able to see its way to meeting our Clients requirements in regard to the four main heads outlined above and the level of premium took due cognisance of the compensation that would otherwise have to be paid for the loss of marine rights, then there is every chance of reaching a negotiated settlement, acceptable to both sides."

(The letter of 19 March 1993 refers to the negotiations but does not, as I read it, make any other reference to the claimant's claim for compensation.)

38. Sir John Swaine, Q.C. argued that the letter of 14 October 1992, on its true construction, states what he described, colloquially, as the claimant's "bottom line"; that is to say, that the claimant wanted to be paid compensation for the loss of its marine rights but was nevertheless prepared to enter into negotiations which would obviate payment of such compensation if the negotiations came to a successful conclusion. The claim for compensation, he said, should be treated as having been made on 20 November 1992, the date of publication of the s.9 notice in the Gazette, as if the letter of 14 October 1992 had been delivered on that date. (Of course, it cannot, consistently with the statutory framework, be treated as having been delivered on any earlier date than the date of the s.9 notice.) But I cannot accept this construction of the letter of 14 October 1992. In my judgment, it contained no such claim. What it contained was a proposal for a settlement of a potential claim which, if accepted, would relieve the potential claimant from the necessity of making any such claim, and would relieve the Director of Lands from having to entertain any such claim; and that was all that it contained. Certainly, the claimant had a right to compensation for injurious affection; and it had, therefore, a right to make a claim for compensation for injurious affection. But a right to compensation for injurious affection is one thing; and a claim for compensation for the injurious affection is another thing. It is the latter with which, in my judgment, s.12 is concerned. I do not find it possible to treat the letter of 14 October 1992 (even when buttressed by the earlier letter of 2 January 1992 and the later letter of 19 March 1993) as if it were a claim under s.12. As it seems to me, the letter of 14 October 1992 intimates a possible claim; but it does not make a claim. Of course, I accept that the result will be most unfortunate, if I am right so far; because, having had a perfectly good claim to compensation, the benefit of that claim will have been lost to the claimant as a result of its failure to make a claim, in accordance with s.12(1) within the time prescribed by s.12(2). But that is not the fault of the Director. It is the claimant's own fault (or that of its advisers). This court is only too familiar with cases of plaintiffs with perfectly good claims for damages for personal injuries, who, or whose advisers, negotiate for months, or even years, with the defendant's insurers without taking the simple and sensible precaution of first issuing a writ and then negotiating afterwards, thus allowing the time for the issue of the writ to go by until it is too late. In such case, the claimant finds himself barred by limitation from prosecuting his claim, unfortunate though that is. So here.

39. The references, in the letters to which I have referred, to the claimant's "preserving its position" do not seem to me to help the claimant. No doubt, the claimant intended to reserve its right to make a claim for monetary compensation if the negotiation did not succeed; and, no doubt, it was indicating to the Director that it did not mean to be taken, by entering into the negotiation, as abandoning that right; but that in my view is no way near enough to translate an intimation of an intention to make a claim into a claim properly so-called.

40. Quite apart from these considerations, 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. Good administration requires that the Director should be able to ascertain by a certain time just what claims there are and how much they are for. In the absence of any sufficient particulars of that from a claimant, it seems to me to be difficult for him properly to implement the scheme for payment of compensation prescribed by the Ordinance.

41. In summary, then, I am satisfied that the claimant fails at the first hurdle because it is unable to show that it ever made here any claim at all sufficient to satisfy s.12 of the Ordinance. If, however, I were wrong on this point and the letter of 14 October 1992 is to be treated as having made a claim for the purposes of s.12, then the fact that the "claim" failed to specify "the sum of money which the claimant was willing to accept in full and final settlement of its claim" is in my opinion fatal to its validity.

42. On this latter point, Sir John Swaine, Q.C. urged us to take the view that the Legislative Council, when passing this Ordinance, did not consider it essential to the scheme that the sum of money which the claimant was willing to accept should be stated at the same time as the written claim was made. He said that provided that the claimant was willing to give an indication of the sum of money which he was willing to accept in full and final settlement of its claim if and when requested by the Director to do so, that would be good enough. I cannot accept this submission. The words of s.12(1) inextricably link the written claim with the sum of money which the claimant is willing to accept. It seems to me that what is required to satisfy s.12(1) is all one thing, that is to say, a written claim stating the sum of money which the claimant is willing to accept in full and final settlement of his claim. There is no room, in my judgment, for holding that while it is imperative for the claimant to submit a written claim, it is not imperative for it to state the sum of money which he is willing to accept. It is true that in the case upon which Sir John Swaine, Q.C. placed much reliance, that is to say, Howard v. the Secretary of State for the Environment [1975] 1 QB 235, the Court of Appeal in England found itself able to hold that although the section which it had to consider required an appeal to be made in writing within a specified time and that requirement was imperative, the further requirement, that the notice of appeal should indicate the grounds of appeal and state the facts on which it was based, was not. But it is always dangerous to reason from the words of one legislative provision to the words of another when construing the latter; and, while not dissenting from the approach of the Court of Appeal in England to the problem posed in that case, I would not adopt the same approach to the problem posed in ours.

43. I therefore would hold, as I have already indicated, that the requirement in our case that the written claim should state the sum of money which the claimant is willing to accept in full and final settlement of his claim is an essential part of the statutory requirement; and, since Sir John Swaine, Q.C. accepts that the letter of 14 October 1992 did not contain any such statement, it follows that both the first and second questions I have posited must be decided against the claimant.

44. For these reasons, I would uphold the decision of the judge to refuse the claimant a judicial review of the Director's decision not to consider its claim; and I would dismiss this appeal.

Liu, J.A.:

45. Section 12(1) and (2) of the Foreshore and Sea-bed (Reclamations) Ordinance may arguably confer on a claimant the right to stake his claim before the gazette publication, but the real issues for our consideration are whether a claim was or was purportedly made at all, and if so, whether it failed to comply strictly with the requirements of s.12(1).

46. On those two issues, I agree with all that has been said by my Lord Mr Justice Godfrey. I would also dismiss the appeal.

Nazareth, V.-P.:

47. I also agree that the appeal must be dismissed. I would only add the following upon the two crucial questions identified by Godfrey JA. As to the first, I am not able to construe the letters of 2nd January 1992, 14th October 1992 and 19th March 1993 as a claim for compensation within the requirements of s.12.

48. And as to the second, I also view the requirement for a written claim stating the sum of money which the claimant is willing to accept as imperative (as opposed to directory) and so an essential part of the requirements of s.12, both upon the language of that provision and the statutory scheme embodied in the Foreshore and Sea-bed (Reclamation) Ordinance. Thus, its absence in those letters renders the communications incapable of constituting a claim within that section. For those reasons, which lie at the very heart of this appeal, it must be dismissed and the decision of Mayo J upheld.