LOI PO INVESTMENT CO LTD v. REAL REACH CO LTD AND OTHERS

Crown lease - Covenant by Crown lessee not to erect or allow to be erected more than one residence on the land - Lessee wanting to erect a 6-storey block of residential flats - Held this would amount to a breach of the covenant as a block of flats includes more than one residence.

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JUDGMENT

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1. This case relates to Kowloon Inland Lots Nos. 7516, 7515 and 7514. The addresses corresponding with those Inland Lots are Nos. 227, 229 and 231 Fa Yuen Street, Kowloon. Each of these three contiguous lots has a frontage of 19.1 ft. to Fa Yuen Street and a depth of 60 ft.

2. These three lots form part of the site of a building which received its Occupation Permit in 1951. That Occupation Permit described the building as "six Chinese houses at Fa Yuen Street", and permission was granted to occupy and use the building for domestic purposes.

3. On each of the three lots with which this case is concerned stands one of those "Chinese houses". The building is four storeys high. Each of these three lots has its own separate Crown lease.

4. Those three Crown leases are in all material respects identical. They were all granted in 1968 but run for a period of 75 years from 1950 with a right of renewal for a further 75 years.

5. The 1st, 2nd and 3rd Defendants each became the Assignee of the Crown lease of one of the lots in this case. Although each of those three Defendants held one of the leases separately, they have joined in an agreement together to sell the three leases to the Plaintiff, which is a development company, for a combined price of $4.9 million.

6. One of the covenants in each lease is that the lessee "will not erect or allow to be erected on the said piece or parcel of ground more than one residence". In essence, the question falling for determination by the court is whether, in the face of that covenant, the Plaintiff, as lessee, is entitled to erect a block of flats on the lots he has purchased.

7. The building on each lot is at present in multiple occupation, each floor being let out separately. That can be seen from page 5 of Exhibit RS-1 attached to Mr. Robert Stoppa's affidavit filed on the 19th May 1984. The court could have been asked to determine whether the, present multiple occupation was a breach of the covenant. The court would then have been seized of a real life situation on which to base its judgment. Perhaps, understandably, the Plaintiff has not sought a ruling on what is actually happening at the moment for fear of stirring up a hornet's nest for itself.

8. Alternatively, the Plaintiff could have presented the court with plans for its proposed development and have asked whether a building erected in accordance with those plans would be in breach of the covenant. That there are plans in existence is made clear from paragraph 6 of Mr. Stoppa's affidavit and also from a letter exhibited as "RS-3" to that affidavit. With a plan in evidence, the court could feel confident that its decision would be rooted in a factual situation.

9. Instead of being asked to make a decision anchored to actual facts, the court has been asked by the present originating summons to rule on the following question: -

"Whether on the true construction of the Crown Leases in respect of Kowloon Inland Lots No. 7516, 7515 and 7514 respectively include the construction of low rise up to six floors multi-storeyed block of residential flats comprising one main entrance door giving access via lobbies, corridors and other common parts and staircases and lifts etc. to the various floors, the building being designed and likely to be used and occupied as separate flats but potentially capable of being used and occupied by one family."

10. My initial instinct was against ruling on a hypothetical question of this nature. Giving advisory opinions has always been anathema to common law judges. The strength of the common law approach has been the deciding of each case on its own individual facts, and the judges have traditionally shied away from sweeping rulings. The cautious case-by-case approach tends to prevent, the court from falling into the error of making rulings which turn out to be inappropriate on account of circumstances no one foresaw or turned his mind to when they were made.

11. Both sides were keen for me to rule on the question posed. The Crown even went as far as to say the broader my ruling, the better, as there are many other pieces of land affected by similar leases. I allowed myself to be persuaded to give an answer, but I still have grave reservations about the justiciability of the question in view of the lack of a proper factual foundation

12. The problem is not made any easier by the inclusion of the concept of a building being "potentially capable of being used and occupied by one family". I intend to disregard that part. I am only concerned with the type of building which the Plaintiff is permitted to erect. What the building is potentially capable of being used for is irrelevant, in my opinion. I see no need to consider all sorts of fanciful possibilities such as the situation envisaged by Mr. Griffiths of a supposed paterfamilias and his umpteen concubines whom he wants to collect all under the same roof. As Mr. Graham for the Crown so rightly pointed out, a building erected as a fire station is potentially capable of being used and occupied by one family. Under God, all things are possible, or put a little less elegantly, "potentially capable". I regard these potential capabilities as nothing better than a red herring in the context of the present exercise.

13. A further complication about the imaginary block of flats contemplated by the question is that I am not sure whether the block is meant to be just on one of the lots or to be spread over all three lots. Both possibilities are canvassed in the correspondence exhibited to Mr. Stoppa's affidavit.

14. For the sake of the present exercise, I am going to assume that the Plaintiff intends to erect one 6-storey block of residential flats which will occupy all three lots. Would that infringe the covenant against erecting more than one residence? L think the answer is, plainly, "Yes". I think, frankly, that the Plaintiff's case is unarguable. To argue that a block of flats is not more than one residence brings to mind the words of Lord Diplock, albeit in a rather different context: "This seems to me to be so plainly wrong as not to merit reasoned refutation": British Airways Board v. Laker Airways Ltd. [1984] 3 All E 39 at 54f.

15. "Residences" is an ordinary word of the English language, and if you have erected a block of flats, you have obviously erected more than one residence.

16. As much as anything to illustrate what I regard as a natural use of language, I quote from Mr. Hartley Bramwell's book, Conveyancing in Hong Kong, at p.51:

"If however the expression is 'one detached or semi-detached residence' it would seem to preclude a development of terrace or 'town' houses and certainly a block of flats could not be allowed as that includes more than one residence".

That proposition of Mr. Bramwell's in no way binds me, but I accept the correctness of his use of English, and the conclusion that it leads him to.

17. I was taken through a series of cases which gave me no assistance whatsoever. They were about the meaning of words such as "dwelling house", "used as and for a private residence only", "house", "private dwelling house". Those cases were Rogers v. Hosegood [1900] 2 Ch. 380; Kimber v. Admans [1900] 1 Ch. 412; Ilford Park Estates Ltd. v. Jacobs [1903] 2 Ch. 522; Barton v. Keeble [1928] 1 Ch. 517; Sunderland & South Shields Water Company v. Hilton & ors. [1928] K. B. D. 516 and Wong Bei Nei v. The Attorney General [1973] H. K. L. R. 582.

18. True, some of the old English cases show that a block of flats can be classified as "a dwelling house". No-one would dispute that in some contexts "a dwelling house" can be a residence. It is clearly fallacious, though, to go on from there to argue that "a dwelling house" is "a residence" and is a block of flats. I simply disagree with Mr. Griffiths that "dwelling house" and "residence" are synonomous. Sometimes they are, sometimes they are not.

19. "Residence" is such a common or garden English word that dictionary definitions were hardly necessary for the present case. Nonetheless, resort was had to the Shorter Oxford English Dictionary, which included the definitions "The place where a person resides; his dwelling-place; the abode of a person (esp. one of some rank or distinction) 1595. b. A dwelling, esp. one of a superior kind; a mansion 1603."

20. As "dwelling" is included in that definition, it is pertinent to observe that Huggins J. A. ,in Hang Wah Chong Investment Co. Ltd. v. The Attorney General, being Civil Appeal No. 84 of 1978, asserted "At block of flats is not a detached or semi-detached dwelling."

21. The court, was also given the Shorter Oxford's of "a flat" as "1. A floor or story in a house. 2. A suite of rooms on one floor, forming a complete residence 1824".

22. Support for the submission that "residence" in the context of the present leases might mean a whole block of flats was sought from the fact that one of the covenants and the delivery-up clause make reference to the plurals, "messuages or tenements". The Plaintff's argument is that those plurals point towards more than one living uriit being contemplated by the word "residence". I will set out the relevant extract from the lease:

"And the said Lessee doth hereby covenant with Her said Majesty by these presents in manner following that is to say that the said Lessee will yearly and every year during the said term hereby granted well and truly pay or cause to be paid to Her said Majesty the said yearly Rent clear of all deductions as aforesaid on the several days and times and in the manner here in before reserved and made payable And will during the whole of the said term hereby granted bear pay and discharge all Taxes Rates Charges and Assessments whatsoever which now are or shall be hereafter assessed or charged upon or in respect of the demised premises or any part thereof And will from time to time and at all times hereafter when where and as often as need or occasion shall require at the said Lessee's own proper costs and charges well and sufficiently Repair Uphold Support Maintain Pave Purge Scour Cleanse Empty Amend and Keep the messuage or tenement messuages or tenements and all other erections and buildings now or at any time hereafter standing upon the said piece or parcel of ground and all the Walls Banks Cuttings Hedges Ditches Rails Lights Pavements Privies Sinks Drains and Watercourses thereunto belonging and which shall in any-wise belong or appertain unto the same in by and with all and all manner of needful and necessary reparations cleansings and amendments whatsoever the whole to be done to the satisfaction of Her said Majesty's Director of Public Works (hereinafter referred to as "the said Director") - And the said messuage or tenement messuages or tenements erections buildings and premises so being well and sufficiently repaired sustained and amended at the end or sooner determination of the term hereby granted will peaceably and quietly deliver up to Her said Majesty".

23. I do not think those plurals lend any comfort to the Plaintiff. They occur in the printed part of a standard form lease. The impression I get is that the printed parts are designed to cover every conceivable eventuality. The effect, in my opinion, is no different than if the draftsman had included a provision "The singular shall include the plural where the context so demands". I do not think those plurals "messuages or tenements" signal any special meaning to be attributed to the word "residence", which appears in the typed part of the lease.

24. Hedged around with my reservations about whether a justiciable issue has been properly brought to court, and bearing in mind, the qualifications I have put on the question posed by the originating summons, my answer is "No".