SECAN LTD. v. ATTORNEY GENERAL OF HONG KONG

IN THE COURT OF APPEAL

1995, No. 120
(Civil)

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H E A D N O T E

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Construction of Special Condition in agreement for exchange of land - Court should not be too astute or subtle in finding defects and must give effect to what the parties by their agreement have clearly intended - the Special Condition by its plain language empowered the Director of Environmental Protection to require the developer to implement such ameliorative measures as he deemed necessary - the Director's powers to so require were not "spent".

Held (Court of Appeal): Appeal allowed and declaration made by judge set aside.

IN THE COURT OF APPEAL

1995, No. 120
(Civil)

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J U D G M E N T

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Litton, V.-P.:

1. The respondent to this appeal, Secan Limited, is the developer of a large site on Ap Lei Chau measuring about 15.5 hectares (155,000 square meters). The appellant is the Attorney-General. The lot was acquired by an exchange of land with the Government under a Memorandum of Agreement dated 28 January 1988 which governed the development of the lot.

2. Under clause 5(a) of the Special Conditions the respondent was required to submit to the Director of Buildings and Lands within six months a concept plan for the Director's approval showing, among other things (i) the alignment of future roads and pedestrian ways and (ii) the disposition, location and distribution of the buildings to be erected. The respondent was also required by clause 5(b) to submit, within the same time limit, landscaping proposals for the landscaping of the lot. By clause 5(c) the approved concept plan and landscaping proposals had to be signed and deposited in the Land Office and thereafter, by clause 5(d), no modifications were permitted without written approval. Clause 5(e) provided that no building landscaping or any other works, other than site formation, piling, reclamation and temporary street works were allowed to be commenced until the concept plan and the landscaping proposals were approved and the commencement of such works was not to prejudice the right of the Director to reject the concept plan and landscaping proposals.

3. By clause 8(a) the lot was not to be developed except in accordance with the concept plan and landscaping proposal.

4. Clause 63(b) stipulated that wherever the Special Conditions provided that the prior approval or consent in writing of the Government or its duly authorised officers was required, they may give the approval or consent on such terms and conditions as they see fit or refuse it at their absolute discretion.

5. Clause 12(a) which has given rise to this litigation provides as follows:

"(12)(a) The Grantee shall within six months from the date of this Agreement submit to the Director for his approval proposals to mitigate any environmental problems as identified and notified to the Grantee within two months from the date of this Agreement by the Director of Environmental Protection, which may directly affect the lot or neighbouring lots or premises and shall implement such ameliorative measures as deemed necessary by the Director of Environmental Protection."

6. On 25 March 1988 the Director of Environmental Protection wrote to the respondent's architect and identified a number of environmental problems. The relevant one for the purposes of this case is item 6 in that letter which says:

"6. Traffic noise impact on the dwellings and schools in the proposed development."

7. The Hong Kong Planning Standards and Guidelines, applicable at that time, specified certain maximum noise levels at the external facade of new developments which should not be exceeded: and as regards exposure to traffic noise, the Guidelines state that for the one hour period of peak traffic flow, the maximum should not exceed a noise level of 70 dB(A).

8. There was, at the date of the letter of 25 March 1988, no concept plan for the development and the future positioning of the residential blocks was then unknown. So, obviously, the noise impact on the proposed dwellings could only be stated by the Director of Environmental Protection in general terms.

9. As stipulated in clause 12(a), Secan Limited was to respond with proposals to mitigate the environmental problems thus identified within six months of the date of the agreement. On 26 July 1988 their architects did so, by submitting an "environmental issues report" prepared by a firm of consulting engineers, and submitted at the same time their concept plan and landscaping proposals. The proposals for dealing with the potential traffic noise problem were found inadequate: on an initial view of the scheme the positioning of three of the tower blocks No. 27, 28 and 29 and the primary school was found to be too close to a road identified in the concept plan as Lee Nam Road: calculations indicated an exposure to a noise level of 78 dB(A). Proposals for weather-stripping the windows and the use of double-glazing and air-conditioning were not accepted.

10. From the time the consultants first submitted their proposal in July 1988 to the date of the first letter from the respondent's solicitors, 7 March 1994, there was much discussion concerning the problem: the consultants and architects representing the respondent on the one hand and the various Government departments and bodies on the other have spent thousands of man-hours on the issue. The records of discussions, meetings, proposals etc. bearing on the noise problem fill several hundreds of pages of text and it is futile to summarise this material.

11. At first, the Environmental Protection Department suggested that the affected tower blocks be re-located further from Lee Nam Road, but this was found to have far-reaching implications on the whole scheme of development and the proposal was therefore not pursued. A structure covering part of Lee Nam Road adjacent to the tower blocks was then considered, but this proposal was finally rejected, in about October 1991. Then in November 1992 a meeting was convened, attended by consultants and architects representing the respondent on the one hand, and officers of various Government departments on the other, to discuss the feasibility of erecting a noise barrier along the road, outside blocks 26 to 29.

12. Following the meeting in November 1992, the Acting Chief Highway Engineer wrote on 8 January 1993 to the respondent's consultants Halcrow Asia as follows:

"Subsequent to our meeting on 25.11.1992 and your presentation of the preliminary design of the roadside noise barrier to ACABAS at its meeting held on 9.12.1992, it has now been decided that the roadside noise barrier shall be constructed as a compromise solution to replace the proposed road cover along Lee Nam Road. The Secretary of ACABAS has been informed of this decision."

13. The "ACABAS" referred to in the letter is a Government advisory body on the appearance of bridges and associated structures.

14. It is the requirement to erect a noise barrier which has given rise to the present litigation.

15. To appreciate the flavour of the dialogue between the parties at the relevant time, it would be helpful to refer to a letter from the Director of Environmental Protection dated 6 April 1993 which says:

"Mr G.D. Nelson	6 April 1993
Deputy Managing Director
Hongkong and Whampoa Dock Co., Ltd.
Dear Mr Nelson,
Re: A.P.I.L. 121, South Horizons - Road Noise     Mitigations Proposals

----------------------------------------

I understand that you and Dr Reed spoke at length some time ago about the noise barrier proposed in lieu of the original cover over Lee Nam Road. Dr Reed asked that I provide you with some barrier applications so that you can be assured that well designed barriers can be effective in an architectural as well as acoustic sense.

Please, therefore, find enclosed five leaflets showing Hong Kong applications. The one at A Kung Kok Village is so well received that we are constantly asked by others to provide something similar for their neighbourhood. Experience indicates that the use of transparent panels, particularly of different colours, serves well the dual purpose of providing noise protection and acceptable aesthetics.

Dr Reed has since met with Mr S.K. KWEI, Director of Highways, and they have agreed that the height of the barrier should not exceed seven metres. I trust that your consultants will make the best use of this lower height requirement and draw on our experience for a mutually satisfactory outcome.

If you would like any further elaboration or discussion, please don't hesitate to contact us.

16. It is to be noted that there, the Director of Environmental Protection was not using the language of strict legal rights but of persuasion and co-operation with the developer.

17. Then, on 7 March 1994, as I have said, solicitors for the respondent appeared on the scene for the first time.

18. On 23 November 1994 proceedings were instituted by originating summons, for relief by way of declarations. I will look more closely later on at the extraordinary and elaborate terms in which the declarations were couched. In essence, the respondent's case is that either by the language of clause 12(a) - reading it with necessary implications - or because of the events which have occurred, the Director of Environmental Protection is not empowered to require the respondent to take any ameliorative measures to deal with noise such as the erection of the noise barrier referred to in the letter of 6 April 1993.

19. The originating summons was eventually amended, and it was this amended summons which the judge Sears J heard in March this year.

20. At the conclusion of his judgment, Sears J said:

" In my judgment, therefore, the requirement by the Director to force the developer to build [the noise barrier] is unreasonable and I would grant a declaration of suitable wording to demonstrate that the court disapproves of the action he is seeking to take by preventing the developers from obtaining a consent so that they can assign these flats."

21. The formal order, reflecting Sears J's judgment, is in these terms:

"UPON THE APPLICATION of the Plaintiff by Originating Summons dated 23rd November 1994 and upon hearing Counsel for the Plaintiff and for the Defendant.

AND UPON reading the documents recorded on the Court file as having been read. IT IS ORDERED AND DECLARED that the Plaintiff is not required by virtue of:

(i) Special Condition 12(a) of the Conditions of Exchange (referred to in the Memorandum of Agreement dated 28th January 1988 made between the Plaintiff and the Government of Hong Kong); and

(ii) any subsequent acts or decisions of the Director of Environmental Protection made or purported to be made thereunder; and/or

(iii) any other condition of the said Conditions of Exchange;

to build the structure being constructed at the location marked in yellow on Appendix I hereto or to take any further or other measures to address the matters raised in paragraph 6 of the Environmental Protection Department's letter of 25th March 1988."

22. It is noteworthy from the passage in the judgment which I have just quoted that the declaration the judge had in mind was not a binding declaration of right as envisaged in Order 15 rule 16 but some form of declaration to reflect the "court's disapproval"

23. It is to be noted also that the declaration made by the judge is not in terms of any of the declarations sought in the amended originating summons which as relevant reads:

"Application by the Plaintiff for declarations that:

(1) paragraph 6 of the letter from the Director of Environmental Protection dated 25th March 1988 did not identify an environmental problem within the meaning of Special Condition 12(a) of the Conditions of Exchange....

(2) the structure ... at Lee Nam Road, Ap Lei Chau does not ameliorate any environmental problem within the meaning of Special Condition 12(a) of the Conditions of Exchange ...; and

(3) the Plaintiff is not obliged by virtue of:

(i) Special Condition 12(a) of the Conditions of Exchange;

(ii) any subsequent acts or decisions of the Director of Environmental Protection made or purported to be made thereunder; and/or

(iii) any other conditions of the Conditions of Exchange; to build the structure ... or to take any further measures to address the matters raised in paragraph 6 of the letter of 25th March 1988 in addition to those taken to date in accordance with paragraphs 4.27-5.29 inclusive of chapter 9 of the Hong Kong Planning Standards and Guidelines (November 1985 ed.) and/or Figure 4.1, Table 4.1 and Section 4.3, paragraphs 4.3.9 and 4.3.10 and Appendix 4.4 inclusive of 'Guidelines for Environmental Planning in Hong Kong,' Section 4: 'Noise' in the Hong Kong Planning Standards and Guidelines (April 1991 ed.) published by the Hong Kong Government.

(4) Alternatively to (3) above, the Plaintiff has duly complied with the provisions of the said Special Condition by implementing the ameliorative measures deemed necessary by the Director of Environmental Protection as referred to the Plaintiff in paragraph 1 of page 2 of the said letter of 25th March 1988, namely those set out in Chapter 9 of the 1985 edition of the said Guidelines."

The Judge's approach

24. It is not easy to follow the thrust of Sears J's judgment. He said at p.6:

"It is not the function of the court, of course, to step into the shoes of either party, but speaking for myself, I can well understand the developers of this high-quality residential development objecting to this physical barrier, which causes loss of view and loss of view between the blocks which I have examined myself. Noise barriers are only used in Hong Kong on very limited occasions. However, my personal view is really immaterial. My sole function is to construe as a matter of law this unusually worded Special Condition."

25. Apart from the comment about "this unusually worded special condition", I would agree with this last sentence; and if the judge had in fact simply confined himself to the task of construction, I apprehend that it would not have been the Attorney-General who is the appellant on this appeal.

Construction of clause 12(a)

26. What we are concerned with here is, in effect, a commercial agreement: one which is intended to give the Government a very large measure of control over the development of this very large site on Ap Lei Chau. In construing the agreement, a court should not be too astute or subtle in finding defects and must give effect to what the parties by their agreement have clearly intended.

27. As far as clause 12(a) is concerned it's effect plainly is this: (i) the Director of Environmental Protection must, by 28 March 1988, identify and notify to the respondent any environmental problems which might directly affect the lot or neighbouring lots or premises; (ii) the respondent must, by 28 June 1988, submit to the Director of Buildings and Lands for his approval proposals to mitigate those environmental problems, and (iii) if any of those proposals are not accepted by the Director of Buildings and Lands the respondent must implement such ameliorative measures as are deemed necessary by the Director of Environmental Protection.

28. Obviously, for clause 12(a) to work, the environmental problems which might directly affect the premises must first be identified. Unquestionably, this has been done, within the time prescribed. The next step was for the respondent to submit its proposals to mitigate those problems. I see no difficulty in the construction of this clause and do not agree with the judge that it is "grammatically imperfect" or that its "loose wording" has given rise to the problem today.

29. The proposal as submitted by the respondent was to have weather-stripping for the windows, to install mechanical ventilation and air-conditioning and to have the windows of the four blocks up to the 10/F glazed with 10mm glass instead of 6mm glass. The respondent has also challenged the Government's predictions concerning traffic noise along Lee Nam Road, suggesting that the noise impact has been exaggerated.

30. Quite simply, the respondent's contentions and arguments have not been accepted.

31. The notion that clause 12(a) does not mean exactly what it says emerged for the first time when the lawyers came on the scene in this case. In their letter of 7 March 1994 Messrs Baker & McKenzie argued that, under clause 12(a), the power of the Director of Environmental Protection to identify environmental problems was limited to those already in existence at the time of the letter of 25 March 1988: at that time there was of course no Lee Nam Road: it had not yet been built: so there could have been no traffic noise of any kind generated along Lee Nam Road. By this one sleight of hand the solicitors hoped to argue the problem away. This is reflected in the first declaration sought in the originating summons: a point faintly argued in the court below and has now been expressly abandoned by Mr Kat in this court.

32. It is noteworthy that prior to the lawyers appearing on the scene, there seemed no difficulty with the proper construction of clause 12(a). In a letter to the Chief Highways Engineer dated 1 December 1992 the respondent's project manager said:

"I refer to your notes of the meeting held at 9.30a.m. on Wednesday, 23 November in your office, concerning the proposed noise barrier along Lee Nam road. I wish to add certain views held by the developer on this proposal in order to keep it within a proper perspective.

The wall was suggested by the EPD as an alternative to the enclosure originally proposed by the developer. Secan Limited has an obligation under the Lease Condition to attempt to satisfy the EPD with measures to mitigate environmental problems which may be raised by them and in an effort to do so we had our consultant design and submit to the appropriate government authorities the enclosure structure....

The suggested alternative wall is an extraordinary measure which borders on the extreme. It would cause the same disruption and delay to the contract works as mentioned above and would create an eyesore which in time will become even uglier since it is clear that Government are unlikely to have the resources to maintain it...."

33. The project manager then went on in the same letter to put forward other arguments for saying that the noise barrier was an undesirable feature of the development. The letter ended up by saying:

"The whole exercise is based on theory, and huge assumptions and the resulting wall, aimed solely at mitigating noise, will create among other problems of management and traffic, an environmental eyesore of staggering proportions.

Secan has spent lavishly and taken extraordinary measures to create a pleasing and comfortable environment for the residents of South Horizons. We have offered to double-glaze the windows in the flats which may be affected by the future traffic in Lee Nam Road and there can be no question that the residents in future would be much less adversely affected by this and the estimated future traffic than by the construction of this wall."

34. The subsequent correspondence shows the various Government departments trying to deal with the objections raised by the developer: for instance, avoiding the "tunnel vision" effect of the footpath and reducing the height of the barrier by a "bent-top" design, etc.

35. At no stage was it suggested that the parties did not know what clause 12(a) meant.

The "reasonable businessman's expectation"

36. It goes without saying that where clause 12(a) empowers the Director to require ameliorative measures to be implemented - that is, those he deems necessary - he must act in good faith. He must exercise judgment. He must not act capriciously. The judgment concerning those measures is his, and his alone.

37. Sears J, however, took a different view. He said:

"The scope of the work to be carried out, as an ameliorative measure, must be that which the reasonable businessman would have expected, having regard to the provisions of the Guidelines which were specifically drawn to his attention."

38. This, in my judgment, is not to construe clause 12(a) but to re-write it. It was this approach which led the judge into further error: Who is to judge what the "reasonable businessman" would have expected? Presumably it would ultimately fall to the court to answer that question. How then is the court equipped to form value judgments of this kind? Have the parties, somehow, by their agreement, assigned to the court the power and responsibility of ultimate judgment in this regard?

39. It appears that counsel in the court below did not refer the judge to the Privy Council's decision in Hang Wah Cheong Investment Co. Ltd. v. Attorney-General of Hong Kong [1981] 1 WLR 1141: a case now relied upon by Mr Peter Graham for the Attorney-General, who did not appear in the court below.

40. In Hang Wah Cheong Investment there was, in the conditions of sale of land, a term similar to that in clause 63(b) of the Special Conditions in this case: that is, that the grant or withholding of approval was in the absolute discretion of the Director of Public Works. The question was whether, as a condition of modifying the terms of the grant, the Government could exact a premium. In rejecting the developer's challenge to the Government, the Privy Council relied on the reasoning in Viscount Tredegar v. Harwood [1929] AC 72 to this effect: that no implication of "reasonableness" could be imported into a lessor's refusal of consent. In the Court of Appeal in Viscount Tredegar v. Harwood [1928] Ch. 59 the court had found that the landlord's decision must be "in accordance with such considerations as are appropriate to, and would guide a reasonably minded man" in coming to the particular decision in issue. The House of Lords by a majority rejected this approach. At p77 Lord Dunedin said:

"My Lords, I am quite unable to concur with the learned judges of the Court of Appeal. It seems to me that they introduce complication and inference into an expression where there is no room for one or the other ...."

And at p79-80 Lord Shaw said:

"The forms of contract, under which the reasonableness of withholding consent is made a term, are perfectly familiar and they were not adopted in the present case; and the condition of the lessor's consent is a condition precedent in absolute terms.

The judgment of the Court of Appeal is, in my humble opinion, wrong in two particulars. It imports the implication of a new clause into the contract: - that the consent of the lessor ... is not to be unreasonably withheld: and, secondly, having imported by implication a clause in those terms, the Court then proceeds to attach to these terms and to this contract ... the further implication of such a clause, namely, that the lessor must furnish a justification for his refusal, and further that such a justification must be something incidental to the individual contract itself and also to the financial standing or responsibility of the alternative insurance company. I am humbly of opinion that this process of piling implication upon implication is not a legitimate mode of construing a very simple and plain condition. It is clogged neither by the one implication nor the other."

41. I would, in deciding this appeal, adopt the approach of the Privy Council in Hang Wah Cheong Investment: that it is not legitimate, in construing clause 12(a), to pile implication upon implication. Clause 63(b) of the Special Conditions in this case specifically absolves the Director of Environmental Protection from having to second-guess what the hypothetical reasonable businessman might or might not think. Ultimately it is his judgment that counts. That is what the agreement says.

42. Mr Kat, for the respondent, asks: Is the Director given a "blank cheque" and is there no time limit to the Director's powers? With respect, these questions are misdirected. The time-table is within the respondent's control. If the respondent puts forward proposals in good faith to mitigate the problems which have been identified, the Director must deal with those proposals within a reasonable time. He cannot sit back and do nothing. Nor can he act capriciously. None of this applies in the present case. It was not the respondent who had put forward the proposal for the noise barrier to deal with the noise problem: the idea emerged from the government side at the meeting in November 1992 and was thereafter refined, with a view to eliminating at least some of the respondent's objections.

The Environmental Guidelines for Planning in Hong Kong

43. The argument based upon the so-called expectations of the reasonable businessman is refined in this way: the Guidelines published by the Government do not, in terms, say that noise barriers for high-rise buildings are appropriate. This then led the judge to a minute examination of the Guidelines. This is what the judge said:

"The surrounding circumstances at the time of this contract were that in Hong Kong, those who enforced the law, insofar as environmental matters were concerned and those who developed, all used a booklet, which is called Environmental Guidelines for Planning in Hong Kong. These are not inflexible, but they are of vital importance for any member of the public to know what he is entitled to do. Indeed, the letter of the 25th March specifically drew attention to these Guidelines, and so the developer on examining the problem which he had to solve was told that it was unacceptable to have residential development which is exposed to a level of more than 70 dB(A)....

There are various methods to reduce noise. One of these is to build noise barriers. These are generally constructed by either earth or solid fences. These, which are very common in Europe which has low rise development, can shield residential buildings from noise caused by traffic ... Hong Kong, however, does not have low-rise buildings, unless one travels out to the New Territories. On Hong Kong Island, the number of low-rise buildings are very small and one only has to walk around South Horizons to be quite amazed at the very high and fairly dense blocks; this is a fairly standard form of residential development in Hong Kong. For example, driving through Mid-levels, one does not see any low rise blocks, because of the value and shortage of land, and so the Guidelines at para. 5.34 says on noise barriers these words:

'It is unlikely that they will have widespread application in Hong Kong where high-rise buildings have to be protected. However their use should be investigated in the following situations:

*Where low-rise buildings are to be protected

(which does not apply here)

*On urban flyovers and elevated roadways

(which does not apply here)

*In passive recreation areas where earth berms may be incorporated into landscaping works.

(which does not apply here)'

Any commercial developer, therefore, in March 1988 would have known that it was inappropriate to build a noise barrier for the development at Ap Lei Chau. The Environmental Protection Department, of course, are entitled to their point of view that this is what they wish to occur. It is clear from the correspondence that albeit that the developer did not want to do this, they were prepared to carry out this road cover. The position, however, as a matter of fact, as I find on the evidence before me, is that all of these blocks have now been built with acoustic treatment. An expert report has been filed on behalf of the Applicant, and much play in this case has been over the wording of these Guidelines. In my judgment, reading these Guidelines as one should do as in March 1988 by a reasonable commercial developer, he would know from para. 5.15 that the Guidelines ... apply to buildings which use windows as their main source of ventilation. I confess I do not know any residential blocks which were built without opening windows, and on the evidence which I have heard, it may be that this is because of the fire regulations, but it is quite clear that a developer would know that he is entitled to provide for acoustic treatment for windows which open. Indeed Table 5.3 para. 5.28 says, 'It is possible to insulate buildings from outside noise by using permanently closed windows.' (In my judgment, this means windows which are kept permanently closed; this may necessitate air-conditioning, or mechanical ventilation.) 'Generally, insulation is a feasible noise control measure only in new projects, such as hospital, high quality residential buildings where air-conditioning and sealed windows are planned from the outset.' In my judgment, this is a high quality residential development where these blocks have been deliberately designed to have sealed windows and air-conditioning....

From the evidence which has been placed before me, the blocks of flats as built now fall within the Guidelines."

44. As I see it, there are at least two fundamental flaws in this approach:

(1) Clause 12(a) does not in anyway fetter the exercise of the Director's judgment by reference to any kind of guidelines; and

(2) Guidelines are guidelines, not strait-jackets.

45. As to (1), to import the Guidelines into clause 12(a) is to re-write the agreement for the parties. When the originating summons was first taken out, there was no suggestion there that the powers of the Director to require ameliorative measures were cut down by reference to any Guidelines. The point first emerged in the amended originating summons.

46. As to (2), the judge had clearly over-looked the published objectives of the Guidelines. The Preface to the booklet states:

"The Hong Kong Planning Standards and Guidelines is a manual of the Hong Kong Government which is used to guide the preparation of statutory and non-statutory land use plans, and the planning of major development projects.

In general, the HKPSG reflect currently approved policy objectives as well as established planning practices appropriate to Hong Kong conditions. The standards and guidelines are applied at the strategic, sub-regional and local planning levels, and thus provide a useful tool for the preparation of progressively more detailed plans and development layouts.

It should be emphasised that the HKPSG are applied with a degree of flexibility, having regard to both local conditions and resource availability. The provisions of the HKPSG are not applied unilaterally, and are subject to periodic review."

47. To suggest that the Guidelines could have fettered the Director's exercise of judgment, or aroused the expectations of the respondent, in the way suggested is, in my view, wholly untenable.

Whether the Director's powers were "spent"

48. As I read Sears J's judgment, the sole basis for his conclusion is the point dealt with earlier. This is sufficient to dispose of the appeal in the Attorney-General's favour. But Mr Kat tells us that he did in fact advance another point in the court below; that by the time the Director came to require the noise barrier as an ameliorative measure in about November 1992 his power to do so under clause 12(a) was already "spent". This, says Mr Kat, is reflected in this passage in the judgment:

"The ameliorative measures as deemed necessary by the Director of Environmental Protection were first, the building of a road cover. Mr Kat submits that once that decision is made, the Director is not allowed to change his mind. I have some sympathy for that submission, because it is understandable that the Director once he comes to a decision, really ought to be bound by it. Mr Kat complains that it is no fault of the developer that this has been turned down and the Environmental Protection Department should have recognized from an early moment that what they were proposing was indeed a monstrous structure."

49. To enable the point to be properly put to us, Mr Kat applied yesterday to amend the originating summons, an application we allowed, in these terms:

"Alternatively, that the power of the Director of Environmental Protection under the said special condition was spent before November 1992."

50. In my judgment the point is untenable. There is simply no foundation for such a submission. The road cover proposal came from the respondent but it was, ultimately, found unacceptable. As a matter of construction of clause 12(a), if the respondent did not then come up with another proposal to deal with the problem, acceptable to the Director, the Director can require the implementation of such measures as he deems necessary. It may be worth recalling that, from the start, the responsibility of putting forward an acceptable concept plan was on the respondent. It knew full well that it had to segregate noise-sensitive buildings from noisy roads. The whole problem stems from the fact that it failed to achieve this in relation to four blocks. It had put forward the covered road proposal as an alternative to relocating the residential blocks. When that proposal was eventually rejected, it was up to the respondent to come up with another proposal acceptable to the Director. Plainly, in my judgment, the Director's power was and is not "spent".

51. Mr Kat, with some considerable courage, then tried to rescue this point by dressing it up as an "estoppel", but he was quite unable to identify precisely what representation is supposed to have been made, upon which the respondent relied to its detriment. As far as I can see from the mountain of papers before us, practical suggestions which have come from the Government were intended to help the respondent to find an acceptable solution. I cannot see how any such suggestions could form the basis of an estoppel which might have affected the parties' legal rights.

"Wednesbury" unreasonableness

52. Mr Kat's next point is that the decision of the Director to require a noise barrier is "Wednesbury" unreasonable - in other words, that the Director has taken leave of his senses. Apart from its obvious lack of merit, the point is irrelevant to the present proceedings. This litigation is not in the field of public law. The respondent commenced proceedings by taking out an originating summons. No leave of a High Court judge has been sought under Order 53 rule 3 for the institution of the proceedings: which would have been necessary had the respondent sought to challenge the exercise of the Director's administrative powers in the public law field. And if leave had been sought, I apprehend that it would not have been granted.

Conclusion

53. At the end of the day, the case turns on a simple matter of construction. Clause 12(a) is free-standing, is clear in its meaning, and calls for no sophistication in interpretation. The judge went far beyond the task of construction. Although he disavowed any such intention, he appears in fact to have formed a value judgment concerning the merits of the noise barrier. For instance he said (p.13 of his judgment):

"I do not agree that those who live within these flats will suffer the environmental disbenefit which the Environmental Protection Department assume that they will have."

54. And earlier on the judge said:

"Speaking for myself, I can well understand the developers of this high-quality residential development objecting to this physical barrier, which causes loss of view and loss of view between the blocks which I have examined myself. Noise barriers are only used in Hong Kong on very limited occasions."

55. This was, quite simply, a value judgment beyond the functions which the judge had to perform in dealing with the originating summons.

56. I would allow this appeal, set aside Sears J's order of 20 March 1995 and, subject to further submissions by counsel, order that the respondent pays the costs here and in the court below.

Bokhary JA:

How the Special Condition operates

57. Special Condition 12(a) deals with environmental problems which may directly affect the Lot or neighbouring lots or premises. It operates in this way. Within two months from the date of the Agreement, the Director of Environmental Protection ("the DEP") may identify such problems and notify the Developer of the same. If that is done, then the Developer shall within six months of the Agreement submit to the Director of Buildings and Lands for his approval proposals to mitigate the notified problems. And the Developer shall implement such measures as the DEP may deem necessary to ameliorate the notified problems.

The noise barrier

58. In the present case, the notified problem was the exposure of four blocks on the Lot to excessive traffic noise from the road upon which those blocks front. And the measure which the DEP deems necessary to ameliorate that problem is a noise barrier of about seven metres in height running along the side of that road where those blocks front upon it.

Its nature

59. By its nature, a noise barrier is a measure which ameliorates a noise problem. It serves as a buffer between a noise emitter and the place where the noise would otherwise unduly impact.

The "spent" argument

60. Prior to the DEP's insistence upon that noise barrier, other ameliorative measures had been explored. But that, on the evidence, did not go so far as to provide any foundation for the Developer's argument that the DEP's right to require ameliorative measures under Special Condition 12(a) had been spent by the time he came to insist upon the noise barrier.

Estoppel and legitimate expectation

61. Nor does the evidence provide any foundation for the Developer's argument that the DEP's right to require the noise barrier is barred by estoppel or any legitimate expectation on the Developer's part.

What then?

62. What then could stand in the DEP's way in requiring the noise barrier?

A problem exists

63. Naturally, he may not require any ameliorative measure in the absence of any problem to ameliorate. But that is not the situation here. For the solution proposed by the Developer would create a problem of its own, namely a restriction on the ability of residents to open their windows as and when they prefer fresh air.

Bad faith, caprice and extraneous purpose

64. Equally naturally, the DEP must not act in bad faith, capriciously or for an extraneous purpose. But there is no evidence that he had acted in any of those ways. And I would add this.

Irrationality

65. If the test is whether the DEP had acted irrationally, then I am of the view that the evidence does not show that he had acted irrationally.

Failure to co-operate etc.

66. The Developer's contention that the Government has breached the Agreement by failing to co-operate with the Developer and by impeding the development is not made out. This development did throw up real environmental difficulties. And the relevant departments cannot, on the evidence, be characterized as unco-operative, obstructive or anything of that kind.

The guidelines

67. As to the Developer's argument based on the Environmental Guidelines for Planning in Hong Kong published by the Government, that argument fails for these reasons. To begin with, Special Condition 12(a) operates by reference to what the DEP deems necessary rather than by reference to what is to be found in those guidelines. Moreover, there is nothing in the guidelines which supports the notion that special windows to reduce noise are always the solution to noise problems affecting high-rise buildings. Nor is there anything in the guidelines which supports the notion that a noise barrier is never the solution to noise problems affecting high-rise buildings.

The "reasonable developer" argument

68. So all that is left is the Developer's argument which runs thus. First, the DEP can only require such ameliorative measures as a reasonable developer would have had in contemplation at the time when the Agreement was made. And secondly, the noise barrier is not such a measure.

It fails

69. In my judgment, that argument fails. Its first limb runs counter to the plain wording of Special Condition 12(a), which obliges the Developer to implement such ameliorative measures as the DEP deems necessary. That is an end to the argument. So the question under its second limb - whether the noise barrier is the sort of ameliorative measure which a reasonable developer would have had in contemplation at the time when the Agreement was made - does not arise. Having said that, however, I should indicate that I am not to be taken as implying that I would have answered that question in the Developer's favour if it had arisen. Would it not have entered a reasonable developer's head that the DEP might deem a noise barrier necessary for blocks like these so very close to a road like this? I cannot say that I am persuaded that it would not have.

Conclusion

70. The DEP has not been given a "blank cheque". Nor has he been given a dud cheque. He has been given the means by which to get on with his job under the Agreement. And he has not strayed beyond what it was his job to do under the Agreement.

71. I, too, would allow this appeal and dismiss the Developer's claim.

Liu, J.A.:

72. I content myself with stating briefly the reasons for reaching a conclusion different from that of Sears J. The submissions to the judge were made on the premise that Special Condition 12(a) was obscure. That is not so. Mr Kat, counsel for the respondent, is unable to identify any ambiguous words or phrases in the Special Condition. It is fundamental that the courts may not resort to any aid to construction when the provision is clear. Chitty on Contracts, 27th edn. vol. 1, pp.580 & 611, paras 12-040 & 12-104. It is also not suggested that any technical terms need be explained. It was not open, therefore, to the parties to invite the judge to put himself in thought in the same factual matrix as that in which the parties found themselves at the time of the grant. Reardon Smith Line v. Hansen-Tangen, [1976]1 WLR 989 at p.997B. The Director of Environmental Protection (DEP) is given a wide power (rather unlimited than unfettered) by Special Condition 12(a), and effect must be given to the clear legislative intent.

73. As a planning condition, the request made by DEP under Special Condition 12(a) "ought to be supported if possible". The Special Condition empowers DEP to "deem" ameliorative measures necessary for mitigating such environmental problems as identified by the Director of Buildings and Lands. Put another way: it is a provision which should be benevolently construed. Fawcett Properties Ltd v. Buckingham County Council [1961] AC 636 at p.679. Whether or not Special Condition 63(b) is applicable to or capable of buttressing up Special Condition 12(a) is of little significance. What matters more is that the wide power of DEP under the Special Condition has not been emasculated. Also, the relevant "Environmental Guidelines for Planning in Hong Kong" are at best only recognised precepts which were not expected to hamper the free exercise of the power of DEP under Special Condition 12(a). This appeal falls to be decided on the validity of the exercise by DEP of such a power.

74. The ameliorative measures deemed necessary by DEP may of course be questioned if they do not "fairly and reasonably relate to the permitted development". Pyx Granite Co. Ltd v. Ministry of Housing and Local Government [1958]1 QB544 at p.572 per Lord Denning. Naturally, these measures may also be challenged for other abuses e.g. if DEP has so unreasonably invoked his powers "that they must be held to be ultra vires". (Emphasis supplied.) See Hall & Co. Ltd v. Shoreham-by-Sea Urban District Court [1964]1 WLR 240 at p.251 per Willmer LJ. When an authority is entitled to act in a certain way as DEP was here under Special Condition 12(a), the Government need not "establish the reasonableness" of the action he took or, as in this case, the ameliorative measures he regarded as necessary. Hang Wah Cheong Investment Co. Ltd v. A.G. of Hong Kong, [1981]1 WLR 1141 at p.1146A/B. DEP could simply not be restricted to his first formed opinion, even if he had at one time deemed as necessary the relocation of the affected blocks or the installation of a road cover, particularly when his instructions were later aborted.

75. There is no room for applying the Wednesbury unreasonableness and legitimate expectation in the public law sense in the context of the prayers of the amended originating summons. Similarly, it is difficult to see how the alleged implied terms or estoppel could or could properly have been entertained in proceedings instituted by an originating summons. The two alleged implied terms, one for timeous co-operation and the other for not frustrating performance, were not disclosed until a day or two before the hearing of this appeal. Once it is shown that the Special Condition is unobscure and confers on DEP an unlimited power, the exercise of that power could not in any case be obstructed by breaches of these alleged implied terms. In the court below, these implied terms were not specifically sought to be introduced; nor were the ingredients of estoppel, though itself raised in the skeleton written submission as a bare issue, identified. The judge therefore did not address himself to implied terms or estoppel. There is clearly no substance in the arguments advanced on behalf of the respondent, whether or not sustainable by the prayers of the amended originating summons, that in the last resort the specified environmental problems had been sufficiently ameliorated by the extra insulations which were largely ascribable to the relevant "Environmental Guidelines for Planning in Hong Kong", that the power of DEP in Special Condition 12(a) was spent by November 1992, that the Government is estopped from exacting a noise barrier in return for building approval or that in equity the Government cannot take advantage of its own breaches of the alleged implied terms by, if I understand counsel correctly, invoking the deeming power under Special Condition 12(a). Also, no firm or irreversible stance could justly be deduced from the very misguided bases upon which a great many legal contentions were submitted to the judge.

76. It was a valid exercise by DEP of his power under Special Condition 12(a). I too would allow the appeal and make the orders the Vice-President proposes.