I VILLAS LTD v. THE SECRETARY FOR JUSTICE

HCA 1883/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1883 OF 2014

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JUDGMENT

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Introduction

1.  In this action, the court is seized with a construction issue concerning the phrase “one residence” (“the Phrase”) appearing in New Grant No.8800 dated 12 November 1958 (“the New Grant”) in respect of Lot No.429 in D.D. 177, Lok Lo Ha, Sha Tin (“the Lot”) registered under the name of I Villas Limited, the plaintiff herein, since 2010.

2.  The plaintiff contends in its pleading that the Phrase does not mean one residential building. It can mean more than one building provided that there is no creation of undivided shares of the Lot and no conferment of exclusive possession of different residential buildings on different persons. Ms Yeung, counsel for the plaintiff, submits that, in simple term, “one residence” means a person’s residence which may consist of more than one building.

3.  On the other hand, in its defence, the Secretary for Justice, the defendant herein, advances a different construction of the Phrase. Its construction is that it prohibits the erection of (i) any building except “one dwelling house” or in the alternative, “one residential building” all for the occupation of one family; (ii) more than one building, and/or (iii) a building with separated main entrances.

4.  Both Ms Yeung and Mr Suen, counsel for the Secretary for Justice, agree that this court can come to a different conclusion on the true construction of the Phrase other than those contended by the parties.

Background facts

5.  By way of background, the following matters contained in the pleadings are either common ground or undisputed and evidenced by uncontroversial documents.

6.  First, the defendant explains the historical facts leading to the grant of the Lot to the predecessor-in-title of the plaintiff. On or about 29 February 1956, the Hong Kong Government received an Application for Conversion whereby one Mr Fung proposed to build one 2-storey village type house of about 1,000 square feet on Lot No. 304 in D.D. 177, Lok Lo Ha, Sha Tin (“the Other Lot”) for self-dwelling purpose.

7.  By a Memorandum of Agreement dated 9 April 1956 (“the MoA”), the Hong Kong Government approved the said application and on the condition that Mr Fung surrendered Section A of the Other Lot, Mr Fung was granted Lot No.406 in D.D.177 in terms of a New Grant No.8458 with a building area of 990 square feet in area (“the Previous Grant”).

8.  By a letter dated 7 December 1956 (“the 1956 Letter”), Mr Fung notified the relevant authority that the construction of his new house (“the House”) had been completed at the Other Lot according to the approved plans submitted on 29 February 1956 and invited an inspection by the District Officer. The approved plans were of the same date as that of the Application for Conversion and it is common ground that the House was a 2-storey village type house for dwelling purpose.

9.  After an inspection, an occupation permit was issued on 27 December 1956 for the occupation of the House, which was erected on Lot 406 and not the Other Lot.

10.  By a memo dated 11 September 1958 (“the 1958 Memo”), the District Commissioner wrote the Colonial Secretary to share his observation about certain irregularities. The irregularities were explained in the following terms:

“The owner of this land has developed part of the agricultural land, i.e. that immediately around the house lot, in such a way that it can now really only be described as a garden. He has also developed as part of the garden a small area of Crown land on permit to him for agriculture.”

11.  In view of the alleged irregularities, the District Commissioner suggested that Mr Fung should surrender the leases (Lot 406 and Lot 304 R.P.) and receive in exchange a building-and-garden lease for a lot of 5443 square feet subject to a revised Crown rent and the payment of appropriate conversion premium in cash. The new lot should be subject to the usual general and special condition for building-and-garden lots and the roofed over area would be restricted to 25% of the whole new lot.

12.  As a result, Mr Fung obtained the New Grant in respect of the Lot for a term of 75 years commencing 1 July 1898 with the option of renewal for a further term of 24 years less the last 3 days. The New Grant includes a document entitled “Surrender and Regrant” which specifies the amount of the premium payable. A comparison of the plan attaching to the Previous Grant and the plan attaching to the New Grant can tell that Lot 406 and the Lot in fact refer to the same piece of land.

13.  Special Condition 6 of the New Grant (“SC 6”) is divided into two main parts, namely, SC 6(a) and SC 6(b). SC 6(b) further has three sub-conditions which include the controversial condition under SC 6(b)(i) (“the Covenant”) containing the Phrase. The entire SC 6(b) reads as follows,

“6(b) No building or site development shall be commenced on the lot until plans in triplicate of such work and a block plan in duplicate showing the position of such work on the Lot shall have been submitted to the District Commissioner. Plans submitted for a R.C.C. new building must be prepared by an authorised architect. Such building shall furthermore be subject to the following rules:-

i) The Lessee shall not be allowed to erect any building on the Lot except one residence of not more than two storeys in height and not more than 25% of the total area of the Lot shall be roffed-over (sic).

ii) Without the consent of the District Commissioner in writing the height of any building shall not exceed 25 37 feet nor shall any building exceed 2 3 storeys in height. No storey shall be less than 10 feet in height.

iii) The ground floor of any new building shall be at such a level above the adjourning ground as may in the opinion of the District Commissioner necessary to ensure proper drainage, and shall in every case be at least 6 inches above such adjourning ground.”

14.  Those matters printed in bold by this court were manually added by hand whereas those struck through by this court were deleted by being struck through.

15.  It should be added that there is no evidence to explain what R.C.C. means in SC 6(b). Ms Yeung submits, with which Mr Suen does not take issue, that it is the abbreviation of “Reinforced Concrete Cement” in civil engineering parlance.

16.  The following matters evidenced by contemporaneous documents and are not in dispute. Mr Fung by his letter dated 12 January 1959 applied to the Tai Po District Office for the approval of the plans for an additional building and an aquarium in the Lot to cope with the development of his business. The 1956 Letter was printed on the letter pad of Kowloon Aquarium with a business address in Kowloon. There is no evidence that Mr Fung had ever carried on any aquarium business on the Lot.

17.  By a letter dated 14 April 1959, the District Commissioner approved such plans and granted to Mr Fung the permission to start the construction of the building strictly in accordance with the plans.

18.  By another letter dated 18 August 1959, the District Commissioner notified Mr Fung that the additional kitchen erected on the Lots had been inspected and permission was thereby granted to Mr Fung to occupy the premises for domestic purposes only. There was no mention of any permission for the commercial use of the Lot.

19.  By virtue of the Basic Law and the New Territories Leases (Extension) Ordinance, Cap.150, the terms of the New Grant have been extended to 30 June 2047. The landlord has also been changed from the British Hong Kong Government to the HKSAR Government.

20.  By an assignment dated 30 July 2010, the plaintiff, formerly known as China Chance International Ltd, became the registered owner of the Lot.

21.  After the acquisition of the Lot, from March 2011 to August 2014, the plaintiff and the District Lands Office (“DLO”) exchanged a number of correspondence regarding the proposed use of the Lot. The parties agree that on the question of the construction of the Phrase, they are not bound by the contentions stated in such correspondence. I do not think it is necessary to go into any detail the contents of such correspondence.

22.  In gist, the plaintiff made a proposal to redevelop the Lot according to the New Grant by the construction of two New Territories Exempted Houses (“NTEH”) of two storeys in height, each of a site coverage of 63.2 square metres, with the height limit of 7.55 m, to be erected and used as a single family accommodation (“the Redevelopment Proposal”).

23.  The DLO rejected the Redevelopment Proposal and indicated that it contravenes the lease conditions and a lease modification is necessary. The plaintiff did not agree to a lease modification due to its intended change of the plot ratio from 0.5 to 1.93.

24.  An impasses resulted and hence the plaintiff commenced this action.

Relevant legal principles of construction

25.  The dispute is centred on the construction of the Covenant and the Phrase and both Ms Yeung and Mr Suen have helpfully provided this court with the relevant authorities on contractual construction. There is no controversy about the established principles of construction and I need only refer to the following authoritative decisions.

26.  I should of course start with the instructive dictum of Ma CJ in Fully Profit (Asia) Ltd v Secretary for Justice (2013) 16 HKCFAR 351 at §15, to which both counsel refer:

“We have been referred to the very well-known statement of principle regarding the construction of contracts contained in the speech of Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society, to which can be added the judgment also of Lord Hoffmann NPJ in Jumbo King Ltd v Faithful Properties Ltd. What emerges from these cases – and other authorities on contractual interpretation – is the overall importance of context when construing contractual terms. The statements of principle in Investors Compensation Scheme and in Jumbo King refer time and again to the relevant background against which the relevant contract and contractual terms must be viewed. It is in my view not particularly helpful in most cases to refer to the ‘ordinary and natural meaning’ of words because, as very often experience tells us, there can be much debate over exactly what is the ordinary or natural meaning of words. The surer guide to interpretation is context. Here, I would just add that in the area of statutory and constitutional interpretation, it is context that is key; context is the starting point (together with purpose) rather than looking at what may be the natural and ordinary meaning of words.

27.  The following extract of the speech of Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at pp. 912F-913F, referred to by Ma CJ in Fully Profit,is apposite:

“The principles may be summarised as follows.

(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the “matrix of fact,” but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] A.C. 749.

(5) The “rule” that words should be given their “natural and ordinary meaning” reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191, 201:

“if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.”

28.  For completeness, I shall also have regard to the following warning given by Mummery LJ in Commerzbank AG v Jones [2003] EWCA Civ 1663 highlighted by Ms Yeung:

“… the deputy judge paid insufficient attention to the actual language of the documents. He placed far too much reliance on what, in the surrounding circumstances, would have been the sensible commercial agreement between the parties. In the result he constructed from the context alone a contract that the parties in their respective situations might have made. In doing so he has not construed the language of the two letters in which the terms of the contract were in fact formally expressed. Of course, the context of a contract matters as an aid to construction, but it should not be used to construct a contract which does not properly reflect the language employed in formal contractual documents.”

29.  With these principles in mind, I turn to the respective cases of the parties.

The parties’ respective cases

The plaintiff’s case

30.  Apart from the declaration sought in respect of the construction of the New Grant, the plaintiff also makes a plea of the Government’s derogation from grant by its allegedly wrongful rejection of the Redevelopment Proposal and claims damages. Ms Yeung indicates that the plaintiff now abandons such a claim at trial.

31.  In her opening submissions, Ms Yeung makes it clear that the position of the plaintiff on the construction of the Covenant is that it only prohibits the creation of undivided shares on the Lot and conferring exclusive possession of different residential buildings on different persons. She submits that provided that the buildings are occupied by the same person or the same group of persons as residence, the buildings erected are still within the meaning of the Phrase and are permissible under the Covenant. In a nutshell, a residence is only delineated by its ownership by one single resident or household and can comprise one or more buildings. Adopting this construction, the plaintiff’s case is that the proposed erection of two NTEFHs still falls within the definition of the Phrase so long as they are for one single family use.

32.  Ms Yeung urges this court to take in account the factual matrix, viz, the historical facts leading to the creation of the New Grant. Such facts are incontrovertibly shown by the Application for Conversion, the Previous Grant and the 1958 Memo.

33.  And of course the New Grant in its entirety including the General Conditions of Regrant and the Special Conditions has to be considered to ascertain the context of the Phrase. In this regard, Ms Yeung reminds this court that a holistic approach should be adopted in construing the Covenant so as to bring it in harmony with other provisions of the New Grant.

34.  First, Ms Yeung observes that in both the Previous Grant and the New Grants, the term “residence” appeared only once in the Covenant whereas “building” or “buildings” were used to refer to buildings on the Lot in both the General Conditions and the Special Conditions. She then submits that the terms “buildings” and “residence” are not supposed to be used interchangeably in the New Grant and they should bear different meanings.

35.  Ms Yeung submits that the retention of the phrase “new building” in SC 6(b)(iii) despite the replacement of the same in SC 6(b) by “R.C.C. building” supports her contention that it bears a different meaning from that of the Phrase.

36.  Next, Ms Yeung underscores the major differences between the Previous Grant and the New Grant by way of the following table in her written submissions:

	Previous Grant	New Grant
Lease	Building	building-and-garden
Prescribed area	990 sq ft	5,443 sq ft
Building area	990 sq ft	(Roofed-over) 1,360 sq ft

37.  Ms Yeung submits that the roofed-over area is substantially larger than the original building area permissible under the Previous Grant and represents an increase of 370 square feet (“the Increased Area”). With this relaxed condition, she submits that that any new building referred to in SC 6(b)(iii) would be permitted so long as its roofed-over area when added to that of the House amounts to no more than 1,360 square feet.

38.  Moreover, Ms Yeung argues that the original Special Conditions 2 to 5 relating to construction of new building were deleted to reflect the fact that no new building was required to be built at the time of regrant. That said, Special Conditions 8 to 10 expressly allow the construction of buildings subject to the approval of the District Commissioner.

39.  Ms Yeung further emphasizes that the amendment to SC 6(b) by the introduction of the phrase “R.C.C building” merely imposes a new requirement on the physical attributes of the building on the Lot rather than disallowing any construction of a new building. She points out that SC 7 actually requires submissions of plans complying with SC 6 prepared by an authorised architect to be approved by the District Commissioner.

40.  Lastly, Ms Yeung points out that the Phrase is used instead of one dwelling house or one residential building in the Covenant. She then submits that this court should give precedence to the actual language used and the Phrase should, thus, have a connotation of a specific meaning rather than bearing the meaning of one dwelling house or one residential building.

41.  Ms Yeung, rightly in my view, indicated at the outset of the trial that the present dispute does not really involve factual disputes and therefore the plaintiff would not call any factual witness.

42.  On the other hand, Ms Yeung raises objection to the evidence of Mr Lau Siu Chung, Chief Land Executive of District Lands Office, Shatin of Lands Department. Mr Lau is the only defence witness. Her major objection is that Mr Lau only commenced his employment with the Government in or about 1984 and cannot have personal knowledge of the circumstances leading to the making of the New Grant. His evidence amounting to personal opinion on the interpretation of the documentary records should also be excluded as he is not legally qualified to give his view on their construction, which is a matter of law.

43.  On this basis, Ms Yeung asks this court to disallow the admission of his evidence. In any event, Ms Yeung submits that no weigh should be given to his evidence.

44.  I do not think that there is any substance in this objection. There has been no application to expunge any part of the witness statement of Mr Lau. Of course in the assessment of his evidence, this court is mindful of the capacity of Mr Lau. In any event, his evidence is not particularly helpful in resolving the construction issue.

The defence case

45.  Mr Suen succinctly states the position of the defence as follows. First, the Phrase should be construed against the factual matrix and the context of the New Grant including, in particular, the existence of the House being a 2-storey village type residential building on the Lot.

46.  Second, Mr Suen contends that, properly construed, the Phrase prohibits the erection of any building except one dwelling house or in the alternative one residential building for the occupation of one family. He no longer contends that the Phrase prohibits the erection of a building with separate main entrances.

47.  Next, Mr Suen submits that the construction of the plaintiff of the Phrase is absurd as it imposes no restriction on the number of dwelling houses or residential buildings and/or the physical attributes of such house(s) or building(s) as one residence which may be erected by Mr Fung, the grantee, under the New Grant.

48.  Lastly, in any event, the defence does not accept that the Phrase allows the proposed erection of two NTEHs.

49.  Mr Suen maintains that it is common knowledge that the Government grants many government leases from time to time and for this purpose the Government has produced standard forms of such government leases containing templates of General Conditions and Special Conditions. Adaptations should be made to such standard forms so as to cater for the particular situations of a particular government lease.

50.  From this, Mr Suen makes the point that the references of “building” or “buildings” in such standard forms are commonplace and it does not mean that the parties contemplate that buildings of any number or any type may be erected. Invariably, government leases contain specific restriction on the number and the type of building which may be erected on a particular demised lot. He refers to Fully Profit to underscore the significance of the fact that only the House had been erected in the construction of the Phrase.   

51.  For the context of the Phrase, it is submitted that the overall objective and purpose of the Covenant should be taken into account. Mr Suen contends that it is clear that the objective of the Covenant is to improve a restriction on the number and type of the building and the physical attributes of buildings, which may be erected on the Lot. Hence, the construction contended by the plaintiff cannot be tenable.

Analysis

52.  First of all, I should make it clear that I agree that I should have regard to the historical facts leading to the creation of the New Grant as the relevant factual matrix. Such facts are narrated above. I refuse to take into account the subject intentions of the parties in these proceedings and the constructions advanced in their correspondence.

53.  I have also perused the New Grant in its entirety and made a particular effort to ascertain the overall objective and purpose of the whole document including the Covenant.

54.  The parties actually do not differ in regard to the user condition imposed by the Covenant and, to be precise, the Phrase. It only allows residential use. The gulf between the parties is about the number of the residential buildings that could be erected on the Lot.

55.  There is no mention of the House at all in the New Grant. There is no evidence that Mr Fung had ever evinced to the District Office an intention to demolish the House and construct another building or some buildings in its stead. Nor is there any evidence that Mr Fung had ever asked for the permission to construct a separate building in addition to the House as his residence on the Lot prior to the New Grant. The undisputed evidence is that the District Office allowed the erection of the additional kitchen for domestic purpose as an annex to the House upon the application of Mr Fung pursuant to SC 7 of the New Grant. The additional kitchen cannot be said to be a separate residential building. 

56.  SC 6 is the first provision in the Special Conditions to impose any restriction on the user and the physical attributes of the buildings to be erected on the Lot such as their height and area. Firstly, SC 6(a) prohibits erection of any building to be used as a “Chai Tong” or for any similar use in the absence of the written permission of the District Commissioner.

57.  Naturally, one would expect other user restrictions to be found in the remaining part of SC 6. There comes SC 6(b)(i). It is noteworthy that the Covenant at the outset imposes a complete ban on the erection of any building on the Lot except one residence. Further restrictions on such a residence are imposed. It should (a) be of not more than two storeys in height and (b) not cover more than 25% of the total area of the Lot.

58.  The Covenant clearly has different purposes to serve. It concerns an exception to the ban on the erection of any building on the Lot. Despite the contrary submission of Ms Yeung, I find that it relates to both the user condition and the physical attributes of the residential building that can possibly be erected on the Lot. Judging from the context, there is no reason why the Covenant should have anything to do with the issue of co-ownership.

59.  I am not convinced that the objective and purpose of the Covenant is to prohibit the creation of undivided shares on the Lot and conferring exclusive possession of different residential buildings on different persons. Such a prohibition is so incongruous in light of all other provisions in SC 6.

60.  If the Covenant is intended to impose a prohibition on the creation of undivided shares, there is no reason why there is no express reference to any undivided shares at all and only a reference to one residence is made. In fact, even if the House was solely for the residence of Mr Fung and/or his family members only, it does not follow that Mr Fung was the entire beneficial owner of the Lot. The sole user of the building is not necessarily its sole owner. I am unable to accept that the Phrase could impose any restriction on the creation of co-ownership of the Lot.

61.  As rightly pointed out by Mr Suen, SC 1 specifically deals with non-alienation. SC 1 contains a restrictive covenant and it provides,

“The Lessee shall not –

(a) assign, or part with the possession of or otherwise dispose of the Lot or any part thereof or any interest therein or enter into any agreement so to do … unless and until it has in all respects observed and complied with the General and Special Conditions to the satisfaction of the District Commissioner …”

62.  Thus, it can be seen that the restrictions in SC 1 are not absolute given its proviso. There is no reason why the Covenant contains the alleged restrictions, which will only remove the contractual effect of the proviso of SC1 even without any mention of the same.

63.  Ms Yeung makes a submission on the differences between SC 1 and SC 6. She argues that whilst SC 1 is in effect a non-alienation clause, SC 6 prohibits the creation of undivided shares such as in the context of a DMC. I find no merit in this submission. In my view, SC 1 plainly concerns the same prohibition.

64.  I accordingly accept the submission of Mr Suen that the construction put forth by the plaintiff violates the fundamental principle of construing a contract that “all parts of it must be given effect where possible, and no part of it should be treated as inoperative or surplus.”: Lewison, The Interpretation of Contracts (6^th Edn) at §7.03.    

65.  Moreover, I cannot accept the contention that the Covenant imposes no restriction on the number of the buildings to be erected on the Lot so long as all of them belong to Mr Fung and they do not exceed the permissible area. I accept Mr Suen’s submission that it is only normal for the New Grant to contain such a restriction in the Covenant. The outcome of non-restriction would be absurd as there can be a number of not-more-than 2-storey buildings with various floor areas scattering on the Lot to be occupied by the family of Mr Fung. This cannot be the overall objective and purpose of the New Grant.

66.  I have not overlooked the Increased Area, which Ms Yeung says is a relaxed condition. I do not think the increase on the building area necessarily means that an additional building covering the Increased Area can be constructed separately. Rather, Mr Fung could make an application for an addition or alteration to the House in accordance with SC 7 to fully utilize the Increased Area.  If need be, he could have demolished the House altogether and constructed in its place one two-storey house with a floor area of no more than 1,360 sq ft.

67.  I further accept the submission of Mr Suen that having regard to the background facts, there is nothing to suggest that the parties had ever the erection of any additional building on the Lot. The original covenant in the General Conditions (§4(a)) for the lessee to develop the Lot by the erection thereon of a building or buildings was deleted.  

68.  I can, thus, conclude that the meaning of the Covenant that would convey to a reasonable man having all the background knowledge including the Previous Grant and the existence of the House is that the New Grant allows Mr Fung to have only one single two-storey building in the form of the House for his residential purpose to be erected on the Lot.

69.  In reaching this conclusion, I am not troubled by the concurrent use of both “the building(s)” and the Phrase in the same document. It does not follow that they should necessarily refer to two different things. The term of “buildings” is merely a neutral term and it is only reasonable for the term of “buildings” to be used in the general sense in the standard forms of government leases. When it comes to a particular user clause, other terms denoting a building for a particular use such as “warehouse”, “clinic” and “residence” are normally used. These terms no doubt also fall within the meaning of “buildings”.

70.  Nor does the retention of the term of “building” in SC 6(b)(iii) cause me any concern. Any new building in the said provision is wide enough to cover the single residential building permitted in the Covenant. Of course it would be clearer if the residence was to be expressly mentioned in SC 6(b)(iii). On the other hand, if the new building referred to in SC 6(b)(iii) means more than one building, there is no reason why it remains to be in the singular.  In addition, the restriction should be expressly applicable to the ground floor of each of the new buildings and not just the new building. This is, however, a subsidiary point.

71.  As regards the submission of Ms Yeung that there are express provisions in the New Grant to allow the erection of a new building, I do not think that this is in dispute. The mere fact that there are such provisions does not suggest that more than one building can be erected on the Lot and does not assist the plaintiff in the construction issue.

72.  Lastly, there is no dispute that the Phrase in its natural and ordinary meaning can mean a dwelling house or a residential building. I see no substance in the contention that the specific use of the Phrase in the Covenant must mean that it bears a different meaning other than a dwelling house or a residential building.     

73.  Mr Suen submits that, in government leases created around the same time as the New Grant, the Phrase was also used to refer to a dwelling house or a residential building. In this connection, he relies on the evidence of Mr Lau and some authorities.

74.  Mr Lau has ample working experience in dealing with government leases and I believe that he is capable of telling from his experience whether the Phrase was used in other government leases to refer to a dwelling house or a residential building. His testimony that the Phrase was used in another grant dated 27 June 1958 for the purpose of creating the restriction of one residential house only was not challenged. Indeed, as pointed out by this court earlier on, the Phrase does bear the meaning of one residential house in its natural and ordinary meaning. I have no reason to cast doubt on his testimony in this regard.

75.  With respect to those authorities in which Mr Suen says it was decided that “residence” meant “dwelling houses”. I accept the submission of Ms Yeung and I do not think I should and can derive much assistance from them. Ms Yeung pertinently draws my attention to Hawley v Luminar Leisure Ltd [2006] IRLR 817. There, at §102, Hallett LJ had this to say,

“The three principles identified above also serve to underline the caution which a court, seeking to identify the meaning of a word in a particular contract, must adopt when considering what assistance can be deprived from either the word’s acontextual meaning, or judicial decisions as to the meaning of the same word in a different contract. Because the contractual and commercial circumstances of each case are inevitably different, it can be positively dangerous to draw assistance from the contextual meaning or from decisions of other courts as to the meaning of a particular word, when context is so important on issues of interpretation. Of course, very different considerations may apply where a particular word or phrase has a specific well-established meaning in a certain type of contract.”

76.  Though government leases are a rather special type of contract, it is yet to be established with cogent evidence that the Phrase has a specific well-established meaning in such leases. I, therefore, place little weight on the evidence of Mr Lau and the authorities cited to this court in my determination of the construction issue.

Conclusion and orders

77.  For the reasons given, I cannot accept the construction advanced by the plaintiff. I refuse to make the declaration pleaded in the Statement of Claim. I dismiss the claim accordingly.

78.  For the avoidance of doubt, this court accepts the contention of the defence that on a true and proper construction of the Phrase in SC 6(b)(i), it means a dwelling house or one residential building.

79.  I have not dealt with all the arguments of the parties skillfully presented by Ms Yeung and Mr Suen in this Judgment. I believe I have given sufficient reasons why the construction of the plaintiff has to be rejected.

80.  There is no reason why costs should not follow the event. I make a costs order nisi that the plaintiff do pay the defendant the costs of this action including all the reserved costs, if any, to be taxed if not agreed.

81.  It remains for me to thank both counsel for their able and thorough submission.