CENTRAL HARVEST DEVELOPMENT LTD v. SECRETARY FOR JUSTICE

HCA 2386/2019

[2026] HKCFI 1334

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2386 OF 2019

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J u d g m e n t

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A. INTRODUCTION

1.  The subject of the present action is the Remaining Portion of Lot No.1941 (“1941RP”) in Demarcation District 95, Kwu Tung, New Territories (“DD 95”).

2.  There is a dispute as to:

2.1     whether Lot 1941 (“Lot 1941”), the mother lot of 1941RP, included a triangular area (“the Disputed Triangle”) at its eastern boundary as shown in yellow cross-hatched green in Plan A (“RASOC Plan A”) annexed to the Re-Amended Statement of Claim (“RASOC”);

2.2     whether it was a term of the grant of Lot 1941 that the lessee could convert Lot 1941 or any portion thereof into building land upon payment of (1) a conversion premium at the rate of ¾ of a cent per square foot and (2) Crown rent in respect of the converted area at the rate of $50 per acre per annum from the date of conversion.

RASOC Plan A

(the Plaintiff labelled the Disputed Triangle as “RP(3)”)

3.  The dispute arises because, although there was a grant of Lot 1941 in around February 1922, the original of the grant has been lost, and there is no record of the grant or its terms, or the area and size of Lot 1941, in the Land Registry.

4.  The Plaintiff seeks, inter alia, declarations that:

4.1     the total area of Lot 1941RP was approximately 190,063 sq ft as at 23rd December 2019, and since 27th December 2019 has been approximately 115,389 sq ft, comprising the area as delineated in RASOC Plan A; and

4.2     the Government lease deemed granted with respect to 1941RP contains a term entitling the lessee to convert 1941RP or any portion thereof into building land upon (1) payment of a conversion premium at the rate of ¾ of a cent per square foot and (2) payment of Crown rent in respect of the area as converted at the rate of $50 per acre per annum from the date of such conversion (“the Conversion Term”).

5.  The Plaintiff says that it has suffered the following loss:

5.1     loss of profits from a potential development of RP(1) (as defined below) and the Disputed Triangle as building land, which it says could have been converted to building land within a reasonable time after 28th March 2013, and

5.2     loss of a chance to obtain ex gratia payment upon the resumption of RP(1) at the compensation rates published in Government Notice 6048 of 13th September 2019.

6.  The trial before me related to the issue of liability only.

B.     THE FACTS

7.  Unless otherwise indicated, the following are undisputed or otherwise indisputable, and I find them as facts.

B1.    The parties

8.  The Plaintiff, a company within the group headed by Henderson Land Development Company Limited, is the registered owner of 1941RP.  It acquired 1941RP through an assignment dated 27th June 1997, from the personal representative by chain of representation of the estate of the deceased owner Jose Maria de Castro Basto (“JM Basto”).

9.  The Defendant is sued in his representative capacity on behalf of the Director of Lands (“the Director”).

B2.    Surveying and recording New Territories Land^[1]

10.  The matters set out in this subsection constitute general historical background which helps to give context to the events in the present case, and to explain some of the terms used in these proceedings; unless otherwise indicated further below, they do not have direct relevance to the present case.

11.  A survey of the New Territories was started after it was leased to the British Government in 1898.  Survey teams were seconded from the Survey Department of India.  The surveyors prepared “Double Lot” sheets in the field, identifying lot boundaries.  The sheets were then fair drawn, and compiled to become Demarcation District (“DD”) sheets.  The DD sheets were originally topographical maps to the scale of 16 inches to a mile (1:3,960), and later, 32 inches to a mile (1:1,980).  The areas were recorded to an accuracy of 0.01 acres (435.6 sq ft), relatively rough in comparison to today’s standards.

12.  The area of the lots were estimated or calculated from the Double Lot sheets by the Indian surveyors, and then recorded in “Field Area Statements” (“FAS”).  The figures were later copied to the relevant Block Crown Lease for the purpose of collecting Crown rent.

13.  A Land Court was set up, and villagers came forward to claim ownership of the various lots.  The Assistant Land Officer would verify the claims and record the details of ownership of the lots.

14.  A Block Crown Lease was executed for each Demarcation District.  The particulars of each lot falling within the Demarcation District (the lot number, nature of the lot, class of the lot, owner’s particulars, and the annual Crown rent), as recorded in the FAS, were copied to the Schedule of the Block Crown Lease.  The lots in the Block Crown Leases were known as the “old schedule lots”.

15.  After the signing of the Block Crown Leases, land which remained unclaimed within each Demarcation District was declared to be Crown land.  Later on, some Crown land was sold by public auction or direct sale as New Grant Lots.  The Plaintiff’s expert Mr Tang Wing Lun said that such New Grant Lots were shown on the ground without physical marking of boundaries and were roughly sketched on plans by unskilled New Territories Administration staff, but he acknowledged at trial that this was not applicable to the present case as Lot 1941 was a case of surrender and regrant, rather than one of sale of former Crown land by public auction or direct sale.  The areas of New Grant Lots were recorded in the FAS for annual Crown rent payment.  New Grant Lots were also recorded in the DD sheets, which became the “DD Control Sheets”.

16.  The DD Control Sheets were updated from time to time and reproduced by retracing or photocopying when they became torn, dilapidated and legible.  The Plaintiff’s expert’s opinion is that the record of the New Grant Lots in the DD Control Sheets was not reliable – he opined that as the New Grant Lot plans did not have any grid references, recording was very difficult; over time, there might be several editions of the DD Control Sheets; there might be tracing errors or redrawing of lost sheets.

17.  There were also DD Retraces which were used by the New Territories Administration staff for their day-to-day administrative work.  These retraces were replaced more frequently than the DD Control Sheets as they were the working documents used in the office.

18.  A correlation exercise was carried out starting in about the 1950s.  The New Territories Administration staff put boundary information from the DD Control Sheets onto 1:1,200 survey sheets of the Public Works Department.  Field verifications were carried out, with consultations of the registered owners and village representatives.

19.  A second correlation exercise was carried out from 1976 onwards, and the results shown on 1:1,000 survey sheets. The correlated boundaries shown on these sheets have become Government office records.  Lot Index Plans, available for purchase from the Survey and Mapping Office, are taken from these survey sheets.  Lot Index Plans contain a disclaimer, stating that the graphical boundaries are for identification only and that the interpretation of their accuracy and reliability requires advice from a professional surveyor.

B3.    The Grant

20.  By a grant made in or around February 1922 (“the Grant”), Lot 1941 was demised to JM Basto in consideration of and in exchange for the surrender of various lots in DD 95 by deeds of surrender dated 22nd February 1922 registered at the Land Registry by Memorial Nos. N51935 and N51936 respectively (“the Deeds of Surrender”).

21.  There is no record of the Grant or its terms, or the area and size of Lot 1941, in the Land Registry.

22.  The two Deeds of Surrender were dated 22nd February 1922.  Pursuant to the deed registered by Memorial No.N51935, Carlos Henrique Basto (“CH Basto”) surrendered 24 lots in DD 95, and pursuant to the deed registered by Memorial No.N51936, JM Basto surrendered 139 lots in DD 95, to the Government.

23.  The Plaintiff’s expert Mr Tang calculates the area of the surrendered lots as being 33 acres.^[2]

24.  The surrendered lots were mostly grouped together, but did not form a completely continuous or regular plot of land.  Some of the lots lay outside the northern and eastern boundaries of Lot 1941 (whether or not one takes the Disputed Triangle as part of Lot 1941).  Conversely, Lot 1941 did not completely consist of the surrendered lots; part of the land within Lot 1941 was originally Crown land.

25.  It should be noted that the grant of Lot 1941 was not a case of sale of land unclaimed under a Block Crown Lease and declared to be Crown land, then sold by public auction or direct sale.  Rather, as the Plaintiff’s expert Mr Tang acknowledged and explained in his oral evidence at trial, the boundaries of Lot 1941 would have been newly drawn up upon the surrender of land pursuant to the two Deeds of Surrender, although this would have been done by reference to a plan retraced from the then DD Control Sheet so as to obtain references for the location of the newly granted lot.  He accepted that a plan would have been traced from the relevant DD Control Sheet, the parties would have negotiated the boundaries of the new lot, the boundaries would then have been drawn on the plan which would then have become the Grant plan, and the Grant plan would lastly have been traced back onto the DD Control Sheet.

B4.    Other government records regarding Lot 1941

B4.1  FAS

26.  There is an FAS for Demarcation District 95.  A page of this which was in the evidence listed out the lot numbers from 1801 to 1950.  The document was preprinted with columns to record the area and use of the lots.  Entries were made in manuscript.  The areas for Lots 1801 to 1924 were entered in decimals (that is, in hundredths of an acre).  The areas for Lots 1925 to 1932 and 1937 were left blank.  The areas for Lots 1933 to 1936 and 1938 to 1940 and 1942 to 1950 were entered in square feet.

27.  The entry for Lot 1941 stated “Basto’s Lot” or “Basto’s Let”, and a figure of 33.657 acres was written above it.

28.  The source of information for the entries is unknown.  However, the Plaintiff’s expert Mr Tang said that it was standard practice that after New Grant Lots – at least, for those originating as unclaimed land sold by public auction or direct sale – had been granted, the area of the lots would be recorded in the relevant FAS.  He checked that Lots 1935, 1936, 1945 to 1950 had been publicly auctioned.

B4.2  Crown Rent Roll

29.  No Crown Rent Roll has been found for Lot 1941.  There is a Crown Rent Roll for 1941RP which dates from about 1979, which (inter alia) set out the area of 1941RP as 0.01 acres (building land) and 7.734 acres (agricultural land) (totaling 4.744 acres), later reduced to 190,963 sq ft.

B4.3  DD Control Sheet

30.  The only available DD Control Sheet of the relevant location in the present case was created on 12th January 1940.  It would have been created in the manner described in section B2 above.

Extract of the DD Control Sheet

31.  The area of Lot 1941 as measured from the January 1940 DD Control Sheet is 30.28 acres.

B5.    Subdivision and sale of Lot 1941

32.  After the Grant in 1922, there were various subdivisions and sales of parts of Lot 1941.

B5.1  Section E

33.  By an instrument of sale dated 26th January 1923 registered in the Land Registry by Memorial No. N54337 (“the Section E Memorial”), Section E of Lot 1941, with an area of 100,000 sq ft (“Section E”), was carved out and assigned by JM Basto to a third party for consideration.

34.  The memorial was signed by JM Basto.

35.  The plan attached to the memorial was entitled “DD 95 Lot No. 1941” (“the Section E Memorial Plan”).  The eastern boundary of Lot 1941 was slanted upwards in a westerly direction relative to the North-South axis marked on the plan.  Section E was marked out as a strip of land with its eastern boundary coinciding with (or appearing to coincide with) the full length of the eastern boundary of Lot 1941.

The Section E Memorial Plan

36.  A small part of the strip at the southern end was narrower in width than the rest of the strip.  The Director says (and the Plaintiff’s expert Mr Tang agreed) that this narrowed part of the strip was for the purpose of providing access to Castle Peak Road (now Fanling Highway) located to the south of Lot 1941 (“Section E Access”).

37.  The Section E Memorial was certified by the signing District Officer as a correct Memorial, and was registered according to s.31 of Ordinance 34 of 1910.^[3]

B5.2  Section A

38.  By a Conveyance on Sale dated 30th April 1923 registered in the Land Registry by Memorial No. N56395 (“the Section A Memorial”), Section A of Lot 1941, with an area of 640,730 sq ft (“Section A”), was carved out and assigned by JM Basto to a third party for consideration.

39.  The memorial was signed by JM Basto.

40.  The plan attached to the memorial again referred to Lot 1941 and not just part of it (“the Section A Memorial Plan”).  The eastern boundary of Lot 1941 was slanted upwards in a westerly direction relative to the North-South axis marked on the plan.  Section A was marked out as a plot of land with its northern, north-western, and western boundaries coinciding with those of Lot 1941, although the plot did not extend as far south as the southern boundary of Lot 1941, save for a small narrow strip similar in shape to that of the Section E Access.

The Section A Memorial Plan

41.  The Director says (and the Plaintiff’s expert Mr Tang agreed) that the narrow strip at the southern end of Section A was for the purpose of providing access to Castle Peak Road located to the south of Lot 1941 (“Section A Access”).

42.  The Section A Memorial was certified by the signing District Officer as a correct Memorial, and was registered according to s.31 of Ordinance 34 of 1910.

B5.3  Section B

43.  By an instrument of sale dated 23rd March 1931 registered in the Land Registry by Memorial No. N79138 (“the Section B Memorial”), Section B of Lot 1941, with an area of 339,571 sq ft (“Section B”), was carved out and assigned by JM Basto to a third party for consideration.

44.  The memorial was signed by JM Basto.

45.  The plan attached to the memorial was entitled “Section B of DD 95 Lot No. 1941” (“the Section B Memorial Plan”).  The eastern boundary of Lot 1941 was slanted upwards in a westerly direction relative to the North-South axis marked on the plan.  The plan also showed Section E, with its eastern boundary coinciding with the eastern boundary of Lot 1941, although the narrowing of Section E at the location of the Section E Access was not shown.  The plan further showed Section A.

The Section B Memorial Plan

46.  The plan was prepared by one “Raven and Basto Architects” and was signed “AHB”.  The Director points out that this was Antonio Hermenegilodo Basto, a son of JM Basto (“AH Basto”).

47.  The Section B Memorial was certified by the signing District Officer as a correct Memorial, and was registered according to s.31 of Ordinance 34 of 1910 (the New Territories Regulation Ordinance 1910).  In the box against “Particulars of incumbrances to which the premises are subject, and other special Covenants on particulars mentioned in the Instrument”, it was written that:

“ The purchaser shall be at liberty to convert the Lot into building ground on payment of Crown Rent in respect of the area so converted at the rate of $50 per acre per annum from the date of such and upon payment of premium in respect of the converted area at the rate of three quarters of a cent per square foot.”

48.  No such term had appeared in the Section E or Section A Memorials.

B5.4  Section B: ss.1, ss.2, RP

49.  On 21st January 1935, Section B was further subdivided into subsection 1, subsection 2 and remaining portion of section B, and subsections 1 and 2 were sold.  The instruments of sale were registered in the Land Registry by Memorial No. N91927 and N91928. Both memorials (“the Section B Subsection Memorials”) were certified by the signing District Officer as correct, and were registered according to s.31 of Ordinance 34 of 1910.  Each contained a virtually identical notation for the “Particulars of incumbrances” to the one in the Section B Memorial, as follows:

“ Particulars of conditions in the Crown Lease.

The purchaser shall be at liberty to convert the area into building ground on payment of Crown Rent in respect of the area so converted at the rate of $50 per acre per annum from the date of such conversion and upon payment of premium in respect of the converted area at the rate of three quarters of a cent per square foot.”^[4]

B5.5  1941RP

50.  After Section E, Section A and Section B were carved out of Lot 1941, what remained was 1941RP.  It is common ground that no section C or section D was ever carved out of the lot.

51.  1941RP comprised a parcel of land to the south of the carved‑out Section A (“RP(1)”), and a parcel of land sandwiched between Section B and Section E (“RP(2)”).  It is the Plaintiff’s case that it also comprised the Disputed Triangle to the east of Section E, and the Director’s case that it did not.

B6.    Correspondence with AH Basto

52.  On 27th June 1955, AH Basto wrote to the District Commissioner regarding 1941RP and Lot 341, both in DD 95, replying to the latter’s earlier letter.  He said that it was not clear which lot or lots was registered in the name of the late CH Basto, and that the lot with 229,000 sq feet was registered in the name of JM Basto.  He also asked when the lease would expire, and went on:

“ I understand that the lot is an agricultural lot, but any area may be converted into Building Lot by payment of a premium of ¾ cent per sq ft. Will you please confirm if this is correct?”

53.  The letter attached a plan which was said to have been copied from the original deed transferring Section A.

54.  The District Commissioner replied on 7th July 1955, saying that AH Basto’s plan was not accurate, and advising AH Basto to obtain an official tracing of the lots, both of which were registered in the name of JM Basto, deceased.  He further said that the registered area of Agricultural Lot 1941 RP was not 229,000 sq ft but 8.85 acres, of which 0.01 acres (435 sq ft) was registered as building land.  The letter went on:

“ On this section a building can be erected subject to the approval of plans, etc, without payment of conversion premium. To the rest of the lot this does not apply, discretion rests with the District Commissioner. In no circumstances would the premium payable be as low as ¾ ct per sq ft. This sounds like an early 1930’s figure. To-day, on the rare occasions when approval is given, it is usual to make it conditional on the surrender of Agricultural Land equal in value to the area of Building Land required taking the difference in value consequent on the altered stated into the account.”

55.  Some years later, by a letter dated 8th December 1959,^[5] AH Basto wrote to the District Commissioner, saying

“ With reference to my letter of the 23rd October 1941 I have now obtained the area of the above original lot which is 33.657 acres = 1,466,098 sq ft. I enclose herewith copy of plan made in 1923 showing:

Area coloured pink Sec. A containing	640,730 sq ft
"     "     blue	640,170 " "
"     "     yellow (left)	92,782 "  "
"     "     yellow (right)	89,160 "  "
Total	1,462,842 "  "

  which is slight less than 1,466,098 sq ft.

     In setting out the lot boundaries a portion on eastern boundary was shifted to the left with the result that there is a shortage of area.

     The areas at present shown as follows:

Sec. A (Canossian Sisters)	640,730 sq ft
Sec. B (originally Soares)	339,571  "  "
Sec. E (now Azevedo known as lot 2016)	100,000 "  "
Area at left (yellow) RP	92,782  "  "
"    " right (yellow) RP	89,160 "  "
Total	1,262,243 "  "

     Deducting 1,262,243 from original area, 1,462,842 leaves a balance of 200,599 sq ft as portion of the RP coloured blue on plan.

     I shall be obliged if you will kindly check these areas and adjust the boundaries accordingly as I understand that the area is less than 100,000 sq ft. …”

56.  Enclosed with the letter was the plan said to have been made in 1923 (“the Basto Plan”).  On this plan, the eastern boundary of Lot 1941 slanted upwards in an easterly direction relative to the North-South axis, so that the shape of the lot differed from that in the Section E, Section A and Section B Memorial Plans.  I will return to the features of this plan later.

Extract of the Basto Plan

B7.    Assignment of RP(2) in 1959

57.  On 22nd August 1959, Messrs D’Almada & Mason (“D&M”), acting for a purchaser intending to purchase 1941RP, wrote to the District Officer asking for confirmation that upon an application for conversion of land from agricultural to building lot, no building covenant would be required.

58.  There appears to have been some further correspondence between D&M and the District Officer.  Then, on 28th September 1959, the District Officer wrote to D&M regarding 1941RP, saying that:

“ This holding is registered as agricultural land and unless you can produce evidence to show that there is a right of free conversion I must assume that there is not. An application to convert this lot for building purposes will involve the surrender to the Crown and re-grant as building land on payment of the full difference in value plus the imposition of a building covenant to be fulfilled within two years.”

59.  D&M responded on 31st October 1959 to ask for the amount payable on an application for conversion of 1941RP for building purposes and the building covenant required.  It is unknown whether or how this was answered.

60.  By a conveyance of sale dated 15th December 1959 registered in the Land Registry by Memorial No. 140566 (“the RP(2) Memorial”), RP(2), with an area of 178,748 sq ft, was assigned to a third party.

61.  RP(2) was later surrendered to the Government.

B8.    Surveys in 1961, 1965 and 1971; correspondence between representatives of owner of 1941RP and the Government

62.  On 20th September 1960, D&M, representing the trustee of the estate of JM Basto, deceased (“Basto’s Trustee”), wrote to the District Officer, saying that the total area of 1941RP was 0.1 acre building land and 8.838 acres agricultural land; RP(2) had been sold, and D&M’s client calculated that the remaining area should be 4.7345 acres or 206,670 sq ft.  However, the only remaining portion of 1941RP had an area of 92,700 sq ft, so that there was a discrepancy with the calculations.  The client sought to investigate the matter in detail in view of the increase in value of land in the New Territories.  The letter ended by asking for the cost of carrying out a detailed survey of the whole of Lot 1941 and its sub‑divisions.

63.  On 20th March 1961, the District Officer wrote to D&M.  The letter referred to D&M’s letter of 20th September 1960 and a subsequent letter.  It said that a survey had recently been completed of the various subdivisions of Lot 1941, and that the land remaining to D&M’s client amounted to about 92,700 sq ft and not the 206,670 sq ft (4.744 acres) mentioned by D&M.  The District Officer opined that the difference was “due to the inaccurate method of calculation of area used in the past”.  He went on to say that the possibility of such a mistake had been considered by the Government, and Gazette Notification 365 of 1906 had addressed this by saying that the exact area boundaries and measurements of each lot would be determined before the issue of the Crown lease; the premium and Crown rent would then be adjusted in accordance with the area and the amounts of premium and Crown rent at which the lot was sold.  He concluded that it appeared that in this case the boundaries and areas of the lot and premium would have to be adjusted when the Crown lease was issued.

64.  In the event, the Government continued to levy Crown rent on an area of 4.744 acres, and no Crown lease was ever issued for 1941RP.

65.  On 12th April 1961, the Crown Lands & Survey Office wrote to D&M, forwarding a dimensioned plan showing the boundaries and area of Lot 1941.  The letter went on to say that the area (of 1941RP) had been found, on survey, to be 91,260 sq ft rather than the 92,700 sq ft mentioned in D&M’s letter of 12th April 1961.  Enclosed with the letter was a plan which identified only RP(1) as 1941RP.

66.  On 10th August 1965, D&M wrote to the District Officer, applying for a survey plan of 1941RP and the setting of boundary stones to mark the lot.

67.  On 16th August 1965, the District Officer wrote back, indicating that he had passed the request to the Crown Lands & Survey Office.  He also indicated that whilst his earlier letter of 20th March 1961 had indicated the area as 92,700 sq ft, this was subsequently amended by the Crown Lands & Survey Office to 91,260 sq ft as indicated in its letter of 12th April 1961.

68.  On 11th November 1965, the Crown Lands & Survey Office sent a memo to the District Officer, informing him that the boundaries of 1941RP had been set out with red pegs in cement, and asking him to take steps to preserve the survey marks.  The accompanying plan showed 1941RP as consisting of RP(1) and no other land.

69.  By letter of 4th January 1969, AH Basto, representing the owner of 1941RP, wrote to the District Officer asking what premium the Government would require for converting RP(1), containing an area of about 92,700 sq ft (presumably into building land).  He asked what restrictions would be imposed regarding the number of houses, the height of the buildings, and whether there was any building covenant.  In this letter, unlike the position he took in 1955, AH Basto did not suggest that 1941RP extended beyond RP(1).  The attached plan showed Lot 1941 as having an eastern boundary slanted upwards in a westerly direction relative to the North-South axis, and Section E as being on the easternmost part of Lot 1941.  In other words, the shape of Lot 1941 in this plan resembled those in the Section E, Section A and Section B Memorial Plans and not the Basto Plan.

70.  On 7th April 1971, the Crown Lands & Survey Office wrote to Basto’s Trustee, saying that the boundaries of 1941RP had been set out on the ground as shown in the plan attached.  The accompanying plan showed 1941RP as consisting of RP(1) and no other land.

B9.    Partial resumption of RP(1) in 1984

71.  In March 1984, 16,586 sq ft of RP(1) was resumed by the Government, consisting of 436 sq ft building land and 16,150 sq ft agricultural land.  In the offers for compensation for resumption, the District Lands Office stated the registered area of 1941RP as being 0.01 acre building land and 4.734 acres agricultural land (totaling 4.744 acres), and that 436 sq ft of building land and 16,150 sq ft of agricultural land had been resumed.

72.  The Crown Rent Roll of 1941RP was amended to reflect the resumption.  The existing figure of 4.744 acres was crossed out, and a new figure of 190,063 sq ft was inserted in red ink.  Crown rent was correspondingly reduced from 1984/85 onwards.

B10.  Further correspondence regarding the boundaries and area of Lot 1941; the Plaintiff’s acquisition of 1941RP and dealings thereafter

73.  In a letter of 11th August 1989, the District Lands Officer replied to a query from Jones Lang Wootton and stated that “the current registered area of Lot No.1940 RP in DD 95 is 190,063 square feet”.

74.  In a letter of 15th March 1995, the District Lands Office replied to a letter from Vigers Hong Kong Ltd, saying that if the documentation of the case were to be finalised (it is unclear what Vigers had proposed), Vigers’ client would have to accept certain terms, including:

74.1     payment of a premium at the rate of 0.75 cents per square foot for the conversion of 1941RP to building status;

74.2     payment of an administrative fee;

74.3     the area of 1941RP was 74,674 sq ft as stated in the District Lands Office’s earlier letter of 4th August 1994;

74.4     the status of the lot upon conversion was to be subject to the development conditions of GN 364 of 1934.

75.  On 27th June 1997, 1941RP was assigned to the Plaintiff.

76.  On 5th June 1999, the Plaintiff wrote to the District Lands Office, saying that it noted from the latter’s letter of 15th March 1995 that 1941RP had a site area of 74,674 sq ft. it was said that this seemed to be based on limited records kept in the District Land Registry.  The Plaintiff had commissioned Leung Shou Chun Land Surveying Consultants Ltd to carry out a survey study.  According to the consultant, the area should be 190,976 sq ft, so that there was a missing portion of 99,716 sq ft.  The Plaintiff sought an agreement to “rectify the situation”.

77.  On 10th June 1999 and 19th July 2001, the Plaintiff entered into tenancy agreements to let 1941RP.  The plan attached to the tenancy agreements showed 1941RP as consisting of RP(1) only.

78.  On 8th November 1999, the District Lands Office replied to the Plaintiff’s letter of 5th June 1999, saying that the Plaintiff’s consultant’s report did not demonstrate sufficient grounds to establish that the area of 1941RP was 190,976 sq ft, and explaining the same.

79.  There was then further correspondence between the parties regarding this issue until about May 2001.  They were unable to reach agreement.  The Plaintiff says that in the meantime, the Government had commissioned studies into the planning and land use of North East New Territories, including Kwu Tung, and these were finalised only in late 2013 by the publication of a draft Outline Zoning Plan (“OZP”) on 20th December 2013, and that the Plaintiff held off discussions during this period.

80.  The correspondence resumed in 2013, although by then, the Plaintiff’s focus shifted to the Conversion Term.

B11.  Correspondence regarding the Conversion Term

81.  On 24th April 1974, the District Office wrote to Basto’s Trustee, referring to earlier correspondence.  The letter then stated:

“ It is confirmed that the lease of Lot No.1941 RP contained a right to the lessee to convert the lot or any portion thereof to building land upon payment of a conversion premium at the rate of ¾ of a cent per square foot.

  Please note that this aspect of the Conditions will be further looked into upon a receipt of a formal application for conversion from the registered owner.”

82.  It will be recalled that in a letter of 15th March 1995, the District Lands Office had written to Vigers, saying that if the documentation of the case were to be finalised Vigers’ client would have to accept certain terms, including payment of a premium at the rate of 0.75 cents per square foot for the conversion of 1941RP to building status.

83.  As described above, there was a pause in the correspondence between the parties between about 2001 and 2013.

84.  On 28th March 2013, the Plaintiff wrote to the District Lands Office, asking for a confirmation that the Government’s position remained the same as set out in the letter of 15th March 1995 to Vigers.  Reference was also made to the District Office’s letter of 24th April 1974.

85.  On 10th April 2013, the District Lands Office sent a holding reply.  The Plaintiff sent chasers on 30th May 2013 and 25th June 2013.

86.  On 8th July 2013, the District Lands Officer replied to say that it was “reasonable” that the content of the letter of 15th March 1995 had “lapsed”, and the case had to be reconsidered “in the current context”.

87.  On 9th July 2013, the Plaintiff stated that the purpose of its letter of 28th March 2013 was to confirm its right to convert the lot to building land, and asked for a confirmation soon.

88.  On 5th August 2013, the Plaintiff sent a chaser.

89.  On 13th August 2013, the District Lands Officer repeated that the letter of 15th March 1995 had lapsed and this was also the case for the letter of 24th April 1974.  The two letters were addressed to former owners and their agents of 1941RP and could no longer be valid.

90.  On 19th September 2013, the Plaintiff wrote to the District Lands Office stating that it sought to exercise its right of conversion of 1941RP to building land.

91.  On 1st November 2013 and 29th November 2013, the Plaintiff sent chasers.

92.  On 3rd December 2013, the District Lands Office stated that as the original Grant was missing, the proposed right of conversion to building land needed to be legally justified.

93.  On 4th December 2013, the Plaintiff asked what information might be required.

94.  On 10th December 2013, the District Lands Office asked the Plaintiff to provide any documents which could support the purported right of conversion.

95.  On 3rd January 2014, the Plaintiff provided a table of details of different sections of Lot 1941 which had been converted to building land.

96.  On 20th March 2014, 9th June 2014, 15th July 2014 and 19th August 2014, the Plaintiff sent chasers.

97.  On 16th September 2014, the District Lands Office asked for details of the proposed conversion.

98.  On 17th September 2014, the Plaintiff proposed that the conversion terms should be subject to the development conditions of GN364 of 1934 or similar terms.

99.  On 14th October 2014, the District Lands Office replied, stating that GN364 of 1934 was no longer applicable to the disposal of Government land and that the statutory outline zoning plan covering the subject lot had been gazetted in the previous year.  It asked for details of the proposed conversion.

100.  On 17th October 2014, the Plaintiff provided the development parameters of the proposed conversion.

101.  On 24th October 2014, the District Lands Office explained that it needed to know the exact location of the site and its area.

102.  On 6th November 2014, the Plaintiff asserted that the site area of 1941RP was 190,063 sq ft as recorded in the Crown Rent Roll, and provided an aerial photo showing the lot.

103.  On 5th February 2015 and 29th May 2015, the Plaintiff sent chasers.

104.  On 24th June 2015, the District Lands Office asked the Plaintiff to confirm the area of 1941RP as 6,937 sq m^[6] to facilitate the consideration of the Plaintiff’s land exchange application.

105.  On 22nd September 2015, the Plaintiff wrote to the District Lands Office on a “without prejudice” basis, indicating that it was agreeable to the proposed site area of 6,937 sq m subject to the District Lands Office’s confirmation of the Plaintiff’s right of conversion of the lot to building land with development conditions similar to GN 364 and that, in the case of land resumption, statutory compensation would be assessed based on this contractual right of conversion or the converted building land status.

106.  On 10th November 2015, 8th December 2015, 16th March 2016 and 25th April 2016, the Plaintiff sent chasers.

107.  On 23rd June 2016, the District Lands Office wrote to reiterate that the site area should be 6,937 sq m, to note that the site fell within an area zoned “GIC”, “OU” annotated “Amenity Area” and also an area shown as Road on the approved Outline Zoning Plan; and to say that given that resumption proceedings had yet to be finalised, it was far too early to offer comments on issues relating to compensation for any proposed resumed properties. The letter did not deal with the Plaintiff’s claim to a right of conversion.

108.  On 11th July 2016, 14th August 2016, 15th November 2016, 16th February 2017, 5th July 2017, 17th September 2018, 31st January 2019 and 15th May 2019, the Plaintiff sent chasers.

109.  No substantive response was given by the Lands Office before the remaining 74,674 sq ft of RP(1) was resumed in December 2019 as referred to below.

B12.  Further partial resumption of RP(1) in 2019

110.  On 27th December 2019, further portions of RP(1) were resumed by the Government: (1) an area of 64,857 sq ft, pursuant to gazette notice No.6046 dated 19th September 2019, and (2) an area of 9,817 sq ft, pursuant to gazette notice No.5965 dated 26th September 2019.  Accordingly, all of RP(1) has been resumed by the Government.

111.  The offers of compensation made to the Plaintiff in November 2019 for this resumption were on the basis that RP(1) was agricultural land and that there was no Conversion Term.  The Plaintiff has commenced claims for statutory compensation regarding the resumption.

112.  On 10th November 2020, the Lands Department wrote to the Plaintiff, saying (inter alia) that since no premium had ever been paid for conversion of 1941RP prior to the date of resumption, the lot was agricultural land as at the date of resumption.

C.     THE ISSUES

113.  The issues for my determination are as follows.

114.  Issue 1: whether the total area of 1941RP (1) as at 23rd December 2019, the date of the writ herein, was approximately 190,063 sq ft and (2) since 27th December 2019, has been 115,389 sq ft; and whether 1941RP comprises the Disputed Triangle.^[7]

115.  Issue 2: whether the Grant contains the Conversion Term.

116.  Issue 3: if the Grant contains the Conversion Term, whether the Plaintiff has exercised its rights thereunder, and whether the Director was in breach of the Grant in 2013 in denying the Conversion Term and the area of 1941RP granted.

D.     THE APPLICABLE PRINCIPLES

117.  The parties have referred to a number of authorities which provide guidance as to the approach to be taken in the consideration of the factual issues of the size and area of Lot 1941, and the terms of the Grant.

118.  The general principle for determining a lot boundary is to ascertain the proper construction of the conveyance.  However, if the answer cannot be found from the conveyance itself, extrinsic evidence of material facts existing at the time of conveyance is admissible.  See Tam Mo Yin v Attorney General [1996] 1 HKC 379 at 383E-G, 386G-I (Yam J); Lintock Co Ltd v Attorney General [1985] 2 HKC 555 at 559B (Hunter J).

119.  As counsel for the Plaintiff, Ms Eva Sit SC (appearing with Ms Julia Au and Mr William Wong) submitted, since the Grant has been lost in the present case, it is necessary to consider the extrinsic evidence.

120.  The Plaintiff further cited Kok Yun Kuen v Au Yeung Bik Tai [1991] 2 HKC 522 at 523D to 524H (Godfrey J) for the proposition that in ascertaining the contents of a grant or deed, memorials registered at the Land Registry may be accepted as secondary evidence of the truth of its contents. I accept that the evidential value of such memorials is not limited to the fact of the existence of the grant to which it relates, or the contents of the terms of such a grant; in Kok Yun Kuen, a memorial was accepted as sufficient secondary evidence of the death of the original Crown lessee.

121.  There were then various authorities cited to me regarding disputes arising out of incomplete or inconsistent grant or conveyancing documents.  Both parties sought to derive various principles from these authorities.  In my view, these authorities are all fact-sensitive.  The fact that a particular documentary record or other piece of evidence carried particular weight in a case does not mean that the same type of record or evidence would necessarily carry similar weight in the present case.  As Ms Sit pointed out, it all depends in each case on what evidence is available in that case; the court in each case needs to consider how it is to ascertain the boundary or area of the land in light of the available evidence in that case.

122.  Thus (for example) the Plaintiff submitted that the payment of Crown rent is a strong indication of the area and use of a lot, citing Lintock and Nishimatsu Construction Co Ltd v. Tang Hon Keung, unreported, HCA 8568/1995, 19th July 1996.^[8]

122.1   Lintock was a case where the figure given for the area of the lot stated in the Block Crown Lease, taken from the FAS, appeared to be wrong and inconsistent with other descriptions of the lot in the Block Crown Lease; in the circumstances, Hunter J relied on the rent of 50 cents paid for the lot, which was the usual rent for a second-class house of 0.1 acre or less, to reject the plaintiff’s claim that the lease was for a lot of 1.27 acres.

122.2   Nishimatsu was a case where a clan had been paying rent, for ninety years, for a lot stated to be 0.15 acres (approximately 6,500 sq ft) in the Block Crown Lease, and then claimed that it in fact owned 4.64 acres (approximately 202,000 sq ft); Waung J observed that the “basic common sense reaction” to the claim was that no village or clan could have mistakenly thought that it had been given a very large piece of land rather than the grant that it actually had.

122.3   The importance of the payment of Crown rent in both of these cases was because of the facts of those cases, and not because of some general principle that the payment of Crown rent should be accorded particular evidential weight.

123.  To take another example, the Defendant submitted that it is the Block Crown Lease and the delineation on the DD sheet that should be looked at in resolving a boundary dispute, citing Siu Chi Tat v Land Zone Ltd [2023] 3 HKC 44 at [43], which in turn cited Liu Ma Cheung & Ors v Lian Yin Fu, unreported, HCA 181/2004, 26th October 2007 at [14].  In the latter, Mr Recorder Kenneth Kwok SC was simply observing that the Block Crown Lease and the delineation of the lot in that case on the DD sheet was the starting point in resolving the boundary dispute between neighbours in that case.

124.  Similarly, whilst the court rejected the attempt in Tam Mo Yin to use a “work back” method of taking the claimed area of a lot to work out the boundaries of the lot, it does not follow that there is a principle that a “work back” method must be wrong (in any event, this is not a term of art, and there are different ways of “working back” from an area).  In that case, it was significant that the area was an estimation, so that inferences based on the area would be open to doubt.  The court also referred to the observation in Sara, Boundaries and Easements, that area measurements cannot establish the shape of a property.  That must be right as a matter of common sense, although whether or not area measurements, taken together with other evidence, might establish a boundary in any particular case will depend on the facts of that case.

125.  Thus the importance of the payment of Crown rent, or the DD Control Sheet, or indeed any other aspect of the present case must be considered in the context of the available evidence in the present case, rather than by reference to the importance that such factors held in other cases.

126.  Ms Sit submitted that even where there are real difficulties in resolving a dispute regarding area or boundary, the court should be reluctant to see that it cannot be determined, or to decide on the burden of proof.^[9]  Reference was made to Siu Chi Tat at [51].  That in turn referred to Derbyshire County Council v Fallon & another [2007] EWHC 1326 at [16], where Mr Christopher Nugee QC (sitting as a deputy judge of the High Court) observed that where the court is asked to determine where a boundary lies, it should be reluctant to say that it cannot be determined; it would be preferable for the court to do its best, even with limited material available, to assess where the probabilities lie. It seems to me that whilst, generally speaking, there is much to be said for positive findings to be made after litigation of a factual issue (whether in boundary disputes or otherwise), whether this can or should be done in any particular case will depend on the facts of that case: cf. Secretary for Justice v Wing Lung Wai Community at 586H-I; Derbyshire County Council v Fallon at [16].

E.     ISSUE 1: WHETHER 1941RP COMPRISES THE DISPUTED TRIANGLE

127.  In order to determine whether 1941RP comprises the Disputed Triangle, the key, as Ms Sit submitted, is to determine where the original eastern boundary of Lot 1941 was at the time of the Grant.

128.  The parties’ respective approaches to this question were supported by expert witnesses called for each side.

129.  The Plaintiff’s case is that the evidence which is the most contemporaneous with the Grant is the FAS and the Crown Rent Roll, which show the area of Lot 1941 to be 33.657 acres; coupling this with the boundary stones which fixed the northern, western and southern boundaries of Lot 1941 and which were presumably placed at the time of the Grant meant that only the eastern boundary could account for the difference between the 33.657 acres shown on the FAS and the 30.28 acres measured from the DD Control Sheet.  The Plaintiff further says that the Basto Plan and evidence of ground occupation supports this theory.^[10]

130.  The Plaintiff says that the Section E, Section A and Section B Memorial Plans, the DD Control sheet, and the surveys in 1961, 1965 and 1971 are not reliable and do not undermine its case.

131.  The Defendant’s approach is to start with the DD Control Sheet, and compare it with other plans kept on record in the District Survey Office, Land Registry and District Land Office; and also to consider ground features as appearing from records; and then to consider the area of Lot 1941 as a test.^[11]

132.  With these in mind, I turn to consider the various pieces of evidence relied on by the parties.

E1.    The FAS and the Crown Rent Roll

133.  There is no evidence as to when the figure of 33.657 acres was entered into the FAS, but in the normal course of events, this would have been contemporaneous with the Grant.  The Plaintiff’s expert Mr Tang gave evidence that it was standard practice that after a New Grant Lot was granted, its area would be recorded in the relevant FAS, and Crown rent would be charged based on this area.  Mr Tang had also ascertained that Lots 1935 and 1936 (that is, prior to Lot 1941) had been auctioned in 1919 and 1920, and Lot 1945 had been auctioned in 1924.  This is consistent with the entries being entered into the FAS as and when the lots were sold.

134.  It is notable that the area for Lot 1941 was recorded in acres, whereas the lots immediately prior to it (Lot 1933 to 1940) and after it on the same page (Lots 1942 to 1950) had their areas recorded in square feet.  It may be that, as Ms Sit surmised, this was because it would have been rather lengthy to write the area for Lot 1941 in square feet (1,466,098 sq ft).  The figure also appears to be in darker ink than for the other entries immediately before and after it, but that does not necessarily mean that it was not written at the time that the entry for Lot 1941 was made.

135.  However, even if the figure of 33.657 acres was written into the FAS contemporaneously, this does not shed light on the accuracy of the figure.  Neither party produced evidence as to how the figure was derived.  Mr Tang considered that it was likely that the Grant would have had a plan showing Lot 1941, and the area of 33.657 acres would have been derived from measuring this plan.  In cross-examination, he said the plan would have been drawn by persons who were not professional surveyors, and that the area would similarly have been measured by staff without surveying skill.  He accepted that therefore, the figure of 33.657 acres might therefore have been inaccurate “to a certain extent”.  He explained that in the 1920s, the standard method of measuring the area of a lot from a plan was to place a grid of small squares over the plan and manually count the squares within the lot.  He considered that this method, if used with enough care, could be as good as measuring the area by splitting the lot into triangles, geometrically calculating the area of each triangle and totaling these; the maximum error for a geometric calculation would be about 35,000 sq ft for a lot of some 1,466,000 sq ft (and therefore much less than the discrepancy between the 30.28 acres on the DD Control Sheet and the 33.657 acres in the FAS).  However, Mr Tang’s evidence was that measurement of area by manual counting (of small grid squares) could be as good as measurement by geometric calculation (of triangles) “with enough care”.  It follows that without sufficient care, the measurement of area by manual counting could be worse than by geometric calculation.

136.  Furthermore, it was Mr Tang’s evidence^[12] that there were discrepancies between the area of six other lots near Lot 1941 shown on the same DD Control Sheet (measured by Mr Tang by scaling off from the DD Control Sheet) and the areas used for auctioning of the lots.  The discrepancy ranged from -2% to -22% (that is, the area derived from scaling off was smaller than that used at auction).

137.  Interestingly, in all six cases, the area derived by Mr Tang from the DD Control Sheet was smaller than the figure entered in the FAS and used for the auction – in other words, this was similar to the present case, where the area derived from the DD Control Sheet (30.28 acres) is smaller than the figure entered in the FAS (33.657 acres).  The extent of the discrepancy in the present case also falls within the range of discrepancies found for these six nearby lots.

138.  That said, it seems that there was not necessarily any rhyme or reason to the discrepancies.  As Mr Tang observed, all of the lots were auctioned on the same day, so that the lots should have been draw and calculated by the same person on the same plan, so that the percentage errors of lots in the same vicinity ought to have been the same.

139.  Mr Tang used the fact of the discrepancies to conclude that the January 1940 DD Control Sheet was not reliable.  However, it seems to me that one cannot tell, from the mere fact that the area of a lot as derived from measuring it on the DD Control Sheet differs from its area as stated in the FAS, that it is the former rather than the latter that was inaccurate.  It could be the FAS figures that were inaccurate.  In closing submissions, Ms Sit acknowledged that there was no evidence to show whether it was the DD Control Sheet or the FAS figures that were correct for the six nearby lots, as the parties had not investigated these lots.

140.  What the discrepancies do show, however, is that there could have been discrepant yet equally contemporaneous representations of the size of a lot, one being a pictorial representation on the DD Control Sheet and one being a numerical representation in the FAS.  There is no evidence in the present case as to which one was more accurate for Lot 1941, or indeed whether both of them might have been inaccurate.

141.  As shown by the letter of 20th March 1961 from the District Officer, mistakes in the official records of the areas of lots were not unheard of, so much so that the possibility of mistakes were provided for in a Government Gazette of 1906, pronouncing that exact area, boundaries and measurements of a lot would be determined before the issue of a Crown Lease for the lot, with premium and Crown rent being adjusted accordingly.

142.  Ms Sit submitted that there was no basis to content that the area stated in the FAS was wrong, relying on Mr Tang’s evidence as to the process of surrender and regrant at the relevant time.  Mr Tang said that if a developer was interested in acquiring a piece of land, he would engage an agent, typically a village elder, to discuss surrender and regrant with the District Office.  If the District Officer wanted to proceed with development, he would propose a regularly-shaped piece of land on a plan and give it to the village elder, from which the area could be calculated.  The District Officer would tell the village elder to purchase agricultural land in the vicinity in order to proceed.  The village elder (on behalf of the developer) would then purchase lots in the village, and when the required amount of land was acquired, there would then be discussions about surrender and regrant.  Sometimes there might be amendments to the proposed regrant lot, for example if the developer was not able to acquire sufficient agricultural land.  A tracing would be made from the DD Control Sheet, and then a more appropriate grant plan would be prepared; after the regrant, the plan would be taken back to the Drawing Office to be traced onto the DD Control Sheet.

143.  Ms Sit’s submission was that this evidence showed that the area of the regrant lot “came first” and formed the basis for a developer to arrange the purchase of agricultural land for surrender and regrant.  However, it seems to me that (1) it could equally be said that not just the area, but also the boundaries and shape of the proposed regrant lot, would have “come first” (with all being subject to further amendments and negotiation), (2) in any event, this evidence did not detract from Mr Tang’s earlier evidence that it was likely that the Grant would have had a plan showing Lot 1941, that the area of 33.657 acres would have been derived from measuring this plan, and that errors might occur in the process, (3) in re-examination, Mr Tang said that only an approximate area would be agreed on at the initial stage, as there might be changes or amendments as the process went on; he then went on to say that the area and the grant plan would come into being at the same time.

144.  The Plaintiff relied on the area of the surrendered lots (which Mr Tang calculated to be 33 acres) as providing further support for the area of Lot 1941 as being 33.765 acres.  Mr Tang said that it was unbelievable that the Plaintiff’s predecessor would have accepted a smaller area for the regrant, particularly as he had acquired various plots in order to make up the surrendered area, and such acquisitions ought to have been at a price higher than the prevailing upset price at auction.  However, the surrendered lots had not been entirely contiguous with each other, whereas the regranted Lot 1941 was one continuous piece of land with a much more regular shape, facilitating the carving-out of portions for sale (with the first such sale, of Section E, occurring in the year after the Grant).  It is well possible that JM Basto perceived there to be value arising from the surrender of non-contiguous and irregular plots and regrant of a continuous and regular lot, even if the latter comprised a total smaller area.  At any rate, it could not be said to be unbelievable that he would have accepted this.

145.  The Plaintiff’s factual witness Mr Leung, a surveyor with experience working in various District Lands Offices and now a general manager of the Plaintiff, gave evidence that the Government might have granted an area larger than that surrendered, rather than granting less, and that no approval was needed for this if the additional area was within 25% of the size of the surrendered area.  He did however also agree that the area of a regranted lot could be smaller than the amount of surrendered land.  At best, this evidence is consistent with both the Plaintiff’s and the Defendant’s cases.

146.  As to the Crown Rent Roll, Ms Sit in closing submissions accepted that the figure of 33.657 acres appearing there would simply have been copied over from the FAS.  It therefore does not constitute a separate source of information as to the area of Lot 1941.

147.  The fact that rent has all along been collected on the basis of the figure of 33.657 acres provides no indication as to whether the method used to arrive at the figure in the first place was accurate.

148.  I therefore do not consider that the FAS and Crown Rent Roll should bear the weight that the Plaintiff contends for, such that it should be the “anchor” against which other evidence should be assessed or made to fit.

E2.    The DD Control Sheet

149.  In his expert report^[13], Mr Tang said that the records of New Grant Lots in the DD Control Sheet were the “least reliable” in the Government recording system, because (1) some New Grant Lots consisting of former Crown land sold by public auction or direct sale were pointed out on the ground without physical marking, (2) errors and omissions were introduced through repeated retracing or photocopying of DD Control Sheets from worn out sheets.

150.  As earlier mentioned, Mr Tang agreed in cross-examination that (1) had no relevance to the present case, as the present case was not one of public auction or direct sale of former Crown land sold as New Grant Lots, but rather, of drawing up a new lot for grant.

151.  As regards (2), the evidence was as follows.  Mr Tang agreed in cross-examination that preparing a grant plan for a New Grant Lot would have involved tracing a plan from the DD Control Sheet, agreeing the boundaries of the New Grant Lot (and making sure that they did not encroach onto other lots as shown from the details traced over from the DD Control Sheet), and drawing them onto the plan to create the grant plan.  The New Grant Lot would then have been traced back from the grant plan to the DD Control Sheet.  It was put to Mr Tang that in tracing the New Grant Lot back to the DD Control Sheet, there ought not to have been so fundamental an error as a change of shape of the lot.  Mr Tang agreed that if the tracing had been done immediately, then there ought not have been such a  fundamental error.  He further agreed that was no evidence to think that Lot 1941 had not been traced onto the (then) DD Control Sheet from the Grant plan at a point in time close to the Grant.

152.  It was then put to Mr Tang that Lot 1941 would continue to have been copied to subsequent DD Control Sheets, ending with the January 1940 DD Control Sheet.  The implication was that equally, there would not have been such fundamental errors in tracing such that the shape of Lot 1941 changed.

153.  At this point, Mr Tang came up with a number of new theories, not previously raised in his written report.

154.  First, he surmised that it was possible that the January 1940 DD Control Sheet had been completely redrawn (rather than retraced from a worn out predecessor), as earlier versions might have been lost.  He then had to accept that there was no evidence that this was the case (and indeed, he had not suggested in his written report that the January 1940 DD Control Sheet was a fresh redrawing; on the contrary, in the joint expert report, he had described it as a retracing from the previous version).

155.  Next, Mr Tang surmised that Lot 1941 had not been copied from the Grant plan to the then existing DD Control Sheet (despite the explanation he had just given that New Grant Lots would be copied from the relevant grant plans to the DD Control Sheet, and his agreement that there was no evidence to think that Lot 1941 had not been traced onto the (then) DD Control Sheet from the Grant plan close in time to the Grant).  The basis for this new theory was that on the DD Control Sheet, a line about 1mm to the west of the western boundary of Lot 1941 could be seen, and another line about 2-3mm to the north of the northern boundary could be seen.  The theory was that these two additional lines were copied from the Section E, Section A and Section B Memorial Plans; had Lot 1941 been copied to the DD Control Sheet at the time of the Grant, then these other lines would not have appeared – if the lines of the Lot 1941 had already been drawn on the DD Control Sheet, then subsections subsequently carved out would simply have followed the lines of Lot 1941 when being drawn on the DD Control Sheet. Since (he further surmised) Section E had wrongly omitted to show the eastern boundary of Lot 1941 (I deal with this claim below), the omission was carried over to the DD Control Plan; and the Section A and Section B Memorial Plans must have simply been copied from the Section E Memorial Plan, so they also had the same mistake.

156.  This theory was not raised in Mr Tang’s written report.  Whilst in the joint expert report^[14] he had mentioned the two additional lines, he expressed the view that they were likely caused by tracing from the Section E, Section A and Section B Memorial Plans in that those plans had been drawn “by different parties with different styles and they may not exactly match each other” – in other words, the Section E, Section A and Section B Memorial Plans had not been copied from each other but had been drawn by different persons, so when they were copied onto the DD Control Sheet, they did not entirely tally with each other.  There was no suggestion that this indicated that Lot 1941 had not been drawn onto the DD Control Sheet in the first place.  Nor was there any suggestion that the error with the eastern boundary of Lot 1941 originated with copying from an incorrect Section E Memorial Plan which had wrongly omitted to show the eastern boundary.  In fact, Mr Tang’s expert report had theorised that the Section E Memorial Plan did show the eastern boundary of Lot 1941 but that this boundary was at the time “unfinalised” and “supposed to be adjusted…at a later date”, and that this unfinalised boundary was copied onto the DD Control Sheet and thereafter wrongly treated as a finalised boundary.^[15]

157.  Next, Mr Tang said that the basis for the theory that Lot 1941 had not been copied from the Grant plan to the then existing DD Control Sheet immediately was the fact that the FAS showed the area of Lot 1941 to be 33.657 acres whilst the Defendant’s expert’s measurement of the area from the DD Control Sheet was 30.28 acres, which mean that an area of about 100,000 sq ft was missing.  But this assumes that the area in the FAS is accurate and is the “anchor” against which other evidence should be assessed or made to fit.

158.  I am not persuaded by these theories of Mr Tang.  I do not find these them to be credible or persuasive.  They were new, and only emerged in cross-examination after Mr Tang had admitted that any tracing error between successive DD Control Sheets should not be so fundamental as to change the shape of Lot 1941. The theories were also inconsistent with what Mr Tang had previously said.  Furthermore, they were based on various assumptions, such as the assumption that the Section E Memorial Plan was wrong and had omitted the eastern boundary of Lot 1941, or that the FAS area was accurate. But if one starts with these assumptions then one would invariably conclude that the DD Control Plan is inaccurate, without having considered whether the DD Control Plan is reliable, independently of these assumptions.

159.  The Plaintiff also relied on the fact that some of the small lots immediately to the north of Lot 1941, such as lots 76, 77 and 78, were shown as yellow on the January 1940 DD Control Sheet.  Since these had been surrendered in 1922 and become Crown land, the yellow colouring ought to have been removed in subsequent DD Control Sheets. (The evidence was that lots which were privately held but which, during the lifetime of the current DD Control Sheet, had become Crown land through surrender, or re-entry, otherwise, would be coloured yellow, and then the colouring and lot boundaries and numbers would be removed in subsequent versions of the DD Control Sheet.)  The submission was that this showed that the surrender and regrant in 1922 was unlikely to have been contemporaneously reflected in the January 1940 DD Control Sheet.^[16]  However, it would have been possible for Lot 1941 to have been correctly drawn onto the DD Control Sheet at the time of the Grant, and the relevant surrendered lots to have been coloured yellow, but for the updating of the yellow areas to have been overlooked in subsequent versions of the DD Control Sheet.  I would also note that the issue was not raised in the Plaintiff’s evidence and only in cross-examination of the Defendant’s expert, so that it has not been the subject of investigation by the Defendant.

160.  In other words, I do not find that the criticisms of the January 1940 DD Control Sheet undermine its reliability.

161.  Whilst the scale of the DD Control Sheet is such that one might not derive very precise measurements from it, what is important about it for present purposes is that it shows the shape of Lot 1941, and that the eastern boundary was slanted, contrary to the Plaintiff’s claim as to where the eastern boundary should be.

E3.    The Section E, Section A and Section B Memorial Plans

162.  The Section E Memorial Plan must have been prepared relatively close in time to the Grant, since the sale of Section E took place in January 1923.  As mentioned, the title of the plan referred to Lot 1941, suggesting that the entire lot, and not just some part of it, was being shown.  The northern, western and southern boundaries of the lot were shown.  It is difficult to see why the eastern boundary would not have been shown, as claimed by Mr Tang.^[17]  This is particularly so since JM Basto, the original grantee under the Grant, would have been retaining the parts of Lot 1941 not carved out as Section E. If any part of Lot 1941 abutted Section E, it would have been in his interest to make it clear what those parts were.  It would have been odd that the part of Lot 1941 abutting the western boundary of Section E was included in the plan but the part abutting the eastern boundary was not.

163.  The Plaintiff pointed out that the Defendant’s own expert Mr Kwok King Hung said that memorial plans carried the least weight, and were for identification purposes only, with their accuracy not being properly verified, as no proper survey was conducted (for their preparation).  At the same time, Mr Kwok said that memorial plans were traced or copied from records in the Office of New Territories Administration.  It seems to me that whilst one might not be able to derive precise data from the Section E Memorial Plan, the plan at least indicates the shape of the lot.

164.  Mr Tang said that the focus would have been on the section being sold, rather than the whole lot.  Even if so, since the point of the plan was to identify which part of Lot 1941 was being sold as Section E, surely it would have been important and helpful to set out the whole lot so that the location of Section E could be properly identified, and boundary disputes avoided.  Given that, even on the Plaintiff’s case, Section E would have been closer to the eastern boundary of Lot 1941 than the western one, it would have made sense to set out the eastern boundary of Lot 1941 rather than the western one; and if the focus was on Section E, so that other parts of Lot 1941 were to be omitted, it was rather pointless to show some of the detail included on the western side (such as the part jutting out at the south western corner) – yet such details were shown.

165.  It is also noteworthy that the Section A Memorial Plan and Section B Memorial Plan have the same shape for Lot 1941.  The Plaintiff says that (1) the Section A Memorial Plan copied the Section E Memorial Plan since the Section E Access was shown in the Section A Memorial Plan, and (2) the Section B Memorial Plan copied the Section A Memorial Plan but not the Section E Memorial Plan, since it showed the Section A Access but did not show the Section E Access.  However, the underlying fields are drawn differently in the Section A and Section B Memorial Plans and no such fields are shown in the Section E Memorial Plan. It is not at all obvious that there was such copying, and I decline to so find.

166.  The Plaintiff says that there were patent discrepancies between the plans, in that the western slanted boundary was stated to be 750' 1" on the Section E Memorial Plan but 760' 1 " on the Section A Memorial Plan; and the eastern boundary of Section A was 930' 0" as shown on the Section A Memorial Plan but stated to be 926' 5" on the Section B Memorial Plan.  Yet despite these minor discrepancies, the three plans were consistent in their shape of Lot 1941.

E4.    Boundary stones; evidence from ground occupation

167.  From the Section E Memorial Plan, it can been that there were boundary stones at various places along the border of Lot 1941: (1) the corner where the northern boundary starts sloping downwards towards the western boundary, (2) the corner where the western boundary starts sloping upwards towards the northern boundary, (3) the south-west corner of the lot, (4) at a number of other points along the southern boundary where the boundary changed direction.

168.  The Plaintiff makes much out of these boundary stones, and their absence from the eastern boundary.  In his report,^[18] Mr Tang relied on the absence of the boundary stones from the eastern boundary for his central theory that:

“ …the eastern boundary might be used for adjusting the final area [of Lot 1941] or the final area was not yet fixed on the setting out day of the [boundary stones]…The lack of boundary stones indicate that the unfinalized eastern boundary was supposed to be adjusted for balancing the original lot area at a later date. However, this appeared never to be done. The DD Control Sheet seemed to copy these unfinalized boundaries…In this way, the unfinalized boundary became a mistake that re-occurred over again and again.”

169.  Similarly, in the joint expert report,^[19] Mr Tang said:

“ …As mentioned above, the 1923 & 1931 memorial plans [for Sections E, A and B] showed the mother lot boundary was surrounded by boundary stones, except the eastern boundary. It proved that the eastern boundary was not yet finalized and was waiting to balance the shortage of area of the mother lot…”

170.  I cannot agree with this reasoning.  How could Lot 1941 have been granted on the basis that one of the boundaries was not yet fixed?  No evidence was put forward to show that any New Grant Lots had ever been granted in this way, or any explanation of how this could operate as a matter of law.

171.  Indeed, when I asked Mr Tang whether the boundaries of Lot 1941 would have been set in 1922 at the time of the Grant, he readily said that they would have been set, and fixed on the Grant plan.  Mr Kwok also opined that the boundary must have been fixed before the boundary stones were installed.  He further observed that in AH Basto’s letter of 8th December 1959, the complaint was that in setting out Lot 1941, a portion on the eastern boundary was shifted to the left – in other words, the boundaries of Lot 1941 had been marked out, but it was just that a mistake had been made in doing it.

172.  In closing submissions, Ms Sit did not adopt Mr Tang’s theory that the eastern boundary of Lot 1941 had not been finalised at the time of the Grant.  Rather, her submission was that the eastern boundary ran along existing field bunds^[20] and therefore did not need to be marked with boundary stones.  However, if one looks at RASOC Plan A, the (1) north eastern section and (2) south eastern tip of eastern boundary of the Disputed Triangle do not coincide with any field bunds.^[21]  Furthermore, as explained below, even for the part of the eastern boundary that coincided with field bunds, this coincidence was simply the result of Mr Tang drawing the boundary in this way in RASOC Plan A. Still further, if the existence of field bunds was what rendered boundary stones unnecessary, then one questions why a boundary stone was not installed at the eastern end of the northern boundary, since the northern boundary cut across fields and did not lie along field bunds.

173.  It is not as if without the boundary stones, the eastern boundary of Lot 1941 as claimed by the Defendant could not be located.  As Ms Sit acknowledged, geometrically, the top and bottom of this eastern boundary could be located simply by using the measurements as set out in the Section E Memorial Plan and measuring out from the boundary stones along the northern and southern boundaries.  Installation of boundary stones was expensive.^[22]  If the eastern boundary of Lot 1941 could be identified without them, their absence from the eastern boundary is not particularly remarkable.

174.  The Plaintiff also reasoned that the northern boundary was fixed because within one year of the Grant, Sections E and A had been sold and occupied by third parties, so that the alignment of the northern boundary could easily be established.^[23]  This suggests another possibility as to why there was no need for JM Basto to install any boundary stones for the eastern boundary of Lot 1941: Section E would be at the easternmost part of Lot 1941, so that delineation of the boundary would become a third party’s concern.

175.  Finally, it is important to note that the boundary stones (or absence thereof) do not provide any evidence of where the eastern boundary of Lot 1941 may be. If the Plaintiff fails to establish its claim that Lot 1941 was 33.657 acres in size, then the absence of boundary stones does not take its claim about the eastern boundary of Lot 1941 any further. In other words, the argument in relation to the boundary stones is premised on the assumption that Lot 1941 was indeed 33.657 acres in size.

E5.    The Basto Plan

176.  The Plaintiff’s case in opening was that the Basto Plan was the “best evidence on the shape and eastern boundary of Lot 1941”,^[24] echoing Mr Tang who described it as “probably the best available plan for the parent lot, Lot 1941”.

177.  The Plaintiff says that the Basto Plan was made in 1923, and therefore close in time to the time of the Grant.  However, the plan first surfaced in 1959 when AH Basto produced it.  He claimed that it was a plan made in 1923, but he does not say anything about its provenance, so it cannot be told whether or not this claim is correct.  Ms Sit submitted that based on the contents of the plan, it appeared to have been prepared some time between 1923 and 1931.  Even if so, it remains unknown who prepared the plan and for what purpose it was prepared, so that it is not possible to assess the reliability of the plan as a source of information for the eastern boundary of Lot 1941.  It should be borne in mind that it was produced to the District Commissioner for the purpose of seeking a boundary adjustment; in other words, it was not produced by a neutral, disinterested party.^[25]  On these bases alone, I do not consider that much weight should be put on the Basto Plan.

178.  In addition, someone at some point had scribbled a line zigzagging through the eastern boundary, as if to cross it out.  The Plaintiff says that the scribbled line cannot be interpreted in this way since the plan was, after all, put forward to claim that the eastern boundary as shown on the Section E, A and B Memorial Plans was wrong.  But equally, the scribbling cannot just be ignored: it happens to be on the disputed eastern boundary.  There is a question as to who added it and when, and what the meaning of it was.

179.  RASOC Plan A was prepared by Mr Tang.  He said he relied on the Basto Plan in such preparation.  Whilst there is some resemblance between RASOC Plan A and the Basto Plan, Mr Tang did not in fact follow it exactly.

179.1   In the Basto Plan, the eastern boundary of the Section E Access was at an angle to the eastern boundary of the rest of Section E.  In RASOC Plan A, the eastern boundary of the Section E Access formed a continuous straight line with the eastern boundary of the rest of Section E.

179.2   In the Basto Plan, the southern apex of the Disputed Triangle was positioned north of the Section E Access.  In RASOC Plan A, the southern apex of the Disputed Triangle was positioned at the southern end of the Section E Access.

179.3   The slope of the eastern boundary of Lot 1941 differed between the two plans.  In RASOC Plan A, the slope did not follow that of the Basto Plan, but instead was positioned so that it coincided with some of the field bunds.

180.  Furthermore, Mr Tang considered that the shape of Section E was more accurately shown in the Section E Memorial Plan than the Basto Plan.  At the very least, this means that the southernmost part of the eastern boundary of Lot 1941 in the Basto Plan, where it is identical to the eastern boundary of the Section E Access, contains inaccuracies.

181.  Thus even on the Plaintiff’s case, the Basto Plan is not said to accurately depict the eastern boundary of Lot 1941.

E6.    Shape of Disputed Triangle

182.  The shape of the Disputed Triangle is a long, thin triangle, tapering at the lower end into a point.  It seems unlikely that JM Basto would have carved out and sold Section E in a way so as to leave himself with a piece of land with no vehicular access (unlike Section E which did have a narrow access road) and a stretch of narrow land at the southern end which would have been rather difficult to use or sell.

183.  Ms Sit submitted that the Disputed Triangle could be accessed via the field bunds.  However, there still would not have been any vehicular access.  If the Disputed Triangle was being kept as farmland,^[26] then it is strange that JM Basto would designate the Section E Access (and indeed the lower part of Section E) in a way so as to slice through the farming plots at the southern end of the Disputed Triangle and leave behind a tapering sliver of multiple plots for himself as the owner of the Disputed Triangle.

184.  Ms Sit further submitted that Section B did not have any access road either, so it was unremarkable that the Disputed Triangle did not.  However, Section B was a reasonably regularly-shaped piece of land, and JM Basto was disposing of it, so the carving out of Section B did not leave him with an irregularly-shaped piece of land with no vehicular access.

E7.    Surveys in 1961, 1965 and 1971

185.  It is not clear that these later surveys discovered any new information, so that they do not take the matter any further.

E8.    Conclusions regarding issue 1

186.  I agree with counsel for the Defendant, Mr Desmond Leung (appearing with Mr Felix Tang and Mr Alan Lee) that if the Plaintiff’s approach to determining the eastern boundary of Lot 1941 is to be accepted, the Plaintiff would have to (1) demonstrate that the area of 33.657 acres is accurate, and (2) (since the area in itself would not show what the shape of Lot 1941 should be) provide credible evidence as to where the alleged “missing area” is located. However, I am not persuaded that the figure of 33.657 acres should be used as an “anchor”, and I am not persuaded that the omission of boundary stones at the eastern boundary means leads to the conclusion that Lot 1941 extended into the Disputed Triangle.

187.  The earliest evidence of the shape of Lot 1941 is the Section E Memorial Plan.  For the reasons I have given above, I am not persuaded that it did not show the eastern boundary of Lot 1941.  I find that Lot 1941 was shaped more or less as shown on the Section E, A and B Memorial Plans, and reject the claim that it was shaped similar to the depiction in RASOC Plan A.  I find that Lot 1941 did not include the Disputed Triangle.

188.  I also do not agree that the area of 1941RP is as contended for by the Plaintiff.  Given the shape of Lot 1941, both experts have calculated that this would not give the area claimed by the Plaintiff.

189.  I further agree with Mr Leung that a further reason why the Plaintiff is not entitled to the relief sought is that it has not identified the eastern boundary of Lot 1941 with sufficient certainty for the remedy of the declaration sought.^[27]  He cited Hong Kong Journalists Association v Commissioner of Police [2021] 1 HKLRD 427 at [50] for the proposition that a declaration has to be sufficiently certain in the circumstances of the case in order for the court to grant it.  Ms Sit did not dispute the proposition, but submitted that it was sufficient for the declaration to state the approximate area of RP1941 and identify its approximate boundary.  The Plaintiff sought damages (for the “missing” area), after all, not the land.

190.  As Mr Tang agreed in cross-examination, one must know the boundary of a lot before one can know its area.  Thus the issue of the size of 1941RP cannot be determined in isolation without also identifying the boundary of 1941RP.  However, Mr Tang agreed that RASOC Plan A did not show the precise location of what remained of 1941RP, and that is why he marked it “For Indication Only”.  For example, the Disputed Triangle, as drawn, encroached slightly into a private lot of land and therefore that part could not form part of 1941RP.  But without a precise boundary, it is not possible to know what the precise area of 1941RP should be.  It cannot simply be said that the precise boundary does not matter and that if it turns out that a particular location does not (or cannot) comprise part of the “missing” area, then it does not matter, another location can be found to “house” the “missing” area: the Plaintiff needs to discharge the burden of identifying the alleged boundary of Lot 1941.  Furthermore, the precise area and boundaries might make a difference to any award of damages.

F.     ISSUE 2: WHETHER GRANT CONTAINED THE CONVERSION TERM

191.  The Plaintiff’s case is that the Grant contained the Conversion Term, relying on:

191.1   the entry in the “Particulars of incumbrances” in the Section B Memorial and the Section B Subsection Memorials referring to a right in terms of the Conversion Term;

191.2   the letter from the District Office of 24th April 1974 (“DO’s 24.04.1974 Letter”) confirming that the lease of 1941RP contained a right for the lessee to convert the lot to building land upon payment of a conversion premium of ¾ of a cent per square foot; and

191.3   the fact that other portions of Lot 1941 have been converted to building land in the same manner as provided for by the Conversion Term.

192.  The Defendant has no positive case and simply puts the Plaintiff to proof.

F1.    The Section B Memorial and the Section B Subsection Memorials

193.  I agree with Ms Sit that the “Particulars of incumbrance” in the Section B Memorial and the Section B Subsection Memorials are good evidence that the Grant contained the Conversion Term.  In particular, the Section B Subsection Memorials expressly described the term as being a condition in the Crown Lease.

193.1   Under ss.6 and 10 of the Land Registration Ordinance (No.1 of 1844) (“the 1844 LRO”), memorials were required to be delivered to the Land Office for registration.  At the time, there was no requirement to deposit the underlying instrument.  Under s.31 of the New Territories Regulation Ordinance 1910, every memorial was to be certified by the Land Officer as correct.

193.2   The undisputed evidence is that the District Officer who signed the memorials was in a position to verify the correctness of the “Particulars of incumbrance”, as he would have had access to the Crown leases.

193.3   There is no reason to think that the District Officers signing the Section B Memorial and the Section B Subsection Memorials failed to carry out their duty to check the correctness of the memorials before signing them.

194.  For the Defendant, Mr Tang^[28] submitted that there was no evidence that the District Officers did actually check the Crown lease, and cited Chase v Chase [2020] NWSC 1689 at [39] to [43] in support of the propositions that clear and convincing proof is needed where secondary evidence is relied on to establish the existence and contents of a lost deed, and that caution needs to be exercised regarding evidence of the terms of a document given by a witness who has not read its entire contents.  However, as Ms Sit noted, that case concerned the proof of a missing trust deed over real estate. In that context, there was a statutory requirement that a declaration of trust respecting land had to be manifested and proved by some signed writing; furthermore, the establishment of an express trust required the three certainties to be met. The applicable test was therefore akin to that of establishing rectification (see [24] to [27], [30]).

195.  Mr Tang further cited Mack v Lenton (1993) 32 NSWLR 259 at 260G-261E in support of the propositions that when reconstructing a document through secondary evidence, the proponent must show that the reconstruction is more than a mere guess, an exercise of the imagination, a suspicion or conjecture; and that where property disputes are in question, a greater degree of reliability and precision of the secondary evidence is required.  As general propositions, these are not controversial.

196.  Neither of these authorities detracts from the admissibility of the memorials as secondary evidence of the truth of their contents (Kok Yun Kuen).  On their face, the District Officers certified the correctness of their contents.

197.  The Defendant also submitted that the memorials only purported to set out particulars relating to the instrument to which they related, that is, the instruments of sale in question (for Section B and subsections 1 and 2 thereof), rather than particulars relating to the Crown lease of Lot 1941.  In fact, the memorials purported to set out (1) “particulars of incumbrances to which the premises are subject” (without specifying whether or not such particulars were confined to the instrument) and (2) “other special Covenants or particulars mentioned in the Instrument”. In any event, in the case of the Subsection B Subsection Memorials, it was expressly stated that the condition being set out was from the Crown lease.

198.  The Defendant then submitted that the term as set out in the memorials was that the “purchaser” had the right of conversion, not that the “grantee” had such a right.  However, if the memorials were setting out the provision in the Crown lease, then the grantee could indeed have been described as “purchaser” (notwithstanding that the grant was by way of surrender and regrant).

199.  The Defendant suggested that the right of conversion might not have been one referred to in the Crown lease, but instead have come from the parties’ subjective understanding of a Government lessee’s right pursuant to prevailing Government policy – but there is no evidence that there was such a policy at the time of the Grant, nor does it seem likely that such an understanding would be described as “Particulars of conditions in the Crown Lease”.

200.  The Defendant also suggested that the right of conversion might have come from a subsequent modification in relation to Section B alone, having nothing to do with other parts of Lot 1941.  However, this is unlikely, given the conversion of other parts of Lot 1941 in the same manner as provided for in the Conversion Term (as addressed below).

F2.    DO’s 24.04.1974 Letter

201.  The DO’s 24.04.1974 Letter, confirming that the lease of 1941RP contained a right for the lessee to convert the lot to building land upon payment of a conversion premium of ¾ of a cent per square foot, constitutes further evidence in support of the existence of the Conversion Term.

202.  The Defendant submitted that the letter was issued some fifty years after the Grant was made and after it had already been lost, so that it should be treated with caution; furthermore, the full set of correspondence was missing.  Whilst it may be unknown how the District Officer in 1974 conducted a verification of the existence of the right or the circumstances leading up to his giving of the confirmation, this does not detract from the fact that the letter does unequivocally confirm the existence of the right.  Had the right been a qualified one, no doubt this would have been stated in the letter.  The letter did not state such a qualification.  It did say that the matter would be looked into further upon receipt of a formal application from conversion, but that would presumably relate to the details of such an application; the letter would not make sense if it were read as indicating that whether the right was qualified would be looked into later, when it was at the same time indicating an unqualified confirmation that there was such a right.

F3.    Conversion of other portions of Lot 1941 into building land

203.  The Plaintiff produced evidence to show that in all cases in the past where subsections of Lot 1941 were converted from agricultural land into building land, the Government allowed this to be done at a premium of ¾ cent per square foot. There were five such conversions, and they took place from 1957 to 1981.  They included conversions for parts of Lot 1941 other than Section B, in other words, where the memorials in question did not contain any reference to the right of conversion.

204.  It is not disputed that normally, the Government charges a conversion premium based on the difference in market value between agricultural land and building land at the time of conversion.  Furthermore, it will be recalled that the District Commissioner’s letter of 7th July 1955 to AH Basto had commented that the conversion premium would “in no circumstances” “be as low as” ¾ cent per square foot; the rate “sounds like an early 1930’s figure”.  Despite these matters, the five conversions for various parts of Lot 1941, which took place after this 1955 observation, were all carried out at the rate of ¾ cent per square foot.  This is strong evidence of an entitlement on the part of the owner of Lot 1941 to convert the land into building land at the rate of ¾ cent per square foot, and that the Government was aware of this entitlement.

205.  The Defendant says that these instances might be explicable on some other basis, for example, negotiation between the parties at the time, pointing to the exchanges between D&M and the District Office in late 1959 regarding the conversion of part of 1941RP.  But there is no evidence to show that it was negotiations that resulted in the terms of conversion in any of the five instances put forward by the Plaintiff.

F4.    Formulation of Conversion Term / existence of other terms

206.  So far, the evidence all points one way in favour of the Plaintiff’s case that the Grant contained the Conversion Term.

207.  The Defendant submits that nevertheless, it is inherently improbable that there was any Conversion Term in the terms claimed, or that it was not subject to some kind of restriction.  It was said, for example, that it was improbable that the Grant gave untrammeled freedom to the grantee to build on any part of the land, without regard to planning or safety restrictions.  Furthermore, the Defendant’s witness Mr Leung acknowledged that in allowing the conversion, the Government could also impose terms, such as those arising by reason of town planning zoning.  The Government could impose conditions through the mechanism of surrender and regrant.

208.  The fact that the Government could impose terms in implementing a surrender and regrant is not inconsistent with the existence of the Conversion Term.  As Ms Sit pointed out, it is not the Plaintiff’s case that there was no other term in the Grant.  The Plaintiff claims loss of profits from being unable to develop the Disputed Triangle and RP(1) as building land (prior to resumption on 27th December 2019) and damages for loss of a chance to obtain ex gratia payment upon resumption of RP(1) at the rates published in Government Notice 6048. It accepts that “hope value” is not claimable.  Issues of quantum, involving (inter alia) evidence as to what could or might have been developed, do not arise for consideration at this stage.

F5.    Conclusions regarding Issue 2

209.  There is clear evidence that the Grant contained the Conversion Term.  I find that the Grant contained this term.

G.     ISSUE 3: WHETHER PLAINTIFF EXERCISED RIGHTS UNDER CONVERSION TERM AND WHETHER DIRECTOR IN BREACH

210.  The evidence shows that:

210.1   between 1999 and 2001, the Plaintiff and the Director corresponded regarding the area and boundaries of Lot 1941 and 1941RP;

210.2   the Government undertook studies between 1998 and 2013 regarding the direction of development and land use planning for Kwu Tung.  Pending finalisation of these, the Plaintiff held off further discussions;

210.3   the parties’ correspondence resumed in March 2013.  It can be seen from the account of the correspondence set out earlier that the Plaintiff made it clear that it sought the Director’s confirmation that the Grant contained the Conversion Term.

211.  In particular, the Plaintiff’s letters of 28th March 2013 and 9th July 2013 sought confirmation from the Government that there was a right to convert 1941RP to building land pursuant to the Grant as had once been confirmed in the District Officer’s letter of 24th April 1974 (and not merely to revive the offer of conversion contained in the District Lands Officer’s letter of 15th March 1995).

212.  The District Lands Officer’s letter of 13th August 2013 made it clear that the Government’s position was that the entitlement claimed was no longer valid.  The Defendant’s factual witness Mr Tsin agreed with this reading of the letter.

213.  The Defendant submitted that the Government did not deny the existence of the Conversion Term, but simply invited the Plaintiff to prove its existence, given that the Grant was missing; moreover, the parties were in amicable discussions regarding a possible conversion.  There was therefore no clear renunciation by the Government.

214.  It seems to me that the Government’s position was made quite plain in the letter of 13th August 2013: the District Lands Officer did not accept that there was any right of conversion; any right belonged to the Plaintiff’s predecessors and had lapsed. He was not saying that he was unsure whether the Plaintiff had such a right because of the lost Grant; he was saying that whatever rights had previously been held by the landowner were no longer valid.  It was not a case of the parties adopting different interpretations of a contractual provision, but of one party simply denying the existence of a provision, and making it clear that it would not perform according to the alleged provision.  Whilst it is true that subsequently, there was further correspondence between the parties and the Government, with the Plaintiff seeking to pursue an exercise of the right to conversion (in its letters of 19th September 2013, 1st November 2013, and 29th November 2013) and the Defendant saying that the proposed right of conversion needed to be justified legally (letter 3rd December 2013) and asking for documentary evidence in support (letter of 10th December 2013), this does not alter the fact that the Government had already expressed its denial of the Conversion Term (a position which has never been retracted). I also agree with the Plaintiff’s characterisation of the subsequent correspondence as “a strategy of dodging and avoiding the [Plaintiff’s request to exercise the Conversion Term], by a combination of asking for (irrelevant) information…, bare holding replies, and simply ignoring [the Plaintiff] for months (and later years) on end”, until RP(1) was resumed on 27th December 2019, so that the Director could then take the stance that the land resumed was agricultural land and would be compensated for on this basis.

215.  The Defendant further says that the Plaintiff failed to apply for planning approval for any proposed conversion, so that the Government was entitled to take the view that any application for conversion (and land exchange or lease modification) would not be approved due to violation of town planning requirements.  I agree with the Plaintiff that this point does not affect the issue of whether there was any breach of the Grant, since it is not being suggested that the entitlement under the Conversion Term was subject to obtaining town planning approval. At best, any inability to obtain planning approval would go to the question of whether the Plaintiff suffered any loss.

216.  I therefore agree that the Director has been in breach since 13th August 2013 of the Government lease deemed granted with respect to 1941RP.

H.     DISPOSITION

217.  I dismiss the application for the declaration as regards the total area of 1941RP.

218.  I make a declaration that the Government lease deemed granted with respect to 1941RP contains the Conversion Term, namely, that the lessee is entitled to convert 1941RP or any portion thereof into building land upon (1) payment of a conversion premium at the rate of ¾ of a cent per square foot and (2) payment of Crown rent in respect of the area as converted at the rate of $50 per acre per annum from the date of such conversion.

219.  The Plaintiff’s claim for damages, if any, arising out of the Director’s breach of the Government lease deemed granted with respect to 1941RP are to be assessed.

220.  I further make a costs order nisi that the costs of the proceedings up to and including the trial of the issues of liability be paid by the Defendant to the Plaintiff, with certificate for two counsel.