MAN PING NAM v. MAN MEI KWAI

CACV 193/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 193 OF 2002

(ON APPEAL FROM HCA NO. 9852 OF 1998)

____________________

____________________

____________________

J U D G M E N T

____________________

Hon Le Pichon JA:

1. This is an appeal from the judgment dated 1 February 2002 of Deputy High Court Judge Andrew Cheung whereby a declaration was granted in favour of the plaintiff by counterclaim ("the respondent") and against the 1st defendant by counterclaim ("the appellant") relating to the appellant's powers as registered manager under section 15 of the New Territories Ordinance, Cap. 97 ("the Ordinance") to grant leases or to enter into tenancy agreements.

2. The declaration made which is the subject of this appeal is in the following terms:

"It is further adjudged and declared in favour of the Plaintiff by Counterclaim and against the 1st Defendant by Counterclaim that the 1st Defendant by Counterclaim as registered manager of the Wui under section 15 of the New Territories Ordinance, Cap. 97 may only grant a lease or enter into a tenancy agreement of whatever duration in respect of land held from the Government under the relevant Government leases in the name of the Wui subject to the consent of the Secretary for Home Affairs but not otherwise;"

Background

3. The appellant, the plaintiff by original action, is the registered manager of the Man Sham Chung Wui ("the Wui") under section 15 of the Ordinance. The Wui is a customary Chinese unincorporated association or business t'ong whose members consists of indigenous New Territories residents of the Man clan. By a Block Crown Lease dated 27 May 1905, lot numbers 733, 674, 669 and 661 in San Tin, which had been owned by the Wui prior to the lease of the New Territories to Britain in 1898 by the Second Convention of Peking, were re-granted to the Wui. The schedule to the Block Crown Lease contained the names of the owners of the relevant lots. The relevant entries named the Wui as lessee of the land, followed by the names of 4 individuals with the surname "Man", collectively described as "司理", transliterated as "trustees". As the Wui is not a legal entity, legal title to the Crown Lease would have vested in the trustees.

4. Very shortly thereafter, on 1 August 1905, section 13 of the New Territories Land Ordinance 1905 (No. 3 of 1905) ("the 1905 Ordinance"), the predecessor section of s. 15 of the Ordinance, was enacted. Under section 13 of the 1905 Ordinance, members of any clan, family or t'ong holding Government land, inter alia, by grant were required to make and prove the appointment of a manager or managers to represent it, and within 3 months of any change of manager to prove the same, failing which the Crown had a right of re-entry to be effected by the registration of a memorandum whereupon the land would become forfeited to the Crown. Although there is no direct evidence, it is to be inferred from the fact that the land never became forfeited to the Crown that managers were duly appointed and registered as required by section 13 of the 1905 Ordinance and in whom the legal estate to the Crown lease would have devolved. More likely than not, the 'trustees' named in the schedule to the Block Crown Lease became the first managers. In any event, it is accepted that section 15 applies to the Wui and that the appellant is its current manager, having been so registered in accordance with section 15 since 1949.

5. The respondent, the defendant by original action, is a member of the Wui. There is a register of members kept by the manager which is updated from time to time. In the Book of Entitlement prepared by the appellant in 1986, 33 names were listed together with their respective entitlements. However, 3 of the names appeared twice in the list. For example, the respondent was named twice and shown as being entitled to 1 shek and 3.5 sheks respectively. There were thus no more than 30 members at that time. It is also apparent from the Book of Entitlement that apart from individuals from the Man clan, more than a third of the members were ancestral and business t'ongs.

6. The meaning of a "wui" or "hui" (會) under Chinese customary law was considered in paragraphs 15 and 16 of the unchallenged expert report by Professor Wejen Chang set out by the deputy judge at paragraph 24 of his judgment. Traditionally, hui or wui were created for different reasons, by businessmen, craftsmen, religious groups etc whose members wished to pool their resources to form a greater and more powerful entity to further their causes more efficiently.

7. It is common ground that members of the Wui were entitled to share amongst themselves a certain quantity of crops calculated according to the weight to be derived from cultivation of the land. Since the founding of the Wui, the unit of "interest" of its members is registered or reckoned in "shek" ("石") or "dam" ("擔") and "dou" ("斗"). "Shek" is the traditional Chinese measurement in weight of seeds which is a hundred catties. One "shek" has ten units of "dou". A person having one "shek" (or "dam") interest in the Wui would be entitled to the crops from a plot on which one "shek" of seeds could be sown and planted. The interests of the members totalled 63.98 sheks. The appellant's interest extends to 1.33 sheks whereas the respondent's interest apparently extends to 5 sheks. It would therefore appear that sometime after 1986 he acquired an additional 0.5 shek although quite when that happened is not entirely clear.

8. The "Constitution of the Wui" which is reflected in the rent book held by each member among other matters provided for the election of a manager who was charged with developing the affairs and promoting the interests of the Wui and the distribution of rent twice a year. Implicit in this was that land owned by the Wui could be let by the manager. The appellant's evidence was to the effect that until about 1950, the land had been cultivated by Wui members. From about 1950, the land has been let by the Wui to farmers for cultivation and more recently also for open storage purposes in return for rental income. Such income is shared amongst the members of the Wui in accordance with their respective interests. At no time had any application been made by the managers of the Wui for consent from the District Office to let the land. Due to resumption of land by Government, what remains as Wui land now comprise lot numbers 733RP, 674RP, 669RP and 661CPR with a total area of over 7 million square feet.

Events precipitating the proceedings

9. The proceedings below came about in this way.

10. By the mid-1990s, some of the members of the Wui did not see eye to eye with the appellant regarding the management of the land. The respondent formed a "Working Group" consisting of some members of the Wui including those who had sold their shares in the Wui to outsiders but who remained registered as members of the Wui to act as nominees of the outsiders since, traditionally, Wui members had to be members of the Man clan. The Working Group disagreed with the letting policy of the appellant and wanted a greater proportion to be let for container storage rather than agricultural purposes because of the much higher rental income to be derived. The appellant and other members of the Wui were content with the rental incomes generated by the existing tenancies and did not want to expend substantial sums of money to fill in fish ponds in order to turn them into open storage ground. By early 1996, some ten-year tenancies of Wui land were expiring and there was also disagreement as to whom the Wui should relet the land.

11. The appellant as manager entered into a two-year tenancy agreement with the 2nd defendants by counterclaim ("the fish pond tenants") and one Leung Yin Yau ("Mr Leung") in respect of a substantial part of Lot No. 733RP consisting of several million square feet at a rent of $640,000 per annum expiring on 30 January 1998. He also entered into another two-year tenancy with two members of the Man clan in respect of 300,000 sq ft of Wui land at a yearly rent of $2.4 million after calling for tenders by intending tenants. A part of this land comprising 190,000 sq ft was eventually sublet to an outside company, Jet Harbour Limited, at a rent of $266,600 per month for container storage, the tenancy expiring also in January 1998.

12. On 28 July 1997, the Working Group issued a "Notice of Termination of Tenancy" signed by the respondent. The Working Group purportedly "representing" the Wui gave the fish pond tenants and Mr Leung a six-month Notice of Termination. Then on 28 December 1997, the respondent and two others signed a purported tenancy agreement letting Wui land to themselves as tenants for a term of five years ("the Purported Tenancy Agreement"). The landlord was said to be the "San Tin Man Sham Chung Wui Owners". The annual rent of $3.6 million was payable either to the manager of the Wui or "the representative sent by the Wui owners to collect rent on his behalf". The Purported Tenancy Agreement contained a provision granting the tenants a pre-emptive right to the renewal of the tenancy at a reasonable rent if upon the expiration of the term the landlord did not require the land for development. It further provided that if the landlord should want to sell the land during the term, the three tenants should have a pre-emptive right to purchase the land at the same price. The Purported Tenancy Agreement was signed by the respondent and a number of others apparently holding shares in the Wui as the "joint representative(s) of the owners" on behalf of the landlord. It was stamped on 20 January 1998 and on the same day, the appellant was informed of its existence and was asked to ratify and confirm it. The appellant declined on the basis that it would not be for the benefit of the Wui.

13. At about this time, Jet Harbour contacted the appellant for the direct letting of that part of the land occupied by Jet Harbour for container storage purposes upon the expiration of the two-year head lease. When this became known to the respondent, Jet Harbour's solicitors were informed that the respondent had entered into the Purported Tenancy Agreement with a majority of members of the Wui. Not surprisingly, Jet Harbour concluded that it would not be safe to enter into a direct tenancy relationship with the appellant pending clarification of the appellant's right to do so. Eventually, it was agreed between the appellant and Jet Harbour that Jet Harbour be allowed to continue in occupation after the expiration of the two-year head tenancy as before on the condition that it should pay a monthly sum of $266,000 as mesne profits or compensation money to the appellant's solicitors as stakeholder pending resolution of the dispute between the appellant and the respondent. For the same reason, the fish pond tenants and Mr Leung did not renew their tenancy when it expired but continued to remain in occupation paying mesne profits or compensation money at the same rate as the previous rent without the protection of any written tenancy agreement. When Mr Leung subsequently did not pay his share of the compensation money, the appellant obtained a court order for possession against him. The fish ponds continued to be occupied by the fish pond tenants pending the outcome of the dispute.

14. The appellant then commenced proceedings against the respondent on 17 June 1998 seeking declaratory and injunctive relief relating to the Purported Tenancy Agreement. The respondent's position was that in order to be effective and binding, all tenancies of the Wui land had to be consented to by the District Officer (now the Secretary for Home Affairs) in order to satisfy section 15 of the Ordinance. He contended that the fish pond tenancy was invalid. The fish pond tenants were joined as 2nd defendants to the respondent's counterclaim for declaratory and injunctive relief relating to the requirement of consent under section 15.

The judgment below

15. The main issue in the original action was the validity of the Purported Tenancy Agreement. The deputy judge held that individual Wui members, whether comprising a majority of the members or not, may not by themselves only enter into any tenancy of Wui property without the participation of its manager. He therefore had no difficulty in concluding that the Purported Tenancy Agreement was null and void and of no effect and did not bind the Wui or the appellant as registered manager. The deputy judge granted a declaration to that effect but did not consider it necessary to grant any injunctive relief on the basis that there was no sufficient evidence for suggesting that the respondent threatened to continue to assert the validity of the Purported Tenancy Agreement, whether by words or conduct. There is no appeal from the judgment in relation to the original action.

16. The deputy judge then turned to consider the counterclaim. That revolved around the question whether a registered manager of a wui could grant a tenancy of wui land without obtaining the consent of the Secretary for Home Affairs pursuant to section 15. The respondent's position was that consent was mandatory and therefore sought declaratory and/or injunctive relief against the appellant relating to his letting or intended letting of Wui land without the consent of the Secretary and declaratory relief against the appellant and the fish pond tenants relating to any current purported tenancy by the plaintiff in favour of the fish pond tenants without obtaining the Secretary's consent.

17. The deputy judge held that, viewed as a whole, the relevant legislation including section 15 aimed at providing a new statutory scheme regulating the management of land held from the Crown by managers registered under the new provisions and subjecting the same to the general control of the Land Officer in replacement of the managers' power (regardless of its actual extent) under Chinese customary law. In his view, section 15 was the manager's only source of power so that the phrase "dispose of or in any way deal with" must be given a large and liberal construction to enable the registered manager to enter into land transactions of all sorts, all subject to the consent requirement. As to the position of the fish pond tenants, the judge concluded that the interim arrangement entered into between the appellant as manager and the fish pond tenants pending resolution of the dispute did not amount to any tenancy relationship. However, the deputy judge rejected the appellant's argument that as there was no existing tenancy agreement, the respondent had no locus standi to sue the fish pond tenants, in view of the appellant's counsel's concession that the respondent as a member of the Wui had sufficient interest to sue in respect of an alleged wrongful purported tenancy. The deputy judge rejected other subsidiary arguments advanced, namely, that the Land Officer or Secretary must be taken to have abandoned the requirement for consent or must be taken to have consented to lettings given the widespread failure of managers to apply for and obtain consent to the letting of tso, t'ong and wui land; and that the counterclaim was an abuse of process, taken out with an "ulterior motive".

18. As to the form of relief, the judge held that a declaration but no injunction should be granted against the appellant. As it was the appellant's past practice to let land without obtaining consent and as there were millions of square feet of Wui land waiting for him to let, the deputy judge considered that the making of a declaration regarding the true legal position would be for the benefit of all concerned, including the appellant. But in his view, no injunction was necessary since he accepted that if the court were to rule against the appellant on the requirement of section 15, the appellant would act accordingly. The deputy judge did not consider it desirable for the court to make declarations directly on the validity of current leases or tenancies entered into without the requisite consent.

This appeal

19. The appellant's primary argument was that as the declaration was made on the basis of certain findings of law which, it was submitted, are erroneous, the declaration itself cannot stand. The appellant also raised secondary arguments to the effect that (i) there was implied consent to the lettings on the part of the Land/District Officer; (ii) the declaration ought not have had been granted because there was no lis between the parties; (iii) in any event, the declaration was too wide. Logically, the submission that the declaration should not have been made should be considered first. If valid, it would undoubtedly have a bearing on whether the other issues need be decided in this appeal.

Whether the declaration should have been made

20. Mr Neoh SC who did not appear below submitted that the declaration should not have been granted. The complaint of the respondent was that the appellant had granted or extended or renewed or continued the fish pond tenancy with the fish pond tenants despite its expiry by effluxion of time at the end of January 1998. It had not been made out: the deputy judge found that there was no basis for finding that any tenancy existed after January 1998. There was no other claim made against the appellant in the counterclaim whether for breach of trust or otherwise. Accordingly, there was no longer any lis between the appellant and the respondent.

21. The starting point must be Order 15, rule 16 itself which provides:

"No action or other proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the Court may make binding declarations of right whether or not any consequential relief is or could be claimed."

It will be noted that Order 15 has two limbs. As Sir Robert Megarry VC pointed out in Malone v Commissioner of Police (No. 2) [1979] 2 WLR 700 at 708B,

"[t]he second limb is in the form of conferring a positive power of making declarations of right. The first limb, on the other hand, is expressed in terms not of conferring any positive power but only of removing one possible objection to proceedings, namely, that a merely declaratory judgement is sought."

The judgment of Bankes LJ in Guaranty Trust Co of New York v Hannay & Co [1915] 2 KB 536 at 570-572 is often cited in support of an almost limitless jurisdiction. But its effect was explained by the Vice-Chancellor in the Malone case at 707F-H in these terms:

"What Bankes LJ was pointing out ... was that in addition to making declarations of right the court can make declarations of non-liability. True, a plaintiff who seeks such a declaration may have no cause of action; but it suffices if he is claiming 'relief'. This, I think means relief from '[some] real liability or disadvantage or difficulty' which affects him (see Thorne Rural District Council v Bunting [1972] Ch 470 at 477, 478) and not mere matters of interest of curiosity or the like. The illustrations which Bankes LJ gives: [1919] 2 KB 536 at 573 make it plain, I think, that he is throughout referring to rights and liabilities that are enforceable in the courts ... It would be ... remarkable if it were to be held that although the second limb of the rule is confined to legal rights, the first limb extends to all liabilities, whether legal, moral, social or otherwise. (I use the word 'legal' to include 'equitable' of course.)

The Vice-Chancellor thus concluded (at 708A) that:

"the power to make declarations is confined to making declarations on matters that are justiciable in the courts."

22. So there are limits to the seemingly wide language used by Bankes LJ in the Guaranty case relating to Order 15 rule 16, such limits being 'inherent in the nature of the relief: a declaration of rights'. See per Lord Diplock in Gouriet v Union of Post Office Workers [1978] AC 435 at 501D. The correct test to be applied is encapsulated in the following passage of Lord Diplock's judgment in Gouriet at 501G:

".... But the jurisdiction of the court is not to declare the law generally or to give advisory opinions; it is confined to declaring contested legal rights, subsisting or future, of the parties represented in the litigation before it and not those of anyone else."

Although Gouriet was a public law case, the principles are applicable in the private law context: see the decision of the English Court of Appeal in Meadows Indemnity Co Ltd. v The Insurance Corporation of Ireland Plc and International Commercial Bank Plc [1989] 2 Lloyd's Rep. 298 at 304. In that case, a reinsured party under a contract of reinsurance could not claim a declaration against the original insured person as to his rights against his insurer under the original insurance contract.

23. I now turn to consider the nature of the respondent's claim made in the counterclaim against the appellant. The first question to address is the nature of the respondent's "interest". It is common ground that the Wui is an unincorporated association. It is also common ground that each member of the Wui has an entitlement to share in the income derived from the assets of the Wui. The asset in question consists of land in the New Territories. The legal estate of the land is vested in the registered manager. No member of the Wui is entitled to have or call for the legal estate of any part of the land belonging to the Wui to be vested in him as such unless all the members were to give their consent. It is the registered manager who has power to dispose of or otherwise deal with the land (subject to any necessary consent from the Secretary.)

24. The counterclaim was not an action by a beneficiary against his trustee for breach of trust. Nor was it for his removal under that part of section 15 of the Ordinance which conferred power on the Secretary "on good cause shown" to cancel the appointment of any manager and to select and register a new manager in his place. Assuming, for the sake of argument, that the deputy judge was correct that the Secretary's consent was required for a letting of land by the manager, what are the consequences of a letting without consent? Section 15 does not state that such a transaction would be a nullity. Whilst it might enable the other party to the transaction to avoid it, if he chooses not to do so, can the transaction be impugned at the behest of a beneficiary? It was said that, in the court below, counsel for the plaintiff had conceded that a member of the Wui had a sufficient interest to challenge the validity of the alleged wrongful purported tenancy i.e. the alleged extension etc. of the fish pond tenancy. Even on the assumption (and I express no view as to its correctness) that it was open to a beneficiary to impugn a letting made without the Secretary's consent (again assuming the necessity of such consent), it does not follow that the letting would necessarily be set aside. At best, the transaction would be voidable but whether or not the court would set it aside would depend on the particular circumstances, such as the terms of the transaction itself, whether consent could be obtained retrospectively, the reason why it was not obtained before the transaction was entered into and like considerations.

25. Section 15 itself was not framed in terms of an outright prohibition; rather, it was made 'subject' to consent. In principle, there is no reason why consent could not be given retrospectively. That retrospective consent is obtainable in practice is clear from the evidence of the respondent's expert. The deputy judge accepted (at paragraph 85) that if consent were to be forthcoming in a particular case, the tenancy should be regarded as fully valid from the beginning.

26. In this connection, I note that the deputy judge considered that a letting without consent would amount to "a wrong done to the Wui". See paragraph 102 of the judgment. That characterization implied that the person 'wronged' suffered some loss or damage as a result. But as is apparent from the discussion above, the effect of the absence of consent to a letting, assuming (without deciding) that it were required by section 15, would depend on the circumstances of the case. If it were suggested that some loss would necessarily be sustained, that is palpably erroneous. In my view, it was unfortunate that the deputy judge characterized the absence of consent to a letting as a wrong done to the Wui, i.e. to its members.

27. So what purpose did the declaration serve? I am unable to agree with the deputy judge that to do so would be "for the benefit of all concerned". I can discern no useful purpose since the consequences of the absence of consent to a particular letting would invariably depend on the particular circumstances. The counterclaim was brought for the adjudication of legal rights of the parties, namely, that the fish pond tenancy (which according to the respondent existed) should be set aside. The issue was not whether or not consent was required but whether a particular transaction ought to be set aside for want of consent, the need for consent being a pre-requisite that had to be established. Such adjudication cannot be made in the abstract. Once the concrete case evaporated with the finding that no tenancy existed, what the court was being asked to do was therefore not a declaration of rights at all. It was nothing more than "an advisory opinion" which according to Lord Diplock in Gouriet, is not within the jurisdiction of the court.

28. The deputy judge acknowledged the possibility of there being "other purported tenants under yet-to-be expired tenancies agreements already entered into prior to 1998 by the appellant without consent who were not parties to the proceedings". "Fairness" to these possible purported tenants was the reason the deputy judge gave for declining to declare those tenancies invalid. This not only implicitly recognised the need to make persons whose legal rights were being adjudicated parties to the proceedings, it also reinforced the conclusion that the declaration made was not a declaration of rights.

29. Yet the deputy judge seemingly failed to appreciate that the declaration he made had ramifications far beyond the appellant and persons who took leases from him without the Secretary's consent. In Yuen Long alone, there are over two thousand registered managers of tsos, t'ongs and clans. The declaration made affected tenancies "of whatever duration". On the evidence before him, it was plain that lettings in the New Territories by registered managers under section 15 without consent was widespread. That was so in relation to oral and short term tenancies: that is readily understandable because of the cumbersome application process involving both time and expense. Even in relation to longer leases such as those that exceed 2 years and are registrable, District Officers have seldom been asked for consent and when that has occurred, it has been an application by tenants seeking protection for themselves rather than the registered managers. That was the oral evidence from the respondent's expert, Christopher James Robinson, who joined the Registrar General's Department (Land Office) as a solicitor in July 1980 and retired in December 2001 as Assistant Director of Lands/Legal in the Legal Advisory and Conveyancing Office, Lands Department. It is to be noted that the few consent letters that were in evidence were of recent vintage: none pre-dated 1988.

30. Regrettably, the potentially unsettling and disruptive effect of the declaration affecting literally thousands of lettings not involved in this action did not appear to have been appreciated or taken into consideration by the deputy judge. The declaration effectively opened up the possibility of lettings made by managers without consent being challenged by the tenants themselves as well as the members of the tso, t'ong or clan, whether or not for good reason. That consideration alone should have caused the deputy judge to exercise great caution and circumspection as regards the form of relief (if any) to be granted.

31. Mr Chan who appeared for the respondent relied on In re Staples [1916] Ch 322 where Sargant J cited the observations made by Shadwell V-C in Curtis v Sheffield [1882] 21 Ch D 1, 3:

"It is true that it is not the practice of the Court, and was not the practice of the Court of Chancery, to decide as to future rights, but to wait until the event has happened, unless a present right depends on the decisions, or there are some other special circumstances to satisfy the Court that it is desirable at once to decide on the future rights. ..."

It was submitted that the respondent had a present right which depended on the court's decision. But when one considers the provisions of section 15, it is plain that it does not purport to confer any "right" on the individual members of the "clan, family or t'ong" whose land is vested in the registered manager. Moreover, the effect of the absence of consent would vary with the circumstances. I do not therefore see how Curtis v Sheffield assists the respondent. Nor could the Guaranty case since the present case is not about a declaration of non-liability.

32. It will readily be appreciated that there was, in reality, no contested legal right, subsisting or future, of the parties to the counterclaim before the deputy judge. In my view, in those circumstances, there is but one answer: a declaration was not warranted and ought not to have been made.

33. This conclusion is sufficient to dispose of the present appeal.

Other matters

34. For my part, I would not consider it appropriate for this court now to rule on the correctness of the deputy judge's interpretation of section 15 for the same reasons. Nevertheless, it is important that this should not be taken that I agree with the deputy judge's ruling. It is therefore desirable that I comment on aspects of his reasoning which underpinned the basis for the making of the declaration since I have considerable reservations about their correctness. Before turning to them, it would be convenient to trace the history of section 15 of the Ordinance.

Section 15

35. As noted above, section 15 started life as section 13 of the 1905 Ordinance. That became section 27 of the New Territories Regulation Ordinance 1910 ("the 1910 Ordinance"). Minor amendments were made to that section in 1912 and 1939. The section then became section 19 of the New Territories Ordinance 1950. That in turn became section 15 of the Ordinance which came into effect in 1964. Further minor amendments were made in 1993 and 1998 but it is fair to say that the present section 15 is in substance the same as the old section 13 of the 1905 Ordinance. In pertinent part, section 15 reads:

"15. Whenever any land is held from the Government under Lease or other grant, agreement or licence in the name of a clan, family or t'ong, such clan, family or t'ong shall appoint a manager to represent it. Every such appointment shall be reported at the appropriate New Territories District Office of the Home Affairs Department, and the Secretary for Home Affairs on receiving such proof as he may require of such appointment shall, if he approves thereof, register the name of the said manager who shall, after giving such notices as may be prescribed, have full power to dispose of or in anyway deal with the said land as if he were sole owner thereof, subject to the consent of the Secretary for Home Affairs, and shall be personally liable for the payment of all rents and charges and for the observance of all covenants and conditions in respect of the said land. Every instrument relating to land held by a clan, family or t'ong which is executed or signed by the registered manager thereof in the presence of the Secretary for Home Affairs and is attested by him, shall be as effectual for all purposes as if it had been executed or signed by all the members of the said clan, family or t'ong. The Secretary for Home Affairs may on good cause shown cancel the appointment of any manager and select and register a new manager in his place. ...

36. The two opposing views on the consent requirement of section 15 may be summarized as follows. The appellant's position was that consent is required only for transactions involving an alienation of land by the registered manager qua owner, that section 15 consent seeks to regulate the transfer of title of the Crown lease only and not the other functions of the manager. The respondent contended that the phrase "in any way deal with" means the disposal of a lesser interest in land.

37. Since section 15 dates back almost a century, the circumstances prevailing at the time when its predecessor section was first enacted i.e. in 1905 are clearly pertinent when it comes to the interpretation of that provision. The New Territories came under British administration only several years before the enactment of the 1905 Ordinance. The Lockhart Report, laid before the Legislative Council in 1900, is a rich and reliable source of information concerning conditions then prevailing. At the time, the New Territories was wholly undeveloped, the area being dotted with groups of villages and small hamlets. Land was often owned by clans, tsos and t'ongs and other forms of association. Letting was common. The Lockhart Report referred to the Proclamation issued on 9 April 1899 by the then Governor, Sir Henry Blake, in these terms:

"In this proclamation the people are assured that 'their commercial and landed interests will be safeguarded and their usages and good customs will not in any way be interfered with,' ..." (emphasis added)

That this was given effect can be seen from sections 6 and 11 of the 1905 Ordinance, re-enacted as sections 20 and 25 of the 1910 Ordinance, passed to consolidate and amend the laws relating to the administration and regulation of the New Territories. These provided as follows:

" 20. ... The Land Officer shall have power to recognise and enforce any Chinese custom or customary right in relation to land, and the decision or judgment of the Land Officer shall be binding on all parties concerned unless the same is varied or set aside as hereinafter provided ...

...

25. In any proceedings in the Supreme Court in relation to land in the New Territories the Court shall have power to recognise and enforce any Chinese custom or customary right affecting such land."

These sections specifically preserved "Chinese custom or customary right" in relation to land in the New Territories.

The underlying reasoning

38. I will now turn to consider the reasoning underpinning the conclusions reached by the deputy judge at paragraph 72:

"... viewed as a whole, the relevant legislation including section 15 aimed at providing a new statutory scheme regulating the management of land held from the Crown by managers registered under the new provisions and subjecting the same to the general control of the Land Officer, in replacement of the managers' power (regardless of its actual extent) under Chinese customary law."

Those conclusions were largely premised on the deputy judge's finding of the 'mischief' section 15 was meant to address. In fact, he identified two such 'mischiefs'. In so doing the deputy judge appeared to have placed considerable reliance on the observations of Briggs J (as he then was) in Lai Chi Kok Amusement Park Co., Ltd. (No. 2) and Tsang Tin-sun [1966] HKLR 124 at 130-131:

"The mischief envisaged by the section is this: land held by a t'ong could in the usual way be conveyed only if the conveyance were executed by all the members of the t'ong. That would as time went on become increasingly difficult, if not practically impossible. The object of the Ordinance of 1905 was to facilitate transactions relating to land. It may well be in the interest of the t'ong that the land should be leased or sold and a convenient means of effecting the conveyance was sought. This was found in the appointment of managers, but at the same time it was necessary to protect members of the t'ong against malpractice on the part of managers. For this the personal supervision of any transaction entered into by the manager was desirable. Such personal supervision would be ensured if every instrument relating to the land had to be executed and signed by the manager in the presence of the Land Officer. At the same time the attestation by the Land Officer would be conclusive proof of his having consented."

39. Under Chinese customary law, land belonging to a t'ong could only be conveyed if all the members joined in the execution of the conveyance. Section 13 of the 1905 Ordinance was therefore enacted to facilitate land transactions by vesting the legal estate in registered managers who could then give good title to land held under a Crown Lease. That is uncontroversial. But the deputy judge read that passage as identifying a second 'mischief' i.e. malpractice on the part of registered managers to which he attached considerable importance (see, for example, paragraphs 66, 67, 69 and 70). If indeed that is a correct reading of the passage cited, it is not apparent from the judgment in the Lai Chi Kok (No. 2) case itself what the basis for finding that the so-called second mischief existed was. First, I am unable to discern from the judgment in that case what evidence (if any) was before the court to support such a finding. Second, it has to be borne in mind that the mischief must be one that existed at the time the 1905 Ordinance was enacted and which section 13 was meant to address. Third, whilst Briggs J referred to land being "leased or sold", the actual case before the Full Court concerned the sale of land and had nothing to do with the power of managers to let land. To that extent, his observations were obiter. The judgment shed no light on why it was thought that malpractice by the trustees was an issue some 60 years earlier, resulting the enactment of section 13 of the 1905 Ordinance. For these reasons, putting the matter at its lowest, I find it doubtful if such a second mischief did exist in 1905 which required legislative intervention.

40. A closely related issue arising from the deputy judge's conclusions at paragraph 72 was whether or not the managers' customary powers to deal with land without obtaining the consent of the Secretary survived the enactment of section 13 of the 1905 Ordinance: see paragraph 71 of the judgment. The deputy judge concluded that the section is (or has become) the manager's only source of power: see paragraphs 70 and 78 of the judgment. But in so construing section 15, the deputy judge did not specifically avert to the proclamation or to sections 20 and 25 of the 1910 Ordinance. True it is that the deputy judge did refer to the proclamation and sections 20 and 25 of the 1910 Ordinance earlier on in his judgment (at paragraphs 22-29). However, when it came to the construing section 15 much later on in his lengthy judgment, it is not clear at all if he had those matters present in mind, in particular, the express preservation of "Chinese custom or customary right". Nor would it appear that the deputy judge ever considered the possibility of a construction that would have harmonised Chinese customary law and section 15 consent.

41. So far as the meaning of "Chinese custom or customary right" is concerned, it was the subject of a Note which appears in Appendix 1A of Comments on the Report of the Committee on Chinese Law and Custom in Hong Kong. The view was expressed that it meant such local custom and customary rights as would according to the principles of English law be recognised as having the force of law. It was thought that the courts might well hold that proof that the custom has subsisted for a substantial period, such as the time of actual human memory would be sufficient. Whilst Professor Chang's report may not be as clear as it might, fairly read, the report supports the view that the manager of a clan or a wui did have power to let land even though a member of a wui, unlike a member of a clan, had greater power in supervising the management of the wui's land. It was also clear that the exercise of powers of management by a manager did not require official approval under Chinese customary law.

42. For these reasons, the deputy judge's analysis of section 15 appears to have been based on a premise that has not been substantiated.

43. It remains to be mentioned that I was a member of the court in Tang Man Kit and Foo Tak Ching (suing as Managers of Wah Yan Mo Fan Heung(華人模範鄉)) v Hip Hing Timber Company Limited CACV 137/2002, an interlocutory appeal which was heard some three weeks prior to the present appeal. The consent requirement of section 15 was one of the issues that arose for decision. The judgment was not available when this appeal was heard. I have had the advantage of reading in draft the judgment of Rogers VP in that appeal, with which I am in agreement. Paragraphs 50 to 56 of that judgment set out the reasons why the court in CACV 137/2002 rejected the proposition that the renting of land required the consent of the Land Office under section 15.

Conclusion

44. I would allow the appeal. I would also make an order nisi for costs both here and below in favour of the appellant.

Hon Cheung JA:

Consent required

45. I am satisfied that the requirement of consent under section 15 of the New Territories Ordinance ("the Ordinance") is not confined only to sale of land, but also extends to letting of clan land (which includes family, tong, tso or wui land) by the managers.

Section 15

46. The section is in wide terms. It covers many aspects of traditional land holdings:

(1) The requirement of appointing managers to represent a clan, family or tong when it holds land from the government.

(2) The registration of the appointment of managers by the relevant authority.

(3) The power of the managers to dispose of or deal with the clan land.

(4) The requirement of consent of the authority when the managers dispose of clan land.

(5) The personal obligations of the managers for government rent and charges and observation of government land grant conditions.

(6) The binding effect of execution by the managers of instruments relating to land on members of the clan.

(7) The cancellation and appointment of managers by the authority.

(8) The power of the authority to re-enter the land where managers are not appointed or where there is a change of the managers.

47. Specifically in respect of disposal of land by the managers, the relevant part of the section is in extremely wide terms : the manager shall have "full power to dispose of or in any way deal with the said land as if he were sole owner thereof, subject to the consent of the (authority)." (emphasis added)

Concerned only with legal title?

48. Mr. Neoh S.C., counsel for the appellant, sought to limit the scope of the section by submitting that the purpose of the section is concerned with identifying the person who held New Territories land from the government so that there is always a person who remains responsible for observing the covenants of the grant. In the case of traditional land holding, the person who holds the title is the manager. Insofar as the section seeks to circumscribe the powers of the registered manager i.e. by the requirement of consent, the objective is to maintain a clear chain of title. This being the objective, the requirement of consent is only needed in the case of sale or mortgage or conveyance of the title of the land to another trustee.

Not the sole purpose

49. This is a very persuasive argument. However, I am not convinced that this is the only purpose of the section. When the New Territories were first leased to the British government, the administration had to regulate the system of traditional land holding of the clans by requiring the managers to be the legal owners and responsible for the rent and lease conditions. That obviously was a reason for the introduction of section 15. However, this does not mean that the consent requirement was also enacted solely for the purpose of ensuring a clear chain of title of ownership. Once the holder of the legal title had been identified, there is no reason to impose the consent requirement solely for that purpose. As Mr. Chan, counsel for the respondent, pointed out, the situation is no different from land in the New Territories being held by individuals. Once the government lessee is identified, his obligation for the rent and his observations of the conditions would follow. The government did not impose a consent requirement on an individual land holder.

Protection of the members

50. The consent requirement was introduced obviously to restrict the power of the manager who is entitled to dispose the clan land as if he was the sole owner. The purpose clearly was for the protection of the members of the tong, tsoi and wui because under Chinese customary law, the manager cannot alienate the clan land without the consent of the representatives and elders of the whole clan : see the Lockhart Report 1900, Appendix No. III, Memorandum on Land. To ensure that the manager will not abuse his power, consent from the authority had to be obtained. The authority, in turn, had to ascertain from the members of the clan whether they have any objection to the disposition by the manager. The purpose of protecting the interest of the members against the malpractice of the manager was clearly recognized in Lai Chi Kok Amusement Park (No. 2) v. Tsang Tin-sum [1966] HKLR 124 and Light Ocean Investment Ltd. v. Enway Development Ltd. [1994] 3 HKC 31.

51. Even if retrospective consent can be given by the authority, it does not mean that the consent requirement is not a matter of real substance. The importance of the requirement is that the manager cannot act unilaterally without regard to the wish of the members whose interests are guarded by the authority.

52. This purpose must be at the forefront of the mind of those who legislated section 15 because this is the means by which the newly acquired powers of the managers can be reconciled with their traditional role and obligations towards the members.

53. In my view this important objective of section 15 transcends the arguments advanced by the appellant that the government is concerned only with an outright disposal of land because it needs to hold a new lessee responsible for observing the covenants of the Government lease or that section 15 is only concerned with granting clear title to the assignee of the land.

Definition of Land

54. Further, land in section 2 of the Ordinance includes not merely physical land but also "every estate and interest in land and also includes any rent or profit issuing out of land and any easement affecting land ...". This is a wide definition and construing sections 2 and 15 together, one should not confine the consent requirement to merely a sale which involves a change of title.

55. Once the wide definition of land is recognized by section 2, it is inevitable to conclude that the two phrases in section 15 i.e. "to dispose of" and "or in any way deal with" are referable to different ways of dealing with the land. The former is concerned with a disposal by an outright sale or mortgage while the latter is concerned with a disposal of a lesser interest in land, such as by letting. It may also include a transfer of title from one manager to another. If the latter phrase is the same as the former then it is superfluous to add the latter.

Ambit of the manager's power

56. It is obvious that a letting of the clan land may well be as important as an outright sale of the land. It all depends on the value of the land and whether the letting is in substance of the same nature as a sale, such as a letting of almost the same length of the lease held from the Government. The land here is about 7,000 million square feet. But all accounts it is an extremely valuable piece of land.

57. One important question is whether under customary law the manager can let land in his own name. The learned judge held that there was insufficient expert evidence placed before him on this point. The opinion of Professor Wejen Chang, an expert on customary law, was admitted as evidence. From what I could ascertain from the court record, he did not give oral evidence. What Professor Chang said on this issue is this :

"The clan land was usually managed by the clan members who set aside the land or clan elders representing the clan's various initial lineages or persons selected by them. Usually the manager would lease or rent the land to tenants for yearly revenue. He was not allowed to mortgage or sell or otherwise dispose of the land. Such transaction must be authorized by the lineages. Traditionally Chinese magistrates and other officials were not involved in management of clan land. Even in the case of mortgage or sale of the land his approval was unnecessary."

58. Reading between the lines, one may say that the manager could let the clan land without the consent of the members. But the expert did not expressly give an opinion one way or the other on this important point. On the contrary, the Lockhart Report stated that "the rent roll is kept by a committee of the clan". This suggests that the clan exercises control over the letting as well. Further, as far as actual practice of some tsos in the New Territories is concerned, the case of Tang Kai Chung & Another v. Tang Chik Shang and Others [1970] HKLR 276 at page 319 provided evidence that in that particular tso, dealings of clan land including letting were subject to agreement in a family meeting. The Tang clan in that case is a well known family in the New Territories, particularly in the Ping Shan area, holding substantial land. This being the state of the evidence it would be imprudent to find that under customary law the manager could let the clan land in his own name or without the consent of the members.

Ordinance overrides customary rights

59. For the purpose of argument, even if it is assumed that under customary law a manager can let out land in his own name without the consent of the members, this does not necessarily mean that section 15 had not overridden this aspect of the power of the manager. The best illustration of the Ordinance overriding the power of the manager came from the opinion of Professor Chang. Official approval of sale or mortgage of clan land by the manager was unnecessary under customary law. Yet under section 15, the consent of the authority is required.

60. The Proclamation issued by the British Government after it had assumed the administration of the New Territories from 1 July 1898 was that the people of New Territories were assured that "their commercial and landed interests will be safeguarded and their usages and good customs will not in any way be interfered with". Inevitably when mechanism was introduced to regulate the system of traditional land holding in the New Territories, this would have an impact on some aspects of the customary law. This is unavoidable because one needs to fit the customary law into the new administrative framework of land transactions : see Wu Koon Tai v. Wu Yau Loi [1996] 2 HKLR 477. The enactment of section 15 clearly introduced a new statutory scheme to the system of disposal of land by the managers. Consent is required from the authority.

The Basic Law

61. Article 40 of the Basic Law which expressly protects the lawful traditional rights and interests of the indigenous inhabitants of the New Territories is not infringed by the requirement of consent in letting by managers. This is because section 15 is, in fact, the means to protect the traditional customs of land holding by tong, tso or wui. The long legislative history of the section 15 which began its life in 1905 vitiates any argument of infringement of the Basic Law.

"Of the same kind or nature" principle

62. In view of the decision I have reached, it is not necessary to decide conclusively on the arguments relied by Mr. Chan relating to the "of the same kind or nature" (i.e. the ejusdem generis) principle. However, it is certainly arguable that the overall statutory scheme indicates that this principle is displaced : see Bennion on Statutory Interpretation 3rd Ed. pages 964-965. The phrase 'to dispose of' is not a "genus (i.e. a category or a kind) describing term". It refers to one type of dealing with land only. Hence the "of the same kind or nature" principle does not apply by the use of the words "dealing with" : see Bennion pages 959-960, Alexander v. Tredegar Iron & Coal Ltd. [1994] KB 390 at 396 and Quazi v. Quazi [1980] A.C. 744 at 809. As a result, the words used in Section 15 are intended to cover different types of dealing with the property.

Abandonment or waiver of the consent requirement

63. It is clear from the evidence adduced at the trial that obtaining consent for letting land by a manager is stated to be one of the transactions (together with sale, mortgage, transfer, entering into a short term waiver of Tso and Tong land) within the ambit of the Land Officer's authority to grant consent. There is also evidence that there is the practice that notices should be posted not only to sale or mortgage but also in relation to lettings. There is evidence that Land Officer had granted consent to manager letting property. There is further evidence that retrospective consent had been granted (see the expert opinion of Robinson). In the circumstances, the appellant has not made out a case that this legal requirement had been abandoned or waived.

Practical consideration

64. It is recognized that there are in existence in the New Territories many short term leases being granted by managers. The requirement of consent clearly will have a substantial impact on dealings between the parties to the transaction and also between the managers and the government. However, if, as a matter of statutory interpretation, consent is required, then the repercussion cannot be the reason for refusing to give effect to the true meaning of the section.

Declaration

65. The respondent is a member of the Man Shum Chung Wui, a clan governed by Section 15. He is a beneficial owner of the Wui land : (see Tang Yau Yi Tong v. Tang Mou Shou Tso [1996] 2 HKLR 212, Chap Yick Clansman's Association v. Mok Fai [1997] HKLRD 580 and Leung Kuen Fai v. Tang Kwong Yu Tong HCMP No. 3305 of 1999). Although he had failed in his counterclaim on the contention that the appellant had extended or renewed the Fish Pond Tenancy despite its effluxion of time at the end of January, 1998, it does not mean that there is no real dispute between the parties. The requirement of consent was clearly identified and contested in the pleadings and in the trial. Factual and expert evidence were called at the trial on this very issue. Any letting by the manager without the supervision of the District Officer obviously affects his interests. It is clear that the appellant will proceed with letting the clan land without obtaining the consent of the members. This is not an abstract question, the answer to which is incapable of affecting any existing or future legal rights of the plaintiff : Rediffusion (Hong Kong) Ltd. v. Attorney General of Hong Kong [1970] A.C. 1136. It is also clear that the learned judge was minded to grant an injunction but for the appellant's indication that he would act according to what the Court may rule on the issue of consent.

66. In my view, subject to a modification on the exact terms of the declaration, a declaration that consent is required in a letting by the manager of the wui land should be granted.

Conclusion

67. Accordingly, for my part, I shall dismiss the appeal.

Hon Stone J:

68. I agree with Le Pichon JA that this appeal should succeed.

69. In my view the learned deputy judge below was over-ambitious in granting the declaration the subject of this appeal. In the circumstances of the case before him there was no need for him to do so. It was pursuant to the establishment of no legal right, and arose out of a debate as to that which, in the event, was an incidental issue, namely the requirement of consent for a letting pursuant to section 15 of the New Territories Ordinance, Cap.97.

70. As Mr Neoh SC submitted, there was no lis between the appellant and the respondent once the complaints of the respondent had been dismissed, nor was there any direct claim of right made against the appellant, whether of breach of trust or otherwise.

71. In the circumstances, therefore, the declaration as made looks remarkably like an advisory opinion by a court which has come across an interesting point in the course of deciding a case and wishes to make its views known on the point for the purpose of general guidance.

72. The jurisdiction to grant declarations is a jurisdiction which should be approached with caution, and is one which should not lightly be exercised. Accepted principle has established that the court will not make declarations in a dispute which is not a justiciable dispute. As Neill LJ expressed the position in Meadows Indemnity Co Ltd v. The Insurance Corporation of Ireland PLC and anr, [1989] 2 Lloyd's Rep. 298 @ 302:

"the jurisdiction of the court is not to declare the law generally or to give advisory opinions; it is confined to declaring contested legal rights, subsisting or future, of the parties represented in the litigation before it and not those of anyone else."

73. Similar appellate authority exists in Hong Kong. See, for example, the observations of the Court of Appeal in Jackson v. Attorney General [1980] HKC 182 wherein the appellant was refused a declaration affecting the manner of his pension computation, McMullin JA noting (at 190A) that that which was sought "was in the nature of a purely advisory judgment of the court", whilst Leonard JA (at 197B) observed that "I know of no case in which a declaration was granted in which there was not a justiciable issue before the court."

74. In my judgment the present appeal may, therefore, be decided on the basis of what Mr Neoh SC termed his 'short point', namely that the declaration was unwarranted and ought not to have been granted. I accept this submission, and respectfully associate myself with the observations of Le Pichon JA concerning the dubious purpose and utility of this declaration, not least that which is termed the "the potentially unsettling and disruptive effect" of the declaration as granted by the learned deputy judge.

75. On this basis there is thus no necessity to proceed to consider in detail the elegantly crafted and historically-referenced argument of Mr Neoh, the main thrust of which is that the consent requirement within section 15, Cap 97, is triggered only when the registered manager purports to transfer legal title to 'wui' land.

76. The irony is that, absent the declaration wrongly so made by the court below, Mr Neoh would have had no platform on which to mount that which clearly he regarded as his primary argument. Be that as it may. For my part, in common with Le Pichon JA, I do not think it appropriate to rule on the complex argument relating to section 15, notwithstanding Mr Neoh's invitation so to do. This issue is far from clear-cut, and its resolution is not required for the disposition of this appeal.

77. I would allow the appeal, with costs to the appellant both here and below.

Hon Le Pichon JA:

78. This appeal will therefore be allowed. There is also to be an order nisi for costs both here and below in favour of the appellant.