CITY UNIVERSITY OF HONG KONG REVISION Basic Law Chinese

CITY UNIVERSITY OF HONG KONG
REVISION
Basic Law
Chinese Constitution (the 1982 Edition)
Article 31 – The state may establish special administrative regions when necessary. The systems
to be instituted in special administrative regions shall be prescribed by law enacted by the
National People’s Congress in the light of specific conditions.
Role of the Basic Law of Hong Kong
Contents: Articles 1 to the end
Annex I II and III, contents and importance
Ordinances assigned to them
Contents
Decree of the President of the People's Republic of China
The Basic Law of the Hong Kong Special Administrative Region of the People's Republic of
China
Preamble
Chapter I:
General Principles(Art 1-11)
Chapter II:
Relationship between the Central Authorities and the HKSAR(Art 12-23)
Chapter III:
Fundamental Rights and Duties of the Residents(Art 24-42)
Chapter IV:
Political Structure
Section 1:The Chief Executive; Section 2:The Executive Authorities; Section 3: The Legislature;
Section 4:The Judiciary; Section 5: District Organizations; Section 6: Public Servants (Art 43104)
Chapter V:
Economy
Section 1: Public Finance, Monetary Affairs, Trade, Industry and Commerce; Section 2:
Land Leases; Section 3: Shipping; Section 4: Civil Aviation; (Art 105-135)
Chapter VI: Education, Science, Culture, Sports, Religion, Labour and Social Services(Art 136149)
Chapter VII:
External Affairs(Art 150-157)
Chapter VIII:
Interpretation and Amendment of the Basic Law(Art 158 & 159)
Chapter IX:
Supplementary Provisions(Art 160)
Definition of Constitution
“A constitution means a document having a special legal sanctity which sets out the framework
and the principal functions of the organs of government within the state, and declares the
principles by which those organs must operate.” (from Bradley and Ewing, Constitutional and
Administrative Law, 12th edition)
Important Articles in the Basic Law
Art 2 executive, legislative, judicial
Art 8 the laws previously in force….common law, rule of equity, ordinances, sub legislation,
custom law.
Art 18 National laws, NPCSC has power to add or delete
Art 158 Interpret and Amend Basic Law
Art 18(3) NPCSC must consult BLC whether to add or delete the BL Annex.
Interpretation
Comparing with its attitude in Lau Kong Yung and Ng Ka Ling, in Ng Siu Tung, the court has
apparently taken a moderate position on the sensitive issue of the enforceability and the binding
force of the NPCSC Interpretation. It did not maintain the controversial stand which it took in
Ng Ka Ling that the Court of Final Appeal has the power to declare the acts of the NPCSC to be
against the Basic Law and, to declare them to be void. Nor has it stayed at the other extreme as in
Lau Kong Yung where it took the position that the NPCSC has so much power that they can
interpret the Basic Law at any time and the power of the NPCSC is unqualified and unlimited.
In Ng Siu Tung, the court tried to stick to ordinary common law principles, namely, the very
fundamental doctrine in administrative law, legitimate expectation and the principle that the
NPCSC interpretation has no retrospective effect upon judgments previously rendered as
promised by the BL Art 158 (3).
This is a good judgment and as seen by many, the CFA started to find equilibrium to handle
cases which fall within its jurisdiction of autonomy and which fall in between the power division
of central-local relations. It is believed that as more cases come by, the CFA will make better
and better judgments in this regard.
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Common Law
Characteristics of the Common Law
1. Equality of Arms
Each side is given equal size of weapon or opportunity - otherwise if it is not heard from both
sides, it is not reaching to the whole truth.
(Common law – emphaizes the involvement and participation of the people).
2.Judicial Precedents – a million dollar analogy, stare decisis. For example: the Indian sexual
harassment case, go to Peking Convention in 1995 for a precedent.
3. Due process of law DPL, law of the land; rule of law; legal judgment. Miranda Rights.
4. Avoiding Miscarriage of Justice – a negative dimension of DPL. Justice is practiced
differently in different countries.
Miranda Rights protection – DPL rights
Justice should be done.
Justice should appear to be done.
5. Locus Standi – the place of standing in law.
Judicial Precedents
Major (1985, p. 18) quoted that the importance of precedent was emphasized by Lord Gardiner
L.C. in a statement made on behalf of all the Lords of Appeal in Ordinary in 1966. He said that:
Their Lordships regard the use of precedent as an indispensable foundation upon which to
decide what is the law and its application to individual cases. It provides at least some degree of
certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for the
orderly development of legal rules.
Is there any scope for the doctrine of precedents to be reformed? Do we have to be a prisoner of
our own qualities or pronouncements? Precedents are well known for their certainty,
predictability and conformity, should we always be bound by these so called good qualities?
Some argued that these fine qualities in fact are impediments in the growth of the Common Law.
A court makes a decision on an issue between a plaintiff (PTF) and a defendant (DFT). There
are three separate elements involved:
(1) The facts of the case as proved by the parties;
(2) The principle of law applied by the court to those facts;
(3) The resulting decision in favour of one of them.
The decision of the court is binding on the parties to the action. Further the principle of the
decision may become binding on other parties in future cases.
The principle becomes the common law.
Due Process of Law
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Rule of law = due process of law = law of the land = legal judgment
1. How (Procedural) the law is going to be applied?
2. Is law applied fairly to all?
3. Is the burden of proof reasonable?
4. What is the information about the allegations?
5. Presumption of innocence.
6. Burden of proof on prosecution.
7. Right to defend oneself.
8. Seek legal aid.
9. Transparency in transfer and trial.
The following are must evidences to demonstrate rule of law
a) Medical treatment
b) Legal aid
c) Meal and food
d) Becomes a guest of the state in prison
e) Gives me the right
f) Gives me the dignified treatment
g) Gives respect
h) Gives fair treatment
Agreement
Offer
Offer and acceptance are the components of agreement which is the basis of the contract. In
practice they are performed one step after another and no binding contract will come into effect
until the formal contract has been agreed.
An offer is addressed to an identified party or opened to the whole world (Carlill v Carbolic
Smoke Ball Company 1893) and it must be distinguished from a mere attempt to negotiate. The
form of the offer is immaterial from the legal viewpoint. It may be done by letter or by telegram,
or it may be oral. A binding contract is established if the offer is accepted.
Offeror and offeree
The party that makes the offer to do or not to do something is called the ‘offeror’ and the party to
which the offer is made is called the ‘offeree’. Upon counter offering, the positions of the two
can reverse.
Invitation to treat (Pharmaceutical Society of Great Britain v Boots (1953))
An invitation to treat is similar to offer and that we need to distinguish their difference. An
invitation to treat is an expression of willingness to enter into a negotiation. An invitation for
contractors to submit tenders is inviting firms to submit offers for doing the work. In the
invitation, it is often stated that the employer is not bound to accept the lowest or any tender or to
be responsible for the cost incurred.
Before an offer is accepted, it may be withdrawn revoked by the one who made it. Thus, a
contractor may submit a successful tender in terms to winning the contract. However, the
contractor may choose to revoke this offer prior to formal acceptance. Moreover, an offer may
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also cease to exist due to the other reasons, such as the passing of a “reasonable” period of time
or the death of the offeror. Tenders for building works do not remain on offer indefinitely. If they
are not accepted within a reasonable time, the offer may lapse, or be subject to some monetary
adjustment should it later be accepted. The building owner may stipulate in the invitation to the
tenderers that offer should remain open for a prescribed period time, say 90 days.
Counter Offer
Such counter-offer will replace and cease the original offer. This fresh offer made is known as a
counter-offer (Hyde v Wrench (1840)), and is subject to the conditions now applied.
Acceptance
After an agreeable offer has been made, there must be an acceptance of it before a contract can
be established.
Advertisements
Partridge v Crittenden [1968] 2 All ER 421
An advert was placed in a magazine stating: ‘Bramblefinch cocks and hens, 25s each’.
This was not an offer simply an invitation to treat.
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
The language used in the advert showed that it was an offer as opposed to an invitation to treat.
Acceptance leads to a ‘unilateral contract’.
Definition of ACCEPTANCE – an unconditional assent to the terms of an offer.
CONTRACT DOCUMENTATION &
STANDARD FORM OF BUILDING CONTRACT (SFBC)
Documents for construction contracts usually comprise the following:(i)
(ii)
(iii)
(iv)
(v)
(vi)
Conditions of Contract SFBC.
Form of Tender.
Bills of Quantities.
Correspondence passing between the tenderer and the employer in the period between the
receipt of tenders and the signing of contract.
Contract drawings.
Specification.
In common law all the documents comprised in the contract are taken together to obtain a true
construction, but some standard forms stipulate that one or other (usually the Conditions of
Contract) shall take precedence.
Conditions of Contract SFBC
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Contractually the conditions of contract constitute the heart of the documentation.
It contains the terms of the contract made between the Employer and the contractor, and in which
their rights and duties arising under the contract are defined.
To be accepted by both contracting parties, the Conditions of Contract should allocate risks sensibly
fairly between the parties, and similarly the duties to be performed and actions to be taken
by both should be set out in reasonable terms.
There are many Standard Forms used in the construction industry and the one most commonly used
in U.K. for building contract is the JCT (Joint Contract Tribunal) Standard Form of
Building Contract, Private, with Quantities. In H.K., the Standard Form of Building
Contract Private Edition – With Quantities published by the HKIA, HKIS and HKICM is
commonly used in the private sector, and the General Conditions of Contract for Building
works is used for all government building contracts (HKIS = the Hong Kong Institute of
Surveyors).
The greatest advantage of the Standard Forms of Contract is that those persons using it become
familiar with its contents with the passage of time. They are thus aware of its suitability
for their own purposes and of its particular strengths and weaknesses.
The use of the standard form also avoids the problems arising from the diversity of forms of
contract drafted by individual surveyors.
The Conditions of Contract comprise the following:a.
Recitals - statements of (usually the background) facts which often appear at the
commencement of a formal document
b.
.
.
.
.
.
Articles
Consideration given by the Contractor
Consideration given by the Employer
Architect
Quantity Surveyor
Arbitration agreement (Arbitration agreement is subject of Article 5 in JCT Standard
Forms, while in HKIS Standard Forms, it is placed in Clause 41).
c.
Terms
This is the main body of the conditions of contract in which the rights and obligations of the
contractual parties are stipulated.
Clause 24 Damages for non-completion
If the contractor fails to complete the works by the Date for Completion stated in the
Appendix to these Conditions or within any extended time fixed under Clause 25 or
Clause 35 of these Conditions and the Architect certifies in writing that in his opinion the
same ought reasonably so to have been completed, then the Contractor shall pay or allow
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the employer a sum calculated at the rate stated in the said Appendix as Liquidated and
Ascertained Damages for the period during which the Works shall so remain or have
remained incomplete, and the Employer may deduct such sum from any monies due or to
become due to the Contractor under this contract.
Clause 25 Extension of Time
It is recognised that time is very precious in construction. Time is of essence, work not according to the
time table is considered to be a breach of contract. But the SFBC allows the following to be reasons to
delay the schedule without penalties, these reasons are:
Listed Events
a) force majeure
b) inclement weather > 20mm rainfall
c) cyclone signal no. 8
d) the excepted risks occurred like strike, civil commotion
e) delay and loss caused by specified peril, or insured peril
f) *architect's instruction to resolve documents discrepancies
g) *architect’s instruction to open up for inspection of work covered up and the consequential
making good
h) *architect’s instruction requiring a variation
i)
*architect’s instruction to increase work magnitude
j)
*architect’s instruction to postpone or suspend work
k) *architect’s instruction to exhume antiquities found on site
l)
*late instructions, late drawings, late details
m) delay by Nominated Sub-Contractor & Nominated Supplier already got extension of time
n) *delay by Nominated Sub-Contractor & Nominated Supplier despite objection by main con
o) delay caused by replacing Nominated Sub-Contractor & Nominated Supplier
p) *delay caused by specialist contractor
q) delay caused by utilities company
r) *employer fails to supply materials on time
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s) *employer fails to give site
t)
delay caused by government departments
u) a special circumstance entitling contractor an extension of time
v) *employer’s breach of contract
Consideration
Consideration sits alongside, offer and acceptance to form a legally binding contract.
Thomas v Thomas [1842] 2 QB 851
A house was conveyed to a widow by executors in accordance with her late husband’s wishes, it
was described as being, in consideration of such desire. The Court’s held that the £1 annual
ground rent was consideration rather than the late husband’s wishes.
Currie v Misa [1875] LR 10 Ex 153
The doctrine of consideration has been defined in terms of either a detriment to the promise or a
benefit to the promisor.
The ratio was:
A valuable consideration in the sense of the law, may consist either in some right*, interest,
profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility
given, suffered or undertaken by the other.
*The above words underlined are generally called the pairing words for explaining consideration.
(d) Existing Contractual Duty to Promisor: Asking for a Relaxation of Terms
Pinnel’s Case [1602] 5 Co. Rep 117a
Payment of a lesser sum on the day in satisfaction of a greater cannot be any satisfaction for the
whole. But the gift of a horse, hawk or robe, etc. in satisfaction is good.
D & C Builders Ltd v Rees [1966] 2 QB 617
Where the plaintiffs had done building work for the defendant for which they were owed £482.
The plaintiffs pressed for payment for six months and in fact were in dire financial straits. The
defendant’s wife, knowing of the financial difficulties, offered them £ 300 in full settlement,
adding that if this was not accepted they would get nothing. The plaintiffs reluctantly agreed to
this arrangement but once the cheque for £300 had cleared they sued for the balance. It was held
that their claim would be successful, the Court of Appeal based its decision on Pinnel’s case.
Given the development of economic duress, it is questionable whether the rule in Pinnel’s case
continues to serve any useful purpose, especially when it can result in unfair decisions, as in:
Foakes v Beer [1884] 9 App Cas 605
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Mrs Beer had on obtained judgment against Dr Foakes for £2,090 and some time later he asked
for time pay. The parties entered into agreement to pay first by £500 and then by instalments.
The parties failed to take into account that a judgment debt carries interest from the date of the
judgment. Five years later Dr Foakes paid all debt, but Mrs Beer still claimed £360 for the
interest on the debt. It was upheld by the House of Lords that Mrs Beer could claim it, the court
relying on the rule in Pinnel’s case.
How can the case of Foakes v Beer be reconciled with D & C Builders Ltd v Rees? It would be
very harsh to see the results of the Foakes v Beer.
One of the exceptions to the rule in Pinnel’s case is the doctrine of promissory estopppel.
The modern doctrine of promissory estoppel is founded in the case:
Central London Property Trust Ltd v High Trees House Ltd. [1947] KB 130
In September1939, the plaintiffs leased a block of flats to the defendants at £2,500 per annum. In
January 1940 many of the flats became vacant because of the war and the plaintiffs reduced the
rent to £1,250 per annum in recognition of this factor. The intention was happily observed in the
contract. No time limit has been set for this arrangement. When WWII ended in August 1945, the
flats were again full and in 1946 the defendant sought to recover the reduced rent for the last
quarters of 1945 and for future years. Denning J agreed that the reduced rent was applied under
war conditions but not after the war ends. Denning allowed the recovery of the full rent for the
said two quarters and for future years. He also turned his attention to see whether the full rent
should be allowed between 1940 to 1945. Basing on the lack of consideration and the rule in the
Pinnel’s case, undoubtedly, if the rule was applied, the plaintiff’s claim would have succeeded.
Denning J however, concluded that the action would fail, relying on the operation of the doctrine
of equitable esptoppel as expressed in:
Hughes v Metropolitan Railway Co. Ltd. [1877] 2 App Cas 439
Negotiations for the sale of a property started after a repair notice had been issued. During
negotiations the repair notice was suspended.
REMEDIES FOR A BREACH
DAMAGES
Damages are the most common form of remedy for breach of contract. There are two different
words. The word damage must not be confused with damages. Damage is the loss or injury
caused by the breach of contract and damages is the amount of compensation awarded by the
court.
1
The Purpose of Damages
The function of an award of damages in contract is to compensate the party not in breach.
2
The methods of calculating Damages
There are five possible measures of damages in contract.
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(a)
Expectation Damages
Expectation damages are intended to put the innocent party in the position he or she would have
been in had the contract been properly performed. The injured party is thus claiming damages for
the gains he could have reasonably expected from the execution of the contract.
Robinson v Harman [1848] 1 Exch. 850
The defendant agreed to grant a lease, having full knowledge he has no title (because of a defect
of the title). This results in the loss of the bargain.
The rule of the common law is, that where a party sustains loss by reason of a breach of contract,
it is so far as money can do it, to place the injured party in the same position he would have been
in had the contract been carried out. [per Parke B.]
(b)
Reliance Damages
Damages under this head are provided to compensate innocent parties by placing them in the
position they would have been in had they not entered the contract with the wrongdoer and then
acted in reliance on that contract.
Such damages are often claimed where the innocent party cannot clearly identify what profit he
would have made had the contract been honoured.
Anglia Television Ltd v Reed [1972] QB 60
The defendant, an actor, had entered into a contract with the plaintiffs to produce a film. At the
last moment the defendant withdrew from the contract with the result that the plaintiffs had to
abandon the whole project. They decided not to sue for expectation losses since these would be
clearly purely speculative, but loss of expenses, or reliance losses, in respect of moneys
expended hiring other actors, finding locations and engaging script writers. The courts allowed
the claim for these items of expenditure.
The Anglia television case is also an authority for the fact that the courts will not allow the
injured party to claim for both the expectation and reliance losses.
(c)
Restitutionary Damages
Restitution does not amount to compensation at all but a method of returning both parties to the
pre-contract status quo.
Its amount is calculated by reference to the contract breaker’s project and reflects the amount by
which Defendant’s profit at Claimant’s expense (either by the failure to provide consideration or
by a deliberate wrongful act, in breach of contract, on Defendant’s part).
Surrey County Council v Bredero Homes Ltd [1993]
Two planning permissions were obtained for increasing the earlier 72 houses to 77 houses. The
plaintiff claimed damages for breach of contract. The damages are related to the additional
profits made by the defendant. The court held that only nominal damages are allowed so as not to
share the additional profit. Damages are intended to compensate victim for the loss.
Steyn LJ in Bredero Homes strongly disapproved of any moves towards such a development of
restitutionary damages. This would go a long way towards preventing deliberate breaches of
contract.
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(d)
Nominal Damages
Sometimes, Defendant will be responsible for only a slight, technical breach in which Claimant’s
loss is minimal. In such cases, the courts award merely nominal damages of $1, creating a
sufficiently minimum of consideration.
(e)
Speculative Damages
Occasionally, there is no clear method by which Claimant’s loss can be computed. The courts’
approach in such cases is to speculate as to the quantum of loss.
In McRae v Commonwealth Disposals Commission [1951] 84 CLR 377, where the court
considered that the claim for loss of profits was incapable of calculation since there was nothing
in the contract to indicate the size of the tanker in question nor the approximate quantity of oil on
board. The court decided that only a claim for reliance loss (type b) would be entertained.
The L.D. clause and the extension of time relation
In the Standard Form of Building Contract, clause 24.2 (1) L.D. and time extension must be
closely related. When the delay is caused partly by the employer’s default, it has been decided
that no L.D. may be recovered unless the contract allows an extension of time to be granted on
the ground of the default, and such extension is in fact granted. This has been illustrated in the
following case:
Peak Construction v McKinney Foundations (1970)69 LGR 1; 1 BLR 111
The building works were suspended after the discovery of defective piles, for which the
contractor was responsible. The employer caused further delay before work restarted. The
contract used was not a standard form and did not allow an extension of time clause to absorb the
employer’s breach of contract. It was held that no L.D. could be recovered for any of the delay.
Salmon L.J. held:
The liquidated damages and extension of time clauses in printed forms of contract must be
construed strictly contra proferentem. If the employer wishes to recover liquidated damages for
failure by the contractors to complete on time in spite of the fact that some of the delay is due to
the employer’s own fault or breach of contract, then the extension of time clause should provide,
expressly or by necessary inference, for an extension on account of such a fault or breach on the
part of the employer.
The reasons of the above decision were that L.D. may be recovered only from a date fixed under
the contract. If no date can be fixed, time will be “at large” (no bounds). Therefore L.D. and time
extension are intimately related.
It is now understood that mechanisms allowing extension of time are not simply for the
contractor’s benefit. If there was no such mechanism and a delay occurred which was not the
contractor’s fault, then the contractor would no longer be required to complete the works by the
completion date; and would only then have to complete the works in a “reasonable” period of
time. The Employer would lose any right to deduct liquidated damages.
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QUANTUM MERUIT
A quantum meruit claim is a claim for reasonable remuneration for work done or services
supplied. The entitlement is called the contractual quantum meruit. This is a convenient remedy
in two cases. Firstly, a claim is available where there is a contract for the supply of services but
no express agreement for payment; in such cases there is an implication that reasonable
remuneration will be paid. In the event of non-payment, the plaintiff may sue on the quantum
meruit. Secondly, a quantum meruit claim will lie where an original contract containing terms
for payment is discharged and replaced by a new contract.
British Steel Corporation v Cleveland Bridge and Engineering Co. Ltd. [1984] 1 All ER 504
British Steel Corporation supplied steel nodes (structural steel members) to the sub-contractor
Cleveland Co. for a construction in Saudi Arabia. The fabrication of some steel nodes were
contracted based on a letter of intent. A negotiation on the variation rates has broken down
making the contract unable to be continued. The supplier and the sub-contractor were claiming
and counter-claiming each other. The court ordered a compensation basing on the quantum
meruit to the supplier.
Employee versus independent contractor (self -employed person)
Employee
When a wrong is committed by an employee, except for some exceptions, all liabilities will go to
his employer. This is the concept of vicarious (felt the same by one person on behalf of another
person) liability and it is strict - in the sense that there need be no fault on the part of the employer
before he can be made liable. If the employer is the defendant, then it will be a clear cut case. The
liability has to be met by an insurance policy for damages claim.
Independent contractor (IC)
Persons who work for others, but who are not employees, are known as independent contractors,
they are themselves employers; or as are defined in Cap 485, they are not in the capacity of
employees.
The traditional test to differentiate between them was based on the employer’s “control” over
employee or IC. Relevant questions include:
1.
2.
3.
4.
Does the employer determine what work the employee or IC will do?
Does he have the authority to direct the employee or IC?
Does he have powers to discipline the employee or IC?
Is the employee or IC paid on a regular (daily, weekly or monthly) basis rather than by
piecework?
Answers to these questions are affirmative for the employee, but not sure for the IC.
Perhaps the best test to pose is, “is the employee employed under a contract of service or under a
contract for service?”
WHPT Housing Association v Secretary of State for Social Services [1981] ICR 717
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An architect accepted work from an association on a freelance basis. He worked for the
association from March 1976 to December 1977 at an hourly rate of £3 and he received a car
allowance. Although he did not keep office hours, he worked on average 28 hours a week in
the associations' office with other employed architects under the supervision of the chief
architect. He did the work allocated to him and attended office meetings. He received neither
holiday pay nor sick pay and, on his claims for payment, he included value added tax. The
association did not deduct income tax or national insurance contributions from his earnings.
He sought to be included as a member of the permanent staff and made a reference, under
section 8 of the Contracts of Employment Act 1972, for an industrial tribunal to determine the
terms of his contract of employment. The tribunal dismissed his claim on the ground that he
was self-employed. The architect sought the opinion of the Secretary of State and the
Department decided him an employed earner under the statute. The Association appealed.
Held, allowing the appeal, that the difference between a contract of service and that for
services was that, in the former, the principal obligation was that an employee provided
himself to serve whereas in the latter a person provided his services; and that the architect had
never undertaken an obligation to present himself at the associations' premises for service and
his principal obligation was to work as an architect during the hours which he chose to offer
to the association and, accordingly, he worked under a contract for services and the decision
of the Secretary of State was wrong in Law.
Webster J offered a differentiation method:
In the contract of service the servant is under obligation to provide himself to serve. In a contract
for services, on the other hand, the party does not contract to provide himself but rather his
services for the use of the employer.
Criminal acts by the employee
The fact that the employee’s tortious act is also criminal and does not benefit the employer, does
not necessarily (though it often will) take that act outside the course of the employee’s
employment.
Lister v Hesley Hall Ltd [2002] 1 AC 215
Agent
Important Statute:
Cap 201 Prevention of Bribery Ordinance PBO
An agent is not an employee and is not protected by Cap 57 Employment Ordinance.
The agent is someone who is appointed to act on behalf of another person called the principal.
Agents are independent contractors and are not engaged on employment contracts. Agents
represent their principals in many ways. For example, a sub-contractor represents a main
contractor in tendering, a solicitor undertakes legal proceedings on the clients’ behalf, and an
estate agent undertakes to find prospective purchasers for someone selling his house. The
architects or surveyors act on the employer’s behalf in relation to building contract work
undertaken by a main contractor. Site agents act as their employer’s representative on site.
The agent is given the power to enter into a contract with a third party on behalf of his principal.
Duties of an agent
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The engagement of an agent will require an agent to perform the agent’s duty as if an employee is
performing the duties owed to an employer.
1
A duty to use the appropriate care and skill as he possesses in performing his functions as
an agent.
2
A duty of obedience to complete any proper acts which are legal ones.
3
No further delegation of duties unless specifically so required. The agency itself cannot
be delegated.
4
A duty exists as not to deny that his principal has title to the principal’s property.
5
A duty to take good care of any money received by him as an agent and later must hand
this over to the principal.
6
The agent must act in good faith, must not compete with his principal, nor make secret
profits such as “commissions” returned by a third party.
7
Statutory duty under the ICAC Law – Chapter 201 Prevention of Bribery Ordinance
PBO. Section 9 provides for maintaining fair play in the market. S9 is summarized as to make it
an offence in law for an agent to solicit or accept an advantage without the permission of his
principal when conducting his principal’s affairs or business. S9 also makes it an offence for an
employee to use any false document, receipt or account to deceive his employer. A person who
violates the PBO can be subject to a maximum penalty of ten years’ imprisonment and a fine of
$1,000,000. The Section further provides that the person who offers the advantage also commits
an offence.
Government Lease System
Registration of Title
Types of Government Leases
1)
Formal Government (or Crown) Lease
The most common means to grant a government land that may come to mind is
certainly a formal lease, duly executed. This is true in the old days when the
government would really do so. But nowadays, the government would rather rely
on the legal mechanism provided by s.14 Conveyancing and Property Ordinance
(CPO) (Cap 219) to treat the Government Lease as having been granted, and
formal government lease is rarely granted.
2)
Conditions of Sale And Certificate of Compliance
Conditions of Sale is in fact a contract between the government, as the landlord,
and a lessee, who is most likely to be a property developer, for example, the
Henderson Land Group. Upon issuance of a Conditions of Sale, a developer is
regarded as having an equitable interest (i.e. his/her interest is recognized only in
equity). Government will set out a list of requirements in the Conditions of Sale,
and when the developer has satisfied all the requirements, the government will
issue a Certificate of Compliance. The Conditions of Sale usually prohibits the
sale of the land before a Certificate of Compliance is obtained. And, when the
Certificate of Compliance is obtained the developer also acquires the legal interest.
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3)
Conditions of Exchange
This is also a land contract. Its difference is that the consideration paid by the
lessee in Conditions of Sale is premium in terms of money, while in Conditions
of Exchange it is either a) surrender of old Government (Crown) Lease or b) land
exchange entitlement: Letters A & B. Same as above a Certificate of
Compliance must be obtained to take advantage of s.14 CPO (Cap 219).
Standard Covenants
In every Government Lease, there are some standard covenants, which include:
1)
Terms of year
Terms of years vary with every lease. Mostly, they are 999 years, 99 years, 75 years with
a right to renew for a further 75 years, or 50 years up to 30 June 2047, depending on the
time it is granted and the locality of the land.
2)
Rental
When a lessee ‘buys’ land from the government, he or she will have to pay a sum of
money as premium. Besides, the lessees also have to pay rent each year. The premium is
always thousands of times more than the rent. For example the Lui San Chun (雷生春)
site cost only $16 per annum for 75 years.
3)
Use
Every lease has a covenant prescribing the use of the land. Modern leases tend to be
more prescriptive than old leases.
A standard covenant on use in an old lease reads like this:
…shall not use, exercise, or follow…the trade or business of a brazier,
slaughterman, soapmaker, sugarbaker, fellmonger…or any other noisy, noisome
or offensive trade or business whatever.
In modern lease, the restrictions are used as means of planning control, so they will be
more specific, e.g. whether it is for residential, commercial, industrial or other uses;
height and density of building; provisions of community facilities (bus stops, social
service centre, etc.).
4)
Repair
The Government Lease always has a covenant in which the lessee promises to keep the
whole of the property in repair. Besides this, the government may also use the Chapter 123
Buildings Ordinance Cap 123 to force lessee to carry out repair works.
5)
Alienation (assignment & subletting)
In general a developer (lessee) may only sell (assign) its land after a Certificate of
Compliance has been issued, and, prior to that, consent from the Government must be
obtained. (Non-compliance was discovered in Whampoa Gardens – sale of most flats has
15
taken place before discovering that some linking foot bridges were not completed; result in
illegal sale!)
The following estates and interests are registrable:
(A) Registration titles: with a title number, the freehold (an estate in fee simple absolute in
possession) or leasehold ownership is to be registered.
(B) Overriding interests: these are encumbrances, interests, rights, and powers in the land not
entered on the register which will bind a new purchaser of the land automatically (如大
廈外牆僭建簷篷而被釘契). Their registration will take effect against a third party; they
include profits, legal easements, leases not more than 21 years and any rights of persons
in actual occupation of the land.
(C) Minor interests: these are equitable interests that must be registered in order to bind a
purchaser of registered land.
(D) Registrable charges: mortgages, etc. They must be registered to take effect.
It is often said that the land registration legislation was premised on three principles: the mirror
principle, the curtain principle and the insurance principle.
1. The mirror principle – the register should be a mirror of all the proprietary rights – both
estates and interests – that exist in any given piece of land. Thus the register should
amount to a comprehensive picture of the land for any prospective purchaser. But the
inclusion of overriding interests denies this principle.
2. The curtain principle: the most ambitious motive behind the 1925 Statute. The aim is to
keep certain types of equitable interests off the register completely. Such equitable rights,
being those taking effect behind a trust, will not bind a purchaser on sale of land because
of over-reaching. A purchaser will not be concerned with such equitable rights – they
are therefore behind the curtain. A purchaser must look behind the curtain to determine
whether any equitable interests exist and then must negotiate with the equitable owners
as required.
3. The insurance principle: once title is registered, the Government guarantees the
authenticity and effectiveness of that title against the world. The Statute provides
rectification where registration has produced hardship or inequality.
Difference between Licence and Lease
The legal significance of a licence is that it is not an interest in land, but rather a right over land
that is personal to the parties that created it (the licensor and licensee). The right conferred can
be enforced only against the person who created it. It does not ‘run’ with land. It is a matter of
contract, not property law and is incapable of binding third parties when the licensor transfers the
‘burdened’ land to a third party.
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It is important to distinguish between leases and licenses, as a lessee enjoys the protection of rent
control and security of tenure provided in the Landlord and Tenant (Consolidation) Ordinance,
while a licensee does not.
Even we know what are lease and licence, sometimes it may be hard to distinguish between lease
and licence and these are the ways:
Certainty of duration
The duration of licence can be certain or not, but that of the lease had to be certain.
Exclusive possession
The right of a licensee is not one for exclusive possession.
Third party
The right of a licensee is a contractual right that binds only the landlord. Once the land title is
transferred to a third party, the right cannot bind that party (see Fast Forward v Magicsound
above).
Inheritable right
The right of a licencee cannot be inherited.
Legislative protection
The interests of licensees are not protected by legislation. (A tenant is also not protected by
the Landlord and Tenant (Consolidated) Ordinance), but it is possible that this legislative
protection be resurrected again soon).
***
Case to ascertain lease
According to Street v Mountford, a lease can be defined as exclusive possession of property, for
a term, at a rent.
Street v Mountford [1983]
Fact: The agreement in the present case was expressed to be a licence to occupy a single
furnished room for a licence fee of £37 a week and subject to the observance of a number of
rules — It was admitted that the occupier, the present appellant, had exclusive possession — The
Court of Appeal had held that exclusive possession, although an essential feature of a tenancy,
was also compatible with a licence — They considered that in the present case the agreement
bore all the hallmarks of a licence; that it was possible to create such a licence to occupy
residential accommodation, if that was the parties' intention, without creating a tenancy; that this
had in fact been successfully done; and that, contrary to the view taken in the county court, the
appellant had no Rent Act protection — Held by the House of Lords, allowing the appeal, that
the appellant was a tenant, not a licensee — An agreement to grant exclusive possession for a
term at a rent, whatever it is called, is a tenancy — Unless the three hallmarks of exclusive
possession, a payment in the nature of rent, and a term are decisive as to a tenancy, it becomes
impossible to distinguish a contractual tenancy from a contractual licence save by reference to a
professed intention of the parties
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Lord Templeman added: Both parties enjoyed freedom to contract or not to contract and both
parties exercised that freedom by contracting on the terms set forth in the written agreement and
on no other terms. But the consequences in law of the agreement, once concluded, can only be
determined by consideration of the effect of the agreement. If the agreement satisfied all the
requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the
effect of the agreement by insisting that they only created a licence. The manufacture of a fivepronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with
the English language, insists that he intended to make and has made a spade.
Introducing Tort Law
Law of Negligence
TORT LAW
Law of contracts or law of torts?
Tort law differs from the contract law in these areas:
1.
2.
3.
4.
Contract law is based on a single underlying legal principle;
Tort law does not have any unifying legal principle;
A contractual relationship can end but a tortious relationship may not be over; and
Tort relationship is of everybody with everybody.
The nature and function of the law of torts
The word tort is Norman French. It means twisted or wrung or, to us a modern word – wrong. A
tort is a wrong for which redress is available in the civil courts. The usual action is an action for
damages, i.e., money compensation, but, where damages are not appropriate, the equitable
remedy of injunction may be available. (To walk unlawfully on another’s land is trespass which
is a tort. If the trespasser repeatedly trespasses, doing no harm to the land, it will not be sensible
to claim money from the trespasser. In this case the remedy would be an injunction barring the
person from trespassing the land).
A Latin phrase describes tort most appropriately – injuria sine damnum, which means “damage is
done without injury”.
Tort law has two components:
(a) it defines what constitutes a legal injury (injury to the legal rights); and
(b) it establishes the circumstance under which one person may be liable for another’s injury.
NEGLIGENCE
Negligence was first recognized as an independent tort in the case of:
Donoghue v Stevenson [1932] AC 562
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The appellant went with a friend into a coffee shop, where the friend ordered for her a bottle of
ginger beer. This was served in an opaque bottle the contents of which could not be seen from
the outside. The shop owner opened the bottle and poured some of the contents into the
appellant’s glass. This she drank and her friend poured in the rest of the bottle. The appellant
alleged that this contained the decomposed remains of a snail which caused her to suffer shock
and then later, a gastric illness. She brought this action for negligence in the Scottish Court of
Session against the manufacturer of the ginger beer. The Scottish Court held that there was no
cause of action; as the bottle was not directly purchased from the manufacturer. The case came
before the House of Lords on the question of law alone. It was held that the manufacturer of the
ginger beer owed a duty of care to the claimant.
Two rules emerged: the broad rule and the narrow rule.
The broad rule
Lord Atkin has made the following general principle governing the duty of care, it is also called
the neighbour principle:
Persons who are so closely and directly affected by my act that I ought reasonably to have them
in contemplation as being so affected when I am directing my mind to the acts or omissions
which are called in question.
From the words used in Lord Atkin’s ratio, later judges or authoritative writers have derived
three principles out of the words, including foreseeability (have them in contemplation),
proximity (closely affected) and directness (directly affected).
The narrow rule
It refers to the final precedent judgment for the case between a ginger beer manufacturer and a
customer who got sick.
There has been a proliferation of cases based on the three derived principles. Later on the
neighbor principle was further developed by Lord Wilberforce into a two-stage test, or is called
the Anns Test.
Anns v London Borough of Merton [1977] HL
The plaintiffs were lessees under long leases of flats in a two-storey block. Walcroft Limited,
who had completed the building of the block in 1962, was also the owners of the block. In 1972,
cracks appeared in the walls and the floors began to tilt. The plaintiffs alleged that these defects
were due to inadequate foundations. Local Authorities were enabled through byelaws made
under the Public Health Act 1936 to supervise and control the construction of foundations of
buildings. Byelaws made by a local authority (the council) provided for the inspection of plans
and the inspection of work. The council approved foundations “3 feet or deeper to the approval
of he local authority”. The byelaws did not provide that the council was under a duty to inspect
the foundations. The plaintiffs alleged that the foundations were built to a depth of two feet six
inches only and not to the depth of three feet required by the plans deposited with the council.
The plaintiffs claimed damages against the council for negligence by their approving the
foundations or their failure to inspect the foundations.
Held that (1) the question of the duty of care must be considered in relation to the council’s
duties, powers and discretions under the Public Health Act 1936; (2) although the Act and the
byelaws did not impose a duty of inspection, it was the council’s duty to give proper
19
consideration of the question whether they should inspect or not; (3) the council were under a
duty to take reasonable care to ensure that a builder did not cover up foundations which did not
comply with byelaws. A right of action would accrue to a person who was owner or occupier of
the building when the damage occurred.
Lord Wilberforce has made the following statement and is called the two-stage test:
First one has to ask whether, as between the alleged wrongdoer and the person who has suffered
damage, there is a sufficient relationship of proximity or neighborhood such that, in the
reasonable contemplation of the former, carelessness on the part of one may be likely to cause
damage to the latter, in which case a prima facie duty of care arises. Secondly, if the first
question is answered affirmatively, it is necessary to consider whether there are any
considerations which ought to negative, or to reduce or to limit the scope of the duty or the class
of person to whom it is owed or the damages to which a breach of it may give rise.
Lord Wilberforce argued that it was no longer necessary to find a precedent with similar facts,
the two-stage test can be developed as:
Establish whether the parties satisfied the requirements of the neighbor test – that is,
to whom the defendant could reasonably be expected to foresee a risk of harm. If the
answer is yes, a prima facie duty of care arose.
Involve asking whether there were policy considerations which dictated that no duty
should exist (omissions*, negligent mis-statements, economic loss).
(i)
(ii)
*The above reasons were added by later judges and authoritative writers.
Effect caused by the two-stage test
Anns Test has both the accelerating and slowing down effects on the number of negligence cases.
In the first stage test, a defendant will be actionable when the prima facie duty of care has arisen.
This has an effect of admitting more potential cases.
For the second stage test, the court will filter out any cases belonging to the three policy
limitations which reduced some potential cases.
Nuisance
A
Definition
Nuisance can usefully be defined as: “A substantial interference and unreasonable
interference with a person’s land or the use or enjoyment of that land.”
B
“Substantial Interference”
Nuisance can be caused by vibrations, fumes, smells, light or noise.
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A nuisance can also be caused by the type of user of adjoining property; for instance, it has been
held to be a nuisance to use adjoining premises for prostitution or as a sex shop.
To be actionable, a nuisance must be substantial. In assessing what is substantial, a range of
factors are considered.
B1
Amenity (enjoyment) Nuisance
In cases where the complaint is an interference with the use or enjoyment of land, several factors
are relevant to gauging the “substantial” nature of the nuisance.
(a)
Unusual Sensitivity of Claimant
The factor may be taken into account in deciding whether to impose legal liability. The concept
is that if you have a thin skull, you should protect yourself well.
Robinson v Kilvert [1889] 41 Ch D 88
(b)
Location of Claimant’s Premises
What is a nuisance in one locality may not be a nuisance in another.
Sturges v Bridgman [1879] 11 Ch D 852
B2
Material Damage to Land
Cases in this category don’t relate to use or enjoyment of the land but focus on matters like
flooding, collapses of Defendant’s buildings onto Claimant’s buildings and the like.
St. Helens Smelting Co v Tipping [1865] 11 HL 642
C
“Unreasonable Interference”
Several factors can again be identified that help to determine unreasonableness.
C1
Seriousness of the Interference
The more serious an interference, the easier it can be classified as unreasonable.
(a)
Duration
The longer an interference, the more serious it is. And the more serious, the more unreasonable it
is.
Matania v National Provincial Bank [1936] 2 All ER 633
(b)
Extent of the Harm
In the St Helen’s case, Lord Wensleydale stated:
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The Law does not regard trifling and small inconveniences, but only regards sensible
inconveniences which sensibly diminish the comfort… of the property affected.
(c)
Character of the Harm
It is generally more difficult to justify physical damage to Claimant’s land than amenity
nuisance.
C2
Reasonableness of Defendant’s User
There are several factors that affect the reasonableness of Defendant’s user.
(a)
Defendant’s motives / purposes for acting
The more unreasonable a Defendant is, the harder it will be for him to justify the interference it
causes. This in no way affects the strictness of the liability.
Hollywood Silver Fox v Emmett [1936] 2 KB 468
Note: In Hunter, Lord Cooke said, “The malicious (evil-minded) erection of a structure for the
purpose of interfering with TV reception should be actionable in nuisance.”
(b)
(c)
Fault on Defendant’s Part; and
The Practicability of Avoiding an Interference.
If Defendant simply has taken steps to avoid his activities from causing disturbance, the fact that
he does not take those steps may be taken by the courts to support a finding that Defendant was
engaged in an unreasonable user.
Leeman v Montagu [1936] 2 All ER 1677
Who Can be Sued?
A
Creators of the Nuisance
It is well accepted that whoever creates the nuisance may be held liable in respect of it. Thus the
creator may always be liable.
Thompson v Gibson [1841]
The defendants erected a building which excluded the public from a part of a space on which a
market was lawfully held. The site of the building was owned, not by the defendants, but by
the local corporation, and the defendants could not have removed the building except by
committing a trespass against the corporation. After the building had been erected, the owner
of the market demised the market to the plaintiff.
Held: notwithstanding their inability to remove the building, the defendants, as the original
wrongdoers, were liable to the plaintiff for continuing the nuisance.
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B
Occupiers
B1
Adopting and Continuing Nuisances Created by Another
One adopts a nuisance when one makes use of the state of affairs comprising the nuisance. One
continues a nuisance where one fails to abate nuisance where one has actual or constructive
knowledge of the nuisance.
Sedleigh-Denfield v O’Callaghan [1940] AC 880
B2
Adopting or Continuing Nuisances Created by Nature
The above principle applies to cases of nuisances created by nature.
Leakey v National Trust [1980] QB 485
B3
Occupier has Control over the Creator
Where Defendant has sufficient control over the creator of the nuisance, for example, where he
calls in independent contractors who create a dangerous state of affairs – the occupier can be
held liable.
Matania v National Provincial Bank [1936] 2 All ER 633
C
Lessors
Leasing a property ends the lessor’s potential for liability. The basis of this rule is that the lessor
has relinquished control over the property in such circumstances.
But there are exceptions.
C1
Nuisance Expressly or Impliedly Authorised by Lessor
Where a lessor grants the tenancy in the actual or constructive knowledge that the land will be
used for a nuisance-creating purpose he may be said to authorize it.
Tetley v Chitty [1986] 1 All ER 663
C2
Duty to Repair Expressly or Reservedly Retained
Where a lessor has retained the right to do repairs, he will be responsible for any nuisance
emanating from the poor state of repairs.
Wringe v Cohen [1939]
Occupiers’ Liability
Who is an Occupier?
S1(2) provides that the Ordinance covers a person “in occupation or control of premises”.
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This raises two questions:
(a)
(b)
Who is in occupation?
What is sufficient control to fall within the Ordinance?
Wheat v E Lacon [1966] AC 552 HL
The victim Wheat, who was lodging in a public house owned by Lacon’s, the brewing Company,
fell down the back staircase and was killed. The handrail ended before the bottom of the escape
staircases and it was dark, there being no bulb in the stairway light. Wheat had made the
arrangement for lodgings with the wife of the manager, who was permitted by the brewing
Company to run a boarding house business. By the arrangement between the manager and the
Company, the Company had the right to enter the premises to inspect the state of repair. Also, by
this agreement the manager’s occupation of the premises did not create a tenancy. Wheat’s
widow brought this action against the Company under the Fatal Accidents Acts, 1846 to 1908,
claiming damages for breach of the common duty of care imposed by s 2(1) and (2) of the
Occupiers’ Liability Act 1957, on the basis that the Company was in occupation or control of the
back staircase and that Wheat was a visitor within s 1(2) of the 1957 Act.
Held: (i) Under the agreement between the Company and the manager, the Company had not
divested itself of the occupation and control of any part of the public house, and the whole of it
was in the occupation of their manager who was their employee; accordingly the Company was
the occupier of the back staircase for the purposes of s 1(2) of the Occupiers’ Liability Act 1957,
but there was not sufficient evidence to enable it to be deduced how the accident happened, and,
on the evidence, the staircase, though unlit, was not dangerous to someone using it with proper
care, so that no breach of duty on the part of the Company to take such care as in all the
circumstances of the case was reasonable had been established.
In Hong Kong, an Incorporated Owner shall be liable for hazard nuisance under Chapter 344 the
Building Management (Amendment) Ordinance as a legal person:
Leung Tsang Hung And Lee Wai Yu v The Incorporated Owners of Kwok Wing House [2007]
FACV No. 4 of 2007
In August 1999, concrete debris fell from an illegal canopy of an owner’s property on the
Eleventh Floor of the building and killed a street vendor. The Court of Final Appeal used the
term “hazard which amounts to public nuisance”. It was held that the Incorporated Owners (IOC)
shall be liable for the injury and damage originated from the 30-year old illegal structure. The
IOC failed to take any measures, even though it actually knew but did not take any steps to check
nor to prevent the debris from falling, resulting in such a fatal injury.
(d)
The Common Duty of Care
S2(2) of the Ordinance speaks in terms of common duty of care. It is:
“a duty to take care as in all the circumstances of the case is reasonable to see that the visitor will
be reasonably safe in using the premises for the purposes for which he was invited or permitted
to be there.”
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Discharging the Common Duty of Care: s2(4)
Recall that the duty owed under the Act is not an absolute one. It is only one to take reasonable
care to ensure the reasonable safety of “visitors”.
Defendant may satisfy the duty if, for example:
(a)
he issued sufficient warning to his visitors, or
(b)
he engaged an independent contractor to ensure the premises were safe.
Warning
Under s2(4)(a) a warning will only absolve the occupier from liability if that warning was
enough to make the visitor reasonably safe.
Roles v Nathan [1963] 2 All ER 908
Two chimney sweeps were killed by carbon monoxide while attempting to seal a sweep hole in
the chimney of a boiler. The defendant occupiers were held not liable, as they could assume that
sweeps would be aware of this particular danger and also because the sweeps had been warned of
the danger.
Independent Contractors
Defendant may have discharged his duty even though injury befalls a visitor if the injury can be
attributed to the fault of an independent contractor.
S3(4)(b) imposes three requirements for this to occur:
(i) The occupier must have acted reasonably in entrusting the work to an independent
contractor;
(ii) The occupier must have taken reasonable steps to satisfy himself that the contractor was
competent; and
(iii) The occupier must have taken reasonable steps to satisfy himself that work was done
properly.
Dr Eric Cheng
City University of Hong Kong
April 11, 2015
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