What is a ‘house’?

As with any question of construction, the search for the meaning of a word used in a deed or agreement is a search for the intention of the parties. The language used by the parties, the context and the policy or aim underlying a provision are all important. The ordinary lay usage of the term is not a reliable guide in isolation.

In Fully Profit (Asia) Ltd v Secretary for Justice ([2012] HKEC 139, CA) (overturned by the Court of Final Appeal) F owned several neighbouring plots of land. Each lot was the subject of a Government lease containing a restriction against building more than one house on the land. The plots had been carved out of a larger lot the subject of Conditions of Exchange which provided that if more than one ‘building’ were erected on the land then there would be a separate lease for each building (special condition 6). They also required the construction of ‘one or more good and permanent buildings’ on the land. There was a prohibition on industrial use and a restriction on building more than twenty houses. The lot covered by the Conditions of Exchange had twenty houses on it, each being the subject of a separate Government lease containing the restriction on building more than one house. There was nothing to indicate that the leases were intended to introduce any additional restrictions beyond those contained in the Conditions of Exchange.

The question was whether building a single 26-storey building  for mixed residential and retail use on a composite site including several of these leases would be a breach of these covenants. The Court of Appeal decided that it would not amount to a breach. It considered the terms of the Conditions of Exchange that had preceded the grant of the leases as well as the leases themselves. The Court concluded that the aims being pursued did seek to limit the density of construction but, provided those limits were observed, did not seek to impose any limit on the type of building to be constructed so long as it could fall within the definition of a ‘house’. Multi-storey buildings were not unknown in Hong Kong at the time of the leases and so were within the range of possibilities that the parties might have contemplated. The Court at first instance had decided that a breach would be involved but it had given too much weight to its view as to what the man in the street at the time of the leases might have understood by the term ‘house’.

Tang V-P said:

‘I do not believe the use of the word “house” in the Special Condition (6) was intended to preclude the building of a massive composite building, even one which would be called “a block of flats”. The Conditions of Exchange is a formal document, no doubt drafted by persons familiar with the law. The pertinent question is what did they intend when they used the word “house”? Did they intend the meaning to depend on common parlance? I think not. In other words, I do not believe it was intended that the meaning to be attributed to the word “house” should depend on whether in common parlance the structure would be called a house or a block of flats. In its context, I believe the word “house” should be read synonymously with “building”. Or that the word should be construed as including what might in common parlance be called a block of flats.’ (at [30])

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