CO129-627-7 Grants of land- new territories 1-12-1950 - 31-12-1951 — Page 46

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Secretariat file No. 13/736/47.

SAVINGRAM

To the Secretary of State for the Colonies.

From the Governor, Hong Kong.

3

46

Date

5th

No.

146

February 1951.

142

1/7/48

54439

Encloure No. I

Flosure No. 2

- -

X

My despatch No.279 of 16th November 1948 and your telegram No.25 of 7th January 1949. Grant of land to Anglo- Iranian Oil Company.

1.

The conditions of sale were completed and the premium amounting to $1,466,320.00 was paid in April 1949.

A copy of the conditions is enclosed. In March 1950, the Company applied through the Director of Public Works :-

(a) for permission to assign the lease, or

(b)

for permission to terminate the lease without forfeiture of the premium.

I enclose a copy of that application,

2.

By General Condition 5 the purchasers bound themselves to complete a Puilding Covenant of $4,000,000 within 48 months "unless prevented by strikes or other labour disputes, the impossibility of obtaining supplies of particular material or other circumstances beyond their control". No work has started.

3.

By Special Condition (4) they had to supply the Director of Public Works with a general lay-out plan within 6 months of the sale. This has not been done,

4.

By Special Condition (5) certain reclamation work had to be completed within 24 months of the sale. No reclamation work has been done.

5.

No Crown lease of course exists since the conditions have not been fulfilled. An assignment of the conditions of sale is impracticable since they were drafted specially to meet the requirements of the purchasers.

The only practicable course is to terminate the agreement and the question therefore arises whether the premium should be refunded in whole or in part. The Attorney General has considered whether the doctrine of frustrations could apply in view of the fact

(a) that the relationship of landlord and tenant had been

created in respect of the subject matter of the contract; and

(b) that by Special Condition 2 it was expressly provided

that the purchasers shall as of right be entitled to an extension of time under General Condition 5A if prevented by the circumstances referred to therein from complying therewith, but that subject to any such extension shall be bound by such General Condition,

and has advised that the doctrine of frustration cannot apply to this case in view of Leightons Investment Trust v. Cricklewood Investment Trust (1943) T.K.B. 493, because although no Crown Lease has actually been granted, a tenancy subsists by virtue of the conditions of sale, more particularly General Condition 6 (c).

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7.