Szeto Yuk Lin v. Kanton Ltd and Others

HCMP 251/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 251 OF 2016

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Before: Deputy High Court Judge Lee in Chambers

Date of Hearing: 7 September 2017

Date of Judgment: 6 October 2017

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JUDGMENT

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INTRODUCTION

1.This is about the Originating Summons of the plaintiff (“P”) taken out on 29 January 2016[1] and the application of the defendants (except D1), pursuant to Order 28, rule 8 of the Rules of the High Court (“RHC”)[2], for the proceedings to continue as if the cause or matter had been begun by writ.  D1 has indicated that it does not want to contest P’s claim.  This court is presently only concerned with the aforesaid application from the defence.[3]

2.P’s action is about the 29 car parking spaces (No 1 to No 29) located in the Lower Ground Carpark (“the Carpark”) of a residential building on MacDonnell Road (“the Building”) which was erected in 1960s and also the 6 additional car parking spaces created in common areas of the Building outside the Carpark.  For the sake of convenience, the 29 car parking spaces inside the Carpark will be referred to in this Judgment by their respective numbers. 

3.The Carpark has two exits, one open to the front and the other to the rear of the Building.  P owns 4 of the car parking spaces (No 1 to No 4) which were assigned to her by her brother in November 2012 at a total consideration of $2 million, all of them located at a corner of the Carpark closer to the rear exit.  No 5 to No 29 are separately and individually owned by other people some of whom are also residents of the buildings.  D6 is the Incorporated Owners responsible for the management of the common areas of the Building.[4]

4.If one looks at the Floor Plan of the Carpark (annexed), it would appear that in order for a normal size saloon car to ingress to and egress from any of No 1 to No 4 via the front exit, one would have to pass through at least Nos 5, 9, 10 and 11, so that if there are vehicles already parking on any of the latter four, those vehicles will need to be moved to allow the saloon car to get in or out.  Or P’s car could use the rear exit without passing through Nos 5, 9, 10 and 11.  However, there is No 27 which reduces the opening at the rear exit, so that it would appear that if a vehicle is already parking on No 27, the remainder of the opening will not be sufficient for a normal size saloon car to manoeuvre.  According to the report of a surveyor commissioned by P, the present arrangement of the car parking spaces in the Carpark would not meet the current standards for internal transport facilities.[5] Besides, it is of note that:

(i) the Deed of Mutual Covenant (“DMC”) of the Building does not provide for the access rights of the owners of the car parking spaces within the Carpark; and

(ii) P’s car parking spaces are located within an area designated as “Children Playground” on the approved building plan retrieved from the Building Department.

P’S CONTENTIONS

5.P’s contention, as regard her access right to Nos 1 – 4, is that there is a covenant binding on all the owners of the 29 car parking spaces.  That covenant, it is said, is contained in the assignments from which the owners obtained their respective interest, so that all of them are required to leave the keys of their motor vehicles parked thereat to the Caretaker’s Office.  The covenant which P seeks to rely is in the following terms:

“ To engage and employ in conjunction with the co-owners of the said lower Ground Floor garage a caretaker to manager the parking of motor cars in the said Lower Ground Floor Garage and to leave a key of each such motor cars with the caretaker of the said Lower Ground Floor Garage and to pay four twenty ninth shares of the salary of the caretaker.”

Alternatively, P relies on the terms of the DMC and/or common law which, she says, give her an implied right of way to her car parking spaces. 

6.Although P says that the aforesaid covenant is binding on all the owners of the 29 car parking spaces, she has only chosen to sue just a selected few. As to this, it is said:

“ Given the fact that not all the other car parking spaces affect her rights and entitlements, she only joins the owners of those whose car parking spaces and the motor vehicle parked thereon affected or would affect her right and entitlement to save time and costs of the proceedings.”[6]

By the above, P means D1 to D5, who are the owners of Nos 5, 9, 10, 11 & 27 respectively.[7] As aforesaid, D1 has already indicated that it will not dispute P’s claim.

7.As regards the 6 additional car parking spaces created by D6 in the common areas, they would not obstruct P’s vehicles from getting in or out of the Carpark.  P’s complaint is that they are created in breach of the DMC and such breach also constitutes a violation of s 18(1)(c) of the Buildings Management Ordinance, Cap 344.  Alternatively, she says that the creation of the additional car parking spaces constitutes trespass upon that part of the land on which they have been marked and used and that P, as a co-owner of the land, is entitled to purge the said trespass by herself irrespective of s 16 of the Buildings Management Ordinance. 

Determinations and relief sought

8.In the Amended Originating Summons, P seeks the determination of the court on the following questions and relief, namely:

“ (a) Whether, having regard to: —

(1) the design of the said building, in particular, the positions of the 29 car parking spaces on the Lower Ground Floor; and

(2) the contents of the assignments from which the owners of the 29 car parking spaces obtain their interest in, inter alia, the Lower Ground Floor, in particular, the Covenant to leave the keys of motor cars parked or be parked thereat to the Caretaker’s Office;

the owners of the 29 car parking spaces, in particular, the 1st to 5th defendants herein, have privity of interest in the Lower Ground Floor so that the rights and liabilities of the assignmentsfrom which they acquire interest in, inter alia, the 29 car parking spaces, could enforce their rights and entitlements against each other.

(b) If answer to (a) is in the affirmative, whether the Plaintiff, as the owner of car parking spaces Nos. 1, 2, 3 and 4 (‘the said 4 car parking spaces’) is entitled to enforce her rights and entitlements in the assignment registered by Memorial Number 1012479 against the owners of the remaining 25 car parking spaces, in particular, the 1st – 5th Defendants, for ingress to egress from the said 4 car parking spaces by obliging them to leave the key to motor cars parked or to be parked at their car parking spaces with the Caretaker’s Office.

(c) If answer to (a) is in the negative, whether the plaintiff, as the owner of the said 4 car parking spaces, has the right against the remaining owners of the 25 car parking spaces for ingress and egress from the said 4 car parking spaces as a right: —

(i) implied under the Deed of Mutual Covenant of 23.5.1960; and/or

(ii) under common law.

(d) Whether the creation of, inter alia, 6 car parking spaces at the common parts of the said land lot (‘the said new car parking spaces’) additional to the 29 car parking space is constituted breach of the said Deed of Mutual Covenant.

(e) If answer to the above is in the affirmative, whether the 6th defendant, as the legal entity Incorporated under s 8 of the Buildings Management Ordinance, is: —

(i) entitled under s 16 of the Building Management Ordinance; and

(ii) obliged under s 18(1)(c) of the Buildings Management Ordinance

to enforce the said Deed of Mutual Covenant in respect of matters relating to common parts by, inter alia, purging the existence of the said new car parking spaces.

(f) If answer (c) above is in the negative, whether the creation and use of the said car parking spaces constitute trespass upon that part of the said land lots on which the said new car parking spaces have been parked and used and that the Plaintiff, as a co-owner of the said land lot, is entitled to purge the said trespass by herself in irrespective s.16 of the Buildings Management Ordinance.

(g) If answer to any of the questions (a) to (f) above be in favour of the Plaintiff’s contentions, whether the Plaintiff would be entitled to damages to be assessed by a Master in Chambers for loss of use of Car Parking Spaces Nos. 1 to 4;”

9.Item (g) above is added to the Originating Summons by way of amendment.[8]

Ds’ Contentions

10.In opposition to P’s action, D2 to D5 put forward a number of legal and factual matters.  The factual matters include the following:

(i) it is disputed that P’s brother had ever intended to use Nos 1 – 4 as car parking spaces.  In fact, P’s brother placed two old cars there without moving them for more than 20 years and those two cars are in a dilapidated state.  At one stage, P’s brother had even unlawfully installed a metal gate across one of his car parking spaces.  In other words, P’s brother had for a prolonged period used Nos 1 – 4 just as a storing place for the car wrecks; 

(ii) it is disputed that P or her brother had intended to remove the two so-called “antique motor cars” from Nos 1 – 4 as she alleges.  In fact, D6 had on a number of occasions requested P’s brother to remove the car wrecks but to no avail;

(iii) it is disputed that there is a necessity for P to access her car parking spaces through the front exit and it is said that the logic of the design of the Carpark might be such that No 1-4 were intended for subcompact cars only;

(iv) it is disputed that the condition precedent for the covenant has ever been met in that no owner (including P and her brother) has ever made any contribution to the salary of a caretaker who would act in effect as a car-jockey;

(v) it is disputed that the covenant has ever been carried out, as no such caretaker as mentioned in the covenant has ever been employed and no owner (including P and her brother) has ever deposited their car keys with the management office; 

(vi) it is said that it has been accepted by owners that some of the car-parking spaces in the Carpark are in fact “landlocked”;

(vii) it is disputed that it is sufficient for P to sue just the present defendants. This is because, if what P says about the binding effect of the covenant was correct, all the owners of the 29 car-parking spaces would have to be involved in and contribute as a group to the hiring a caretaker.  Moreover, two to three such caretakers would have to be hired in order to provide a 24-hour coverage; and

(viii) there are other practical difficulties which need to be sorted out before the alleged covenant could be implemented, like insurance cover for vehicles which are to be jockeyed by the caretaker.

11.As to the above, P’s reply is that the aforesaid factual disputes are “irrelevant” for consideration of any of the issues that needed to be resolved in this action.  Alternatively, it is said that should those disputes be relevant, the same could be resolved by the trial judge upon cross-examination of the deponents of the affirmations (essentially P) without the necessity of a “full bloomed” action.

THE RELEVANT LEGAL PRINCIPLES

12.Under Order 28, rule 8(1) of the RHC, the court has power to order originating summons proceedings to continue as if the cause or matter had been begun by writ where it appears to the court at any stage of the proceedings that the proceedings should be so continued.  The provision confers a flexible case management power on the court.  It is a discretionary power that can be exercised where the court takes the view that the proceedings should ‘for any reason’ be continued as if begun by writ.  Rule 8 does not specify or limit the possible reasons, but the usual ground relied upon by defendants is that there are substantial disputes of fact.  In Anna Dorothea Erna Lungershausen & Another v Thomas Joseph Dillon, Jr[9], DHCJ Muttrie pointed out that the onus is on the applicant to show it will be just and convenient to make the order. 

13.In Shum Wah Ming v The Estate of Chen King Ngo, deceased & Another[10], Cheung J (as he then was) reminded that originating summons procedure is not and is never intended to be a short-cut to resolve disputes which could only be properly dealt with in a writ action. 

14.As explained by G Lam J in the recent case of IO of Foo Hoo Centre v HK Alliance in Support of Patriotic Democratic Movement of China[11]:

“ 10. The rationale is that, in general, where there are substantial factual disputes, there should be pleadings so that the precise issues between the parties can be properly identified (although O 28 r 4(5) also empowers the court to order points of claim etc to be delivered and stand as pleadings without converting the proceedings into a writ action). Lack of pleadings in complicated cases can often cause difficulties both at trial and on appeal; see eg, Young’s Engineering Co Ltd v The Hong Kong and Shanghai Banking Corporation Ltd & Ors [2004] HKCU 701 (unrep, HCMP 2676/2002, 18 June 2004). Cross-examination of the witnesses and discovery of documents may also be necessary for resolving disputes of fact, which are not automatically provided for in the originating summons procedure, although it is, again, possible for the court, where appropriate, to give specific directions for cross-examination of deponents of affidavits (see RHC O 28 r 4(4) and O 38 r 2(3)) and for discovery of documents (see O 24 r 3) without ordering the whole proceedings to continue as if begun by writ.

11. These rules, like all the other rules in the RHC, must be exercised with a view to the furtherance of the underlying objectives of the Rules as set out in Order 1A and, ultimately, in the interests of justice.

THE ISSUES

15.In the present case, there are two major issues raised by the defence application:

(i) whether there can be shown on the available evidence genuine or substantial issues of fact between the parties: see §28/8/2, Hong Kong Civil Procedure 2017; and

(ii) whether P’s claims against the defendants are sufficiently clear and have sufficient particulars so as to enable the defendants to identify the issues in the action and to properly prepare for their defence.

Consideration

Substantial factual issues

16.In my view, the case does entail a number of factual disputes and some of them are even raised by P herself, namely:

(1) P’s assertion that her brother “had enjoyed de facto enjoyment” of the 4 car parking spaces since 1990 and that “he had never encountered difficulties in exercising his then rights and entitlements as owner of” Nos 1 – 4.[12]

(2) P’s assertion that “the 6^th Defendant … performed its role as the person managing, inter alia, the 29 car parking spaces by causing and allowing free ingress to and egress from the said 4 car parking spaces.  There was a Caretaker’s Office on the Lower Ground Floor through which the 6^th Defendant managed, inter alia, the use and enjoyment of the 29 car parking spaces ….”[13]

(3) P’s assertion that “ingress to and egress from the said 4 car parking spaces had no difficulties as caretakers would be able to cause movement of the motor cars obstructing the said 4 car parking spaces for the purpose of enabling access and egress therefrom.” [14]

(4) P’s reliance on the expert evidence of her surveyor about the design of the Carpark and that suggests that the case is not simply about the construction of documents/assignments but also requires consideration of expert evidence.  

17.Moreover, I agree with the submission of D3 in his very helpful written submission that the factual disputes between the parties are in fact substantial and they include the following areas: 

(i) whether P/her brother are telling the truth in asserting that the brother had owned an apartment in the Building and had enjoyed rights under the implemented covenant as P alleges;

(ii) whether P/her brother have ever paid management fees or employed a Caretaker or deposited their car keys with said Caretaker as contemplated under the covenant;

(iii) whether D6 has ever provided the said Caretaker to implement the covenant;

(iv) whether the covenant in question had ever been implemented at all throughout the history of the Building or whether it has been waived or acquiesced in by the owners of the car parking spaces and is thus unenforceable;

(v) whether the car wrecks are owned by P/her brother;

(vi) whether P purchased her brother’s car parking spaces knowing that they were land-locked;

(vii) on what factual basis does P say that the covenant and/or her rights have been breached;

(viii) what is the factual basis, if any, for any alternative claims of implied term, common law right or easement;

(ix) whether the admission by P’s surveyor that P’s 4 land-locked car parking spaces are not a permitted use on the Buildings Department approved plan undermines P’s claim;

(x) the factual issues concerning the prior existence of a gate bisecting one of P’s car park spaces;

(xi) whether the front access is feasible or necessary and whether the covenant could feasibly be implemented at all; and

(xii) whether there is any obstruction of access to the rear of the Building as alleged.

18.With respect, I am unable to accept the submission of Mr Chong, counsel for P, that the aforesaid factual disputes are “irrelevant” to the determination of the questions that P poses in the Amended Originating Summons.  In my judgment, they would be relevant to the substances relating to P’s claims as put in the Amended Originating Summons.  My reasons are as follows:

(1) The factual disputes would be relevant to P’s claim based on the covenant in the relevant assignments in that:

(i)the defendants have raised the defence of waiver/ estoppel arising from the factual assertion that the covenant has never been implemented nor intended to be implemented in the entire history of the Building over a period of some 60 years, as is the common knowledge and assumption of all the owners of the car parking spaces and their predecessors in title,[15] so that it would be detrimental and unconscionable for P to assert that the covenant should now be enforced.  The issue of estoppel is pre-eminently a fact-sensitive one which makes it unsuitable to proceed in the absence of pleadings; and

(ii)apart from the claim of damages in item (g) of the Amended Originating Summons, P has not identified any reliefs that she is seeking.  If she does seek declarations or injunctions, those are discretionary remedies which do not automatically follow upon the establishment of a right.  However, the granting of declaratory or injunctive reliefs would be a highly fact-sensitive matter entailing consideration of, inter alia, many of the factual issues raised by the defendants, including the practical difficulties of putting the arrangement under the covenant into effect and the absence of necessity for P to utilize the front exit.  

(2) The factual disputes would also be relevant P’s alternative claim based on the alleged breach of her implied right under the DMC and at common law. 

(3) Moreover, the assessment of damages, if any, would also involve the resolution of many of the factual disputes mentioned above.

19.It is clear that the aforesaid factual disputes cannot be resolved on affidavit evidence: cf Ip Kam Wah & Another v Fair City Group Ltd[16]. As regards by Mr Chong’s suggestion that the factual disputes can be adequately dealt with by cross-examining of the deponents of the affirmations filed without the necessity of having a “full-bloom” trial, that in my view would not be satisfactory.  I note that P’s brother has not filed any affirmation, so that Mr Chong’s suggestion would not entail P’s brother being cross-examined by the defendants.  The same can be said about P’s surveyor who also has not filed any affirmation but whose report is simply exhibited to P’s affirmation.  On the other hand, a lot of what P said in her affirmations is based on hearsay evidence and that would render it difficult for the defendants to cross-examine her effectively.

20.Lastly, the cases relied upon by Mr Chong, namely Wisename Ltd v The Secretary for Justice[17] and Chiu Shu-choi v Merrilong Dyeing Works Ltd[18], with respect, do not assist P:

(i) as regards Wisename, it is not a case on wavier/estoppel but about a breach of Crown Grant.  The case was decided on the basis that the parties were at one that the condition of the Crown Grant under consideration was to be construed in the factual matrix of the circumstances surrounding the signing of the New Grant.  It was also accepted that in the absence of any words of limitation, the scope and extent of a right of way would generally depend on the purpose for which it was intended to be used; and

(ii) as regards Chiu Shu-choi, it is also not a case on wavier/estoppel but on the right of passage (the use of a lift in an industrial building to reach an upper floor) implied under a deed of mutual covenant.

Neither of the two aforesaid cases stands for the sweeping proposition that factual circumstances or disputes are “irrelevant” to the defence of waiver/ estoppel, the appropriateness of declaratory reliefs or the assessment of damages as discussed above. 

Lack of clarity and sufficient particulars

21.With respect, I agree with the submissions of D3 and D6 that P’s claims, in particular those based on the alleged breach of implied terms of the DMC and common law, are ill-defined and lack sufficient particulars so that they would cause embarrassment to the defendants in preparing the defence:

(a) there is no clear identification of the term that, P said, is implied in the DMC;

(b) the nebulous common law right is left opaque and similarly the alleged easement right;

(c) it is ambiguous and obscure, from a reading of the Amended Originating Summons and P’s affirmations, as to whether D6 is only sued in relation to the creation of the 6 additional car parking spaces or whether it is also sued in relation to P’s alleged access right to Nos 1 – 4.  The confusion arises from, among other things, the following paragraph in P’s 1^st affirmation:

“ 33. The IO, as the incorporated owners performed its role as the person managing, inter alia, the 29 car parking spaces by causing and allowing free ingress from the said 4 car parking spaces. There was a Caretaker’s Office on the Lower Ground Floor through which the IO managed, inter alia, the use and enjoyment of the 29 car parking spaces and the position is the same as now-a-days.”

The paragraph quoted above seems to suggest that D6 should has a role to play in the enforcement of the covenant or in assisting P to access her car parking spaces.  D6 should not be required to engage in guesswork but is entitled to know with certainty as to what case it is asked to meet; and

(d) as to the claim of damages:

(i)there is no plea or clarity in the Amended Originating Summons as to the cause of action or basis supporting the claimed damages or as to the breaches giving rise to the damages;  

(ii)it is entirely unclear whether the claim for damages is based on contract and/or tort; and

(iii)no particulars have been given about the claimed damages apart from a bland description.

Conclusion

22.Based on the above, I am satisfied that this is a suitable case for this court to exercise its case management discretion by ordering that the present proceedings be continued as if it had been begun by writ. 

23.Therefore, this court makes the following directions:

(1) the present proceedings be continued as if the cause or matter had been begun by writ.

(2) the Plaintiff is to file and serve her Statement of Claim within 28 days from the date of this judgment.

(3) the Defendants are to file and serve their respective Defences within 28 days thereafter;

(4) the Plaintiff do file and serve her Reply, if any, within 28 days thereafter;

(5) the parties are to file and serve their respective list of documents within 28 days thereafter;

(6) there shall be inspection of the documents within 14 days thereafter; and

(7) there be liberty to apply for further directions.

Costs

24.I am of the view that it must have been apparent to P, after receipt of the affirmations of the defendants at the latest, that the procedure for originating summons is entirely inappropriate for the present case.  Therefore, P should not have insisted on characterizing the Originating Summons as a construction summons and her stance in this application: Lai Kwong-ma v Tang Hop-wan[19].

25.In the circumstances, I make an order nisi that D2 to D6 should have their costs of this application, including all costs reserved, to be taxed if not agreed.

Mr K M Chong and Mr Alvin Chong, instructed by Louis K Y Pau & Co, for the plaintiff

The 1^st defendant, represented by its director Mr Ting Ka Yu, appeared in person

The 2^nd defendant, represented by Mr Tsang Chee Ching Alfred, appeared in person

The 3^rd defendant, represented by Mr Jeremy Bartlett, appeared in person

Attendance of Kok & Ha Solicitors, for the 4^th defendant, excused

Mr Nathan Wong, of Haldanes, for the 5^th defendant

Ms Carol L W Wong, instructed by Winnie Leung & Co, for the 6^th defendant