Pierhead Garden Management Co Ltd v. The Incorporated Owners of Pierhead Garden

HCA 559/2013

[2021] HKCFI 678

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 559 OF 2013

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Before:  Hon K Yeung J in Court

Dates of Hearing:  21-24 and 28 May 2019

Date of Judgment: 16 March 2021

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JUDGMENT

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A.   Introduction

1.The Plaintiff (“P”) was the ex‑manager of a development in Tuen Mun known as Pierhead Garden (“Pierhead Garden” or the “Development”). 

2.The Defendant (“D” or “IO”) is the incorporated owners of Pierhead Garden.

3.This is the trial of their disputes over:

(a)  the ownership rights and/or right to use the loading and unloading areas which comprise:

(i)  10 loading and unloading bays (“Loading Bays 1‑10”) located on the 1^st Floor (lower level) of the Development, and

(ii)  the goods handling platform adjoining Loading Bays 1‑10 (the “Adjoining Platform”), and

(b)  the right to use the driveway in the car park areas on the 1^st Floor (lower level) adjoining Loading Bays 1‑10 (the “1/F Driveway”).

4.The main dispute relates to Loading Bays 1‑10 and the Adjoining Platform.  P claims that it is the legal and/or beneficial owner of the same, alternatively has the exclusive right to use and control the same, or alternatively has the right to manage the same.  D avers that they are common areas.

5.Ms Audrey Eu SC leading Mr Lee Tung‑ming appeared for P.   Mr Richard Khaw SC leading Mr Sunny Chan and Mr Jeffrey Lee appeared for D. 

B.   The parties

6.Kowloon‑Canton Railway Corporation (“KCRC”) was the grantee of the land at Tuen Mun Town Lot No 291 (the “Lot”). The grant was made by an Agreement and Conditions of Grant dated 2 April 1986 (which contains a set of Special Conditions (the “Special Conditions”) as varied and modified by (1) two Modification Letters dated 12 August 1986 and 5 November 1987, (2) a Letter dated 8 August 1988, and (3) a No‑Objection Letter dated 3 July 2007 (collectively, the “New Grant”).  

7.P was incorporated in Hong Kong on 19 May 1987.  It was a wholly‑owned subsidiary of KCRC until 14 December 2007 when KCRC transferred all its shareholdings in P to MTR Corporation Limited (“MTRC”). P has since then been a wholly‑owned subsidiary of MTRC.

8.D was incorporated on 6 September 1994 pursuant to Section 8 of the Building Management Ordinance (Cap 344) (“BMO”).

C.   The factual background

9.By the New Grant, KCRC was on 2 April 1986 granted a lease of the Lot from 2 April 1986 to 30 June 2047.

10.The development of Pierhead Garden was governed by the New Grant.

11.Special Condition (3)(a) provides that KCRC shall develop the Lot.  KCRC did. The Development was completed in 1988.  The Occupation Permit was issued on 18 August 1988.  The first assignment (to a purchaser of a residential flat) was dated 17 October 1988 (the “First Assignment”).  The Deed of Mutual Covenant and Management Agreement for the Development (the “DMC”) was at the same time entered into.

12.The user of the Lot is governed by the New Grant. The following provisions are of particular relevance:

(a)  Special Condition 4(a) stipulates that the Lot and the buildings erected thereon “shall not be used for any purpose other than non-industrial (excluding godown) purposes”[1];

(b)  Special Condition 4(a) is subject to Special Condition 4(b)[2];

(c)  Special Condition 4(b) contains specific provisions governing the users of different levels of the buildings to be erected:

(i)  ground floor level for light rail transit system terminus and transport interchange;

(ii)  first floor level for non‑industrial but not residential and godown purposes;

(iii)  the second floor level for entrance, private residential and recreational as may be approved;

(iv)  above the second floor for private residential only.

The relevant terms of Special Condition 4(b) are as follow (all emphasis added):

“ (b) Subject to these Conditions, no part or parts of any building or structures or structures erected or to be erected:-

(i) at ground floor level shall be used for any purpose other than for the purposes of :-

(a) a Light Rail Transit System terminus … (hereinafter collectively referred to as ‘the Light Rail Transit System terminus’); and

(b) transport interchange facilities … (hereinafter collectively referred to as ‘the Government Accommodation’) …

(c) such entrances, stairways, escalators, lifts, lobbies, refuse chamber service areas or such other facilities as may be approved by the Director as being necessary for the private residential purposes referred to in sub‑clause b(iv) of this Special Condition;

(ii) at first floor level shall be used for any purpose other than non‑industrial (excluding residential and godown) purposes;

(iii) at second floor level (hereinafter referred to as ‘the podium level’) shall be used for any purpose other than for the purposes of such entrances, stairways, escalators, lifts, lobbies, service areas, caretakers’ offices as may be approved by the Director as being necessary for private residential purposes and such recreational purposes as may be approved in writing by the Director

(iv) above podium level, shall be used for any purpose other than private residential purposes.

(c) Notwithstanding anything to the contrary contained in these Conditions, the first floor level referred to in sub‑clause (b)(ii) of this Special Condition or a part thereof may, subject to the approval of the Director, be so designed, built or constructed as to contain two sub‑levels which shall not be used for any purpose other than for the parking of private motor vehicles and for the loading and unloading of goods and service vehicles as required by Special Condition No. (36) hereof.

(d) For the purposes of these Conditions, the buildings or the portions of the building or buildings erected or to be erected on the lot the users of which are referred to in sub‑clauses (b)(i)(c), (b)(ii), (iii), and (iv) and (c) of this Special Condition shall be collectively referred to as ‘the Non‑Industrial Development’ ”.

(d)  Special Condition 4(c) mentioned Special Condition (36)[3]. It relates to the provision of car parks and loading and unloading spaces:

(i)  Special Condition (36)(a) relates to the provision of parking spaces for the purpose of parking private motor vehicles belonging to the residents of the buildings and their bona fide visitors at the rate of not less than one space per 10 residential units:

“ Space and/or car ports shall be provided within the lot to the satisfaction of the Director for the parking of motor vehicles at the rate of not less than one space per 10 residential units in the building or buildings erected or to be erected on the lot. The space so provided shall not be used other than for the purpose of parking private motor vehicles belonging to the residents of the building or buildings erected or to be erected on the lot and their bona fide visitors.”

(ii)  Special Condition (36)(b) relates to the provision of loading and unloading spaces.  Two types are required to be provided.  One type is for the use of domestic blocks.  The other is for the use of retailing spaces.  The locations and provisions rates for the 2 types are different, and they shall not be used for any other purpose:

“ (b) Space shall be provided within the lot to the satisfaction of the Director for the loading and unloading of goods and service vehicles. Such space shall be in the form of bays each measuring 3 metres x 11.00 metres with a minimum headroom of 4.0 metres and shall be provided at the rate of one bay for each domestic block and 930 square metres or part thereof of gross floor area of the space designed and intended to be used for the retailing of goods in the building or buildings erected or to be erected on the lot and shall abut a goods handling platform or area which must be provided and so laid out that goods loaded or unloaded from such platform or areas may be transported within the lot or from the retailing areas both vertically and horizontally. The space so provided shall not be used for any other purpose.”

(e)  Special Condition (37)[4] contains further provisions relating to parking spaces and loading and unloading spaces, that:-

“ A lay‑out plan indicating the parking spaces or car ports or both and the loading and unloading spaces to be provided within the lot in accordance with Special Condition No. (36) hereof shall be approved by the Director… The parking spaces or car ports or both and the loading and unloading spaces indicated on the said approved plan shall not be used for any purpose other than the purposes set out in Special Condition No. (36) hereof. The Grantee shall maintain the parking spaces or car ports or both and the loading and unloading spaces in accordance with the said approved plan and shall not alter the layout except with the prior written consent of the Director.”

13.In relation to the allocation of undivided shares and the disposition thereof, Special Conditions (31)(f) and (g)[5] provide, inter alia, that(all emphasis added):-

“ (31) Notwithstanding that the General and Special Conditions herein shall have been observed and complied with to the satisfaction of the Director, the Grantee shall not assign, mortgage, charge, or part with the possession of or otherwise dispose of the Non‑industrial Development or any part thereof or any interest therein or enter into any agreement so to do except by way of an assignment or other disposal of undivided shares in the whole of the lot, together with the right to the exclusive use and occupation of individual floors or units in any building or buildings erected therein and even then such assignment or other disposal shall be subject to the following conditions :-

…

(f) in the said Deed of Mutual Covenant the Grantee shall in addition to the undivided shares allocation in respect of the Light Rail Transit System Terminus and the Government Accommodation contained in Special Condition Nos. (25)(a) and (28)(b) hereof allocate to those parts of the lot which comprise the common areas of the lot including footpaths, pedestrian bridges, walkways, roads, gardens, driveways, open spaces, parking, loading and unloading areas, services areas, the covered footbridge and the connections thereto, if any, roofs, non‑building area, the Liquefied Petrolum Gas Compound, refuse collection chambers, and all other common parts, amenities and facilities, toilets, air‑conditioning plant and equipment and facilities, treatment and disposal plant, lobbies, stairways, escalators, common entrances, halls passageways, and lifts contained in the development or redevelopment of the Non‑industrial Development (hereinafter collectively referred to as ‘the Reserved Common Parts’) and the whole of the retail shopping areas at the first floor level (hereinafter referred to as ‘the Reserved Commercial Areas’) a number of undivided shares in the lot which in the opinion of the Registrar General (Land Officer) shall be appropriate to the Reserved Common Parts and the Reserved Commercial Areas;

(g)[6]      The Grantee shall not assign, mortgage or charge … or otherwise dispose of or part with possession of any of the undivided shares allocated to the Reserved Common Parts and the Reserved Commercial Areas in accordance with sub‑clause (f) of this Special Condition or any interest therein or enter into any agreement so to do save that with the prior written consent of the Registrar General (Land Officer) who shall have an absolute discretion in this respect the Grantee may assign the whole of the said undivided shares (but not a part thereof) to an incorporated company whose principal business is that of estate management and who shall give an undertaking in writing to the Government that he shall in all respects comply with the provisions relating to the management and maintenance of the lot in these Conditions and that any breach of the undertaking shall be deemed to be a breach of these Conditions rendering his relevant interest in the lot liable of being vested in the Financial Secretary Incorporated, it being the intention that the ownership and management of the Reserved Common Parts and the Reserved Commercial Areas shall remain in the hands of the Grantee or the said estate management company for the whole of the lease term hereby agreed to be granted …”

14.Special Conditions 32(a) and (b)[7] relate to the management of the Development, that:-

“ (32) (a) The Grantee (which expression shall for the purpose of this Special Condition only mean the person entering into and executing this Agreement or, in his place, the estate management company referred to in Special Condition No. (31)(g) if an assignment of the said undivided shares to such estate management company be permitted thereunder) shall in accordance with the provisions of the said Deed of Mutual Covenant and the said Management Agreement with regards to costs and charges, throughout the said term well and sufficiently manage, … the lot and all buildings and structures erected or to be erected thereon together with … all … parking, loading, unloading, manoeuvring and service areas, … thereunto belonging and which shall in anywise belong or appertain to the lot … to the satisfaction of the Director …

(b)  Any breach of sub‑clause (a) of this Special Condition shall notwith-standing that such breach is in respect of some part of the lot or some building or part of some building thereon to which the Grantee does not have the right to the exclusive use and occupation, be deemed to be a breach of a covenant, condition or stipulation in a lease or tenancy in respect of the Grantee’s relevant interest in the lot for the purpose of Section 7 of the Crown Rights (Re‑entry and Vesting Remedies) Ordinance so as to enable such relevant interest to be vested, in the event of any breach occurring, in the Financial Secretary Incorporated …”

15.When completed, and consistent with the New Grant, the Development comprises inter alia the following:

(a)  On the Ground Floor or street level:

(i)  the light rail transit system terminus and interchange area on the ground floor (referred to in the DMC as the “LRTS Complex”) — as required and governed by Special Condition 4(b)(i)(a);

(ii)  transport interchange facilities on the ground floor (referred to in the DMC as the “Government Accommodation”) — as required and governed by Special Condition 4(b)(i)(b);

(b)  On the 1^st Floor Level:

(i)  one floor of commercial space with a shopping mall with approximately 9,300 m² of space designated for the retailing of goods (which was until 2006 known as “Pierhead Plaza”, and now known as “Ocean Walk”), and immediately adjacent to the shopping mall Loading Bays 1‑10 and the Adjoining Platform on the 1^st Floor (lower level) — as required and governed by Special Conditions 4(b)(ii), 4(c), 31(f) & 36(b);

(ii)  2 split‑level of parking areas with a total of 168 car parking spaces on the 1^st Floor (lower level) and on the 1^st Floor (upper level) — as required and governed by Special Conditions 4(b)(ii) & 4(c);

(c)  On the 2^nd Floor level and above, 6 multi‑storey residential blocks (as governed by Special Condition 4(b)(iv)) and 6 loading and unloading areas (one for each of the 6 residential blocks on the podium, as governed by Special Condition 36(b)).

16.The car parking spaces and Loading Bays 1‑10 and the Adjoining Platform are only accessible by vehicles via a spiral driveway (the “Spiral Driveway”) from street level to the 1^st Floor (lower level) and then through the 1/F Driveway.

17.The 1/F Driveway runs between the Loading Bays 1‑10 on one of its sides, and the other car parking spaces on the other.  Hence, one side of the 1/F Driveway faces and adjoins Loading Bays 1‑10, and its other side faces and adjoins the other car parking spaces.  As will be seen from below, one recurring complaint P has is that on several occasions when the 1/F Driveway was cordoned off, D only cordoned off the half of the 1/F Driveway facing and adjoining Loading Bays 1‑10 (hence blocking access to some or all of them), but not the half of the 1/F Driveway that faces and adjoins the other car parking spaces.

18.By the DMC, P was appointed the manager of the “Estate”.  “Estate” is defined in the DMC as meaning the whole of the Development but excluding the LRTS Complex and the Government Accommodation.

19.Concerning the allocation of undivided shares under the DMC:

(a)  the Lot and the buildings thereon were notionally divided into 32,942 undivided shares, which were allocated as follows[8]:

	Description (per the DMC)	Undivided shares
a.	Residential Accommodation	24,344
b.	Commercial Accommodation (including the Reserved Commercial Areas)	5,330
c.	Parking Areas	168
d.	Government Accommodation	1,800
e.	LRTS Complex	350
f.	Retained Areas	300
g.	Common Areas and Facilities	650
h.	Air-Conditioned Accommodation	Nil
Total :		32,942

(b)  P is the registered owner of:

(i)  the 5,330  undivided shares allocated to the “Commercial Accommodation”;

(ii)  the 650 undivided shares allocated to the “Common Areas and Facilities”; and

(iii)  the 32 undivided shares allocated to 32 of the 168 car parking spaces. 

(c)  Those 5,330 undivided shares allocated to the “Commercial Accommodation” were originally held by KCRC.  That remained so until 2 December 2007 when KCRC, with the consent of the Director of Lands under Special Condition 31(g) of the New Grant, assigned those shares to P;

(d)  Those 650 undivided shares allocated to the “Common Areas and Facilities” were originally held by KCRC.  That remained so until 31 January 1989 when KCRC, with the consent of the Registrar General (Land Officer) under Special Condition 31(g) of the New Grant, assigned those shares to P, P being the manager of the Estate at the time. 

20.Some of those terms and descriptions set out in the table above to which undivided shares were allocated, and certain other related ones, are defined in the DMC as follows:

(a)  “Residential Accommodation”[9]:

“ means such parts of the Development constructed or to be constructed for residential purposes in accordance with the Building Plans”;

(b)  “Commercial Accommodation”[10]:

“ means such parts of the Development constructed or to be constructed for commercial purposes in accordance with the Building Plans”;

(c)  “Reserved Commercial Areas”[11]:

“ means such portions of the Commercial Accommodation as are now or may from time to time be used as retail shopping areas and are required to be dealt with in accordance with Special Condition (31)(f) and (g) of the Conditions”;

(d)  “Parking Areas”[12]:

“ means such spaces, car ports, ramps, driveways or areas provided in or upon the Lot or any Buildings or structures erected or to be erected on the Lot the use of which is or will be set aside or reserved for the parking of private cars and light vans or for the storage of motor vehicles …”;

(e)  “Government Accommodation”[13]:

“ means the transport interchange facilities …provided and constructed in accordance with Special Condition (9) …”;

(f)  “LRTS Complex”[14]:

“ means the light rail transit system terminus and interchange area … provided and constructed in accordance with Special Condition (8) …”;

(g)  “Retained Areas”[15]:

“ means all areas within the Lot or the Buildings not forming part of the Residential Units, the Commercial Accommodation, the Parking Areas, the LRTS Complex, the Government Accommodation, the Common Areas and Facilities or those which are or will be included in the Common Areas and Facilities or which have been or will be assigned for the exclusive use and enjoyment of any individual Owner”;

(h)  “Common Areas and Facilities”[16]:

“ means collectively the Development Common Areas and Facilities, the Commercial Common Areas and Facilities, the Residential Common Areas and Facilities and the Pedestrian Footbridge”;

(i)  “Development Common Areas and Facilities”[17] means and includes in effect all passages, roadways, areas, systems, devices or facilities for common use and benefit of the Development but

“ …EXCLUDING the Residential Common Areas and Facilities, the Commercial Common Areas and Facilities and such areas within the Development in respect of which the exclusive right and privilege to hold, use, occupy and enjoy the same belongs to any particular Owner and such facilities within the Development serving only any particular Owner and such areas, systems, devices and facilities within the Development serving or intended for the common use and benefit of the LTRS Complex and the Government Accommodation…”;

(j)  “Commercial Common Areas and Facilities”[18] (with emphasis added):

“ means and includes such of the entrances, lift lobbies, loading and unloading areas, refuse station, refuse chutes, switch rooms, transformer rooms, pump rooms, machine rooms, hopper rooms, fan rooms, BTM rooms, store rooms, management rooms and/or counters, meter rooms, air‑conditioning plant rooms and areas, and such of the escalators, lavatories, flower beds, landscaped flat roofs, water tanks, sprinklers, drains, channels, sewers, meters, transformers, lighting, salt and fresher water intakes and mains, Central Air‑Conditioning System, wires, cables and other facilities whether ducted or otherwise through which fresh or salt water, sewage, gas, electricity and other services are supplied to the Commercial Accommodation, pumps, tanks, sanitary fittings, electrical installations, fittings, equipment and apparatus, fire prevention and fighting equipment and apparatus and such other areas and any other systems, devices and facilities provided or installed in the Development intended for the common use and benefit of the Owners and occupiers of the Commercial Accommodation and their bona fide visitors and such other areas within the Lot and such other systems, devices and facilities within the Development as are now or from time to time designated by the First Owner for common use and benefit of the Commercial Accommodation in accordance with these presents but EXCLUDING the Development Common Areas and Facilities and the Residential Common Areas and Facilities and such areas within the Development in respect of which the exclusive right and privilege to hold, use, occupy and enjoy the same belongs to any particular Owner and such facilities within the Development serving only any particular Owner;”;

(k)  “Residential Common Areas and Facilities”[19] means and includes in effect all passages, roadways, areas, systems, devices or facilities:

“ provided or installed in the Development intended for the common use and benefit of the Owners and occupiers of the Residential Accommodation and their bona fide visitors … EXCLUDING the Development Common Areas and Facilities and the Commercial Common Areas and Facilities and such areas within the Development in respect of which the exclusive right and privilege to hold, use, occupy and enjoy the same belongs to any particular Owner and such facilities within the Development serving only any particular Owner.”

21.The DMC contains, inter alia, the following further relevant provisions:

(a)  Clause 37[20], inter alia, that:

“ The management of the Estate shall subject to Clause 10 of this Deed be undertaken by the Manager throughout the residue of the term agreed to be granted under the Conditions and during any renewal or continuation thereof from the date of issue of the first Occupation Permit for any part or parts of the Estate ... In addition to the other powers expressly provided in this Deed, the Manager shall have full and unrestricted authority to do all such acts and things as may be necessary or expedient for or in connection with the Estate and the management thereof ...”

(b)  Clause 10[21], inter alia, that:

“ The parties hereto have agreed with the Manager for the Manager to undertake the management, operation, servicing, maintenance, repair, renovation, replacement, security and insurance of the Estate ... from the date of issue of the first Occupation Permit for any of the Buildings or any part or parts thereof and shall continue until terminated by the Manager giving to the owners not less than three (3) calendar months’ notice in writing to terminate the same or in the event that it is wound up or has a receiving order made against it ...”

22.By an assignment dated 2 December 2007, KCRC assigned to P the 5,330 undivided shares in Pierhead Garden “TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT the Commercial Accommodation (including the Reserved Commercial Areas) (as defined in the [DMC] of the Development”[22].

23.Paragraph 7 of the 7^th Schedule to the BMO relating to termination of manager’s appointment by owners’ corporation is applicable to the DMC.

24.On 5 September 2011, and in exercise of its power under paragraph 7 of Schedule 7 of the BMO, D gave notice to P that P’s appointment as manager of the Development would be terminated on 31 December 2011.

25.On 1 January 2012, D appointed Guardian Property Management Limited (“Guardian”) as the new manager in place of P.

26.Also on 1 January 2012, P appointed Urban Property Management as P’s agent for managing the Commercial Accommodation.

27.On the Adjoining Platform, a guard house has been erected (the “Guard House”).  Prior to 31 December 2011, the Guard House was occupied by P.  On 1 January 2012, D took over the occupation of the Guard House and had it occupied by security guards engaged by it or Guardian.

28.There is no serious dispute that between around September 2012 and April 2013, D had closed down at different times various parts of the 1/F Driveway.  The relevant events have for pleading purposes been presented in four stages of closure, (the “1^st to 4^th Stages of Closure”, and collectively the “4 Stages of Closure”).  Much of what happened have been agreed and set out in the Agreed Chronology, which I reproduce with some modifications as follows:

Date	Event
6.09.2012	It is reported that a lady had tripped while walking over that part of the 1/F Driveway adjoining Loading Bay 5, and had fell and injured herself
The 1st Stage – 27 September 2012 to 10 December 2012
27.09.2012	IO cordoned off and closed down half of the 1/F Driveway adjoining Loading Bays 5‑8
28.09.2012	1/F Driveway adjoining Loading Bays 5-8 reopened
09.10.2012	D posted up on 9 October 2012 stating that the repair works to the 1/F Driveway would commence on 10 October 2012
20.10.2012	IO only permitted vehicles of less than 3 metres in height were to enter the car park
26.10.2012	IO closed down the part of the 1/F Driveway adjourning Loading Bays 5-10 (“Closed Area 1”) IO only permitted vehicles of less than 2 metres in height to enter into the Development
29.10.2012	P demanded Guardian to allow goods vehicles of height of 3 metres to use the loading bays on the first floor
30.10.2012	IO through Guardian only permitted use of Lift 6 by P’s tenants to deliver goods to the shopping mall
05.11.2012	IO only permitted vehicles of less than 3 metres in height but less than 6 metres in length to enter the Development
14.11.2012	Lift 6 was closed down
06.12.2012	By notices posted up in the vicinity of Loading Bays 1-10 and on the adjourning platform on 6 December 2012, D alleged that the ownership of Loading Bays 1-10 and the adjourning platform vested in D
The 2nd Stage – 11 December 2012 to end February 2013
11.12.2012	A goods vehicle of over 3 metres height had entered the Development causing some slight denting to one of the cable trays installed at the ceiling above Loading Bay 4.
11.12.2012	IO closed down the entirety of the 1/F Driveway adjoining Loading Bays 3‑10 (“Closed Area 2”)
12.12.2012	IO notified P that IO would forthwith arrange for repair of works on 1/F Driveway and ostensibly commenced works by digging up the surface parts of the 1/F Driveway
13.12.2012	IO instructed Guardian to only permit private cars and mini‑vans to enter the Development
19.12.2012	P received a letter from the IO asking about the substances making up the concrete slab of the 1/F Driveway, stating that if the information was not provided within 7 days it would send some samples to the laboratory for testing.
12.2013 – 01.2013	There was a standstill and no progress had been made on the repairs throughout December 2012 and January 2013 on the basis that sample of construction materials of the 1/F Driveway had to be sent to the laboratory to test for compatibility with human health
04.01.2013	Lift 6 reopened
02.2013	Contractor of P secured the dented cable tray above Loading Bay 4
05.02.2013	Repair works to the portion of the 1/F Driveway adjoining Loading Bays 8-9 were completed
06.02.2013	All repair works to the 1/F Driveway adjoining the Loading Bays 1‑4 were completed
The 3rd Stage – 1 March 2013 to 13 March 2013
01.03.2013	A small hole around the size of a HK$5 coin (the “Hole”) was found on the 1/F Driveway
06.03.2013	The dented cable tray above Loading Bay 4 had been replaced and all the repair works in relation to the cable tray were completed
06.03.2013	MTRC carried out emergency procedures to remove the loose concrete identified around the Hole and installed protective netting under the Hole
08.03.2013	The Buildings Department issued a letter to the IO requiring the IO to repair the floor of the 1/F Driveway around the Hole
11.03.2013	IO closed down half of the entire 1/F Driveway adjoining Loading Bays 1-10 (“Closed Area 3”)
The 4th Stage – from 13 March 2013 to early April 2013
14.03.2013	IO expanded the closure area further to outside Loading Bay 1 (“Closed Area 4”)
13-14.03. 2013	IO attempted to stop P’s tenants from using P’s 6 Car Parking Spaces to load and unload goods for onward delivery to their shop premises
18.03.2013	IO installed a metal pole immediately outside Loading Bay 1
09.04.2013	P commenced present Action and made application for interlocutory injunction against the IO
12.04.2013	Undertaking given by the IO to reopen part of the 1/F Driveway adjoining Loading Bays 1‑4
13.04.2013	The part of the 1/F Driveway adjoining Loading Bays 1‑4 was reopened by the IO

29.At each of the 4 Stages of Closure, parties exchanged extensive correspondence. 

30.In the meantime, by letter dated 5 December 2012 from the District Lands Office, the Government made inquiry as to whether the Guard House was in compliance with the New Grant. 

31.On 9 April 2013, P commenced this action and made an application for interlocutory injunction against D.

32.On 12 April 2013, D gave an undertaking to reopen part of the 1/F Driveway adjoining Loading Bays 1‑4.  D did so on the following day.

33.On or about 22 December 2014, the side of the Hole at the floor of the 1/F Driveway was repaired and the part of the 1/F Driveway adjoining Loading Bays 5‑10 was reopened.

D.   The parties’ pleaded cases

D.1.   P’S CLAIM

34.In its Re‑Amended Statement of Claim (“RASOC”):

(a)  P makes reference to a number of provisions in the New Grant and the DMC;

(b)  P’s main claim, at Section (B.3) of the RASOC, is that it is the legal and beneficial owner of Loading Bays 1‑10 and the Adjoining Platform with right and privilege to hold, use, occupy and enjoy the same;

(c)  P pleads, in the alternative at Section (B.4) of the RASOC, that if it is not the owner of Loading Bays 1‑10 and the Adjoining Platform:

(i)  it as the registered and beneficial owner of the undivided shares allocated to the “Commercial Accommodation” is entitled to:

(1)  the use and control of Loading Bays 1‑10 and the Adjoining Platform;

(2)  the right to manage the same; and

(3)  the right of way over the “Development Common Areas and Facilities” in accessing to and from the same;

(ii)  notwithstanding D’s service of notice on 5 September 2011 upon P terminating the latter’s appointment as manager from 31 December 2011, P retains as sole owner of the “Commercial Accommodation” the exclusive use and control as well as the right to manage Loading Bays 1‑10 and the Adjoining Platform or what may fall within the definition of the “Commercial Common Areas and Facilities” (if any);

(iii)  further and in any event, only P as the sole owner of the undivided shares allocated to the “Commercial Accommodation”, and its tenants, licensees etc are entitled to use Loading Bays 1‑10 and the Adjoining Platform for all purposes connected with the proper use and enjoyment of the “Commercial Accommodation”, and such right to use is not held or shared in common with any other owner of the Development;

(d)  P further avers at Section (B.5) of the RASOC that as the owner of the undivided shares allocated to the “Commercial Accommodation”, P and its tenants are entitled to pass and repass over and along and to use the 1/F Driveway for all purposes connected with the proper use and enjoyment of the “Commercial Accommodation”, including for accessing Loading Bays 1‑10 and the Adjoining Platform to load and unload goods for delivery to the tenants and licensees of the “Commercial Accommodation” for their business operations;

(e)  P avers that since September and October 2012, D has without proper basis or justification obstructed or otherwise interfered with P’s right of way over the 1/F Driveway by closing down the same in stages (ie the 4 Stages of Closure summarized above), thereby preventing P and its tenants from accessing and/or using Loading Bays 1‑10 altogether.  D has taken various further steps directed solely at impeding and obstructing P’s attempts to gain access to and use and enjoy Loading Bays 1‑10 for P’s legitimate business purposes and those of its tenants;  

(f)  In addition, P avers that D has remained in wrongful occupation of the Guard House and refused to vacate the same;

(g)  P seeks, inter alia:

(i)  a declaration that P is the legal and/or beneficial owner of Loading Bays 1‑10 and the Adjoining Platform;

(ii)  alternatively, a declaration that P has the exclusive right to use and control Loading Bays 1‑10 and the Adjoining Platform;

(iii)  further or alternatively, a declaration that P has the right to manage Loading Bays 1‑10 and the Adjoining Platform under the terms of the DMC;

(iv)  a declaration that P has the right and is entitled to use the 1/F Driveway under the terms of the DMC;

(v)  an injunction against D to restrain trespass, nuisance etc;

(vi)  an order directing D to vacate the Guard House;

(vii)  damages to be assessed for nuisance and trespass, and alternatively breach of the DMC (in particular clauses 3 and 7).

D.2.   D’S DEFENCE AND COUNTERCLAIM

35.In its Re‑Amended Defence and Counterclaim (“RAD&C”):

(a)  D also refers to a number of provisions in the New Grant and DMC;

(b)  In respect of Section (B.3) of the RASOC, D avers[23] that:

(i)  under the DMC, KCRC held the 650 undivided shares for the “Common Areas and Facilities” on trust for all owners of the Development;

(ii)  even if P is the registered owner of Loading Bays 1‑10 and the Adjoining Platform, these areas are held by P on trust for all owners of the Development;

(iii)  P has never had exclusive use of Loading Bays 1‑10 and the Adjoining Platform.  Any exclusive control which P might have had was only the consequence of P discharging its duty as the manager;

(c)  In respect of Section (B.4) of the RASOC, D avers[24] that Loading Bays 1‑10 and the Adjoining Platform are part of the “Common Areas and Facilities” and that whilst P may use those areas as other beneficial owners, P has no right to control or manage them when it ceased to be manager as from 1 January 2012:

(d)  In respect of Section (B.5) of the RASOC, D denies that Loading Bays 1‑10 and the Adjoining Platform are part of the “Commercial Accommodation”, and pleads that under the terms of the DMC, the right to pass and repass the 1/F Driveway is always subject to the use of the manager;

(e)  D admits most of P’s pleas regarding the 4 Stages of Closure of the 1/F Driveway, but avers that the 1/F Driveway was closed down in different stages for safety precaution and repairs and inspection of the condition of the floor slab to prevent accident.  According to D, P insisted on reopening the 1/F Driveway without alleviating the safety concern of or raised by D;

(f)  Regarding the Guard House, D avers that it was erected by KCRC or P prior to 31 December 2011.  It was used by P when it was manager prior to 31 December 2011.  Upon the appointment of Guardian as manager in January 2012, P shared with Guardian the use of the Guard House. Although P mentioned dismantling the Guard House, no further action has been taken by P and it is still using and occupying the Guard House together with Guardian;

(g)  In support of its counterclaim for a declaration that Loading Bays 1‑10 and the Adjoining Platform form part of the “Common Areas and Facilities”, D refers to the definition in the DMC that loading and unloading areas designated for the common use and benefit of the “Commercial Accommodation” are part of the “Commercial Common Areas and Facilities”, which in turn are part of the “Common Areas and Facilities”;

(h)  D further avers that upon the termination of P as manager, the 650 undivided shares allocated to the “Common Areas and Facilities” ought to be transferred to D.  D counterclaims for an order directing P to do so.

D.3.  P’S REPLY AND DEFENCE TO COUNTERCLAIM

36.In its Re‑Amended Reply and Defence to Counterclaim (“RAR&DC”), P admits that it holds the 650 undivided shares allocated to the “Common Areas and Facilities” as trustee for all the owners of the undivided shares for the time being.  It however avers that Loading Bays 1‑10 and the Adjoining Platform do not form part of the “Commercial Common Areas and Facilities” or the “Common Areas and Facilities” within the meaning of the DMC.

37.P also avers that any use of or purported exercise of the alleged power of management to close down the 1/F Driveway by the manager shall not wrongfully or unreasonably interfere with P’s property rights, including the rights to use the same for all purposes connected with the proper use and enjoyment of the “Commercial Accommodation”.

38.P further denies that it has shared or otherwise used the Guard House since 31 December 2011.

39.In respect of D’s counterclaim for the transfer of the 650 undivided shares allocated to the “Common Areas and Facilities”, P pleads that in the absence of any release from or modifications to an undertaking it provided to the Government dated 11 October 1988 (the “Management Undertaking”) or the Special Conditions in the New Grant, any purported transfer of the said 650 undivided shares by P would render the interests of P and that of its successors and assigns at risk of forfeiture. 

E.      The issues

40.The issues are, as agreed between the parties, as follows:

(a)  Issue 1 — Whether P is the legal and beneficial owner of Loading Bays 1‑10 and the Adjoining Platform;

(b)  Issue 2 — Whether P is entitled to the exclusive use and control of Loading Bays 1‑10 and the Adjoining Platform;

(c)  Issue 3 — Whether P is entitled to the right to manage Loading Bays 1‑10 and the Adjoining Platform;

(d)  Issue 4 — Whether Loading Bays 1‑10 and the Adjoining Platform are part of the common areas and facilities of the Development;

(e)  Issue 5 — Whether P is entitled to enjoy the right of way over or to use the 1/F Driveway for accessing Loading Bays 1‑10 and the Adjoining Platform under the terms of the DMC;

(f)  Issue 6 — Whether D is in wrongful occupation of the Guard House;

(g)  Issue 7 — Whether D has wrongfully interfered with P’s (i) rights as the owner of, (ii) rights to the exclusive use and control of, (iii) rights to manage, and/or (iv) right of way or rights to use the 1/F Driveway for accessing, Loading Bays 1‑10 and the Adjoining Platform;

(h)  Issue 8 — Whether P is entitled to the injunctive reliefs sought in prayers (5), (6) and (7) of the RASOC;

(i)  Issue 9 — The amount of special and general damages for nuisance, trespass, breach of the DMC and wrongful interference with P’s property rights payable by D to P;

(j)  Issue 10 — Whether P is liable, and shall be ordered, to transfer to D the 650 undivided shares allocated to the “Common Areas and Facilities” in the DMC.

F.      The witnesses

41.P called Wu Hei Catherine (“Wu”).  She is an Assistant Shopping Centre Manager of MTRC.  Her statement (“Wu/WS”) is dated 14 August 2017 which she adopted as her evidence‑in‑chief.

42.Wu was cross‑examined.  Her credibility was not subject to any serious challenge.  Mr Khaw in fact started his cross‑examination by telling Wu that there were not many facts in dispute between parties in this case, and that there were just a few matters he wished to clarify with her.

43.I have considered Wu’s evidence.  I find that her evidence is inherently probable, detailed, materially consistent (both internally and externally), and is supported by contemporaneous records and documents.  I find her to be an honest and reliable witness.  I accept her evidence.

44.D called 盧偉強(“Lo”).  He is the Chairman of D.  His statement in Chinese (“Lo/WS”) is dated 14 July 2017 which he adopted as his evidence‑in‑chief.

45.Lo was cross‑examined.  I find that there are material areas in his evidence which is not supported by the records, and do not appear in his witness statement.  I will set them out below when I come to the Issues. 

46.In so far as there is any dispute of facts and any difference between their evidence, this Court prefers the evidence of Wu.

47.I will refer to their evidence below when necessary.

48.In respect of Wu’s evidence, I record that immediately before the commencement of her oral evidence, Mr Khaw raised objections to the admission of §§33.1 to 33.5, 117 to 119, and 128 to 135 of Wu/WS on the basis that they were not relevant to any pleaded issue.  I allowed the admission of those paragraphs on a de benne esse basis.  At the very end of the trial after Mr Khaw had made his reply on the law, Mr Khaw upon this Court’s request for clarification confirmed that he was no longer maintaining any objection regarding the admissibility of those parts of Wu’s evidence, though he maintained his submissions that P should be confined to its pleaded case, and that subsequent conduct should not be considered for the interpretation of the DMC.

G.   Issue 1 and Issue 4

49.Issues 1 and 4 are related and may be taken together.  The combined question is whether Loading Bays 1‑10 and the Adjoining Platform are owned by P (as P contends) or form part of the common areas (as D contends).

G.1.  THE APPLICABLE LEGAL PRINCIPLES

50.Parties agree that the resolution of these 2 issues turns on the proper interpretation of the DMC.  That must be right: Chow Sai Ping v Chan Yam King [2013] 2 HKLRD 280 at §9 (per Barma JA).

51.The applicable legal principles in interpreting a DMC are not in serious dispute, and may be summarized as follows:

(a)  A DMC is a contract which runs so as to bind all owners and their assignees and the manager: Grande Properties Management Ltd v Sun Wah Ornament Manufactory Ltd (2006) 9 HKCFAR 462, §2 (per Chan PJ);

(b)  The provisions of the deed are usually aimed at facilitating the management of the building by reducing conflicts among co‑owners on the one hand and preventing abuse by the manager and the majority owner on the other.  Such conflicts should be resolved by a purposive construction and common sense application of the relevant provisions of the deed and the DMC: Grande Properties Management, §2 (per Chan PJ);

(c)  The construction of a document is not a game with words.  It is an attempt to discover what a reasonable person would have understood the parties to mean.  This involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve.  The overriding objective is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean: Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279 at 296C — 297H (Lord Hoffmann NPJ); Smart Essence Development Ltd v Hong Kong Housing Authority, unrep, HCA 450/2016 (28 April 2016), per DHCJ Paul Lam SC at §§44 and 47 citing Multi Link Leisure Developments Limited v North Lanarkshire Council [2010] UKSC 47 at [11];

(d)  In commercial contracts, the construction of the contract should generally accord with commercial common sense: Tai Fat Development (Holding) v Incorporated Owners of Gold King Industrial Building, unrep, CACV 22/2014 (23 December 2014) at §16 (per Barma JA);

(e)  The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear. But on the other hand, the Court must be alive to the possibility that one side may have agreed to something which with the benefit of hindsight may not have served his interest: Building Authority v Appeal Tribunal (Buildings) (ENM Holdings Ltd) (2018) 21 HKCFAR 194 at §54;

(f)  When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties: Smart Essenceat §46 (DHCJ Paul Lam SC).  Subsequent conduct of the parties is generally inadmissible when construing a contract: SNE Engineering Co Ltd v Chim Kee Machinery Co Ltd, unrep, CACV 101/2016 (11 July 2017) per G Lam J at §52 citing James Miller & Partners Ltd v Whitworth Street Estate Ltd [1970] AC 583 at 603; Marble Holding Ltd v Yatin Development Ltd (2008) 11 HKCFAR 222, §22; The New China Hong Kong Group Ltd (in liquidation) v AIG Asian Infrastructure Fund LP, unrep, CACV 24/2008 (12 February 2009), §78; and

(g)  While construing a DMC, the Court is entitled to consider other relevant documents such as the first assignment, the government grant and the approved building plans: Tai Fat Developmentat §17.

G.2.  PARTIES’ RESPECTIVE SUBMISSIONS

52.In gist, Ms Eu’s submissions are as follow:

(a)  KCRC as the developer was the original owner of the entire estate;

(b)  5,330 undivided shares have been allocated by the DMC to the “Commercial Accommodation (including the Reserved Commercial Areas)”;

(c)  KCRC and subsequently P, as the registered owner of those 5,330 undivided shares, was and is entitled to the exclusive use of the “Commercial Accommodation (including the Reserved Commercial Areas)”;

(d)  Loading Bays 1‑10 and the Adjoining Platform are part of the Commercial Accommodation as defined in the DMC;

(e)  P therefore owns Loading Bays 1‑10 and the Adjoining Platform as part of the Commercial Accommodation and is entitled to the sole and exclusive right and privilege to hold, use, occupy and enjoy the same;

(f)  The definition of “Commercial Common Areas and Facilities” includes “loading and unloading areas”.  Those descriptions prima facie refer to Loading Bays 1‑10 and the Adjoining Platform[25].  But that same definition contains exclusionary provisos (“Exclusionary Provisos”), namely:

“ such areas within the Development in respect of which the exclusive right and privilege to hold, use, occupy and enjoy the same belongs to any particular Owner and such facilities within the Development serving only any particular Owner”;

(g)  Loading Bays 1‑10 and the Adjoining Platform fall within both of those Exclusionary Provisos, therefore fall out of “Commercial Common Areas and Facilities”;

(h)  The interpretation P is contending for is supported by the factual background of the DMC and the terms of all the relevant documents as a whole, accords with the purpose of the DMC, accords with commercial common sense and surrounding circumstances, and accords with fairness.  

53.In gist, Mr Khaw’s submissions are as follows:

(a)  “Commercial Accommodation” is only defined in broad and general terms.  In contrast, the definition of “Commercial Common Areas and Facilities” specifically includes “loading and unloading areas”, and hence Loading Bays 1‑10 and the Adjoining Platform;

(b)  “Commercial Common Areas and Facilities” are within the definition of “Common Areas and Facilities”, which have been allocated 650 undivided shares;

(c)  In order for P to prove that it owns Loading Bays 1‑10 and the Adjoining Platform, it has to demonstrate that they do not fall within “Commercial Common Areas and Facilities”, which P cannot;

(d)  The Exclusionary Provisos has no application given in particular section 2 of the BMO.

G.3.  DISCUSSION

54.Mr Khaw submits that[26] the first and fundamental question to ask should be whether Loading Bays 1‑10 and the Adjoining Platform falls within the definition of “Commercial Common Areas and Facilities”.  If they do, that would have nothing to do with P’s ownership of the 5,330 undivided shares allocated to the Commercial Accommodation.

55.Ms Eu on the other hand submits that the starting point should be whether Loading Bays 1‑10 and the Adjoining Platform comes within the definition of “Commercial Accommodation”, and that the correct way of looking at the matter is whether the DMC evidences an agreement for P as the sole commercial to have the exclusive rights over Loading Bays 1‑10 and the Adjoining Platform[27].

56.I do not find the disagreement on the approach material.  I can see why parties would urge me to start at a point regarded as advantageous to their own case.  But adopting the approach explained in Jumbo King, this Court should bear firmly in mind the concept of “unity of possession”, and that when construing the DMC, this Court has to have regard to the deed as a whole, its language, the factual and legal background against which it was concluded, and the practical objects which it was intended to achieve.  Issues 1 and 4 will have to be considered in the round.

57.The starting point is the New Grant.  KCRC was the grantee.  As required and pursuant to the New Grant, KCRC became the developer of the Lot.

58.When things first started, KCRC was the developer and owner of the entire Development.  Subject to the terms of the New Grant, KCRC initially owned everything, and was in the position to reserve all interests in the Development unto itself.

59.Special Condition 4(a) governs the users of the entire Development.  The Development could not be used for any purpose other than “non‑industrial (excluding godown) purposes”.

60.Whilst “Non‑industrial (excluding godown) purposes” includes both “residential” and “retailing” uses, which parts of the Development can be used for which of the two users are regulated:

(a)  Special Condition (4)(b)(ii) stipulates that no part of the 1^st Floor level “shall be used for any purpose other than non‑industrial (excluding residential and godown) purposes”, whilst

(b)  Special Condition 4(b)(iv) permits only private residential purpose for the part of the Development above podium level.

61.The intended demarcation between “residential” and “retailing” uses are further made obvious by Special Condition 36(b):

(a)  Under Special Condition 36(b), the provision of loading spaces is required;

(b)  Two types of such spaces are required to be provided — one type is for the use of domestic blocks, and the other for the use of retailing spaces;

(c)  The provision rates of the two different types are different;

(d)  Their required locations are also different. Loading spaces for the retailing of goods shall “abut a goods handling platform or area which must be provided and so laid out that goods loaded or unloaded from such platform or areas may be transported within the lot or from the retailing areas both vertically and horizontally”;

(e)  The loading spaces so provided shall not be used for any other purpose.  That must mean that the 2 types of loading spaces cannot be used interchangeably, otherwise, the required provision rates and locations specifically regulated in the Special Conditions will become meaningless.

62.I have also set out Special Condition (31)(f) which requires the allocation of undivided shares to inter alia “the whole of the retail shopping areas at the first floor level (hereinafter referred to as ‘the Reserved Commercial Areas’)”.

63.I agree with Ms Eu[28] that it is clear from Special Conditions 4(b)(ii), 4(b)(iv), 36(b) and 31(f) that the New Grant provides for and contemplates the development of, distinct from any spaces for residential uses, retailing spaces or areas at the 1^st Floor level together with loading and unloading bays and adjoining platform to serve the retailing spaces, and that those loading and unloading bays and adjoining platform are not to be used for any other purposes.

64.The First Assignment and the DMC were executed simultaneously[29].

65.In the DMC:

(a)  5,330 undivided shares are allocated to “Commercial Accommodation (including the Reserved Commercial Areas)”;

(b)  650 undivided shares are allocated to “Common Areas and Facilities”.

66.I have set out above the definitions of “Commercial Accommodation”, “Reserved Commercial Areas”, “Common Areas and Facilities”, “Development Common Areas and Facilities”, “Commercial Common Areas and Facilities” and “Residential Common Areas and Facilities”. 

67.Given the terms of those definitions, and in particular the existence of the Exclusionary Provisos, the questions as to whether Loading Bays 1‑10 and the Adjoining Platform fall within “Commercial Accommodation” or “Commercial Common Areas and Facilities” are interlinked.

68.I have been informed that there is no building plan delineating what falls within “Commercial Accommodation”[30], and that one can only refer to the definition when deciding what it comprises.

69.The following matters tend to support the view that Loading Bays 1‑10 and the Adjoining Platform were and were intended to be constructed for commercial purposes:

(a)  the distinctly regulated permitted users of the different parts of the Development as I have explained above;

(b)  the exclusion of residential purpose as a permitted user for the 1^st Floor level by Special Condition 4(b)(ii);

(c)  the specific requirements under Special Condition (36)(b) to provide for two different types of loading and unloading spaces with different locations and provision rates;

(d)  the number of Loading Bays 1‑10 built (ie 10) being consistent with the stipulated provision rate applicable to retailing spaces (9,300 / 930 = 10); and

(e)  Loading Bays 1‑10 and the Adjoining Platform being situated on the 1^st Floor (lower level) immediately adjacent to the shopping mall (see the “1^st Floor Plan Commercial & Car Park”[31]), as required by Special Condition (36)(b).

70.I do not accept Mr Khaw’s submissions that because the definition of “Commercial Common Areas and Facilities” refers expressly to “loading and unloading areas”, one should conclude on that basis “alone”[32] that Loading Bays 1‑10 and the Adjoining Platform form part of the “Commercial Common Areas and Facilities”:

(a)  In my view, that approach advocated by Mr Khaw is inconsistent with the one explained in Jumbo King that the DMC has to be read as a whole against the factual and legal background against which it was concluded and the practical objects which it was intended to achieve;

(b)  Mr Khaw’s approach in fact does not even have regard to the Exclusionary Provisos contained in the very same definition;

(c)  One main thrust of Mr Khaw’s argument in this regard is that the specific reference to “loading and unloading areas” in the definition of “Commercial Common Areas and Facilities” should prevail over the definition of “Commercial Accommodation” which he submits is “in rather general terms”[33];

(d)  I do not accept Mr Khaw’s contention that the definition of “Commercial Accommodation” is broad or general.  It is an important definition which defines what P owns.  Its scope is clear when considered in the light of the terms of the New Grant and the DMC as a whole.  As submitted by Ms Eu during her oral closing submissions, that definition is not vague, not unworkable, not unreasonable, consistent with the New Grant, and makes commercial sense.  I do not accept Mr Khaw’s contention that it should be “trumped” by the definition of “Commercial Common Areas and Facilities”.

71.Relevant to the Exclusionary Provisos are the following considerations:

(a)  As I have observed above, when things first started, KCRC was the developer and owner of the entire Development;

(b)  Clause 1 of the DMC[34] provides that subject to the New Grant, the DMC and the interest, right and interest assigned or granted by the First Assignment:

“ [KCRC] shall at all times hereafter … have the sole and exclusive right and privilege to hold, use, occupy and enjoy to the exclusion of the First Assignee the whole of the Lot and the Development …”;

(c)  KCRC was the owner of, amongst others, the 5,330 undivided shares allocated to the “Commercial Accommodation (including the ‘Reserved Commercial Areas’)”;

(d)  By the First Assignment, save the residential flat assigned to the first purchaser, KCRC reserved unto itself “such exclusive rights and privileges as are specified and contained in the [DMC]”[35];

(e)  I have set out Special Conditions (31)(f), (31)(g), 32(a) and 32(b) above.  I accept Ms Eu’s submissions[36] that the combined effect of those conditions is that:

(i)  The undivided shares allocated to the “Common Areas and Facilities” and the “Commercial Accommodation” should be held by KCRC, and may only be assigned by KCRC with the prior consent of the Registrar General (Land Officer);

(ii)  Even with such consent, only “the whole of the said undivided shares (but not a part thereof)” of the said undivided shares may be assigned.  The permitted assignee would have to be a company whose principal business is that of estate management, and would have to give an undertaking to the Government that it shall manage and maintain the same in accordance with the New Grant;

(f)  The DMC must be interpreted at the time it was made.  At the time the DMC was made:

(i)  the Commercial Accommodation was, and was intended to be solely owned.  There was no need to have any commercial common areas;

(ii)  I accept Ms Eu’s submission that there is nothing unusual in having a definition but with nothing that falls into it;

(iii)  if the Commercial Accommodation were to be sub‑sold in the future with the requisite permission, a sub‑DMC can be entered into;

(iv)  Loading Bays 1‑10 and the Adjoining Platform were and intended to serve one single owner, ie KCRC, and there was no other owner with whom the sole commercial owner had to share the use of Loading Bays 1‑10 and the Adjoining Platform;

(g)  I refer again to the definition of “Commercial Common Areas and Facilities”.  In addition to “loading and unloading areas”, it includes a long list of other areas, systems, devices and facilities.  Objectively, it makes little commercial sense for the parties and for KCRC as the developer to have intended that everything in that long list was to form part of the “Commercial Common Areas and Facilities” so as to give the manager management rights over them.

72.In support of D’s interpretation, Mr Khaw relies on the following matter:

(a)  Mr Khaw refers[37] to Tai Fat Development wherein all three levels of court (ie the Court of First Instance, the Court of Appeal and the Court of Final Appeal) held that given the express inclusion of “loading and unloading areas” in the definition of “Common Areas” and the express reference to 13 car parking spaces under “Loading and Unloading Areas” in the First Schedule, the 13 car parking spaces formed part of the common areas of the building;

(b)  In my view, the decisions in Tai Fat Development were factual.  On the interpretation of a deed of mutual covenants, the reference to a previous decision involving a deed with different terms and executed under a different factual matrix is of little assistance;

(c)  Mr Khaw emphasizes[38] the wording of the definition of “Commercial Common Areas and Facilities”.  He submits that they are “intended for the common use and benefit of the Owners and occupiers of the Commercial Accommodation and their bona fide visitors”;

(d)  While the definition does contain those words, those word themselves are subject to the Exclusionary Provisos, and it remains a matter of interpretation as to whether Loading Bays 1‑10 and the Adjoining Platform fall within those Provisos;

(e)  Mr Khaw relies on the definition of “common parts” in section 2 of the BMO and Incorporated Owners of Man Hong Apartments v Kwong Yuk Ching & Ors [2001] 3 HKC 116 at 124G in support of his argument that “an area serving only any particular Owner must refer to an area which has been expressly and specifically reserved in an instrument registered at the Lands Registry”[39], but that “there is no provision in either in the First Assignment or in the DMC which has expressly reserved the [Loading Bays 1‑10 and the Adjoining Platform] for the exclusive use and enjoyment of an individual owner”[40];

(f)  In that regard, I accept Ms Eu’s submissions that neither the BMO nor Incorporated Owners of Man Hong Apartments says that the exclusive rights to the “areas” or “facilities” have to be “expressly” reserved or identified in a registered document.  The issue remains a matter of the construction of the relevant title documents, and it is not necessary for the relevant parts to be “expressly” mentioned — see by way of illustration Jumbo King, and So John & Anor v Lau Hon Man & Ors [1993] 2 HKC 356.

73.On the other hand, I accept Ms Eu’s submissions[41] that P’s approach and interpretation:

(a)  give regard to the provisions of the DMC as a whole read in the light of the New Grant and the First Assignment;

(b)  accord with one of the aims of the DMC, ie to facilitate the management of the building by reducing conflicts among co‑owners)

(c)  accord with the purposive and common sense approach that should be adopted in the interpretation of its terms, in the sense that regarding the long list of the other areas, systems, devices and facilities in the definition of “Commercial Common Areas and Facilities” will lead to endless disputes over their management and maintenance;

(d)  accord with commercial common sense and surrounding circumstances; and

(e)  are consistent with the view that where certain parts of the building are being enjoyed and used by a single owner, they ought not be regarded as common parts or common areas — see Metro City Management Limited v Tsui Fee Hung Vincent & Lam Wai Fun, HCA 4327/2003, 13 January 2005, at para 50; Metro City Management Limited v Tsui Fee Hung Vincent & Lam Wai Fun, CACV 328/2005, 6 June 2006, at paras 15‑16 (per Rogers VP) & para 61 (per Yuen JA); The Incorporated Owners of Westlands Garden v Oey Chiou Ling & Wong Fung Ling [2011] 2 HKLRD 421, at paras 35‑38; So John at 362F‑363C.

74.In the light of all of the above and having considered Issues 1 and 4 in the round, I am of the view that a reasonable person would have understood the parties of the DMC to mean that Loading Bays 1‑10 and the Adjoining Platform, intended and having been constructed for commercial purposes, are part of the “Commercial Accommodation” as defined in the DMC, that the ownership of the 5,330 undivided shares allocated to the “Commercial Accommodation (including the Reserved Commercial Areas)” carries with it the exclusive right to use, occupy and enjoy Loading Bays 1‑10 and the Adjoining Platform, that they fall within the Exclusionary Provisos and are excluded from the definition of “Commercial Common Areas and Facilities”, and that interest therein has been reserved unto the KCRC as the developer. 

75.By an assignment dated 2 December 2007, KCRC assigned to P the 5,330 undivided shares in Pierhead Garden “TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT the Commercial Accommodation (including the Reserved Commercial Areas) (as defined in the [DMC] of the Development”.  P has since then been the registered owner of the same.

76.Given my views above, the fact that P has been holding the 650 undivided shares allocated to the Common Areas and Facilities as trustee for all the owners of the undivided shares for the time being, which P in its RAR&DC accepts to be the case, has become irrelevant.

77.For the avoidance of doubt, I state that I have in construing the DMC not relied on any events that took place subsequent to its creation[42].

G.4.  CONCLUSIONS ON ISSUES 1 AND 4

78.I conclude that:

(a)  P is the legal and beneficial owner of Loading Bays 1‑10 and the Adjoining Platform; and

(b)  Loading Bays 1‑10 and the Adjoining Platform are not part of the Common Areas and Facilities of the Development.

H.   Issues 2 and 3

79.Following on from my conclusions on Issues 1 and 4, I hold that P as the registered owner of Loading Bays 1‑10 and the Adjoining Platform is also entitled to the exclusive use and control of the same, and is also entitled to the right to manage the same.

80.Given my conclusions on Issues 2 and 3, there is no need for me to rule on P’s alternative claim.  In deference to submissions made, I make the following observations:

(a)  P’s alternative case in this regard[43] is that even if Loading Bays 1‑10 and the Adjoining Platform fall within the definition of “Commercial Common Areas and Facilities”, the position remains that P, being the only owner of the “Commercial Accommodation”, is the only owner entitled to use them;

(b)  Conceptually, I do not find it easy to consider this alternative case of P’s.  It is run on the basis that the Court has ruled against P and has concluded that Loading Bays 1‑10 and the Adjoining Platform are common areas.  But in reaching that conclusion, the Court would have already concluded that, properly construed, the DMC intends that the Loading Bays 1‑10 and the Adjoining Platform are common areas so that other co‑owners have the right to use and enjoy them as such pursuant to the terms of the DMC.  That being the conclusion, when considering this alternative claim, other terms of the DMC will have to be construed consistently on that basis. My discussions below therefore will have to be understood in this light;

(c)  Ms Eu relies on Clause 3 read together with paragraph 1(a) of the Second Schedule, and Clause 7 of the DMC. She emphasized that common areas are to be used in common with other owners “having like rights”.  As P has been the sole owner of the Commercial Accommodation, and other owners of the residential units having no rights or business to use Loading Bays 1‑10 and the Adjoining Platform, P is the only owner entitled to use and manage them;

(d)  If necessary, I would on this point have accepted Mr Khaw’s submission, based upon Incorporated Owners of Shatin New Town v Yeung Kui [2010] 2 HKC 241 at §§8‑12, that those clauses in the DMC only deal with the “right to use” as opposed to any “exclusive right to use and control”.  The fact that P is the sole owner of the Commercial Accommodation does not affect that;

(e)  In this regard, I would also have accepted Mr Khaw’s submission that if Loading Bays 1‑10 and the Adjoining Platform fall within the definition of “Commercial Common Areas and Facilities”, they would also by definition be part of the “Common Areas and Facilities”, which would then be “under the exclusive control of the Manger”, as provided by §41 of the DMC[44], that:

“ The Common Areas and Facilities and the Pedestrian Footbridge shall be under the exclusive control of the Manager who may make rules or regulations or impose conditions regulating the use and management thereof subject to the provisions of the [New Grant]”;

(f)  So that there can be no misunderstanding, Issues 2 and 3 are concerned with P’s right to use and manage Loading Bays 1‑10 and the Adjoining Platform in its capacity as the owner of the Commercial Accommodation, but not in his previous capacity as Manager of the Development. In any event, its appointment as such has been terminated;

(g)  Ms Eu relies upon Silver Triumph Holdings Ltd v Guardian Property Management Ltd [2012] 3 HKC 391, per Kwan JA at 15 for the proposition that when the Manager manages the Development Common Areas, the Manager “should not conflict with or affect the right of any owner to use occupy and enjoy his own unit and to use the common areas and facilities”;

(h)  In my view, Silver Triumph does not assist P.  In Silver Triumph, a part of the development owned by an owner could only be accessed via the refuse storage chamber which was a common area.  The manager refused to provide a duplicate key of the refuse storage chamber.  The Court of Appeal held that the manager was wrong, and it was in that context that the above observations were made by the Court of Appeal.  It has nothing to do with whether that owner had any exclusive right to use the refuse storage chamber, as P is now suggesting as part of its alternative case in respect of Loading Bays 1‑10 and the Adjoining Platform;

(i)  Further, if Loading Bays 1‑10 and the Adjoining Platform were parts of the Common Areas and Facilities, section 16 of the BMO would bite.

81.For the above reasons, in respect of Issues 2 and 3, had I ruled that Loading Bays 1‑10 and the Adjoining Platform were part of the “Commercial Common Areas and Facilities”, I would have held that P in its capacity as the owner of the “Commercial Accommodation” would not have the exclusive use and control of Loading Bays 1‑10 and the Adjoining Platform, and would not be entitled to the right to manage the same.

I.   Issue 5

82.As I have described above, to access Loading Bays 1‑10 and the Adjoining Platform and the other 168 car parking spaces, vehicles from street level would have to go via the Spiral Driveway and then the 1/F Driveway. 

83.There is, and can be, no dispute that the 1/F Driveway forms part of the Development Common Areas and Facilities which all owners of the Development have the right to use[45]. 

84.P as the registered owner of the Commercial Accommodation, and, as I have held, as the legal and beneficial owner of Loading Bays 1‑10 and the Adjoining Platform, is entitled to enjoy the right of way over or to use the 1/F Driveway for accessing Loading Bays 1‑10 and the Adjoining Platform under the terms of the DMC.

J.       Issue 6

85.The Guard House was erected by KCRC.  It did so before December 2011.  P had occupied it when it was Manager of the Development.

86.The Guard House is situated on the Adjoining Platform.

87.The location of the Guard House has been admitted by D[46].

88.Following on from my conclusions on Issues 1 and 4, the Adjoining Platform forms part of the “Commercial Accommodation” of which P is the owner.

89.By letter of 5 December 2012[47], the District Lands Office, Tuen Mun sought clarification from MTRC as to whether the Guard House was a breach of the New Grant.

90.When giving evidence, Wu said that upon receipt of the inquiry from the Government, P got its own engineers to look at the Guard House and formed the view that it was an illegal structure.  Preparations were made for its dismantling.  All equipment in it was removed.  

91.P made repeated demands to D to move out and deliver vacant possession of the Guard House, so that the unauthorized Guard House could be dismantled.

92.At §19(4) of the RAD&C[48], D pleads that “upon the appointment of Guardian as the current manager of the Development in January 2012 by [D], [P] shared with Guardian the use of the guard house and Guardian is still using the guard house”.

93.However, during cross‑examination, Lo accepted that:

(a)  in 2012, D sent to P notices[49] requesting P to remove all its things from the Guard House so that D could renovate the Guard House, which P did;

(b)  D did not vacate the Guard House as the other guard room D had been using was too small, and that D was still looking for another one;

(c)  because D had refused to vacate the Guard House, P could not demolish it even though they had been requested by the Government to do so.

94.I accept Wu’s evidence[50] that on 20 May 2015, P managed to have the old disused equipment removed from the Guard House, but D persisted in occupying the same.

95.On the evidence, I find that D has been and is in wrongful occupation of the Guard House erected on the Adjoining Platform owned by P. 

96.Following from my view that D has been and is in wrongful occupation of the Guard House, I hold that D’s continuous occupation of the Guard House constitutes trespass.  In this regard, I record that in the course of her closing submission, Ms Eu confirms that P is, in so far as D’s occupation of the Guard House is concerned, not seeking any mense profit.

97.Further, from the evidence, I also find that the erection of the Guard House constitutes a breach of the New Grant, contrary to Special Condition 36(b).  It is also an illegal structure.

K.   Issue 7

98.Issue 7 asks whether D has wrongfully interfered with P’s

(a)  rights as the owner of,

(b)  rights to the exclusive use and control of,

(c)  rights to manage, and/or

(d)  right of way or rights to use the 1/F Driveway for accessing,

Loading Bays 1‑10 and the Adjoining Platform.

99.I have answered Issues 1 to 5 in favour of P.  I have found that P has all those rights set out in (a) to (d) of Issue 7.

100.The issue now is whether D has wrongfully interfered with any of those rights of P’s.

K.1.   RESTRICTIONS ON THE MANAGER’S POWER TO MANAGE

101.I start off with the obvious, that P’s rights as the owner of the Commercial Accommodation are subject to the provisions of the DMC.

102.P has the rights to use the 1/F Driveway “in common with other having like rights”.  Those rights are “subject to the rights of the Manager”.

103.To consider Issue 7, one needs to consider first of all the scope of the Manager’s rights.  The following matters are important:

(a)  I have set out part of Clause 37 of the DMC above.  The Manager’s authority to manage, though said to be “full and unrestricted”, are limited by the words “as may be necessary or expedient for or in connection with the Estate and the management thereof;” (emphasis added);

(b)  Mr Khaw highlights[51] Clause 37(i) of the DMC in relation to the Manager’s power to “keep all the Common Areas and Facilities in good condition and working order”.  But that power is also subject to the restriction of being necessary;

(c)  Mr Khaw highlights[52] also Clause 38(a) of the DMC which gives the Manager the power to ban vehicles or any particular category of vehicles from the Development.  But the proviso in Clause 38(a)[53] has to be noted, that:

“ 38. … the Manager shall have power:-

(a) To ban vehicle or any particular category of vehicles from the Estate or any particular parts thereof either generally or during certain hours of the day or night PROVIDED ALWAYS that the right of the Owners to the proper use and enjoyment of the Parking Areas in accordance with the provisions of the [New Grant] and these presents shall not be affected”;

(d)  I have set out Clause 41 of the DMC above in relation to the Manager’s power to make rules;

(e)  Whilst the Manager may under Clause 43(a) of the DMC to “make, revoke and amend House Rules regulating the use, occupation, maintenance and environmental control of the Estate”:

“ 43(b) Such House Rules shall be supplementary to the terms and conditions contained in the [DMC] and shall not in any way conflict with such terms and conditions …”

(f)  I accept also Ms Eu’s submissions[54] that as a matter of law:

(i)  any rules so made by the manager, being accessory or subsidiary to the DMC, are inherently inferior to the DMC and would be invalid if they are inconsistent with the terms of the DMC — Tsang Chi Ming v Broadway‑Nassau Investments Ltd [2009] 1 HKLRD 96, at §§53 & 66‑67; Building Management in Hong Kong, 3^rd ed, §4.188; Incorporated Owners of Hang Tsui Court v Ho Fu & Ors [2011] 6 HKC 40, at §10;

(ii)  the rights of the manager in regulating the use of the 1/F Driveway should not conflict with or affect the rights of P to use the same — Silver Triumph, at §§12‑15;

(iii)  the exercise of the Manager’s power is subject to an element of reasonableness.  As observed by Kwan JA in Silver Triumph at §17:

“ … it is trite, in a building management context, the rights of parties under a deed of mutual covenant are ‘not absolute and must as a matter of construction be subject to an element of reasonableness and also must coexist with other provisions in the DMC unless specifically excluded’ …”

(g)  Mr Khaw refers to sections 18(1)(a) and (c) of the BMO.  They are not controversial.  I note that the statutory duty on the IO to enforce the DMC under section 18(1)(c) is to “do all things reasonably necessary”.

(h)  Mr Khaw puts forward [55] the proposition that the overall duty of the Manager is one of “proper management” which means doing what is reasonably required in the circumstances.  That again is not controversial.  That in fact echos the element of reasonableness explained in Silver Triumph.

104.I record in this regard the following matters:

(a)  In his written opening[56], and in the course of his oral opening, Mr Khaw sought to rely on Clause 44 of the DMC. The effect of that clause is that D would not be liable to an owner unless there are gross negligence, dishonesty or criminal acts;

(b)  Ms Eu objected to that course, on the basis that Clause 44 had not been pleaded;

(c)  Having heard parties, I on the second day of the trial ruled that D was not entitled to do that.  For the reasons explained when I gave my ruling, I was of the view that allowing D to rely on the unpleaded Clause 44 at that late stage would cause prejudice to P, in that P would be deprived of any chance to compile and put forward evidence in an attempt to prove that the relevant acts involved dishonesty or gross negligence, or to seek discovery in those regards.

105.In the light of the above, parties have focused their submissions on the reasonableness or otherwise of what D did during the 4 Stages of Closure:

(a)  Mr Khaw submits that the evidence “starkly demonstrate that D’s conduct was reasonable”[57] and that “a review of the evidence will show that the [4 Stages of Closure] was obviously not unreasonable”[58].  He then undertakes an extensive review of the evidence[59];

(b)  Ms Eu on the other hand submits that “the unreasonableness is evident from”^[60] the extent of the closure being disproportionate to the damage at the 1/F Driveway, the selective and/or discriminatory closure, the slow speed of the repair, the additional steps taken by D to impede the alternative methods deployed by P and/or P’s tenants to work round the closure, and the imposition of restrictions on the heights and/or lengths of vehicles that would be allowed access through the Spiral Driveway.  She further submits[61] that “the oral evidence of [Lo] further demonstrates the unreasonableness of D in all [4 States of Closure], and it was a systematic attempt of D to undermine the operation of the shopping mall”.

K.2.   WHAT DID D AND GUARDIAN DO?

106.I have set out above the events that parties agreed took place during the 4 Stages of Closure. 

107.I have considered Wu’s evidence on the 4 Stage of Closure[62], which I accept.

108.I have also considered Lo’s evidence.

109.Both Ms Eu and Mr Khaw submitted in the course of their submissions that this Court should reach an overall conclusion on the reasonableness or otherwise of D’s conduct based on the totality of the evidence.  In doing so, inferences may be drawn.

110.I have considered the detailed evidence and testimonies in their totality.  I have considered Ms Eu’s and Mr Khaw’s submissions.  I accept Ms Eu’s submission that what D did during the 4 Stages of Closure are overall unjustified and unreasonable.  My main reasons are as follows.

111.D should realize that the Loading Bays were busily used by tenants of the shopping mall.  During cross‑examination, Lo confirmed that that was his understanding.

112.In respect of the 1^st Stage of Closure:

(a)  I accept that the 1^st Stage of Closure was triggered by the reported event of a trip‑and‑fall that took place at the 1/F Driveway near Loading Bay 5 over a spot where the ground was uneven;

(b)  However, the extent of the closure is in my view unreasonable and unjustified:

(i)  Supported by photographs, Wu said that the extent of unevenness there was very small;

(ii)  Yet, D decided to close down the half of the 1/F Driveway adjoining Loading Bays 5‑8 on 27 September 2012;

(iii)  While the initial closure was reopened on 28 September 2012, a bigger area (ie Closed Area 1) was closed down on 26 October 2012, and remained closed until 10 December 2012 (when on the following day an even bigger area (ie Closed Area 2) was closed off);

(iv)  When giving evidence in Court, Lo claimed that advice had been sought from the management office, security department and some professionals.  The professionals were described as an engineering consultant responsible for overseeing the residential towers;

(v)  It turned out that that so‑called engineering consultant was a resident within the Development in the construction business;

(vi)  No record has been produced on any professional advice received in that regard.  None appears in Lo/WS.  When specifically re‑examined by Mr Khaw as to what the advice was on the areas to be closed, Lo gave the circular answer that “He advised us to cordon off those areas we actually cordoned off”;

(vii)  At some stage during cross‑examination, Lo resorted to disputing the extent of the closure as stated in Wu/WS and as marked on the plans produced by her.  He claimed that the extent of the actual closure varied and was smaller than that as marked;

(viii)  However, those plans were produced during the stage when the interlocutory injunction was sought.  Lo accepted that D had never suggested that those plans were incorrect;

(ix)  I reject Lo’s evidence in the above regards;

(c)  The closure was selective:

(i)  The first point to note is that only the half of the 1/F Driveway adjoining Loading Bays (5‑8 initially, and 5‑10 subsequently) was closed, but not the half adjoining other car parking spaces;

(ii)  According to Wu, there were other areas on the 1^st Floor (lower level) where the floor was also uneven[63]. Lo accepted that;

(iii)  However, no other part of the 1/F Driveway had been closed;

(iv)  I agree with Ms Eu’s submissions that the closure was discriminatory against P;

(d)  The duration of the closure was also unreasonable and not justified:

(i)  Closed Area 1 was closed down from 26 October 2012;

(ii)  During cross‑examination, Lo claimed that that was done to enable the contractor to see what had to be done;

(iii)  No valid explanation has been provided as to why it was necessary to close Closed Area 1 from 26 October 2012 to 10 December 2012 just to show the contractor what had to be done;

(iv)  But even when repair works did commence on 12 December 2012, all D did initially was to dig up a small area adjoining Loading Bays 3 and 4[64];

(v)  Mr Khaw argued that the time taken was reasonable given the time needed to invite tenders.  But no valid reason has been given as to why closure was necessary while tenders were being arranged. That is particularly do given the alternative method of putting protective metal plates on top of the damaged areas (as pointed out by Wu in the course of her evidence);

(e)  In the meantime, D imposed various restrictions on the height and/or length of the vehicles permitted to enter the Development.  I accept Ms Eu’s submissions[65] that there is no proper basis for Lo to suggest that vehicles of over 3m (as later over 2m) height would whilst vehicles of 3m (and later 2m) height or less would not cause further damage to the 1/F Driveway;

(f)  The closing down of lifts:

(i)  As explained by Wu[66], as a result of what D had done, larger trucks could not enter the Development and had to park on the public streets outside the Development.  Deliverymen had to then transport the goods using Lifts 6 to 8 on the ground floor connecting (amongst other things) the shopping mall on the 1^st Floor.  Some also used the passenger escalators connecting the street level to the 1^st Floor shopping mall for delivery of goods;

(ii)  However, Guardian then started to complain about tenants of the shopping mall using the lifts for delivery of goods.  From 30 October 2012, only Lift 6 was permitted to be used;

(iii)  Then on 1 November 2012, D started to complain about damage to an advertisement sign inside Lift 6.  The photographs produced[67] show that the damage was trivial.  Further, only after 2 days of such use, D expressed concern that Lift 6 might be worn out by prolonged use as a cargo lift, and required P to be responsible for any related examination or repair;

(iv)  Eventually, on 14 November 2012, even Lift 6 was closed.  

113.In respect of the 2^nd Stage of Closure:

(a)  On 11 December 2012, a goods vehicle over 3m in height entered the Development and caused some slight denting to one of the cable trays installed at the ceiling above Loading Bay 4;

(b)  That incident triggered the 2^nd Stage of Closure;

(c)  Closed Area 2 was involved.  It was bigger than Closed Area 1.  It was the half of the 1/F Driveway facing and adjoining Loading Bays 3‑10.  Loading Bays 3‑10, representing 80% of the loading bays constructed for the use of the Commercial Accommodation, had become out of use;

(d)  In Lo/WS, Lo does not explain why the 2^nd Stage of Closure was necessary;

(e)  During cross‑examination, Lo claimed that D was worried that there might be another incident where a cable tray might be hit;

(f)  I do not find that reason reasonable.  I accept Ms Eu’s submission[68] that one only need to regulate the access of over‑height vehicles to the loading bay.  I accept Wu’s evidence[69] that the dent had nothing to do with the safety of the 1/F Driveway;

(g)  On 13 December 2012, D instructed Guardian to only permit private cars and mini‑vans to enter the Development;

(h)  In the meantime, in relation to the repair works of the floor of the 1/F Driveway:

(i)  As mentioned above, even when repair works did commence on 12 December 2012 on the 1/F Driveway, all D did initially was to dig up a small area adjoining Loading Bays 3 and 4. 

(ii)  By letter of 19 December 2012 to P[70], D asked about the substances that made up the concrete slab of the 1/F Driveway.  Further works were put on hold;

(iii)  Mr Khaw relies on that request to explain the delay in the repair works[71]. However, I accept Ms Eu’s submission[72] that there was no reason why the entirety of Closed Area 2 would during the interim and pending clarification of D’s queries have to be remained closed off;

(iv)  Repair works only resumed in late January 2013;

(v)  Despite completion of the repair works in early February 2013, Closed Area 2 remained closed.  D only re‑opened part of the 1/F Driveway facing the private car parking spaces;

(i)  Wu states[73], which I accept:

“ 93. In fact, even after the dented cable tray above Loading Bay 4 had been replaced and all the repair works in relation to the cable tray had been completed by [P’s] contractor on 6 March 2013, [D] did not reopen that part of the 1/F Driveway adjoining Loading Bays 1-4 …

94.  Further, though (1) all the repairs relating to the cable tray and the portion of the 1/F Driveway adjoining Loading Bays 1-4 (the half facing Loading Bays 1-4) had all been completed and (2) no works were being carried out at the portion of the 1/F Driveway adjoining Loadings 5-10 (the half facing Loading Bays 5‑10) at the time, the portion of the 1/F Driveway adjoining Loading Bays 1-10 (the half facing Loading Bays 1-10) remained cordoned off.  On the other hand, [D] had the portion of the 1/F Driveway adjoining Loading Bays 1-10 (the half facing the private car parking spaces) reopened …” 

(j)  In the end, Closed Area 2 remained closed from 11 December 2012 until 10 March 2013 (save that from 6 February 2012, the half of the 1/F Driveway facing the private car parking spaces was reopened, while the half facing the Loading Bays remained closed), followed by the closure of Closed Area 3 on 11 March 2013;

(k)  Upon cross‑examination, Lo claimed that despite completion of the repair works, D was still waiting for its contractor’s instructions to reopen Closed Area 2, or the confirmation that the cement had set.  None of those appears in Lo/WS.  Nor has any record been adduced.  I do not accept the same.  I accept Ms Eu’s submissions in this regard[74], bearing in mind that the other side facing the car parking spaces was not blocked, that it is unreasonable for Lo to suggest that D would have just sat there for almost 2 months (from February until April 2013 when P got an undertaking from D to re‑open Loading Bays 1‑4 upon applying to Court) to wait for the contractor’s instructions to reopen the 1/F Driveway after the works had been completed.

114.In respect of the 3^rd Stage of Closure:

(a)  The 3^rd Stage of Closure was triggered by the discovery of the Hole on 1 March 2013;

(b)  The Hole when discovered was the size of a HK$5 coin.  It was on the 1/F Driveway adjoining Loading Bays 9‑10.  According to the plan marked PGMC‑57 produced by Wu[75], the Hole was some 21.2m to 31.2m from Loading Bay 4 to Loading Bay 1. Wu further states[76] that the distance between the Hole and each of the Loading Bays 1‑8 respectively was longer than the distance between the Hole and the other half of the 1/F Driveway facing the car parking spaces;

(c)  On 11 March 2013, D closed down the half of the entire 1/F Driveway adjoining Loading Bays 1‑10 (ie the Closed Area 3). Access to all Loading Bays 1‑10 was thereby blocked;

(d)  Wu describes[77] that there was disparity in treatment in relation to the Hole.  Whilst D cordoned off Closed Area 3, that other half of the 1/F Driveway adjacent to the other car parking spaces was not;

(e)  However, given the professional advice which D had obtained, I do not find D’s acts during the 3^rd Stage of Closure to be unreasonable:

(i)  Relying on IO of Tung Lo Court v Leung May Chun Alison Aliance, unrep, CACV 52/2014, 17 December 2014[78], Mr Khaw submits[79] that D was entitled to rely on professional advices that it had received;

(ii)  I agree;

(iii)  In relation to the Hole, D engaged Petros Consulting Engineers Limited (“Petros”) to find out the structural condition of the car park;

(iv)  According to the report by Petros[80], and as highlighted by Mr Khaw[81]:

(1)  There was slight to moderate corrosion in the reinforcement at the loading and unloading bays;

(2)  Concrete defects may be present across the 1/F car park;

(3)  Since the loading and unloading bays are subject to heavy cyclic loading, repair works should be up to very high quality;

(4)  A detailed structural survey on the car park is recommended to identify latent defects;

(5)  The defective area is not recommended to open to any traffic until repair work is carried out;

(v)  In my view, the closure of Closed Area 3 but not the half of the 1/F Driveway facing and adjoining the car parking spaces could be justified by the heavy cyclic loading which the Loading Bays would be subject to.

115.In respect of the 4^th Stage of Closure:

(a)  The 4^th Stage of Closure commenced on 13 March 2013 till early April 2013.  It involved Closed Area 4, which extended to outside Loading Bay 1;

(b)  As stated by Wu, which I accept, that upon the closure of Closed Area 3 at the 3^rd Stage of Closure:

“ 104. … [P] had to deploy 6 of its own private car parking spaces immediate opposite Loading Bays 1‑10 (… ‘[P’s] said 6 Car Parking Spaces’) as a temporary loading area for the mini-vans arranged by [P] and its tenants to load and unload goods, and then to transfer them by foot via Loading Bay 1 and a narrow strip next to it to access the loading platform and from there into the shopping mall …

…

107. On 13 and 14 March 2013, [D] attempted to stop [P’s] tenants from using [P’s] said 6 Car Parking Spaces to load and unload goods for onward delivery to their shop premises…

108. When [D] failed to stop [P’s] tenants from using [P’s] said 6 Car Parking Spaces to unload the goods for onward delivery, it expanded the closure area further (outside Loading Bay 1) on 14 March 2013 so that access via Loading Bay 1 to the loading platform became further restricted (‘Closed Area 4’) …

109. As a result some deliverymen had to use the shopper’s entrance to the shopping mall adjacent to Loading Bay 1, which is also quite narrow and difficult for large trolleys to manoeuvre through.

110.  But [D] did not stop there.  On 18 March 2013, [D] installed a metal pole immediately outside Loading Bay 1, with the effect that (together with the enlarged Closed Area 4), it became impossible for large goods trolleys to be transported from [P’s] said 6 Car Parking Spaces through that entry point to the loading platform.  In other words, the acts of [D] had completely blocked any use of the loading platform …”   

(c)  Those acts of D were in my view clearly unjustified and unreasonable;

(d)  Not even Lo sought to justify those acts.  When cross‑examined by Ms Eu, he put the blame on Guardian, and claimed that Guardian had received wrong instructions, that Guardian had been criticized for that, and that the pole had only been there for one day;

(e)  P’s complaint about the installation of the metal pole formed part of its complaint when it applied for the interlocutory injunction.  Lo has filed an affirmation in reply.  Never in his previous affirmation or witness statement has Lo ever mentioned that Guardian had received wrong instructions, or that Guardian had been criticized for that, or that the pole had only been there for one day.  Nor has any record of Guardian having been criticized been produced;

(f)  I reject Lo’s evidence in those regards;

(g)  Lo under cross‑examination further claimed that despite the installation of the metal pole, a gap wide enough for a van to be driven through was left there.  He was in that regard contradicted by photographs produced[82].

K.3.   CONCLUSION ON ISSUE 7

116.For the reasons set out above, with the exception of D’s responses upon discovery of the Hole during the 3^rd Stage of Closure, I find that overall, D’s acts during the 4 Stages of Closure were unjustified and unreasonable.  I find that D has wrongfully interfered with all of P’s rights raised in Issue 7.

117.I also accept Ms Eu’s submissions[83],  relying on Clerk & Lindsell on Torts, 22^nd ed, para 20‑01, 20‑02 & 20‑06, that D’s wrongful interference with P’s use or enjoyment of Loading Bays 1‑10 and the Adjoining Platform also amounts to nuisance.  Mr Khaw’s submissions based on Hunter v Canary Wharf Ltd [1997] AC 655 to the effect that P lacks locus to sue for private nuisance goes away upon my conclusions on Issues 1 and 4.

118.The above sufficiently answer Issue 7.  I record that in the course of cross‑examination, Ms Eu specifically put to Lo that all those actions by D about putting up banners at the entrance to stop vehicles over a certain height to enter, cordoning off of very large areas, the stopping of the use of the Loading Bays, the stopping of the use of Lift 6, they were all part of D’s plan to pressurize P in order that P would concede the management of the Loading and Unloading Areas to D.  I note that Lo denied that.  In my view, the evidence justifies the drawing of such an adverse inference.  If necessary, I will draw the same.

L.   Issue 8

119.At §N32 of her written opening, Ms Eu submits that as the 1/F Driveway has been re‑opened, there is no need for the injunctive relief to be granted in relation thereto.

120.In the course of the trial, both during her opening and closing submissions, Ms Eu confirmed that:

(a)  in so far as the Guard House is concerned, if this Court is with P and grants the order prayed for separately at §(7) of the prayer, P will not need any further injunction relief sought at §(5);

(b)  consistent with §N32 of her written opening, P no longer seeks any injunctive relief.

121.In so far as the Guard House is concerned, following on from my views on Issue 6, I make an Order directing D to vacate or procure its agents or servants to vacant the Guard House, in terms of §(7) of the prayer.

122.I otherwise grant no other injunctive relief.

M.   Issue 9

M.1.  SPECIAL DAMAGES

123.I deal with the special damages first.

124.Wu states[84] that for the period from 15 November 2012 to 31 March 2014, P had incurred a total sum of HK$1,562,270 for hiring light goods vehicles for providing the transit for delivering the goods of the tenants of the shopping mall.  She has prepared a schedule summarizing the expenses[85] (the “Damages Schedule”).

125.On the question of liability, Mr Khaw has raised two points, which I will deal with in turn.

126.The first point Mr Khaw raises relates to the type of damages which P can recover based on private nuisance:

(a)  Mr Khaw refers again to Hunter v Canary Wharf Ltd, and in particular the following observations by Lord Lloyd at 695B‑696C:

“ Private nuisances are of three kinds. They are (1) nuisance by encroachment on a neighbour/s land; (2) nuisance by direct physical injury to a neighbour’s land; and (3) nuisance by interference with a neighbour’s quiet enjoyment of his land ...

In the case of encroachment the plaintiff may have a remedy by way of abatement. In other cases he may be entitled to an injunction. But where he claims damages, the measure of damages in cases (1) and (2) will be the diminution in the value of the land. This will usually (though not always) be equal to the cost of reinstatement ...

Exactly the same should be true of nuisances within class (3).  There is no difference of principle.  The effect of smoke from a neighbouring factory is to reduce the value of the land.  There may be no diminution in the market value.  But there will certainly be loss of amenity value so long as the nuisance lasts.  If that be the right approach, then the reduction in amenity value is the same whether the land is occupied by the family man or the bachelor.”

(b)  Mr Khaw refers further to Williams v Network Rail Infrastructure Ltd [2018] 3 WLR 1105, per Sir Terence Etherton MR at §43, that:

“ 43. It is also well established that, in the case of nuisance through interference with the amenity of the claimant’s land, physical damage is not necessary to complete the cause of action. To paraphrase Lord Lloyd’s observations in Hunter’s case [1997] AC 655 , 696C, in relation to his third category, loss of amenity, such as results from noise, smoke, smell or dust or other emanations, may not cause any diminution in the market value of the land, such as may directly follow from, and reflect, loss caused by tangible physical damage to the land, but damages may nevertheless be awarded for loss of the land’s intangible amenity value. Reflecting the fact that the cause of action is one for interference with property rights, loss of amenity value and the right to claim damages for it does not turn on any exceptional sensitivity or insensitivity of the person entitled to exclusive possession: Barr v Biffa Waste Services Ltd [2013] QB 455 at para 36. What is relevant is the objective effect on the amenity value of the land itself, and it is that effect which satisfies any requirement there may be to show damage. Provided, by reference to all the circumstances of the case and the character of the locality, and according to the objective standards of the average person, the interference with amenity is sufficiently serious, there will be an actionable private nuisance.”

(c)  On the authorities before me, I accept Mr Khaw’s submissions[86] that the special damages P seeks to claim are irrecoverable under an action for nuisance, as those are neither physical damage done to P’s land nor loss of the land’s amenity value.

127.The second point Mr Khaw relates to the recoverability of those special damages under P’s cause of action of breach of DMC:

(a)  P’s claim based on D’s breach of DMC is contractual in nature;

(b)  Mr Khaw’s main submission in this regard is that it cannot be said that P’s out‑of‑picket expenses fall under D’s reasonable contemplation as a likely result of the breach.  He relies on Richly Bright International Ltd v De Monsa Investments Ltd (2015) 18 HKCFAR 232 per Ma CJ at §§15‑23 and 28‑41 and The Achilleas [2009] 1 AC 61 at §15;

(c)  Ms Eu submitted in the course of her oral closing that the special damages were clearly within the reasonable foreseeability of D.  She further pointed to a number of letters in which P warned D that it would claim from it losses that P might suffer as a result of D’s acts;

(d)  On this point, I agree with Ms Eu.  Loading Bays 1‑10 and the Adjoining Platform are built for the use of the Commercial Accommodation.  Lo understood that they had been busily used.  P’s tenants included Park’n Shop and Mannings.  Unloading of supplies are important for those retail businesses.  If Loading Bays 1‑10 and the Adjoining Platform are blocked, it is reasonably foreseeable that alternative means of transportation would need to be arranged. Costs and expenses would be incurred.  Further, the height and length limits imposed by D would affect the types of vehicles that could access the Development.  One example was grease‑removal trucks mentioned by Wu.  Additional costs and expenses would be caused;

(e)  In my view, the special damages which P is seeking are of the type which are directly and reasonably foreseeable, and are not too remote.

128.On the question of quantum:

(a)  Mr Khaw submits[87] that the damages shall in any event be subject to discount.  He relies amongst others on the poor structural condition of the 1/F Driveway which called for further investigation;

(b)  Ms Eu submits that as quantum has never been challenged, there should be no discount;

(c)  As can be seen from the Damages Schedule, P is seeking expenses incurred between 15 November 2012 and 30 March 2014[88];

(d)  Loading Bays 1‑4 were re‑opened on 13 April 2013;

(e)  According to the evidence, Loading Bays 5‑10 continued to be cordoned off and were not opened till end of 2014 because of the repair works that followed from the discovery of the Hole[89];

(f)  I have explained why I do not find D’s responses upon discovery of the Hole, in the light of the advice from Petros, unreasonable;

(g)  I accept therefore Mr Khaw’s submissions that the special damages should be discounted given the repair works that followed from the discovery of the Hole;

(h)  I allowed the special damages up to early April 2013, in the rounded‑off sum of HK$562,000.

M.2.  GENERAL DAMAGES

129.P claims general damages for the inconvenience suffered as a result of the nuisance and the interference with P’s property rights.

130.Ms Eu[90]:

(a)  accepts that there is no scientific way of translating the inconvenience into a sum of money, and that the Court will have to make an assessment by reference to the extent of the inconvenience occasioned: So John at p 358G‑359G; and Lo Yu Chu v Kam Fu Lai Development Co Ltd [1994] 3 HKC 18, at p 29G‑30C.

(b)  In this case, the inconvenience lasted for over 2 years from September 2012 to December 2014, and has caused very significant interference to the operation of P’s shopping mall, as a result of which P had to undertake various measures in order to work round D’s wrongful acts to mitigate the damage or interference to the operation of the shopping mall;

(c)  The general damages to be awarded ought to be substantial, and should be no less than HK$300,000 — c.f. Leung Yung Chun v Chan Wing Sang [2000] 1 HKLRD 456, at p 462I‑463E; Li Ching Har v Wong Suk Kit [2019] HKDC 150, at paras 41‑45.

131.I do not accept Mr Khaw’s submission[91] that P is only entitled to nominal damages.  As submitted by Ms Eu, D’s acts have caused significant interference to the operation of P’s shopping mall.  The case of Hing Sheung Fung Investment Co Ltd v IO of Man Kee Mansion, unrep, HCA 59/2006 (4 February 2008) is factually different — see §80.

132.However, for the same reasons I discount the special damages, I also discount the general damages P is seeking. Without meaning to achieve any arithmetic accuracy, I discount the amount by ¾, resulting in the figure of HK$75,000.

N.   Issue 10

133.There is little dispute that P holds the 650 undivided shares allocated to the “Common Areas and Facilities” as trustee for all the owners of the undivided shares for the time being.

134.The difficulties in their transfer however arise from the Management Undertaking and the need for release or consent from the District Lands Office.

135.At the end of the hearing, Mr Khaw placed before me a draft order, and requested that an Order nisi be made in those terms.  I agree that that is the best way to deal with the situation.  I thereof make an Order nisi that:

“ An order that the estate right title benefit and interest of and in 650 equal undivided 32,942^nd parts or shares of and in Tuen Mun Lot No. 291 (‘the Common Areas and Facilities’ of and in Pierhead Garden, Tuen Mun, New Territories) be transferred from the Plaintiff to the Defendant holding such estate right title benefit and interest on trust for all the Owners for the time being of the Development subject to a written consent being granted by the District Lands Office pursuant to Clause 31(g) of the New Grant as stipulated in the letter dated 12 August 1986 from the District Lands Office to Kowloon‑Canton Railway Corporation.”

136.I also give parties liberty to apply in respect of that Order nisi.

O.   Disposition

137.In respect of P’s claim, and for the reasons set out above:

(a)  this Court:

(i)  grants in favour of P a Declaration that P is the legal and beneficial owner of Loading Bays 1‑10 and the Adjoining Platform, in terms of §(1) of the prayer;

(ii)  grants in favor of P a Declaration that P has the right and is entitled to use the 1/F Driveway under the terms of the DMC, in terms of §(4) of the prayer;

(iii)  grants an Order directing D to vacate or procure its agents or servants to vacant the Guard House, in terms of §(7) of the prayer;

(iv)  awards P general damages for nuisance, trespass and breach of DMC, assessed at HK$75,000;

(v)  awards P special damages for breach of DMC, assessed at HK$562,000, by reason of D’s breach of the DMC;

(b)  Ms Eu is no longer seeking any injunctive relief, as the Loading Bays 1‑10 and the Adjoining Platform have been reopened.  I grant no injunctive relief sought in §(5) of the prayer.  For the same reasons, I see no need to grant any direction sought in §(6) of the prayer.

138.In respect of D’s Counterclaim:

(a)  I dismiss the claim for the declaration sought in §(1) of the prayer;

(b)  I respect of §(2) of the prayer, I grant the Order nisi as set out in §135 above.

P.      Interest and costs

139.I make an order nisi that there be interest for the general damages at 2% per annum from the date of the writ to the date of judgment, interest for the special damages from say 10 April 2013 at half judgment rate to the date of judgment, and thereafter all at judgment rate until payment.

140.I make the following costs order nisi: that P shall have 80% of the costs of its claim, to reflect the facts that it does not obtain all the relief it sets out to seek, and that D is successful in respect of the 650 undivided shares, with certificate for two counsel; I otherwise make no further costs order in respect of D’s defence and counterclaim.

141.All orders nisi will become absolute within 14 days of the date of the judgment, unless either or both parties write in and seek any variation in the meantime, in which case I will give directions for the further conduct of the same.

Ms Audrey Eu SC, leading Mr Lee Tung‑ming, instructed by Deacons, for the Plaintiff

Mr Richard Khaw SC, leading Mr Sunny Chan and Mr Jeffrey Lee, instructed by K C Ho & Fong, for the Defendant