Wing Ming Garment Factory Ltd v. Sanwa Trading (H.K.) Ltd
Read the full judgment text of HCA 1805/2016 on BabelCite. This High Court CFI judgment was delivered on 16 November 2021.
1. In 1991, the plaintiff (“Wing Ming”) sold to the defendant (“Sanwa”) a single car parking space, numbered 2, on the ground floor of the Wing Ming Industrial Centre (“Building”) in Kowloon. Now, 30 years later, I am asked to determine a dispute as to what space was actually sold and purchased.
Cited by 4 cases · Cites 4 cases
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HCA 1805/2016 [2021] HKCFI 3357 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1805 OF 2016 ________________________ BETWEEN
________________________ Before: Hon Coleman J in Court Dates of Hearing: 9-10 and 15 November 2021 Date of Judgment: 16 November 2021 ________________________ J U D G M E N T ________________________ A. Introduction 1.In 1991, the plaintiff (“Wing Ming”) sold to the defendant (“Sanwa”) a single car parking space, numbered 2, on the ground floor of the Wing Ming Industrial Centre (“Building”) in Kowloon. Now, 30 years later, I am asked to determine a dispute as to what space was actually sold and purchased. 2.The dispute turns on a decision as to what was the common intention of the parties and, where the parties agree that a sale was actually concluded by a preliminary sale and purchase agreement dated 28 August 1991 (“PSPA”) and an assignment dated 8 February 1992 (“Assignment”), there are two candidates for what car parking space was sold. They are readily described by reference to two diagrams:
3.As can be seen from the diagrams, the Re-Designated CPS 2 was positioned on what was the area marked “VOID” on the DMC Plan, and following the erection of a new partition wall (“Partition Wall”) which enclosed the Original CPS 2, CPS 3 and CPS 4 preventing access to those spaces. 4.Wing Ming says it sold Re-Designated CPS 2, and that it has never sold but has retained ownership of the Original CPS 2. Sanwa says it purchased the Original CPS 2. 5.These proceedings are not the first occasion on which a decision impacting this car parking space has been necessary from the Court. On 20 December 2007, Reyes J gave judgment (“Reyes Judgment”) in HCA 8805/1993 (“1993 Action”), in which he held that the areas marked “VOID” in front of CPS 2, 3 and 4 can only be “Common Areas and/or Common Facilities” as defined in the DMC. Amongst other relief, Reyes J granted a mandatory injunction requiring Wing Ming to demolish the Partition Wall and to restore CPS 2, 3 and 4 to their original position. 6.Wing Ming’s appeal to the Court of Appeal was dismissed by its Judgment dated 27 June 2008 (“CA Judgment”), which stated that Reyes J was clearly right in holding that the areas marked “VOID” adjacent to CPS 2, 3 and 4 are common areas. 7.As a result, in around 2010, the Partition Wall was demolished, and CPS 2 was relocated back to the Original CPS 2 (as were CPS 3 and 4 also relocated back to their original positions). Photographs show that, as is common in Hong Kong car parks, the location of the car parking space is shown by floor paint. The paint colour of the car parking space is surrounded by a white line, and is different from the other parts of the floor (including the area marked “VOID” on the DMC Plan). 8.Unsurprisingly, though Sanwa had for many years used the Re-Designated CPS 2 as its parking spot, Sanwa has since at least June 2011 used Original CPS 2 as its parking spot. Perhaps more surprisingly, Wing Ming commenced these proceedings in 2016 claiming that Sanwa has been trespassing on the Original CPS 2, and seeks the relief of an order for possession of the Original CPS 2 and mean profits from June 2011 until possession is delivered up. 9.Sanwa defends the claim, and counterclaims seeking a declaration that it has throughout been the legal and beneficial owner of the Original CPS 2 on the DMC Plan, and an order that the plan attached to the Assignment (“Assignment Plan”) be rectified to depict the correct location of the car parking space as the Original CPS 2. 10.At trial, Wing Ming has been represented by Ms Audrey Eu SC, leading Ms Chantel Lin, and Sanwa has been represented by Mr Jonathan Chang SC, leading Ms Esther Mak. 11.In addition to the various documentation available, evidence was given at trial by (1) Mr Yuen Man Pui, managing director of Wing Ming, and (2) Mr Ng Kwok Wing, a director of Sanwa. But I think it is common ground that the case turns on interpretation of documents rather than the credibility of witnesses. 12.This is my Judgment after trial. B. Relevant Chronology 13.Wing Ming was the original developer and registered owner of the Building. The land on which the Building was subsequently developed had been granted to Wing Ming by Conditions of Sale dated 13 September 1974 (subsequently modified in 1975 and 1985). 14.Relevantly for present purposes, the Special Conditions (9) and (10) of the Conditions of Sale provide:
15.The Building was built in accordance with building plans which were approved by the Building Authority in 1978, and the plans included the approved plan for the ground floor (“Approved Plan”). The occupation permit of the Building was issued on 14 November 1978. 16.The Building has 12 storeys respectively from G/F to the 11/F (Roof Floor) and in addition it has a Basement and an Upper Roof. There are 11 car parking spaces (“Original CPSs”), and a container parking space (“Container PS”), all of which are situated on the ground floor and are indicated on the Approved Plan. 17.A Car Parking Layout Plan, which is the same as the Approved Plan, was separately registered with the Land Registry as required under the Special Conditions of the Conditions of Sale of the land to Wing Ming. 18.Prior to 2 March 1991, Wing Ming was the sole owner of the Land and the Building was for self-use. Hence, there was no need for any DMC and no question of any common areas. However, in around March 1991, Wing Ming notionally divided the Building into 1,323 equal undivided shares, and the shares were allocated among various units and the Original CPSs within the Building. 19.The allocation was identified in the DMC, made on 2 March 1991, between Wing Ming (being the First Owner) and a purchaser of two floors and two Original CPSs (being the Second Owner), and the then manager of the Building (“Essman”). The Recitals to the DMC include the following:
20.As the Recitals indicate, attached to the DMC were various floor plans, including in particular the DMC Plan. On the DMC Plan, all of the Original CPSs and the “VOID” areas in front of each of them are coloured green. But see also further, below. 21.The DMC has a definition section by which “Common Areas” and/or “Common Facilities” shall mean, amongst other things:
22.The DMC was made (in part) for the purposes of and at the same time as an assignment dated 2 March 1991, by which Wing Ming sold 210 equal undivided shares and the exclusive right to the 6th and 7th floors and CPS 6 and 7 to the first of various purchasers of units in the Building. It seems that, prior to the division and allocation of the undivided shares, Wing Ming had formed the desire to extend the existing ground floor premises and relevant cockloft. Therefore, clause 5 of Sub-section C (“SPECIAL RESERVATIONS”) of Section I of the DMC provides a special reservation for Wing Ming to construct the loft over the Original CPS 2, 3 and 4 (and, it might be noted, at least not expressly over the space marked void). 23.Following the first sale of units, and by a series of further agreements for sale and purchase and assignments (which both pre-dated and post-dated the dealings with Sanwa), Wing Ming sold various units and CPSs in the Building. In each sale, the documents included a clause by which Wing Ming purported expressly to reserve a right to alter the common areas. Further, the plans attached to the documents showed the CPSs coloured to include those areas marked “VOID”. 24.The sale of the Container PS (which was sold together with the 1st and 2nd floors and CPS 10) included a covenant that the purchaser would give way to facilitate the owners of “location C” and/or CPS 2 to move in and out. From the attached plan, the location of “location C” and CPS 2 was a reference to the Re-Designated CPS 2. But, it might be thought that the owner of the Container PS would probably need to have covenanted to facilitate access to the Original CPS 2, or at least it would have been preferable had such a covenant been made, as the Container PS extended as far as right in front of Original CPS 2 and the area marked “VOID” to its front. 25.In two sales post-dating the Assignment to Sanwa, there was a special covenant, by which the purchaser agreed with Wing Ming, its successors and assigns and the owners for the time being of CPS 2, 3 and 4 that notwithstanding anything in the DMC, the purchaser, its successors and assigns would not object in any manner but would allow and consent to Wing Ming and the owners for the time being of CPS 2, 3 and 4 or any part or parts thereof converting them to other lawful purposes, subject to the approval of the Building authority or other appropriate authority. 26.However, and in any event, there is no suggestion that Sanwa had sight of these various documents or knew of their contents prior to entering the PSPA and the Assignment. On that basis, it does not seem to me that they are of any real assistance in the interpretation of the contract. Further, none of the contractual covenants between Wing Ming and other purchasers of units and CPSs in the Building actually gave Wing Ming consent to vary the DMC so as either (a) to attach the exclusive right to hold, use and occupy the “VOID” area to the 5 shares allocated to the Original CPS 2, or (b) to limit the exclusive right to hold, use and occupy the space attached to the 5 shares to only the “VOID” area, rather than to all of the green coloured area comprising Original CPS 2 and the area marked “VOID” to its front. 27.I accept Mr Ng’s evidence that in the latter half of 1990 he was looking for new premises for Sanwa. When walking around Cheung Sha Wan Road, he saw an advertising board on the external wall of the Building and thought it might suit Sanwa’s requirements. Someone in the Building’s management office, a security guard, took him to tour one upstairs unit. From the advertising board and the security guard, Mr Ng knew that the agent was Jones Lang Wootton (“JLW”), of whom Mr Ng enquired the price. The facts (a) that there was an advertising board affixed to the Building, and (b) that the security guard appeared to know of JLW as agent, are consistent with JLW being the agent of Wing Ming. 28.Thinking there was no rush, Mr Ng made no further enquiry until July or August 1991. At that time, upon further enquiry, he learned from JLW that only the 4th, 5th and 10th floors of the Building still had vacant/unsold units. A staff member of JLW took Mr Ng to see perhaps two of those units and to see the car parking spaces. Obviously, there can be no dispute that what he was shown at that time was the Original CPS 2, 3 and 4. His preference was to buy Original CPS 2. 29.I accept Mr Ng’s evidence that at the time of looking around the ground floor of the Building, neither he nor the agent had any floor plan. Whilst the space shown looked big enough to park two private cars, the agent apparently said something – whether or not he referred then to any intended building of a partition wall – to make it clear to Mr Ng that any parking space he might buy would likely only have space for one private car. The particular details of any alteration were not given, and of course any alteration would be contingent on other matters. 30.I also take account of the evidence given by Mr Ng in cross-examination that, although he did not know the details of the alteration work, he later knew enough to understand that the car parking space could be “moved forward” from the Original CPS 2 because of a new partition wall, though that would need application and approval. 31.There is various correspondence from August 1991 involving JLW. The first letter is one dated 19 August 1991 from JLW to Sanwa relating to the potential purchase of “5/F, & Parking Space No. 4 on G/F”. The letter asked for a copy of it to be signed and returned as confirmation of acceptance of the terms, which JLW would then submit to Wing Ming for consideration and acceptance (if any). Confirmation was given by Sanwa by the signature of Mr Ng against Sanwa’s authorised signatory chop. It does not seem to me to be of any great moment that Mr Ng apparently confirmed an interest in purchasing CPS 4, when he now says he had no such interest and was always interested only in CPS 2. Either a mistake was made, or the target for some reason changed, but that does not assist in the interpretation of the agreement ultimately made in this case. 32.Certainly, by the date of 22 August 1991 and at all times thereafter, reference was to CPS 2. There is a draft letter of that date (on paper with no pre-printed header, but which was obviously to be issued by JLW) relating to “Space Marked “2” on the Ground Floor”. By this point of time, therefore, there has been a separation of the potential purchase of the 5/F unit and a car parking space. 33.In common with all subsequent similar letters, the draft letter provides that the agency fee of 1% of the sale price is to be paid by Wing Ming to JLW upon completion of sale and purchase. There is no reference to any other agency fee payable by Sanwa. That is at least consistent with JLW acting as Wing Ming’s agent. The draft letter also includes the following:
34.That statement indicates the desired change, and seems likely to be by reference to the desired relocation of CPS 2 to a position in front of or forward to the Original CPS 2. But the statement also indicates that approval for any such relocation had yet to be obtained. 35.There are various JLW letters dated 28 August 1991. One of them (“5/F PSPA”) forms the preliminary sale and purchase agreement for the 5/F unit. Clause 9 provides that the 1% of sale price agency fee payable to JLW will be borne by Wing Ming. Clauses 10 and 11 providers follows:
36.There are three versions of a further letter dated 28 August 1991, headed “Space Marked “2” on the Ground Floor”, relating to the purchase by Sanwa from Wing Ming of the car parking space for HK$400,000. The difference between the various versions includes the absence or presence of some signatures, initials and what appears to be some use of a circular chop of Sanwa. There is no dispute that one of the versions constitutes the PSPA. 37.In full, the PSPA provides as follows:
38.Attached to the copy PSPA in the trial bundle is a ground floor plan of the Building, apparently showing the Re-Designated CPS 2, coloured green, and with the handwritten dimensions “7.5’ H MIN” and “7.5’ x 15’ MIN”. There are also one faint and one clear version of what seems to be the Sanwa circular chop, as well as the initials of Mr Yuen and the signature of Mr Ho of JLW, near the green area. I note that whilst the PSPA itself is a black and white copy, the plan is a colour copy. 39.There is a dispute as to whether that plan was actually attached to the PSPA, which does not mention it expressly. Rather there is mention only of the DMC as an attachment, and the fact that the agreement would be subject to the existing DMC, and the additional declaration that Sanwa has read through the DMC before signing the offer letter. On balance, I find that the colour copy plan was not attached to the PSPA. But in any event there can be no dispute that, as at the date of the PSPA, the Re-Designated CPS 2 was neither in existence nor referred to in the DMC Plan. 40.On that basis, it seems to me that the subject-matter of the PSPA was the Original CPS 2. Further, it is unlikely that the subject-matter of the PSPA was different from the subject-matter of the subsequent Assignment. 41.The assignment for the 5/F is dated 26 September 1991. However, it appears to be common ground that the assignment of CPS 2 was delayed because it could only take place if appropriate approvals were obtained as had previously been indicated were being sought. I accept Mr Ng’s evidence that he agreed to the delay at least in part because he trusted Wing Ming, and they seemed to have the shared intention that what would ultimately be sold was a lawful car parking space, and something which Wing Ming could actually sell. 42.On 29 October 1991, the Architect/Authorised Person acting for Wing Ming applied for approval of proposals in respect of ‘Building (A & A) Amendment’. By letter from the Buildings Ordnance Office, Buildings and Lands Department dated 5 December 1991, the proposals were approved on a standard form with six pre-printed paragraphs and two additional typed paragraphs which stated:
43.Also dated 5 December 1991 is the Form 12 issued by the Building Authority under section 14 of the Buildings Ordinance. The BOO reference number is ‘BLD (B) 2-3/4053/72(2)’. The Form 12 states (emphasis in original):
44.On the basis of the two documents dated 5 December 1991, it appears that – whilst approval had been given to the proposals in the alterations and additions plans – (1) corresponding structural plans were yet required for approval, (2) comments from various government departments including the District Lands Officer were outstanding, to be conveyed in due course, and (3) approval of the plans did not authorise the commencement or carrying out of any building works. 45.There is also a Form 14 issued under section 14 of the Buildings Ordinance. That is the form which gives consent to the commencement and carrying out of the works described as “Building Works (Alterations & Additions)”, namely the relevant works proposed to be performed by Wing Ming. The Form 14 specifies that those building works are to be carried out in accordance with the following plans, as are listed in a table, as follows:
46.The only ‘Consent Date’ shown is 13 July 1993, and the Form 14 bears to hand written “}” signs which seem to indicate that all three entries for ‘Date of Notice of Approval’ were given just one ‘Consent Date’ as shown, and against one handwritten signature of CY Wu against the chop of that name in the ‘Signature’ column. 47.This is also consistent with the ‘Certificate on completion of building works not resulting in a new building or of street works’ filed by Essman on 25 October 1995, which specifically refers to the consent of the works under relevant reference number as having been given on 13 July 1993, the works having been completed on 26 October 1995. 48.On that basis, I do not think it likely that the Partition Wall had been installed by the end of January 1992. As all of the proposed works, including the Partition Wall, were put forward in one set of drawings under the same reference number, albeit with a further submission of structural drawings as was required by the original approval of plans, consent to doing any of those works was only given in July 1993. Further, the Partition Wall was placed where it seems likely to have had some potential structural impact on the cockloft built on or across the top of it. 49.I acknowledge that the clear suggestion that the Partition Wall was not actually completed by January 1992 was first made only in Mr Ng’s cross-examination – when it might be thought that the date of the erection of the Partition Wall was something to which prior focus would have been given. But, there is perhaps some support for Mr Ng’s evidence by the very nature of the complaint made by Wing Ming in the 1993 Action (see below). In any event, irrespective of that point and on balance on the evidence overall, I accept Mr Ng’s evidence that for a while after purchasing CPS 2, Sanwa parked its vehicle in the Original CPS 2. 50.Nevertheless, it must be clear that both Wing Ming and Sanwa probably thought that any necessary approvals and legal matters were being dealt with so that the completion of the purchase of CPS 2 might go ahead, and at some point it was envisaged that CPS 2 might be relocated. 51.On 8 February 1992, Wing Ming and Sanwa entered into the Assignment for the “Property” described as follow:
52.There was a plan attached to the Assignment (ie. the Assignment Plan) with the original Void Area next to the Original CPS 2 marked “G”. This is the area referred to by Wing Ming as the Re-Designated CPS 2. It is right that the Assignment was prepared by Sanwa’s then solicitors, whose duty it was to check and accept title. 53.Whether Sanwa parked its vehicle in the Re-Designated CPS 2 from February 1992, or from some later period in or after mid-1993, Sanwa could only have parked its vehicle in that location once the Partition Wall had been erected. Sanwa then continued to park its vehicle in the Re-Designated CPS 2, apparently without complaint, until sometime after June 2010, when the Partition Wall was removed and the Original CPS 2, 3 and 4 were reinstated. 54.That was the result required by the outcome of the 1993 Action. I shall deal separately below with the content of the relevant judgments, but a brief introduction to the claim may be useful at this point. In the 1993 Action, Wing Ming claimed against the Incorporated Owners (“IO”) of the Building for breach of the DMC, in encroaching or permitting New Gas & Company (“New Gas”) to encroach on Wing Ming’s reserved right to construct a loft in the airspace over CPS 2, 3 and 4 as indicated in the DMC Plan. The encroachment was in permitting New Gas in August 1993 to install a fire services pipe which entered into and ran through the length of such air space, which resulted in Wing Ming’s plans to construct a loft in the air space and rent it out once constructed being delayed. Wing Ming contended that, to construct the pipe, New Gas must have entered into the airspace which Wing Ming had not authorized. The IO and New Gas defended the claim on the basis that there was no encroachment on any airspace over CPS 2, 3 and 4. They argued that Wing Ming unilaterally re-designated common area (marked “VOID” in the DMC Plan) as CPS 2, 3 and 4, then constructed a loft over the true car parking spaces and the adjacent re-designated spaces. There was also the erection of the Partition Wall below the loft, enclosing the true car parking spaces, and separating those parking areas from the re-designated spaces. It was contended that was all unlawful, as contrary to the DMC and Conditions of Sale relating to the Building. 55.As can be seen from that summary, and as is clear from the plan annexed to the Reyes Judgment, it was a central issue in the 1993 Action as to whether the Re-Designated CPS 2 at the location marked “VOID” on the DMC Plan was actually on common area in accordance with the DMC. 56.Following the Reyes Judgment, and Wing Ming’s unsuccessful appeal from it, the required works were performed. As already indicated above, photographs of the ground floor taken after those works show CPS 2, 3 and 4 being in the Original CPSs location, and specifically marked accordingly on the ground itself. The different colour floor paint shows the demarcation between the white-outlined light grey parking spaces and the darker grey common areas. Notably, the photographs show that there is no other parking space delineated on the ground in front of Original CPS 2. 57.On 17 April 2018, Wing Ming commenced proceedings in the Lands Tribunal in LDBM 89/2018 against the IO, seeking the dissolution of the existing Management Committee of the IO and the appointment of an accountancy firm as the administrator of the Building. To justify the claimed relief, Wing Ming relied on certain facts which it asserted. 58.Relevantly for present purposes, Wing Ming’s pleaded case (§5) made reference to the fact that as developer it had sold several units with car parks to purchasers including Sanwa. In section C2 of the pleading headed ‘Failure to Prevent and/or Stop the Conversion of Common Parts in the Car Park of the Building’, Wing Ming pleaded in §§29-34:
59.The pleading was verified by a statement of truth by a director of Wing Ming. The facts asserted as true are obviously at odds with the facts now relied upon by Wing Ming in this action. 60.In passing, it might be noted that in §36, Wing Ming pleaded a further breach by the IO in causing, procuring and/or permitting the parking of private cars in designated parking spaces for lorries and/or containers on trailers (i.e. CPS 5, 6, 7, 8, 9 and 10). This seems to me to be a recognition of what is shown on the DMC Plan, namely that the parking space areas in those parking spaces are longer than that shown for CPS 2, 3 and 4 – with the consequent difference in size of the areas in front of those spaces marked “VOID”. This is also consistent with the original Special Conditions (9) and (10) of the Conditions of Sale of the land in 1974 (see above) which specified that half of the space provided for parking, loading and unloading should be used for the parking private cars and light vans, and the other half for lorries, and referred to the attached layout plan approved by the Building Authority. C. Reyes Judgment and CA Judgment 61.At the start of his judgment (§§1-2), Reyes J described the context. Since 1993, the owners of the Building had been locked in bitter dispute about almost all aspects of the building’s management. As Reyes J put it, on one side of the dispute is Wing Ming, and on the other side are all other owners, represented by the IO. He then set out (§§3-12) the particular contest to be decided in relation to the main claims summarised (as I have also summarised them above). In the context of his brief chronological review, Reyes J specifically noted (§35(1)) that the area identified as having been sold to Sanwa is marked “VOID” on the DMC Plan, and that CPS 2 to 10 and the “VOID” areas in front of each are also coloured green on the DMC Plan. 62.As Reyes J noted (§§37-39): (a) at the time when the fire pipe was installed by New Gas, there was no loft over CPS 2, 3 and 4 as shown in the DMC: but (b) by the time of the trial there was a loft over CPS 2, 3 and 4 as marked in the DMC, but the loft was not confined to the space over CPS 2, 3 and 4 as it also extended into the space above the “VOID” areas marked on the DMC Plan in front of CPS 2, 3 and 4; and (c) the Partition Wall had been erected below the loft so as to separate CPS 2, 3 and 4 from the areas marked “VOID” as shown on the DMC Plan. 63.Reyes J also noted (§40) that if a 40-foot container were parked in the Container PS shown in the DMC Plan, Sanwa would not be able to park a vehicle in the Re-Designated CPS 2, so that the lines marking off the container PS have consequently been painted so as to extend no further than the edge abutting that space. This point is criticised by Ms Eu, on the basis that Reyes J apparently did not know that the purchaser of the Container PS had covenanted to give access across the end of it to CPS 2. But, the criticism is somewhat weakened by the fact of the re-painting. 64.In any event, the key holdings were that:
65.In the CA Judgment, it was identified that unless the areas marked “VOID” adjacent to the Original CPS 2, 3 and 4 belonged to Wing Ming, no liability for damages could arise on the claim. In answering that question, focus had to be on the circumstances peculiar to the areas marked “VOID” adjacent to the Original CPS 2, 3 and 4. Amongst the particular circumstances, the CA looked at the definitions in the DMC, and the special conditions of the land grant which contained specific requirements relating to the provision of space “for the parking, loading and unloading of vehicles”. 66.The conclusion was that Reyes J was “clearly right” in holding that the areas marked “VOID” adjacent to the Original CPS 2, 3 and 4 are common areas. D. Agreed Issues 67.The parties have agreed the following issues to be determined at trial:
68.Whilst I may traverse most of those issues, I am not sure they need necessarily be compartmentalised quite in the above way. E. Subject-Matter of the Assignment 69.This is obviously the key question, and it requires the application of general and well-settled principles on the construction of contracts. No reference to authority is necessary. The exercise is to discover what a reasonable person would have understood the parties to mean. This involves having regard to the individual words used by the parties, but also 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. 70.In the context of a conveyance, where there is a dispute with regard to what is actually conveyed, that is a matter of construction of the whole conveyance, including the parcel clause and the plan, in light of other relevant surrounding circumstances. Again, the object is to ascertain what the parties intended to be passed and what was passed under the document. 71.In this case, the relevant documents to consider include the PSPA and the Assignment, with what strikes me as the reasonable presumption that they related to the same subject-matter. 72.The starting point is to note that, though the PSPA was headed by reference to the parking space marked “2” on the ground floor, the actual subject matter of the Assignment was and could only have been the 5 equal undivided shares in the Building, together with the right to use, occupy and enjoy a designated car parking space. This is because an assignment concerning a unit in a multi-story building is the proprietary grant of the undivided share(s) allocated to the unit. The right to exclusive possession of the unit is based on mutual covenants running with the land, such as are found in the DMC in this case. Hence, the purported grant of exclusive possession in assignment should be read as a reference to the product, as a matter of contract, of the mutual covenants simultaneously being entered into, rather than any proprietary grant under the assignment itself. 73.There seems little doubt that the parties envisioned the possibility of the Original CPS 2 being “moved forward” – a possible relocation to Re-Designated CPS 2 – at a later date, albeit only if proper approval was obtained and certain “legal matters” were satisfactorily dealt with. But, I agree with Mr Chang that does not change the fact that the property intended to be sold was the Original CPS 2. As an aside, it seems the “legal matters” were separate from and in addition to the buildings approval. Anyway, that evidences the common intention to transact only what was properly able to be transacted. The common intention was and remained to conclude a transaction on the sale of 5 equal undivided shares, with the right to use CPS 2 in the Building. 74.The Assignment identified the rights ‘carried’ or ‘bundled’ with the 5 equal undivided shares as “the sole and exclusive right and privilege to use occupy and enjoy Car Parking Space No. 2 on the Ground Floor of the Building as shown coloured green on the plan annexed” (which showed the Re-Designated CPS 2). But that does not of itself answer what rights were ‘carried’ or ‘bundled’. It is necessary first to look at the DMC and the DMC Plan. 75.The Recitals to the DMC, when read together and in context identify, that the 5 undivided shares allocated to each car parking space numbered 2-10 are allocated only to the actual car parking spaces shown, and not to any area marked “VOID” on the DMC Plan. As a matter of ordinary meaning, “void” means empty and might be contrasted with, for example, a marked car parking space. Therefore, whilst Ms Eu is right to say that “void” does not necessarily mean common area or passage way, nor does it likely mean car parking space, or there would have been no need to differentiate one thing from the other. I conclude that the allocation of the 5 equal undivided units was to the Original CPS 2. 76.On this point, there is some confusion in the submission on behalf of Wing Ming as to what the green marking on the DMC Plan signifies. As stated, the area coloured green includes both the CPSs as marked and the areas marked “VOID”. Therefore, the following options arise as to what the green coloured area comprises:
77.Ms Eu cannot have it both ways: if the whole of the green coloured area on the DMC Plan (that is, both the area of the car parking space marked 2 and the area marked “VOID” in front of it) is car parking space, then it would be the use of that whole space which would run with the 5 equal undivided shares allocated to CPS 2; yet Ms Eu’s submission depends upon the rights ‘carried’ or ‘bundled’ with those 5 equal undivided shares being attached to only half of the area marked green on the DMC Plan. If that were not so, then Wing Ming would have been trespassing when it purported to sell Re-Designated CPS 2 and yet blocked off access to Original CPS 2. 78.Nor can there be any argument proceeding from the suggestion made that no share was allocated to the Original CPS 2, which Ms Eu submits would not stop Wing Ming from asserting its right to exclusive possession to the space because by agreement this is private area which has never been sold. That suggestion turns the facts and the documents on their head. Ms Eu’s further submission that there may have been some form of sub-division also does not seem to me to fit the facts. Whatever comprised CPS 2 was allocated 5 equal undivided shares under the DMC, and whatever was sold and purchased in 1991/1992 was all of those 5 equal and undivided shares. There was no sub-division. As Mr Chang submitted, it makes little sense for Wing Ming to claim that it retained the right to exclusive possession of Original CPS 2 despite having sold all of the 5 equal undivided shares in the Building which under the DMC attached to the very space which Wing Ming claims to have retained. 79.Once it is accepted that the rights carried or bundled with the 5 equal undivided shares can only run with part/half of the area coloured green on the DMC Plan, that must be a reference to the Original CPS 2. Of course, Ms Eu focuses on the assignment Plans, but I do not think one simply ignores the DMC when construing the agreement. Indeed, that is further supported by the following matters:
80.That seems to me to be the straightforward answer to what the parties must have intended to be the subject-matter of the Assignment. Wing Ming and Sanwa must have intended to sell and purchase the 5 equal undivided shares together with the rights attached to those shares by the DMC, being the right to use, hold and occupy the Original CPS 2. 81.I do not think that answer is somehow ‘trumped’ by discussions of a possible “move forward” or by the plan attached to the Assignment, where it is the Re-Designated CPS 2 which is coloured green. I accept Mr Chang’s submission that where the verbal description sufficiently identifies without reference to the plan the property being conveyed, then the plan is not determinative of the parties’ objective intention on the subject-matter of the assignment. 82.I also note a degree of inconsistency in Wing Ming’s case as to which plan was supposedly attached to the PSPA. Its pleaded case is that the plan attached was the one marked “W-3” appended to the Amended Statement of Claim. But the evidence of Mr Yuen is that the plan attached was the one showing the Re-Designated CPS 2 coloured and with the dimensions handwritten on it. Of course, as I have already noted, the PSPA itself only refers to there being one attachment, namely the DMC. But even the plan showing dimensions gives those dimensions by references to ‘minimums’, not in fact precise dimensions. 83.I also reject Ms Eu’s submission that it is clear from the special covenants included in the DMC and the various documents of title, most of which were not seen by or known to Sanwa at the material time, that the various owners of the Building agreed to the Re-Designated CPS 2 as a car park and not as common area. Nor do I think the green colour of the Re-Designated CPS 2 evidences that agreement in any way. Here too, there is some inconsistency. On Wing Ming’s own case, there would be no need to seek consent from all co-owners when Wing Ming contended that the “VOID” space was not common area but formed part of the Original CPS 2. But, anyway, the contractual covenants in the other documents simply do not grant Wing Ming consent to vary the DMC so as to attach the exclusive right to hold, use and occupy the “VOID” area to the five shares that were allocated to the Original CPS 2. 84.Ms Eu submits that, although the Original CPS 2, 3 and 4 are now reinstated by the subsequent demolition of the Partition Wall, this does not retrospectively change the subject-matter of the Assignment. That may be right, but it really only begs the question as to what was the subject-matter of the Assignment. Indeed, it can also be put the other way round, in that the erection of the Partition Wall would not retrospectively change the subject-matter of the Assignment. Therefore, the precise date of construction of the Partition Wall unlikely affects the analysis. 85.As to Sanwa’s acceptance without complaint of the long-term use of Re-Designated CPS 2, that of itself could not create any lawful right to use it (when it was part of the common area of the Building). Also, Sanwa understood it was purchasing a car parking spot which would accommodate only one private car, and precisely where that spot might have been may not have been of prime importance – at least, not until the Reyes Judgment. F. Other Matters 86.Having reached the conclusion that the subject-matter of the Assignment was the block of 5 equal undivided shares in the Building, together with use and possession of the Original CPS 2, the matters arising under the various sub- paragraphs of Agreed Issue 2 (see above) do not arise. However, I would make the following comments on them. 87.Title: I tend to think that the question of title is something of a red herring. Wing Ming had title to convey the 5 equal undivided shares in the Building. Insofar as what rights to exclusive use and position are ‘carried’ with those shares were an aspect of title, I do not accept on the evidence (see above) that the re-designation of car parking spaces was relevantly approved by the Buildings Authority and/or the Director of Lands Office, nor was there actual agreement between the co-owners of the Building to any relevant variation the common areas under the DMC. 88.Res Judicata / Issue Estoppel: I have reached my conclusion on my own reasoning. In so doing, I have not considered the previous judgments as evidence. However, I also think that Wing Ming is in any event bound by the findings in the Reyes Judgment and the CA Judgment. 89.It is trite that an issue estoppel arises where: (1) the decision was judicial in the relevant sense; (2) it was in fact pronounced; (3) the tribunal had jurisdiction over the parties and the subject matter; (4) the decision was final and on the merits; (5) it determined a question raised in the later litigation; and (6) the parties are the same or their privies, or the earlier decision was in rem. There is no dispute between Ms Eu and Mr Chang that the first four requirements are satisfied. 90.As to requirement (5), this seems to me to be satisfied. The central issue determined in the 1993 Action was whether the area marked “VOID” on the DMC Plan was common area, or whether it could be re-designated to be a car parking space. The same question arises in these proceedings, by reference to precisely the same car parking space. I do not think that because some aspects of the evidence may be enlarged or differently presented that that changes the fundamental factual basis of the question answered and to be answered. 91.As to requirement (6), this also seems to me to be satisfied. As Mr Chang submits, there is commonality of interest over the common parts as between the IO and Sanwa (as one co-owner of the Building). Ms Eu submits that estoppel is binding on a person in an official capacity and binds his successors as privies, but does not bind him personally or in another capacity. Here, she says, the IO acts in a representative capacity, in relation to the use of common areas, but cannot have represented Sanwa as regards ownership of Sanwa’s car parking space. But whilst the principle put forward may be correct, its application must depend upon the circumstances. The relevant issue on which the estoppel is said to arise is the issue as to whether the “VOID” area is common area. Therefore, whilst it might be said that the IO does not represent Sanwa as regards ownership of CPS 2, the IO plainly does represent all the owners in the Building (who are all its privies) as regards whether the “VOID” area is capable of having been unilaterally re-designated by Wing Ming from common area. Indeed, in that regard the IO represents both Wing Ming and Sanwa, who are both its privies for this purpose. In any ordinary sense, and to use language commonly adopted in this area, Sanwa is being vexed twice. 92.Thus, whilst I acknowledge the point made in Yip Service Co Ltd v Mauretania Co Ltd (unreported, HCSA 73/2007, 12 January 2009, DHCJ To) at §18, that it is only where the factual basis is the same that one goes on to consider the question of issue estoppel, it seems to me that the factual basis is the same, dependent as it is upon the DMC. Once the DMC came into force, Wing Ming as a matter of fact did not have the right of exclusive possession to the common areas, including the “VOID” areas. 93.It is also impermissible for Wing Ming to blow ‘hot and cold’ on the point about the “VOID” areas. Even if the counterparty to the LDBM proceedings is the IO (and not just Sanwa as one individual co-owner), it seems to me to be an abuse for Wing Ming to assert and rely upon a legal and factual position in those proceedings which is diametrically opposite to the legal and factual position it wishes to assert in these proceedings. 94.Estoppel: The principles of estoppel by convention have been identified in ‘Spencer Bower: Reliance-Based Estoppel’ 5th Ed at §8.6 as follows:
95.Ms Eu also relies on the authority of Amalgamated Investment & Property Co ltd v Texas Commerce International Bank Ltd [1982] 1 QB 84, where Lord Denning MR held at 121H:
96.But the essence of the application of the principle of estoppel by convention is to circumstances where it would be unjust or unconscionable for the person alleged to be estopped from asserting a different legal or factual position, or from going back on the shared assumption. 97.The principle does not factually apply in this case. This is because the shared assumption seems to me to have been that the conveyance related to 5 equal undivided shares together with the relevant ‘carried’ rights to exclusive use and possession of a CPS 2, being something properly approved and legally permissible. In so far as either party thought that might have applied to Re-Designated CPS 2, that turned out to have been incorrect, as has been specifically ruled on in the Reyes Judgment and the CA Judgment. 98.In any event, it is difficult to understand why any form of estoppel by convention might be applied to the circumstances of this case, as that would require the Court to give effect to an arrangement which the Court has held in previous proceedings – and where I independently conclude in these proceedings – to be one which would trample on the rights of third parties. 99.I would reject Wing Ming’s argument on estoppel by convention. 100.Limitation: The limitation argument is tied to the title point, which I think to be something of a red herring. 101.Damages: Though the point no longer arises, I think there is more force in Wing Ming’s position as regards damages. If Sanwa is entitled to rectification, it can use the Original CPS 2 in future, and it has had some use of the Re-Designated CPS 2 in the past. I do not think it has suffered damage. If it is not entitled to rectification, Sanwa can unlikely obtain damages via the back door. 102.Trespass and Remedy: If I had found that the subject-matter of the Assignment was the Re-Designated CPS 2, the corollary would be that the Original CPS 2 has never been conveyed to anyone, and ownership was retained by Wing Ming. On that basis, then Sanwa’s use of the Original CPS 2 would amount to trespass. The parties have agreed, for the purpose of these proceedings, that the fair market rental of the Original CPS 2 from 1 June 2011 to 31 May 2021 is $3,300 per month, which for 126 months until November 2021 would total $415,800. However, I am not sure the question of remedy is that simple. As the photographs show, there is no parking space delineated where it is said that Re-Designated CPS 2 should be or is. I also note that the photographs indicate that Wing Ming continues to use only the Original CPs 3 and 4 (and not the space immediately in front of them) – though this was not further explored in evidence. So there seems to me to be at least some doubt as to whether or not there was any true loss to Wing Ming. G. Rectification 103.First, I reject Ms Eu’s submission that the fact that Sanwa now seeks an order that the Assignment Plan be rectified to depict the correct location of the CPS conveyed as the Original CPS 2 amounts to an “admission” that the subject matter of the Assignment is the Re-Designated CPS 2. Obviously, it does not. 104.Rather, once the conclusion is reached that the subject-matter of the Assignment included the exclusive right and privilege to use, occupy and enjoy the Original CPS 2, there can be no reasonable dispute that Sanwa is entitled to a declaration that it has since the date of the Assignment been the legal and beneficial owner of the Original CPS 2, as reflected in the 5 equal undivided shares. 105.I remind myself of the legal principles relating to rectification, which are well-established. In essence, rectification is limited to those circumstances where the contract does not accurately reflect the parties’ true agreement, with the following requirements:
106.On the basis of my earlier conclusions, I have found a clear common intention that the subject-matter of the Assignment up to the time of its execution was not properly reflected by the Assignment Plan. It logically follows that the Assignment should be rectified so as correctly to reflect the true intention and the correct location of the car parking space as the Original CPS 2. 107.I do not accept Wing Ming’s earlier suggestion that the claim for rectification is statute-barred (though this was anyway abandoned in opening submissions). Nor do I accept that the belatedly raised (but unpleaded) argument on laches should lead the Court to refuse to grant rectification in the circumstances of this case. It is, of course, correct that Sanwa learned of the Reyes Judgment in late December 2007, and of the CA Judgment in mid-2008. But, precisely because of the content of those judgements, and the reinstatement works that were performed as a consequence, it does not seem to me that there is any basis for criticising Sanwa for not seeking formal rectification of the Assignment until it was sued for trespass. Acknowledging that rectification is a discretionary remedy, I see no reason in the overall circumstances why (if otherwise appropriate, as I have held to be) Sanwa should be denied that remedy as a result of any timing matters. H. Result 108.I find in favour of Sanwa. Therefore, I dismiss Wing Ming’s claim. I allow Sanwa’s counterclaim to the declaration and order for rectification as pleaded in the prayer to the counterclaim. 109.As to costs, I see no reason why costs should not follow the event. In those circumstances, Wing Ming is to bear Sanwa’s costs of the action (including any reserved costs), to be taxed if not agreed, with certificate for two Counsel.
Ms Audrey Eu SC and Ms Chantel Lin, instructed K&L Gates, for the plaintiff Mr Jonathan Chang SC and Ms Esther Mak, instructed by Howell & Co., Solicitors, for the defendant |
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