Wing Ming Garment Factory Ltd v. Sanwa Trading (H.K.) Ltd
Read the full judgment text of CACV 571/2021 on BabelCite. This Court of Appeal judgment was delivered on 1 June 2023.
1. The principal issue which arises for determination in this appeal against the Judgment of Coleman J dated 16 November 2021 (“ Judgment ”) is whether the subject matter of the agreement for sale and purchase between Wing Ming (vendor) and Sanwa (purchaser) contained in or evidenced by an offer letter dated 28 August 1991 was the “ Original CPS 2 ” (as contended by Sanwa), instead of the “ Re-designated CPS 2 ” (as contended by Wing Ming).
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CACV 571/2021, [2023] HKCA 691 On Appeal From [2021] HKCFI 3357 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 571 OF 2021 (ON APPEAL FROM HCA NO 1805 OF 2016) ________________________
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________________ J U D G M E N T ________________ Hon Chow JA (giving the Judgment of the Court): INTRODUCTION 1.The principal issue which arises for determination in this appeal against the Judgment of Coleman J dated 16 November 2021 (“Judgment”) is whether the subject matter of the agreement for sale and purchase between Wing Ming (vendor) and Sanwa (purchaser) contained in or evidenced by an offer letter dated 28 August 1991 was the “Original CPS 2” (as contended by Sanwa), instead of the “Re-designated CPS 2” (as contended by Wing Ming). 2.The Original CPS 2 is a reference to the car parking space marked “2” on the Ground Floor Plan (“DMC Ground Floor Plan”) attached to the Deed of Mutual Covenant dated 2 March 1991 in respect of Wing Ming Industrial Centre (“the Building”). The following diagram shows the Original CPS 2 to 4 and the “VOID” areas in front of them as depicted on the DMC Ground Floor Plan[1]: 3.The Re-designated CPS 2 is a reference to the “VOID” area in front of the Original CPS 2 on the DMC Ground Floor Plan, and came about as a result of certain modification works carried out in 1992/1993 by Wing Ming, in particular the construction of a partition wall (“Partition Wall”) enclosing the Original CPS 2 to 4. The following diagram shows the Re-designated CPS 2 to 4 after the construction of the Partition Wall[2]: The re-designation of CPS 2 was reversed consequent upon the judgment of Reyes J dated 20 December 2007 in HCA 8805/1993 (“the Reyes Judgment”) holding that the “VOID” areas in front of the Original CPS 2 to 4 were common areas of the Building and requiring Wing Ming to remove the Partition Wall, which Wing Ming did in around June 2010. BASIC FACTS (i) The Building and the Car Park Layout Plan 4.Wing Ming was the developer of the Building, situated at No 15 Cheung Yue Street, Kowloon and erected upon New Kowloon Inland Lot No 5491 (“the Lot”), which was granted by the Government to Wing Ming pursuant to Conditions of Sale dated 13 September 1974. 5.Special Conditions (9) and (10) of the Conditions of Sale provide, inter alia, as follows:
6.On 31 July 1978, the Building Authority approved building plans for the Building, including a Ground Floor Plan (“the Approved Ground Plan”) designating thereon 11 car parking spaces (“Original Car Parking Spaces”) and a container parking space (“Container Space”). Pausing here, it may be noted that the Approved Ground Floor Plan does not show or delineate any “VOID” areas in front of the Original CPS 2 to 10 as shown on the DMC Ground Floor Plan (see §10 below). 7.On 14 November 1978, the Building Authority issued the Occupation Permit in respect of the Building, comprising 11 storeys from the G/F to 10/F together with a Basement and a Roof and an Upper Roof. 8.On 6 March 1979, a copy of the Approved Ground Floor Plan, certified by an authorized architect as having been approved by the Director of Public Works, was registered in the Land Registry pursuant to SC (10) (“the Car Park Layout Plan”). (ii) The DMC 9.In the early 1990s, Wing Ming started to sell off individual floors together with car parking spaces of the Building to purchasers. 10.On 2 March 1991, Wing Ming as the First Owner, Super Kind Investment Ltd (“Super Kind”) as the Second Owner[3] and a company called Essman Construction Company Limited as the Management Company entered into a deed of mutual covenant (“DMC”) in respect of the Building. Attached to the DMC are various floor plans of the Building, including the DMC Ground Floor Plan. The DMC Ground Floor Plan depicts 11 car parking spaces marked “1” to “11” (“Original CPS 1 to 11”) corresponding to the Original Car Parking Spaces shown on the Car Park Layout Plan, as well as the Container Space. In front of each of the car parking spaces marked “2” to “10” on the DMC Ground Floor Plan is an area marked “VOID”. 11.By the DMC, the Lot and the Building are sub-divided into 1,323 undivided shares, with:
12.In the DMC:
13.On the DMC Ground Floor Plan, the following areas are all coloured “green”: (i) the Original CPS 2 to 10 and the “VOID” areas in front of them, (ii) the Original CPS 1 and 11, and (iii) the Container Space. (iii) The sale of 5/F and Car Parking Space “2” to Sanwa 14.In the latter half of 1990, Mr Ng, a director of Sanwa, was looking for new premises for Sanwa, and saw an advertising board on the external wall of the Building and thought it might suit Sanwa’s requirements. A security guard from the Building’s management office took him to tour one upstairs unit. He did not at that time commit to purchase any unit in the Building. 15.In July or August 1991, Mr Ng learned, upon further inquiry with Jones Lang Wootton (“JLW”), the agent handling the sale of units in the Building, that only the 4/F, 5/F and 10/F of the Building still had vacant/unsold units. A staff member of JLW took Mr Ng to see two of those units and the car parking spaces on the Ground Floor of the Building, and he was shown the Original CPS 2, 3 and 4. Mr Ng’s preference was to buy the Original CPS 2. 16.At the time of looking around the Ground Floor of the Building, neither Mr Ng nor the agent had any floor plan. Whilst the space shown looked big enough to park two private cars, the agent apparently said something to the effect that any parking space that Mr Ng might buy would likely only have space for one private car. Mr Ng was also given to understand that the car parking space could be “moved forward” from the Original CPS 2 and a new partition wall would be built, though that would need application and approval[4]. 17.Starting from August 1991, there were exchanges of correspondence between JLW and Sanwa concerning the latter’s intended purchase of the 5/F and a car parking space of the Building. It is not necessary to set out the details of the correspondence in this judgment, save to mention that the sale and purchase of the 5/F and a car parking space of the Building was eventually split into two sets of document. 18.In relation to the 5/F of the Building, Wing Ming and Sanwa signed a letter prepared by JLW dated 28 August 1991 confirming the agreement for the sale and purchase of the 5/F at the price of HK$12,708,800. A formal sale and purchase agreement was entered into on 10 September 1991, and completion took place by an assignment dated 26 September 1991. 19.In relation to the car parking space, there are 3 versions of a letter prepared and signed by JLW dated 28 August 1991 confirming Sanwa’s offer to purchase from Wing Ming of the “Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre”. The first and second versions were not signed by either Sanwa or Wing Ming, but a circular chop of Sanwa appeared on pages 1 and 2 of the second version. For the present purpose, it is only necessary to focus on the third version, referred to at the trial as the “PSPA”, which was signed by both JWL and Wing Ming on page 3. A circular chop of Sanwa also appeared on pages 1, 2 and 3 of the PSPA. An additional Clause 6(ii)a was inserted on page 2 of the PSPA, next to the initials of Mr Ho of JWL and Mr Yuen of Wing Ming. 20.The PSPA states, as far as material, as follows:
21.Importantly for the present purpose, the Judge found as a fact that a ground floor plan, with the Re-designated CPS 2 coloured green next to the initials of Mr Ho[5] and Mr Yuen and two circular chops (one faint and on clear) of Sanwa (“the Colour Copy Plan”)[6], alleged by Mr Yuen to have been attached to the PSPA[7], was not attached to the PSPA[8]. We shall come back to the significance of this finding later in this judgment. 22.It is not in dispute that, at the time of the making of the PSPA, it was Wing Ming’s intention to convert the Original CPS 2 to 4 to some use other than for the parking of vehicles, and relocate the Original CPS 2 to 4 to the “VOID” areas in front of them to become the Re-designated CPS 2 to 4. Such intention could be gleaned from Clause 10 of the PSPA, and similar provisions in some earlier sale and purchase agreements/assignments entered into by Wing Ming and other purchasers in respect of some other floors/car parking spaces of the Building. 23.On 29 October 1991, the Architect/Authorised Person acting for Wing Ming submitted building plans (“the A&A Plans”) for some intended alterations and additions works at the Building to the Building Authority for approval. Those works involved, inter alia, the construction of a mezzanine floor to form a loft area, the demolition of an internal wall, and the building of a new wall (ie the Partition Wall) enclosing the area comprising the Original CPS 2 to 4[9]. On 5 December 1991, the Building Authority approved the A&A Plans. Consent for commencement of the relevant works was given on 13 July 1993, and the works were certified to have been completed by 26 October 1995. 24.In the meantime, by an assignment dated 8 February 1992 (“the Assignment”), Wing Ming assigned, or purported to assign, to Sanwa the property described in the Second Schedule thereto, namely -
25.Annexed to the Assignment is a “Car Park Ground Floor Plan” (“the Assignment Plan”) of the Building with the “VOID” area in front of the Original CPS 2 marked “G” and coloured Green. This is the area referred to by Wing Ming as the Re-designated CPS 2. The Original CPS 2 to 4 are not shown on the Assignment Plan. 26.As found by the Judge:
(iv) The 1993 Action against the IO 27.In 1993, Wing Ming brought an action in the High Court, HCA 8805/1993 (“1993 Action”), against the Incorporated Owners (“IO”) of the Building for breach of the DMC, alleging that a fire services pipe (“the Pipe”) running through the length of the air-space over the Original CPS 2, 3 and 4 as indicated on the DMC Ground Floor Plan installed by New Gas & Company upon the IO’s instruction encroached on Wing Ming’s right to construct a loft in the said air-space as reserved by Clause 5 of Subsection C of Section I of the DMC. The IO denied that there was any encroachment of any air-space over the Original CPS 2, 3 and 4 shown on the DMC Ground Floor Plan. They argued that Wing Ming had unilaterally re-designated common areas (marked “VOID” on the DMC plan) as the Re-designated CPS 2 to 4, constructed a loft over the Original CPS 2 to 4, and erected the Partition Wall below the loft enclosing the Original CPS 2 to 4. This caused those parking areas to be separated from the Re-designated CPS 2 to 4. The IO further argued that, in any event, the Pipe only ran through the length of the air-space above the “VOID” areas, and never entered the air-space over the Original CPS 2 to 4. Since the “VOID” areas were in fact common area, there was no breach of any air-space right of Wing Ming under the DMC, which only reserved to it a right to construct a loft over the Original CPS 2 to 4. 28.The 1993 Action was tried by Reyes J in December 2007. By the Reyes Judgment, Reyes J held in favour of the IO, finding (inter alia) the following:
29.Reyes J granted, inter alia, a mandatory injunction requiring Wing Ming to (i) demolish the Partition Wall, and (ii) restore the car parking spaces to what was shown on the Car Park Layout Plan. Pausing here, it may be noted that there were other issues raised between the parties in the 1993 Action (including the IO’s counterclaim against Wing Ming for outstanding management fees) which were determined by Reyes J. However, those issues are not relevant to the present action, and do not require consideration here. 30.Wing Ming’s appeal against the Reyes Judgment was dismissed by the Court of Appeal (constituted by Le Pichon JA, and Suffiad and Sakhrani JJ) in CACV 27/2008. By a judgment dated 27 June 2008 (“the CA Judgment”), the Court of Appeal held, inter alia, that:
31.Wing Ming sought leave to appeal against the CA Judgment in respect of “the pipe issue”, arguing that the following question was a question of great general or public importance which ought to be determined by the Court of Final Appeal under s 22(1)(b) of the Court of Final Appeal Ordinance, Cap 484:
32.On 17 June 2009, the Court of Appeal rejected Wing Ming’s application for leave to appeal in respect of the pipe issue[17], holding that it was “a concurrent finding of fact that [Wing Ming] had not in fact made any application for the alteration of the approved layout plan for the car parks” and thus the said question was purely hypothetical and did not arise for determination; in any event the question could not be determined divorced from its context, was fact sensitive, and as such could not be said to be a question of great general or public importance[18]. 33.Wing Ming also sought leave to appeal on the “or otherwise” basis, arguing that the Court of Appeal’s finding that the “VOID” areas were common areas was not a pure finding of fact but also involved a question of construction and the Court of Appeal, in reaching that conclusion, was obviously wrong. The Court of Appeal held that while, as a matter of construction, a different view could not be ruled out altogether, it would not follow that in reaching their conclusion, the Court of Appeal was obviously wrong[19]. 34.On 16 September 2009, the Appeal Committee of the Court of Final Appeal (constituted by Li CJ and Bokhary and Ribeiro PJJ) rejected Wing Ming’s renewed application for leave to appeal in respect of the pipe issue, holding that the decisions of Reyes J and the Court of Appeal were case specific and did not turn on the said question, and as to discretionary leave on the “or otherwise” basis, Wing Ming was, apart from anything else, confronted with concurrent factual findings adverse to it which it had no reasonable prospects of having overturned[20]. 35.Wing Ming eventually demolished the Partition Wall and reinstated the Original CPS 2 to 4 in about June 2010. The reinstated car parking spaces were demarcated by different colour floor paint (in light grey inside rectangular white outlines) from the common areas (in darker grey). (v) The 2016 Action against Sanwa 36.On 11 July 2016, Wing Ming commenced the present action, HCA 1805/2016 (“the 2016 Action”), against Sanwa, alleging that Sanwa had been trespassing on the Original CPS 2, and sought, inter alia, an order for possession of the Original CPS 2 and mesne profits from June 2011 until delivery up of vacant possession of the Original CPS 2. The underlying basis of this claim was that what Wing Ming sold to Sanwa under the Assignment was the Re-designated CPS 2, instead of the Original CPS 2 (of which Wing Ming contended it had all along retained the right to the exclusive use and possession). 37.Sanwa defended Wing Ming’s claim on the basis that it had throughout been the legal and beneficial owner of the Original CPS 2 shown on the DMC Ground Floor Plan, and sought an order that the Assignment Plan be rectified to depict the correct location of the car parking space that it had purchased from Wing Ming as the Original CPS 2. (vi) The 2018 Action against the IO 38.On 17 April 2018, Wing Ming commenced an action in the Lands Tribunal in LDBM 89/2018 (“the 2018 Action”) 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 complained, inter alia, that the IO had failed to prevent and/or stop the conversion of commons parts in the car park of the Building. The following facts were pleaded by Wing Ming in support of this complaint:
39.Wing Ming’s aforesaid pleading was verified by a statement of truth by a director of Wing Ming. It is thus apparent that Wing Ming accepted that the Reyes Judgment finally and conclusively determined that the “VOID” areas were common areas of the Building, and relied on the Reyes Judgment to mount its claim against the IO in the 2018 Action. THE JUDGMENT 40.The trial of the 2016 Action took place before the Judge in November 2021. At the trial, the Judge heard oral evidence from Mr Yuen (managing director of Wing Ming) and Mr Ng (director of Sanwa). As pointed out by the Judge, it was common ground that the case turned on interpretation of documents rather than the credibility of the witnesses. 41.On 16 November 2021, the Judge gave the Judgment in favour of Sanwa. 42.In the Judgment, the Judge made, inter alia, the following material findings:
43.Accordingly, the Judge:
THE PRESENT APPEAL 44.Wing Ming appealed against the Judgment by a Notice of Appeal dated 13 December 2021. In the Notice of Appeal, Wing Ming raises the following grounds of appeal:
DISCUSSION (i) Grounds 1 and 2 - the subject matter of the sale and purchase 45.The ascertainment of the subject matter of the sale and purchase between Wing Ming and Sanwa depends on the true construction of the PSPA. According to Wing Ming, the PSPA constituted the preliminary sale and purchase agreement of the Re-designated CPS 2[30]. On the other hand, Sanwa denies that the subject matter of the sale and purchase under the PSPA was the Re-designated CPS 2, which was not in existence as at the date of the PSPA nor referred to in that document or the DMC; instead the common intention of the parties was that Wing Ming agreed to sell and Sanwa agreed to buy “CPS 2 which Wing Ming had title and the right to convey”, ie the Original CPS 2[31]. 46.The applicable principles for the construction of a written agreement are well settled. The Court shall have regard to, amongst other matters, its context and purpose, the factual matrix surrounding the agreement, as well as the language used by the parties. The exercise is an objective one. 47.In the present case, the subject matter of the sale and purchase under the PSPA is stated to be “the captioned property (‘the Property’)”, that being a reference to the “Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre” mentioned at the beginning of that document. There is no suggestion that, as at the date of the PSPA, any area on the Ground Floor of the Building was actually marked “2”. In our view, the “Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre” was plainly a reference to an area marked “2” on a floor plan of the Ground Floor of the Building. The Judge found, as a fact, that the Colour Copy Plan was not attached to the PSPA; instead the PSPA only referred to the DMC as an attachment. In Clause 6(ii)a of the PSPA, it was expressly agreed by the parties that the intended transaction was “subject” to the existing DMC. It was also declared that “the Purchaser has read through the DMC before signing this Offer Letter”. The DMC Ground Floor Plan was one of the plans attached to the DMC. 48.In our view, the “Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre” in the PSPA is a reference to the area marked “2” on the DMC Ground Floor Plan. The only area marked “2” on the DMC Ground Floor Plan is the Original CPS 2. The area corresponding to the Re-designated CPS 2 is marked “VOID”, not “2”. The fact that both the Original CPS 2 and the “VOID” area in front of it are coloured green in the DMC Ground Floor Plan does not assist Wing Ming, because the subject matter of the sale and purchase under the PSPA is not the “Space Marked ‘green’ on the Ground Floor of Wing Ming Industrial Centre”. The “VOID” area in front of the Original CPS 2 or, what amounts to the same thing, the Re-designated CPS 2, is not the subject matter of the sale and purchase under the PSPA. 49.The Judge’s conclusion that the subject matter of the agreement for sale and purchase between Wing Ming and Sanwa under the PSPA was the Original CPS 2 is further supported by the following considerations:
50.Under Ground 1, Wing Ming argues that all contemporaneous documents show that the subject matter of the sale and purchase was the Re-designated CPS 2 (§1.1 of the Notice of Appeal). We set out below the main documents relied upon by Wing Ming and our comments on them:
51.On behalf of Wing Ming, Ms Audrey Eu, SC argues the fact that Mr Ng admitted (at §10 of his first Witness Statement) that the “Property” to be sold required application to the Building Authority first[38] shows that the “Property” could not be the Original CPS 2, because no approval from the Building Authority was required for the sale of the Original CPS 2 by Wing Ming to Sanwa[39]. 52.At §10 of his first Witness Statement, Mr Ng referred to a provision in an earlier draft, unsigned offer letter dated 22 August 1991 for the purchase of the “Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre”. That provision (“Requisite Approval Clause”) was reproduced in the PSPA:
53.In our view, the part of the evidence of Mr Ng that Ms Eu relies upon should be read in light of the fact, as found by the Judge, that there was discussion between Mr Ng and JLW concerning the possibility of “moving forward” the car parking space intended to be purchased by Sanwa from the Original CPS 2 subject to proper approval being obtained and certain “legal matters” being satisfactorily dealt with[40]. Mr Ng’s position was that -
54.Mr Jonathan Chang, SC (for Sanwa) argues that on a proper reading of the PSPA, it only suggested that in the absence of Building Authority approval, Wing Ming could not sell the right to use the Re-designated CPS 2 to Sanwa. However, this did not alter the parties’ intention to conclude a transaction on the sale of 5 equal undivided shares together with the right to use “Car Parking Space No.2” in the Building (ie the Original CPS 2). One problem with this submission is that generally speaking, a word or expression in a written agreement ought to bear the same, consistent meaning throughout the document. If, as earlier mentioned, upon the true construction of the PSPA, the word “Property” should be read as a reference to the Original CPS 2, it would be difficult to reconcile such construction with the statement in the Requisite Approval Clause that Wing Ming “[had] applied to the Building Authority for approval to use the Property for parking of private car” (underlining added). 55.While we would accept that the language used in the Requisite Approval Clause is not perfect and cannot be fully reconciled with what we consider to be the true construction of the PSPA, we believe that the intention of the parties was clear: Wing Ming’s wish was to move the Original CPS 2 forward to the “VOID” area in front of it to become the Re-designated CPS 2 and sell it to Sanwa. On the other hand, Sanwa’s wish was to purchase a lawful car parking space which Wing Ming had ownership of and was lawfully able to sell. Objectively, the car parking space that Sanwa wished to purchase would be the Original CPS 2. Nevertheless, Sanwa was willing to take the car parking space as moved forward if Wing Ming was able to obtain the requisite Government approval to enable Wing Ming to sell it to Sanwa. If Wing Ming was unable to obtain the requisite Government approval, Wing Ming would be under no obligation to proceed with the intended sale and purchase of a car parking space in the Building. 56.As it was, Wing Ming failed to apply for, or obtain, the requisite Government approval to change the layout of the Car Park Layout Plan, or move the Original CPS 2 forward to the “VOID” area in front it, and yet proceeded to complete the sale and purchase under the PSPA. Objectively, there was nothing to suggest that the parties had changed their intention to enter into a lawful transaction involving a sale and purchase of a car parking space which Wing Ming had ownership of and was lawfully able to assign to Sanwa. By proceeding to complete the PSPA in such circumstances, the clear intention of the parties to the Assignment must continue to be to transact what was properly able to be transacted, ie an assignment of the Original CPS 2. 57.Wing Ming also relies on some other bits and pieces of Mr Ng and Mr Yuen’s evidence in support of its case that the subject matter of the sale and purchase was the Re-designated CPS 2 and not the Original CPS 2[42] (§1.2 of the Notice of Appeal). It is not necessary to deal with them in any great detail. As mentioned by the Judge, it was common ground that the present case turns on interpretation of documents[43]. In Ms Eu’s opening, she also says that “[t]he crux is the interpretation of contemporaneous documents signed by the parties as seen in the context of the surrounding circumstances”[44].
58.Wing Ming contends that the Judge’s finding that the common intention of the parties up to the time of execution of the Assignment was that the subject matter of the Assignment was the Original CPS 2 is contrary to the factual matrix (§1.3 of the Notice of Appeal). We set out below the matters relied upon by Wing Ming and our comments on them:
59.Wing Ming next argues that the Judge erred in law and in fact in holding that the common intention was to transact only what was properly able to be transacted, and he conflated (i) the question of the common intention of Wing Ming and Sanwa in respect of the subject matter of the sale and purchase under the Assignment with (ii) the question of whether something was properly able to be transacted, which Ms Eu says was a question of title (§1.4 of the Notice of Appeal). We do not accept this argument. As a matter of ordinary business commonsense, one would have thought that the parties to an assignment would seek to transact what was properly able to be transacted. It is, of course, conceivable that in some special circumstances, the parties to an assignment may knowingly enter into a transaction where the assignor’s title to the property to be assigned may be in doubt or may be known to be defective. However, there was nothing on the facts of this case to suggest that this was what Wing Ming and Sanwa intended to do by entering into the Assignment. In our view, what could properly or lawfully be transacted was a matter which the Judge was entitled to take into account when determining the true, objective intention of the parties to the Assignment. 60.Wing Ming argues that the Judge erred in law and in fact insofar as the finding in §40 of the Judgment (ie the subject matter of the PSPA was the Original CPS 2) was based on his finding that that there was 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. Wing Ming also complains that the Judge was wrong to say that there was no dispute that the Re-designated CPS 2 was neither in existence nor referred to in the DMC (§1.5 of the Notice of Appeal). In our view:
61.Wing Ming next argues that insofar as the Judge reached his finding in §80 of the Judgment (namely, what the parties must have intended to be the subject-matter of the Assignment was the Original CPS 2) was based on the assignment of 5 equal undivided shares allocated to the Original CPS 2 in the DMC, he conflated the issue of a legal estate in land with the issue of exclusive possession of the subject matter of the sale and purchase under the Assignment (§1.6 of the Notice of Appeal). As can be seen from the above discussion, we have arrived at the conclusion that the subject matter of the sale and purchase under the PSPA is the Original CPS 2 without relying on the fact that under the DMC, 5 equal undivided shares are allocated to the Original CPS 2. On the other hand, the fact that 5 equal undivided shares have been allocated to the Original CPS 2 in the DMC is relevant to the question of the parties’ common intention as regards the subject matter of the Assignment. For the purpose of this part of the discussion, the following principles are relevant:
62.In the present, case, 5 undivided shares have been allocated to the Original CPS 2 under the DMC. By the Assignment, those 5 undivided shares were assigned by Wing Ming to Sanwa. There is no, or no sufficient, evidence that Wing Ming and Sanwa intended to “de-couple” or “dissociate” the 5 undivided shares from the Original CPS 2. In such circumstances, the prima facie inference is that Wing Ming and Sanwa intended that the right to exclusive possession of Original CPS 2 would be passed from Wing Ming to Sanwa together with the 5 undivided shares under the Assignment. 63.Lastly, Wing Ming argues that insofar as the Judge based the finding that the common intention between the parties was that the subject matter of the Assignment up to the date of its execution was the Original CPS 2 on the physical demarcations on the Ground Floor of the Building, such finding is unsafe and unreliable as this was never an issue and no evidence was given as to what physical demarcations there were and when or why or by whom physical demarcations were made (§1.7 of the Notice of Appeal). In this regard, Wing Ming refers to and relies upon §§7, 63 and 102 of the Judgment. We have considered those paragraphs of the Judgment, but do not see that the said finding of the Judge was based on the actual physical demarcations on the Ground Floor of the Building. In particular:
64.Ground 2 of the Notice of Appeal contends that the Judge erred in law and in fact in failing to give proper weight to the Assignment and the Assignment Plan. As mentioned in §50(4) above, the Judge found that the Assignment/Assignment Plan did not reflect the true common intention of the parties as regards the subject matter of the assignment and should be rectified. We agree with the Judge’s view on this matter. 65.In all, Grounds 1 to 2 are rejected. (ii) Ground 3 - rectification 66.Wing Ming argues that the Judge erred in law and in fact in granting an order for rectification of the Assignment in that:
67.Point (1) is just semantics. At §106 of the Judgment, the Judge made a specific finding that it was “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”. 68.In respect of point (2), the issue of “mistake” is a red-herring. In Hua Tyan Development v Zurich Insurance Co Ltd (2014) 17 HKCFAR 493, at §51, Ma CJ (with whom the other members of the Court of Final Appeal agreed) set out the correct approach to rectification of a contract where it does not accurately reflect the parties’ true agreement, as follows:
69.The above principles were set out by the Judge at §105 of the Judgment, and he found the 4 conditions for rectification of the Assignment to be satisfied. 70.As for Wing Ming’s reliance on the fact that the Assignment was prepared by Sanwa’s solicitors, that fact, while relevant to the question of whether the Assignment Plan accurately reflected the parties’ common intention regarding the subject matter of the Assignment, was not conclusive. In view of the Judge’s finding of 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, the Judge was plainly correct to make an order for rectification of the Assignment. All the more so having regard to the declaratory relief granted by the Judge (see §43(1) above). (iii) Grounds 4 - title 71.Under this ground, it is argued that the Judge (i) wrongly rejected Wing Ming’s evidence that it had obtained the approval from the Building Authority, and there was no objection from the Director of Lands, as regards the re-designation of the Original CPS 2 to 4, and (ii) erred in holding that there was no actual agreement between the co-owners of the Building to any relevant variation of the common areas under the DMC. 72.This ground can be disposed of briefly. Reyes J and the Court of Appeal both found that Wing Ming had failed to obtain the requisite Government approval required by SC (10) to change the layout of the Car Park Layout Plan, or convert the “VOID” areas in front of the Original CPS 2 to 4 for use as car parking spaces. We agree with this finding, and do not propose to repeat the reasoning of Reyes J and the Court of Appeal leading to it. 73.In any event, this finding of Reyes J and the Court of Appeal has stood for many years, and constituted an essential step to their conclusion that Wing Ming was not entitled to shift the Original CPS 2 to 4 to the “VOID” areas in front of them. The Court of Final Appeal was not prepared to re-examine the correctness of this finding on the basis that it amounted to a concurrent finding of fact. The general principle against disturbing a concurrent finding of fact made by the first instance court and the intermediate appeal court only applies to the Court of Final Appeal when considering an appeal against the judgment of the intermediate appeal court in which the relevant finding was made, and has no application to our present situation. Nevertheless, we should be slow to re-open such a finding where no new relevant evidence has been adduced unless we consider it to be plainly wrong. We are far from being satisfied that this is the situation in the present case. 74.In short, we do not accept the argument that the Judge wrongly rejected Wing Ming’s evidence that its purported re-designation of the Original CPS 2 to 4 had been relevantly approved by the appropriate Government authorities[45]. This conclusion makes it unnecessary to consider the further question of whether there was actual agreement between the co-owners of the Building to any relevant variation of the common areas under the DMC. We would merely observe that on Wing Ming’s case, the “VOID” areas were not common areas but formed part of the “car parking spaces” as defined in the DMC, and thus there was no need for Wing Ming to vary the common areas under the DMC in order to re-designate the “VOID” areas in front of the Original CPS 2 to 4 to become the Re-designated CPS 2 to 4 (although any such re-designation would still require the Government’s approval of the necessary changes to the Car Park Layout Plan)[46]. On the other hand, if (as rightly held by the Judge), the “VOID” areas were (and are) common areas under the DMC, the other co-owners’ agreement to such re-designation would be required. However:
(iv) Ground 5 - the Reyes Judgment and CA Judgment 75.Under this ground, Wing Ming argues that the Judge erred in law and in fact in concluding that it was bound by the findings in the Reyes Judgment and the CA Judgment, and that Reyes J was “clearly right” in holding that the areas marked “VOID” adjacent to the Original CPS 2 to 4 were common areas. 76.This ground can also be disposed of briefly. Regardless of whether Wing Ming is strictly bound by, or is barred from seeking to re-open, the findings in the Reyes Judgment and/or the CA Judgment, we agree with them, in particular the findings that: (i) the “VOID” areas are common areas of the Building under the DMC, (ii) the “Vehicle Parking Space(s)/Car Parking Space(s)” as defined in the DMC relate only to the spaces marked “1” to “11” and coloured green, but not the “VOID” areas even though they are also coloured green, on the DMC Ground Floor Plan, and (iii) Wing Ming failed to obtain the requisite approval from the appropriate Government authorities required by SC(10) to change the layout of the Car Park Layout Plan, or convert the “VOID” areas in front of the Original CPS 2 to 4 for use as car parking spaces. 77.The above findings have stood for many years, and have been acted upon by both Wing Ming (in demolishing the Partition Wall and re-instating the Original CPS 2 to 4) and Sanwa (in moving its vehicle back to the Original CPS 2). That being so, we would not be minded to re-open them unless there are compelling reason(s) to do so. We can see none. 78.We also agree with the Judge that Wing Ming is bound by, and/or is barred from seeking to re-open, the above findings in the Reyes Judgment and/or CA Judgment on the ground of issue estoppel/abuse of process. Wing Ming’s present challenge to the said findings plainly constitutes an impermissible attempt to mount a collateral attack on the Reyes Judgment and CA Judgment which have become final and conclusive following the Court of Final Appeal’s refusal to grant leave to appeal in respect of the “pipe issue”. Wing Ming’s challenge to the finding that the “VOID” areas in front of the Original CPS 2 to 4 are common areas is particularly egregious having regard to the fact that (i) Wing Ming and Sanwa had acted upon that finding for many years prior to the commencement of the 2016 Action, and (ii) Wing Ming has plainly accepted that the Court finally and conclusively determined that the “VOID” areas were common areas of the Building and relied on that finding to mount the 2018 Action against the IO. (v) Ground 6 - Estoppel by convention 79.The estoppel raised by Wing Ming concerns the question of whether Sanwa can dispute Wing Ming’s title or use of the Re-designated CPS 2[50]. 80.The alleged estoppel is based on the premise that both Sanwa and Wing Ming had acted on the common assumption that Sanwa would buy and Wing Ming would sell the Re-designated CPS 2 after Wing Ming had obtained the requisite approval to change the layout of Car Park Layout Plan and use the “VOID” area in front of the Original CPS 2 as a car parking space, and that the Assignment was completed on the common assumption that Wing Ming had obtained the requisite approval[51]. However, Wing Ming never obtained the requisite approval, and there is no finding by the Judge that the parties proceeded to complete the sale and purchase based on any common assumption that Wing Ming had obtained the requisite approval. Thus, Wing Ming has failed to prove the underlying factual basis for the alleged estoppel to arise. 81.In any event, even if the parties had acted on any (mistaken) assumption that Wing Ming had obtained the requisite approval (which we do not accept to be the case), it would be unjust to uphold the alleged estoppel against Sanwa because (i) the mistaken assumption was the result of Wing Ming’s own failure to obtain the requisite approval from the appropriate Government authorities, and (ii) Sanwa will not be entitled to use the Re-designated CPS 2 as its car parking space because that is a common area of the Building. As correctly held by the Judge, the Court should not give effect to an arrangement which would trample on the rights of third parties (ie the other co-owners of the Building and/or the IO). (vi) Ground 7 - trespass 82.In view of the conclusions reached above, the issues of whether Sanwa trespassed on the Original CPS 2 and whether any damages should be awarded to Wing Ming do not arise for consideration. 83.For the same reason, it is not necessary to consider the Respondent’s Notice, which is relevant only in the event of Wing Ming’s appeal being allowed. DISPOSITION 84.Wing Ming’s appeal against the Judgment is dismissed with costs to Sanwa, to be taxed if not agreed, with certificate for 2 counsel.
Mr Audrey Eu SC and Ms Chantel Lin, instructed by Howell & Co., for the Plaintiff Mr Jonathan Chang SC and Ms Esther Mak, instructed by Hampton, Winter & Glynn, for the Defendant [1] This diagram is taken from §2(1) of the Judgment. [2] This diagram is taken from §2(2) of the Judgment. [3] Super Kind had entered into a sale and purchase agreement dated 11 February 1991 and an assignment dated 2 March 1991 with Wing Ming for the purchase of the 6/F and 7/F and the “Car Parking Spaces Nos. 6 and 7” of the Building. It would appear from the ground floor plans attached to the said agreement and assignment that Wing Ming sold, or purported to sell, not just the Original CPS 6 and 7, but also the “VOID” areas in front of the Original CPS 6 and 7, to Super Kind. [4] See also §6 of the Supplemental Witness Statement of Mr Ng dated 16 December 2019. [5] At §45 of Mr Yuen’s 1st Witness Statement dated 8 February 2019, Mr Yuen said that the initials next to the faint circular chop of Sanwa was not the signature on behalf of Wing Ming and he could not recall whose signature it was. However, at the trial, Mr Yuen said that the initials were his (Bundle D, p 3, lines E-J). [6] Bundle B1, p 110. [7] §36 of Mr Yuen’s 1st Witness Statement dated 8 February 2019. [8] §§38-39 and 82 of the Judgment. [9] See §7 of the Judgment of the Court of Appeal in CACV 27/2008 (27 June 2008). [10] §49 of the Judgment. [11] §59 of Mr Yuen’s First Witness Statement dated 8 February 2019. [12] §48 of the Judgment. [13] §53 of the Judgment. [14] §8 of the Judgment. [15] As pointed out by Reyes J at §52 of the Reyes Judgment, the post of Director of Public Works had not existed for some time by the 1990s. [16] See CACV 27/2008, Reasons for Judgment (19 June 2009), §11. [17] Note that the Court of Appeal granted leave to appeal in respect of “the issues relating to management fees” on the basis that Wing Ming was entitled to appeal as of right. [18] See CACV 27/2008, Reasons for Judgment (19 June 2009), §12. [19] See CACV 27/2008, Reasons for Judgment (19 June 2009), §13. [20] See FAMV 40/2009, Determination (16 September 2009), §6. [21] §§38-39 and 82 of the Judgment. [22] §40 of the Judgment. [23] §73 of the Judgment. [24] §§75 and 79 of the Judgment. [25] §80 of the Judgment. [26] §87 of the Judgment. [27] §§88-92 of the Judgment. [28] §93 of the Judgment. [29] §106 of the Judgment. [30] §10.4(c) of the Amended Statement of Claim. [31] §7(5) and (6) of the Amended Defence and Counterclaim. [32] §73 of the Judgment. [33] §30 of the Judgment. [34] Clause 10 of the PSPA. [35] §§27 and 33 of the Judgment. While Wing Ming contends that “all the offer letters were made by JWL on behalf of [Sanwa]”, its alternative case was that JWL/Mr Ho acted as the joint estate agent for both Wing Ming and Sanwa (see §§4.1-4.3 of the Re-Amended Reply). [36] §28 of the Judgment. [37] §29 of the Judgment. [38] §10 of Mr Ng’s first Witness Statement dated 8 February 2019. [39] §3(g) of Wing Ming’s Submissions dated 15 December 2022. [40] §§30 and 73 of the Judgment. [41] §12 of Mr Ng’s first Witness Statement. [42] §6 of Wing Ming’s Submissions. [43] §11 of the Judgment. [44] §2 of Wing Ming’s Submissions. [45] §87 of the Judgment. [46] See §4.2 of the Notice of Appeal. [47] See clause 16.1 of the agreement for the sale and purchase of the 6 & 7/F and car parking spaces nos 6 & 7 between Wing Ming and Super Kind dated 11 February 1991, clause 16.1 of the agreement for the sale and purchase of the 8 & 9/F and car parking spaces nos 8 & 9 between Wing Ming and Renley Industries Limited dated 1 February 1991, and clause 15.1 of the agreement for the sale and purchase of the 3/F and car parking spaces nos 1, 5 & 11 between Wing Ming and Conwan Development Limited dated 14 May 1991. [48] See the assignment between Wing Ming and Super Kind dated 2 March 1991, the assignment between Wing Ming and Renley dated 22 March 1991, and the assignment between Wing Ming and Conwan dated 27 May 1991. [49] Note that in clause 15.1 (Alteration of Common Area) of the agreement for the sale and purchase of the 4/F and Flat Roof between Wing Ming and Goldtex Enterprises Limited dated 27 September 1991, it is expressly provided that “[t]his reservation survives after completion and the Assignment shall contain such reservation in the Vendor’s favour.” [50] §22 of the Amended Statement of Claim. [51] §6.2(a) and (b) of Notice of Appeal. | |||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under CACV 571/2021