Growth Bright Ltd. v. The Incorporated Owners of Grandview Building

CACV000843/2000

CACV843/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 843 OF 2000

(ON APPEAL FROM LANDS TRIBUNAL

APPLICATION NO. LDBM 61 OF 2000)

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Coram: Hon Leong CJHC, Woo JA & Yuen J in Court

Date of Hearing: 20 March 2001

Date of Handing Down Judgment: 30 March 2001

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J U D G M E N T

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Hon Leong CJHC (giving the judgment of the Court) :

1. The present appeal concerns the rights of the appellant (applicant), Growth Bright Ltd, under the Deed of Mutual Covenants of Grandview Building ("the building") in Mongkok. The building has 22 floors and two separate ground entrances, one at Fa Yuen Street and the other at Nelson Street. On the ground floor to the 3rd floor are shops and commercial units. The remaining floors from the 4th floor to the 22nd floor contain residential units. The building is served by three lifts. Two of them run from the ground floor entrance at Fa Yuen Street to the 22nd floor and serve the residential floors ("residential lifts"). The residential lifts do not stop on the 1st, 2nd and 3rd floors. At these floor levels there are no openings in the lift shaft walls, and the lift shaft walls were made of two layers of building materials, the inner layer being a brick wall and the outer layer being a concrete wall. The remaining lift runs from the ground floor entrance at Nelson Street to the 1st, 2nd and 3rd floors. This lift serves the commercial units. A common staircase runs from the roof down to ground floor of the building and exits to a back lane. Access on each floor to this staircase can only be gained from the inside but not from the outside. Obviously, this common staircase is only used as an emergency exit.

2. The appellant is the owner of the commercial units on the 1st, 2nd and 3rd floors. It also owns a number of shops on the ground floor. The respondent is the Incorporated Owners of the building. The appellant has a plan to break open shaft walls of the residential lifts and install lift doors at the openings so that one of the residential lifts (designated at the trial as lift "A") can be used as a fireman's lift for the 1st, 2nd and 3rd floors and visitors to the commercial floors can also use this lift. The proposed plan has been approved by the Buildings Department. The respondent opposed the plan. The appellant took the matter before the Lands Tribunal and claimed a declaration that it has the right to carry out its plan to break open the lift shaft walls and install lift doors on the commercial floors. The appellant also sought an injunction to restrain the respondent from obstructing the appellant carrying out such work. The respondent resisted on the ground that the appellant has no such right under the Deed of Mutual Covenant ("the DMC").

3. The relevant clauses of the DMC provide as follows :

"3. Each owner shall hold his part of the said building and the said premises subject to and with the benefit of the following rights privileges and obligations namely :-

(a) Full right and liberty to go pass and repass over along the entrances, staircases, landings and passages in the said Building and the footpaths with the said premises and to use the lifts for all purposes connected with the proper use and enjoyment of his part of the said Building.

(e) The right for the owner or occupiers for the time being of any part of the said Building with or without servants, workmen and others at all reasonable times on notice (except in case of emergency) to enter into and upon the other parts of the said Building and the common areas thereof for the purpose of carrying out any work necessary for the maintenance and repair of the said Building or any part thereof causing as little disturbance as possible and making good any damage caused thereby.

4. Each owner shall be bound by and shall observe and perform the following covenants provisions and restrictions :-

(f)b. The Costs of operating servicing repairing and renewing the lifts serving the units on the 4th to top floors (inclusive of the said building) (hereinafter referred to as 'the main lifts') shall be borne and paid by the owners of units on the 4th to the top floors (inclusive) of the said building in proportion to the respective shares in the said land attributable to such units for the time being owned by them PROVIDED ALWAYS that the owners of the Restaurant, Ground Floor and External Wall shall be exempt from and shall not be liable to contribute towards such costs charged and expenses.

(m) The Ground, First, Second and Third Floors of the said Building shall be used for commercial purposes only and the units on the 4th to top floors (inclusive) shall be used for private residential purposes only."

4. The appellant's case before Deputy Judge Tong at the Lands Tribunal as well as in the present appeal is that clause 3(a) of the DMC gives the appellant the right to use the residential lifts for purposes connected with its proper use and enjoyment of the commercial units and for that purpose, the appellant has an implied right to break open the residential lift shaft walls and install lift doors there so that lift A can also serve the commercial floors. The appellant also says it has a similar right under clause 3(e) to do the same. The appellant's alternative case is that although no openings had been made in the lift shaft walls on the 1st, 2nd and 3rd floors when the building was built, the building design caters for such openings to be made at some time after completion of the building.

5. The appellant's case is also that the exemption afforded to commercial owners and owners of the external wall under clause 4(f)b from contributing towards the costs of servicing and renewal of the residential lifts does not prevent the appellant from using lift A in the manner proposed. The appellant's argument is that if lift A serves the 1st, 2nd and 3rd floors as well, it ceases to be a lift serving the 4th to the 22nd floors only and the exemption in clause 4 will no longer apply. In that case, the appellant as a user of one of the residential lifts will contribute to the lift expenses and this is not unfair to the residential owners.

6. The Deputy Judge found that clause 3(a) does not give the appellant the right to use lift A for access to the commercial floors nor as a fireman's lift for those floors, in particular, clause 3(a) does not give the appellant a right to break open the residential lifts shaft walls. He found the appellant's right to use the residential lifts is limited to gaining access to the service facilities on the 4th floor and the top floor for inspection, maintenance and repairs.

7. He also found having regard to the physical state of the building on completion that the building was designed to separate the users of the commercial units from the users of the residential units. He found that residential lift shafts were not designed and constructed to enable openings to be made on the 1st, 2nd and 3rd floors. The DMC was drafted after the building plans were finalised and the building was completed. He also found the DMC was drafted in the light of the physical state of the building and its design. The work proposed by the appellant does not fall within clause 3(e) which is purely concerned with work necessary for the maintenance and repair of the building.

In his judgment, he concluded:

"Having this right to use the domestic lifts in the manner as aforesaid was one thing but saying that such right would enable the applicant to break open the lift shaft walls on the commercial floors and have doors installed to make those domestic lifts serving the commercial floors as well was quite another. Having considered the surrounding circumstances of the building in 1978, I am of the view that the latter act would clearly defeat the designers' intention of separating the users of the domestic premises from those of the commercial premises. Such act would also fundamentally alter the use of the domestic lifts as designated in the DMC. For this reason I rule that clause 3(a) of the DMC did not give Applicant the right he had contended for."

8. The appellant appeals. There are a number of grounds of appeal but the primary complaints are these:

9. The Deputy Judge was wrong in finding that the appellant's right to use the residential lifts was restricted to inspecting and maintaining the service facilities on the top floor and the 4th floor. The judge should have found the appellant was entitled to use the residential lifts for access to the commercial units. If the appellant were entitled to such use, the judge erred in refusing to find that such use includes the making of openings on the 1st, 2nd and 3rd floors to install lift doors there.

10. The Deputy Judge was wrong to find that such use was at variance with the design intention and was wrong to equate the intention of the parties to the DMC to the design intention which is not relevant in construing clause 3(a).

11. The Deputy Judge was also wrong to find clause 3(e) did not cover the proposed work.

12. Mr Chong for the appellant submits that the clear wording of clause 3(a) does not restrict the appellant's use of lift "A" in the manner found by the Deputy Judge. He submits that clause 3(a) allows any owner, commercial or residential to use lift "A" in any manner so long as it is for the proper use and enjoyment of the owner's unit. That being the appellant's right, the appellant has an implied right to break open the residential lift shaft walls in order that lift "A" may be used by the owners of the commercial units. This implied right, Mr Chong submits, had been conceded by the respondent.

13. Mr Chong further submits that the judge should not have held that the designer's intention to separate the commercial and residential units was a valid reason to exclude the Appellant from exercising his right of access to lift "A". He argues that the factual matrix the court may look into is only an aid to interpret or explain the DMC but not for the court to base on to exclude the appellant's right. He submits that the Deputy Judge was wrong to have given substantial weight to the intention of the designer and the condition of the building on completion.

14. On this last point, Mr Chong referring us to a passage on construction of documents in the judgment of Lord Hoffmann NPJ in Jumbo King Ltd v Faithful Properties Ltd Others [1999] 3 HKLRD 757, submits that the language of clause 3(a) clearly shows that the parties to the DMC intended that all owners should be able to use all the lifts in the building for the proper use and enjoyment of their units and that meaning should be given effect to even though it may not be fair to some owners.

15. The passage Mr Chong has referred to is at page 773 of the judgment where Lord Hoffman NPJ said this:

"The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve. Quite often this exercise will lead to the conclusion that although there is no reasonable doubt about what the parties meant, they have not expressed themselves very well. Their language may sometime be careless and they may have said things which, if taken literally, mean something different from what they obviously intended. In ordinary life people often express themselves infelicitously without leaving any doubt about what they meant. Of course in serious utterances such as legal documents, in which people may be supposed to have chosen their words with care, one does not readily accept that they have used the wrong words. If the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other." (Emphasis ours)

In our view, it is necessary to construe a DMC in relation to the building concerned and not in a vacuum. Jumbo King requires that in construing clause 3(a), regard must be had to the factual and legal background and the practical object it was intended to achieve. Jumbo King does not assist the appellant's contention that the physical state of the building and the design intention that resulted in the physical state are irrelevant. The Deputy Judge was right when construing the intention expressed in clause 3(a), to take into consideration the physical state of the building in 1978 and the construction of the building that separated commercial use from residential use. We agree with his finding that the building was so constructed that the residential lifts and the Fa Yuen Street entrance were not constructed with a view to being used by the commercial owners for commercial purposes including access to the commercial floors by visitors thereto. That no openings on the lift shaft walls on the commercial floors were made and the walls were constructed of double layers of material is indicative of the restrictive use of the residential lifts contemplated, which is the factual background against which clause 3(a) should be construed.

16. Moreover, it is our view that clause 4(f)b of the DMC clearly draws a distinction between the obligations of the owners of the residential units and those of the owners on the commercial units regarding service and renewal of the residential lifts in the building. The parties to the DMC must be taken to be aware of this distinction when they entered into the agreement. The commercial owners, shop owners and external wall owners must have known of the exemption afforded to them under this clause because they were not the normal user of the residential lifts. It is implicit that they knew the residential lifts were not for access to the commercial floors or for other commercial purposes otherwise they would not have been exempted. The appellant's argument that it will no longer be exempted under clause 4(f)b from contribution towards the residential lifts expenses if lift A is allowed to stop on the commercial floors and it will then have to contribute has no relevance to his right to carry out the proposed work. It cannot be right that so long as the appellant is willing to contribute to the residential lift expenses, it can make openings on the lift shaft walls. It must be remembered that if the appellant has to contribute to the residential lift expenses as a result of the alterations the appellant made to lift A, taking away the exemption in clause 4(f)b, other commercial or shop owners and the owners of the external wall would be similarly affected. They would be forced to contribute at the whim of any owner for the time being of any of the units on the 1st to 3rd floors.

17. It is not clear what concession had been made by the respondent at the trial. Mr Lo for the respondent submits that no concession had been made at the trial. We cannot be certain from what we read in the transcript that there was a concession made by the respondent that the appellant had the implied right to break open the lift shaft walls if the appellant had the right to use the residential lifts in the manner it had contended. Be that as it may, we have come to the conclusion that the Deputy Judge was right to find that the appellant's right to use the residential lifts is no more than for the purpose of inspection, maintenance and repairs of the service facilities installed on the upper floors and does not extend to using them for the appellant's commercial purposes. We do not think we need to go into the question of whether there was a concession of any kind at the trial.

18. In these circumstances and for the reasons stated above, we dismiss the appeal and make an order nisi that the costs of the appeal shall be to the respondent.

Representation:

Mr K M Chong, instructed by Messrs K W Lai & Co., for the Applicant

Mr Henry H Y Lo, instructed by Messrs Ho & Tam, for the Respondent