Shine Empire Ltd. v. The Incorporated Owners of San Po Kong Mansion & Others

HCA003444/2001

HCA3444/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.3444 OF 2001

----------------------

-----------------------

Coram : Deputy High Court Judge Muttrie in Chambers

Date of Hearing : 25 April 2002

Date of Judgment : 6 May 2002

---------------------------

J U D G E M E N T

---------------------------

1.The 1st defendant appeals against Master S. Wong's decision to grant summary judgment under Order 14 for delivery of vacant possession of the suit premises and other reliefs.

2.The suit premises are the roofs of the San Po Kong Mansion. The plaintiff claims to the registered owner of, and entitled to possession of the roofs. It avers that on a date unknown to the plaintiff, the 1st defendant wrongfully entered and took possession of the premises and has thereby trespassed and is still trespassing on them, and further that the 1st defendant without the consent of the plaintiff rented or granted licence to the other defendants for certain fees for the purpose of installation of aerials and transmitters at the premises. These fees amount to at least $2,540,490.00 and the 1st defendant is liable to account to the plaintiff for them. The plaintiff claims possession against all the defendants, and from the 1st defendant the sum of $2,540,490.00 and an account of the fees and/or income received.

3.The defendant denies that the plaintiff has any title to or is the owner or is entitled to possession of the premises. It denies trespass and in further reply to the allegation of trespass avers that in about 1972 the plaintiff's predecessor in title discontinued possession of the premises or was dispossessed of them by the 1st defendant, since when the latter has been in continuous exclusive possession of the premises. Therefore the 1st defendant pleads that the plaintiff's claim is barred and its title if any is extinguished by the provisions of the Limitation Ordinance, Cap.347. The defendant admits that it has granted licence to the other defendants to install aerials and transmitters at the external wall of the building and part of the roof, and received licence fees therefor but denies liability to account for them.

4.The San Po Kong Mansion was developed in the late 1960s. By Clause 19 of the Deed of Mutual Covenant dated 15 May 1968 the "roof" was reserved to the vendor, Yue Lee Co. Ltd, with the right to build one or more additional floor, or penthouse or attic, though none was ever built. The "roof" was assigned to other companies and then to the plaintiff in 1987. In fact, as it appears from the plan and photographs, the San Po Kong Mansion has 16 blocks, eight on each side of a central area (described on the plan as "right of way", containing lift machine rooms, stairheads and the like) with light wells between the sides of the blocks. What concerns us is the roofs of the blocks.

5.A dispute arose because the 1st defendant since about 1997 entered into licensing agreements with the other defendants, which are mobile telephone companies, for the latter to erect telephone transmitters and aerials on the roofs. There are now some 39 aerials which, so far as can be seen from the photographs exhibited to the affirmations on both sides, consist of oblong boxes mounted vertically on poles attached to the parapet walls of various of the block roof. They are connected to black cables which also appear to be fixed along the parapet walls. There are two huts, presumably for electronic equipment, one on the roof of Blocks A7 and A8 and the other on the roof of Blocks D5 and D6. Cables come out of them but it is not clear whether they are connected to any or all of the aerials. These matters came to the notice of the plaintiff and on 27 April 1999, through its solicitors, it demanded removal of "metal poles and thick black cables, transmitters and two structures".

6.Before going into any discussion of questions of adverse possession and limitation, it seems to me that there is a factual issue which has not been addressed, and that is the extent of the 1st defendant's trespass, if any. The 1st defendant was incorporated in 1972 and registered under the Multi-Storey Buildings (Owners Incorporation) Ordinance 1970 which was superseded by the Building Maintenance Ordinance, Cap.344. It is now governed by the provisions of the latter Ordinance. It has certain rights in respect of the common parts of the building.

7.Section 16 of the Ordinance provides:

"When the owners of a building have been incorporated under section 8, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners, and accordingly-

(a) any notice, order or other document which relates to any of the common parts of the building may be served upon the corporation at its registered office; and

(b) any proceedings in the tribunal in respect of any of the common parts of the building may be brought and pursued by or against the corporation."

8.In section 2, "common parts" are defined as

"(a) the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner; and

(b) unless so specified or designated, those parts specified in the First Schedule."

9.Paragraph 4 of the First Schedule specifies, inter alia, parapet walls. If, as it appears, the 39 aerials are attached to the parapet walls and the parapet walls are part of the common parts of the building the plaintiff cannot complain of continuing trespass in respect of them though it might complain of trespass committed in getting access to put them there. What damages might be involved for such trespass is not clear but I doubt that they would include the continuing fee income. There might be continuing trespass in respect of the two huts but whether these supply power or signals to any or all of the aerials, or are separate installations is not clear. One exhibit, a contract between the 1st and 5th defendants, has a diagram which appears to show a base station serving six aerials but this was produced, not for its technical content but to show the address of the 1st defendant as being the "roof of San Po Kong Mansion".

10.The point is, I think, that even if the 1st defendant cannot set up adverse possession, and the plaintiff's title has not been extinguished, there is still a denial of trespass. I do not see the argument that limitation applies to the trespass but there will have to be an inquiry as to the extent of the trespass and what damages if any flow from it. The plaintiff can hardly expect to get back all the fees paid by a telephone company for putting an aerial on the common parts of the building even if its installation involved trespass. It will be more than a simple matter of accounting.

11.The Writ was issued on 28 September 2001. So far as adverse possession is concerned it will be for the 1st defendant to establish adverse possession for a period of 20 years prior to that date. Time begins to run as soon as the owner is dispossessed, or discontinues his possession, and adverse possession is taken over by some other person. To establish adverse possession that other person must prove that he had both factual possession of the land and the requisite intention to possess. However at this stage Order 14 rule 3 of the Rules of the High Court places the threshold onus on the defendant to show that there is a triable issue.

12.Evidence for the 1st defendant comes from Mr Wong Bit Tat, its Chairman, and Mr Lau Ping Kwan, its Vice-Chairman. The evidence is, in brief, that the 1st defendant and the owners of the properties within the San Po Kong Mansion all along regarded the entire roof as part of the common parts of the building, and managed it accordingly, along with the other common parts. Neither the plaintiff nor its predecessors in title made any claim to ownership or responsibility for any part of the roof until the plaintiffs did so through their solicitors on 27 April 1999. The 1st defendant's management activities included repairing the fence walls on the roof, also maintenance and cleaning of gutters and pipes. It evicted squatters and kept the entrances to the roof locked at night. It sought to have illegal structures demolished in 1981. It allowed the residents to use the roof for various purposes such as hanging out washing and putting up aerials. Later it put up a common aerial. It licensed occupiers of structures on the roofs of Blocks D2, D3 and D4 since 1983. It built its own office, storeroom and toilet, parts of which encroached on to the roofs of Blocks A1and 2 and Blocks 4 and 5 in 1996; and so on.

13.Evidence for the plaintiff comes from its director Mr Daniel Kwan, whose evidence is formal, and from his assistant property manager Mr Fung Yu Cheong. The latter says that he has been inspecting the premises on behalf of the plaintiff since 1996. There is no evidence as to what the plaintiff or its predecessors in title actually did, before that. Mr Fung in his two affirmations raises various explanations and arguments about what the plaintiff did, and did not do about rates and property tax in respect of the roofs and so on; the usual lawyer-drafted affirmations containing as much argument as evidence, including legal argument that an owners' incorporation does not have the capacity to undertake adverse possession of premises.

14.Order 14 does not allow for a trial on the affidavits. It is not necessary to go into any evaluation of the evidence at this stage. There is nothing in the surrounding facts and circumstances to show that it cannot be believed. If it is believed it will show that the plaintiff's predecessor in title discontinued or perhaps never exercised possession of the premises, and that the 1st defendant took possession of them and exercised factual possession, thinking they were part of the common parts of the building over which it was required to exercise the rights of the owners. Factual possession requires a sufficient degree of physical control but whether that is established is a question of fact, depending on the circumstances, in particular the nature of the land and the manner in which such land is commonly enjoyed: see Powell v. McFarlane (1979) 38 P & CR 452.

15.However, more than factual possession is required. The possession must be adverse to the owner and the possessor must have the animus possidendi, i.e. "an intention for the time being to possess the land to the exclusion of all other persons, including the owner with the paper title"; per Slade LJ in Buckinghamshire County Council v. Moran [1990] Ch 623 at 643. This at first sight presents some difficulty. The 1st defendant, as owners' corporation, could not intend to possess the land to the exclusion of any owner. But the 1st defendant is created under statute to stand in place of all the owners collectively. It seems to me that as such, it can possess a part of its building adversely to the exclusive rights of a single owner and it can intend to possess that part to the exclusion of the owner. For instance, if an owner abandoned possession of a flat and the owners' corporation took it over as an office for the common good of all the other owners I think it would have the necessary possession and intention. If it retained possession for the limitation period it would acquire a possessory title on behalf of the owners whom it represented and the flat would become part of the common parts of the building.

16.Here the evidence is that the 1st defendant regarded the roofs as part of the common parts of the building. In effect, it did not know it was trespassing; it was in the same position as a squatter who believes he owns the land. This makes no difference. Per Saville LJ in Hughes v. Cork [1994] E.G.C.S. 25:

"The learned Judge appears to have held that it is impossible for someone who believes himself to be the true owner to acquire title by adverse possession since such a person cannot, ex-hypothesi, have an intention to exclude or oust the true owner. If this were the law then only those who knew they were trespassing, that is to say doing something illegal, could acquire such a title, while those who did not realise that they were doing anything wrong would acquire no rights at all. I can see no reason why, as a matter of justice or common sense, the former but not the latter should be able to acquire title in this way. What the law requires is factual possession i.e. an exclusive dealing with the land as an occupying owner might be expected to deal with it, together with a manifested intention to treat the land as belonging to the possessor to the exclusion of everyone else."

17.It is argued that it is ultra vires the Building Management Ordinance and/or the Deed of Mutual Covenant for the 1st defendant to claim adverse possession against the exclusive ownership of an owner whose interests it is there to protect. I think the above analysis answers that point.

18.I may be wrong in this analysis; a judge after hearing evidence might come to a different conclusion; but it seems to me that however one looks at this case, it is not simple. Leaving aside for the moment the questions of adverse possession and the factual issue which I mentioned earlier, the 1st defendant also argues that the plaintiff's claim for restitution of the licence fees may be met by two defences namely "change of position" and estoppel. If as the 1st defendant says it has used the licence fees received for the benefit of the other residents, that may give rise to an equitable defence to the restitutionary claim. I do not think it is necessary to consider these defences now but they do increase the complexity of the matter and in any event how the 1st defendant has applied the fees received, and the plaintiff's action or inaction over the years will be a matter of evidence. In practical terms, also, even if the plaintiff succeeds, then how it will recover money which has been spent to the benefit of the more than 400 owners is something it will have to consider.

19.Order 14 is for simple cases where there is no reasonable doubt that a plaintiff is entitled to judgment. As Rogers JA put it in Ng Lung Sang Anita v. Lam Yuk Lan [1999] 4 HKC 106 at 111:

"The old adage that if you have to sit down, it is not a case for Order 14 is equally applicable today as it was when it was first coined."

20.Per Godfrey JA Man Earn Ltd v. Wing Ting Fong [1996] 1 HKC 225:

"Unless it is obvious that the defence put forward by the defendant is 'frivolous and practically moonshine', Order 14 ought not to be applied.": see Codd v. Delap (1905) 92 LT 510 per Lord Lindley at 511.

21.For the reasons given above I do not see that it is obvious that the defence put forward is "frivolous and practically moonshine".

22.It follows that the Master's order must be and is set aside and the 1st defendant is given unconditional leave to defend. The costs of the appeal and of the application before the Master be (nisi) to the 1st defendant in any event.

Representation:

Ms Vivian Chih, instructed by Messrs Peter Mo & Co., for the Plaintiff

Mr Andy Hung, instructed by Messrs Y.C. Lee, Pang & Kwok, for the Defendant