Hong Kong Ping Jeng Lau Co Ltd v. The Incorporated Owners of United Centre
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1. By this originating summons, the plaintiff claims a declaration against the defendant relating to the plaintiff's use of three floors of the United Centre, Queensway, Hong Kong which the plaintiff owns in that building.
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HCMP002971A/1989 IN THE SUPREME COURT OF HONG KONG HIGH COURT MISCELLANEOUS PROCEEDINGS NO. 2971 OF 1989 ----------- BETWEEN
----------------- Coram: Godfrey J. Date of judgment: 4th December 1989 ----------------------- J U D G M E N T ------------------------ 1. By this originating summons, the plaintiff claims a declaration against the defendant relating to the plaintiff's use of three floors of the United Centre, Queensway, Hong Kong which the plaintiff owns in that building. 2. The position is governed by a Deed of Mutual Convenant made on 28th April 1981 between Lipak Investment Company Limited ("the First Owner"), Gammon Properties Limited ("Gammon") and Michigan Realty Limited ("the Second Owner"). Immediately before the assignment of part of the building to the Second Owner, the land was vested in the First Owner, which had constructed on the premises the building known as United Centre. The Deed of Mutual Covenant recites that for the purpose of the sale, the premises and the building had been notionally divided into 74,554 equal undivided shares. By an assignment, also of 28th April 1981, the First Owner assigned to the Second Owner 1,662 of those undivided shares, thus leaving the First Owner with 72,892 undivided shares. 3. Gammon was made a party to the Deed as the manager of the building. 4. By the 7th recital, the parties declared as follows:-
5. The Deed of Mutual Convenant contains many provisions which are usual in this type of instrument. In addition, it contains a provision which I was told was, or may be, somewhat unusual. It is that provision with which I am concerned. It is contained in Clause 17 of the Deed of Mutual Covenant. So far as is material, this provides as follows :-
6. The plaintiff is anxious to assign its floors (the 4th to 6th floors inclusive) to someone who does want to use them for banking purposes. It has applied to the First Owner in this connection; but the First owner has demanded $12 million for its consent, and the plaintiff is not disposed to pay the First Owner this or any other sum. The First Owner is not a party to these proceedings; and, if I were to make any declaration in these proceedings, it would not bind the First Owner. But that is a matter for the plaintiff and the First Owner and has nothing to do with the defendant. 7. So far as the defendant is concerned, it does not adduce any argument before me to the effect that the plaintiff is not entitled to use its three floors for banking purposes. However, it is not prepared to concede that the plaintiff is entitled to do this. Accordingly, it is necessary for the plaintiff to satisfy the court that it has the right to use these floors for banking purposes. 8. The plaintiff asks me to construe the words which I have quoted in this sense - that while the First Owner was the owner of any shares in the building, then the consent of the First Owner was required to the proposed use of the floors for banking purposes. Subsequently, the restrictions cease to operate. And, says the plaintiff, the position now is that the First Owner no longer retains any share in the said building. (That has in fact been the position since 8th August 1988.) The First Owner is described in the Deed of Mutual Covenant in terms which show that that expression, where the context so admits, includes the First Owner's successors in title and assigns. But I am satisfied that, in a provision such as this, the context does not admit of the construction of the words "the First Owner" as including any such successor in title or assign. It is in my judgment plain that the right conferred on the First Owner, whatever it is, by clause 17(g) is a right personal to the First Owner and not to any successor in title or assign. 9. The effect, says the plaintiff, is this - During the time when the First Owner held that position, i.e. until 8th August 1988, it was possible for someone in the position of the plaintiff to apply to the First Owner for dispensation against the restrictive provisions of Clause 17(g). So far I entirely agree with the plaintiff. Thereafter, says the plaintiff, the effect of the words I have quoted is that the restrictions themselves no longer apply at all and accordingly, the plaintiff is now free to use the three floors it owns for whatever purpose it likes (subject, of course, to the provisions of any legislation affecting that use). As a matter of construction of the Deed of Mutual Convenant, says the plaintiff, there is no provision any longer in force in relation to its three floors (or indeed any other floor in the building) which perpetuates the restrictions on user. 10. I find myself entirely unable to accept this submission. As it seems to me, the parties to the Deed of Mutual Convenant intended that these restrictions should subsist during the life of the building, and (in accordance with the terms of the 7th recital) that those obligations should enure for the benefit of all subsequent owners after the date of the Deed of Mutual Covenant. The exception is that, during the tenure of the First Owner as such, the First Owner did have a dispensing power. It could consent to a change of user from that prescribed by clause 17(g). That, in my view, no longer obtains. After the 8th August 1988, no one retains any such dispensing power. The restrictions can only be waived or modified by all the owners of the building. 11. It is no doubt possible to argue that the defendant, representing all the owners in the building other than the plaintiff, might have power to grant such a dispensation, though in fact the argument of the defendant before me suggested that the powers of the defendant were limited, in effect, to the control, management and administration of the common parts. But I do not have to decide that question today. It is sufficient for present purposes to hold, as I find myself constrained to do, that the construction which the plaintiff has advanced cannot be supported. The plaintiff is bound by the restrictions contained in clause 17(g) and unless it can persuade whoever does have any dispensing power to exercise it in its favour, it will continue to be bound by those provisions. For those reasons, I am unable to accede to the argument advanced before me on behalf of the plaintiff. 12. The choice now lies between making no order on this summons, or making a declaration positively against the sense in which the plaintiff invites me to construe the Deed of Mutual Covenant. Before exercising this choice, I will hear counsel.
Representation: Ms Audrey Eu instructed by M/s. Baker & McKenzie for Plaintiff Mr Patrick Fung instructed by M/s. Woo & Woo for Defendant |