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

HCA 3444/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3444 OF 2001

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BETWEEN

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Before: Deputy High Court Judge Mayo in Court

Dates of Hearing: 16-19 & 23 November 2004

Date of Judgment: 3 December 2004

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J U D G M E N T

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1.The Plaintiff is the successor in title of the developer of a large complex of flats and commercial premises at San Po Kong known as San Po Kong Mansion.

2.The building was developed in 1968.

3.The 1^st Defendants are the Incorporated Owners of San Po Kong Mansion.  They were incorporated on 13 October 1972.

4.San Po Kong Mansion is a high rise composite development consisting of 4, 20 storeys blocks which are subdivided into 4 sub blocks and each sub block is divided into 2 units.  There are commercial premises on the first 5 floors and above that are residential units.

5.The developer Yue Lee Co Ltd reserved the roof of the whole of the building to itself save for lift machine rooms, water tanks etc and a right of way for parties having a legitimate purpose on the roof.

6.It can be added that the area of the roof amounts to 16,800 square feet and it is possible to gain access to all of the roof without having to enter by a different stairway.

7.The Deed of Mutual Covenant which provides for the rights and obligations of all owners of the building is dated 15 May 1968.

8.It is not a well drafted deed.  It contains inconsistencies.  However it would appear that what was contemplated was that Yue Lee reserved the roof with the intention that if the requisite planning consent was obtained an additional floor would be added to the building.  This was never proceeded with.  It was provided in the Deed of Mutual Covenant that Yue Lee and their successors in title would not have to contribute towards the maintenance payments payable under the Deed.  However, there is even ambiguity on this issue.

9.Yue Lee assigned their interest in the roof to one of their Associated Companies for a nominal consideration and they in turn assigned the interest to another Associated Company which assigned it to the Plaintiff which is also an Associated Company.

10.In 1995, the 1^st Defendant entered into various licence agreements with the 2^nd to 6^th Defendants which licenced them to install aerials, telephone transmitters and other telecommunication equipment on the roof (the said equipment) in consideration of receiving fairly substantial licence fees.

11.The main purpose of this equipment was to facilitate the transmission of messages on cell telephones operated by the various other Defendants.

12.It is the 1^st Defendant’s case that the licence fees which they received were used by them to reduce the amount of maintenance payable by the owners under the Deed of Mutual Covenant.

13.The Plaintiff’s contend that the presence of the said equipment on the roof constitutes a trespass.

14.The 1^st Defendant’s defence is in the alternative.  On the one hand it is argued that having regard to the terms of the Deed of Mutual Covenant, the parapet walls form part of the common parts of the buildings and they are entitled to licence the other Defendants to install the said equipment on the roof.  In the alternative they contend that they have obtained a possessory title to the roof by adverse possession of it.

15.Sakhrani J made an order on 20 October this year that the present hearing would be confined to the issue of liability and that there would then if necessary be a further hearing on quantum.  One consequence of this was to obviate the necessity of the 2^nd to 6^th Defendants attending the present hearing.

16.Three witnesses gave evidence for the Plaintiff.

17.Mr Daniel Kwan is a director of the Plaintiff.  He said that he had given instructions to members of his staff to inspect the roof from time to time.

18.He had not been aware of any problems in connection with the roof.  He had however been aware of the fact that the managers of the Building had erected a structure on the roof for use as an office.  As this structure was mostly on the right of way on the roof he had not been particularly concerned about it and had not taken any action in relation to it.

19.What had concerned him however was that reports came back to him in 1995 that various strange structures had been attached to the parapet walls.  He had made inquiries of the Chairman of the Incorporated Owners as to what these were and why they were there and he received no assistance whatever in ascertaining what it was all about.  Indeed the attitude of the Chairman had been in every way obstructive.

20.He had subsequently learnt that the structures were telecommunications equipment and that the 1^st Defendant had been receiving very substantial licence fees from telecommunication companies for the right to install their equipment on the parapet walls and roof.

21.He had not been aware of any resolution having been passed by the Incorporated Owners authorising the 1^st Defendant to enter into these licensing Agreements.

22.He said that the Plaintiffs had continued to exercise their rights as owners of the roof and that so far as could be ascertained the 1^st Defendant’s presence on the roof had been consistent with their exercising the normal duties required of them by virtue of the provisions contained in the Deed of Mutual Covenant.

23.The Plaintiff had not paid any maintenance to the 1^st Defendant as there was no provision for this in the Deed of Mutual Covenant so far as the owners of the roof were concerned.

24.He was cross-examined at some length by Mr Hung for the 1^st Defendant.  It was certainly my impression that the amount of supervision which had been exercised by the Plaintiff of the roof had been of a perfunctory nature.  Mr Kwan had been unaware of the fact that there had been a fire at the building in 1993 which had resulted in the electricity supply being shut off for about 3 weeks.  Also he was unaware of the fact that apparently extensive remedial works had been undertaken by the 1^st Defendant on the roof.

25.He also was cross-examined at some length on the subject of the stamp duty which had been payable on the Assignment of the roof to the Plaintiff but this did not seem to me to take matters very far.

26.It did however appear to be the case that Mr Kwan had only started to take an interest in the roof when he discovered the substantial licence fees which were being received by the 1^st Defendant.

27.Mr Albert Chan a junior employee gave evidence of the inspections he undertook of the roof up until 1994.  It was my impression that his visits had been of a rather casual nature.

28.The other employee who had conducted inspections Mr H S Tang also did not appear to me to have spent much time or effort on his investigations.

29.Both these witnesses gave evidence that they had free access to the roof when they undertook their inspections.  I accept their evidence that they had no difficulty in gaining access to the roof on their visits and that they did not observe anything which would have led them to believe that the title to the predecessor in title to the Plaintiff had in any way been called in question.  So far as it goes I accept the evidence of both witnesses as being truthful.

30.The two main witnesses for the 1^st Defendant were Mr Wong Bit Tat, the Chairman of the Incorporated Owners and Ms Liu Suk Yee who is presently on the committee.

31.Mr Wong described how the 1^st Defendant had discharged its duties and responsibilities since its inception.

32.The main thrust of Mr Wong’s evidence is the 1^st Defendant has since 1972 proceeded upon the assumption that the roof of the building came within the purview of the Incorporated Owners.

33.Indeed the way in which he explained this was to state that the Plaintiff had been ‘dispossessed’ by the 1^st Defendant of the roof.

34.This being the case, the 1^st Defendant had attended to the maintenance and upkeep of the roof and this had involved it in considerable expenditure.  For example the roof and parapet wall was in a dilapidated and dangerous condition in 2003 and it had been necessary for the 1^st Defendant to spend approximately $180,000 so that necessary repairs could be effected.  It needs however to be added that no documentary evidence was produced to prove that this expenditure had in fact been incurred.

35.However the Management Committee resolved in June 2003 that in the light of the ongoing dispute over the ownership of the roof no further money would be expended on the roof unless there was an emergency or it was mandated by a Building Authority Order.

36.The reason Mr Wong gave for not informing the Plaintiff of this situation was that in the opinion of the majority of owners, the Plaintiff did not own the roof.  Having regard to the issues canvassed in this litigation, this is not a plausible or convincing explanation for not informing the Plaintiff of the position.

37.Throughout all of the period of the existence of the Management Committee it had proceeded upon the assumption that the roof formed part of the common parts of the building and had taken appropriate action as required.

38.This had included taking measures to evict squatters and closing off access to the roof from midnight to 7 am.  They had also taken action for the demolition of illegal structures on the roof.

39.The Management Committee had itself erected a structure on the roof for use as an office for the conduct of management business.  This was mainly on the right of way. 

40.The Management Committee had entered into the Licence Agreements referred to in the pleadings.  According to Mr Wong, they had done so for what they perceived to be the best interests of all of the owners in the building.

41.The licence fees had been applied towards the revenue of the 1^st Defendant and this had meant that the amount of the contributions the Owners were required to make had not had to be increased as would otherwise have been the case.

42.There is an important aspect of Mr Wong’s evidence which has to be borne in mind.

43.He was only appointed Chairman of the Management Committee in January 2000.  He took over from a Mr Wong Toi Yee.  It was apparent that the records and accounts of the Incorporated Owners left much to be desired.  Indeed Accountants declined to prepare some of the Accounts on account of the fact that some documents were missing. 

44.Mr Wong had first participated in the affairs of the Committee in 1998.  It was from this involvement that he had concluded that licence fees which had been received from the Telecommunication Companies had been credited to the 1^st Defendant’s funds.

45.It has to be said that the Accounts which were before the Court were not in a satisfactory state.  No accounts at all were produced for the years 1997 to 1999 inclusive.

46.The explanation Mr Wong gave for this was that no such accounts had ever been prepared.

47.When Mr Wong was taken through the accounts which were before the Court he was unable to explain a number of glaring discrepancies and inconsistencies and I was by no means convinced that all of the licence fees which were received from the other Defendants have in fact been applied for the benefit of the owners at large.

48.In the final analysis I did not consider Mr Wong to be a reliable witness.  It was my impression that he did not himself have much direct knowledge concerning the activities of the 1^st Defendant prior to the year 2000.  Even after he was appointed Chairman I was not convinced that his version of what had transpired was truthful or accurate and my overall conclusion was that I could attach little weight to his evidence.

49.The other witness to give evidence for the 1^st Defendant was Ms Liu Suk Yee.  She is a Member of the Management Committee.  It was clear from her evidence that she has some knowledge of the affairs of the Incorporated Owners since its inception.

50.She had knowledge concerning the roof and its use since the early 1970’s.  It had always been regarded as being part of the common area of the building.

51.It had been the practice for residents to go on to the roof and have parties there.

52.Each year after 1995 a party had been held to celebrate the mid Autumn Festival and a number of residents would attend.

53.She was aware that extensive repair work had been undertaken on the building in 1982 and 1983.  This had also included work to replace the gutters on the roof.  All of the expenses for the work had been borne by the 1^st Defendant to the best of her knowledge.

54.She was aware of the fact that it had been necessary to demolish illegal structures on the roof and that it had been the 1^st Defendant that initiated the necessary action.

55.Ms Liu gave evidence that prior to 1995 there were a large number of what has been described as fishbone antennae which were erected by individual owners to enable them to receive good television reception.

56.She had never considered that it was necessary to obtain permission from anyone to install the antennae on the roof.  In fact most of the antennae had been installed on the parapet wall.

57.In 1995 everyone had been required to remove their antennae as this obstructed scaffolding which had to be erected to enable repair work to be undertaken on the building.

58.Subsequent to this a reception disc was installed on the water tank which enabled all owners to obtain good television reception.

59.What is important to bear in mind in relation to these antennae is that even if any possessory right was being acquired the beneficiary would not have been the 1^st Defendant but the individual owners who had erected the antennae.  I say this on account of Ms Liu’s evidence that it did not appear to be the practice for the individual owners to obtain permission from the 1^st Defendant and their role appears to be confined to turning a blind eye in the situation.

60.In 1996 there had been problems concerning seepage of water to the flats on the 19^th floor and this had necessitated substantial repair work being undertaken.  It was her impression that the cost of this had been borne by the owners through the 1^st Defendant.  To the best of her knowledge the Plaintiffs had not made any contribution towards the costs of this.  The reason she gave for this was that everyone had been under the impression that the roof formed part of the common parts of the building.

61.Ms Liu was a much better witness than Mr Wong.  She clearly had a detailed knowledge and excellent recollection of the matters she had been involved in since the early 1970’s.

62.It needs however to be emphasised that Ms Liu’s evidence must be of very limited value prior to the time she became actively involved in the affairs of the 1^st Defendant in the year 2000.  Prior to this her evidence would for the most part be hearsay and she would have little or no direct knowledge concerning the intentions and policies of the 1^st Defendant.

63.There were some inconsistencies in her evidence.  She referred to the lamentable state of affairs which had existed in relation to the roof when derelicts and other undesirable persons had frequented it and that she considered it to be unsafe to go there.

64.All of this was inconsistent with the drift of her evidence that the 1^st Defendant was exercising control over the roof.  I am inclined to the view that it was only in more recent years that the 1^st Defendant exercised any meaningful control such as restricting access to non-residents.  Certainly I do not think that the gate was installed more than 20 years before the Plaintiff issued their writ in these proceedings.

65.It has to be said however that virtually all of the action Ms Liu referred to which had been taken by the 1^st Defendant over the years appeared to me to be consistent with duties normally undertaken by Incorporated Owners.

66.They did not seem to me to indicate that the Plaintiff had necessarily relinquished its ownership of the roof.  

67.So far as the facts of the case are concerned the final matter to be dealt with is the Expert evidence.

68.Expects were called by the Plaintiff and the 1^st Defendant.  The Plaintiff called Mr K W Chan of Dudley Surveyors Limited and the 1^st Defendant called Mr S T Wong of Proficient Surveyors & Company.

69.There was a large measure of agreement between the experts.

70.At the present time, there are altogether 35 antennae or aerials.  31 of these are attached to the interior of the parapet wall and 4 to the exterior faced parapet walls.

71.There are also 4 transmitter boxes placed on the floor of the roof.  According to Mr Wong’s report, the total space taken by the transmitter boxes amounts to 3.69% of the total area of the roof.

72.There were also thick cables attached to the transmitters and the aerials and these for the most part ran along the parapet walls.  They did also extend to some extent on to the roof itself.

73.There was agreement that the width of the parapet wall was 255 millimetres and that the width of the exterior wall of the flat immediately below the parapet wall was 100 millimetres.

74.Mr Chan gave evidence that the parapet wall was of different construction to the exterior wall beneath it and in his opinion could be considered physically as being separate from the exterior walls.  I accept the validity of this evidence.

75.Mr Chan also made the point that the Assignment of the roof to the Plaintiff had referred to the Building Authority plan of the roof and assigned to the Plaintiff the area coloured in pink on the said plan.  The measurements on this plan exactly coincided with the measurements he had taken on the roof which included the width of the parapet walls.

76.When the Assignment is taken in conjunction with the Deed of Mutual Covenant, it is difficult to avoid coming to a conclusion that the demise of the roof did include the parapet walls.

77.One way of looking at this would be to consider whether it would make much sense to reserve to oneself the exclusive right to the roof and not at the same time to include the parapet walls.  Unless these walls were included in the demise, it would be unsafe to use the roof for most purposes.  It might also be added that when an individual flat is assigned to a purchaser, it is not customarily the case to include in the demise the interior walls of the building.

78.In determining whether the parapet wall and roof are common parts of a building, Mr Hung submitted that the starting point must be the definition of “common parts” in section 2 of the Building Management Ordinance, Cap. 344.

“common parts” (公用部分)means –

(a)          the whole of a building, except such parts as have been specified or designed in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner; and (Amended 8 of 1993 s. 2)

(b)          unless so specified or designated, those parts specified in the First Schedule;”

79.The next step is to determine whether or not the parapet wall and roof have been reserved exclusively for the use and occupation of any owner.

80.Mr Hung referred to the Deed of Mutual Covenant.  While it is apparent that the roof was reserved to the Yue Lee the parapet wall was not referred to.  It was also not referred to in the Assignment dated 31 March 1970 from Yue Lee to Kui Fung Investment Company Limited its Associated Company.

81.According to Mr Hung the consequence of this was that it was not open to the Plaintiff to contend that the measurements on the plan could be called in aid of establishing that the parapet walls were included in the demise.

82.Mr Hung submitted that as the parapet wall was an item which is specifically referred to in the Schedule to the Building Management Ordinance it was necessary for it to be the subject of an Assignment otherwise it would automatically become a common part of the building.

83.Mr Hung also expressed doubts as to whether the roof had in fact been reserved in the Deed of Mutual Covenant as Yue Lee’s use of the roof was dependent upon their obtaining permission from the Building Authority to erect an additional floor above the roof.

84.Clause 19 of the Deed of Mutual Covenant reads:

“19.   The sole right and privilege to the use of the open yard space (if any) subject to clause 6 hereof and of the roof of the said building (other than the roof of the Theatre) shall be reserved to the Vendor of the building and/or its assigns who may at their own cost and expense erect on the roof one or more additional floor or penthouse or attic and extend the lift to serve floor or penthouse or attic (all of which shall be its exclusive property) if and when the plans thereof are approved by the Building Authority.  In the erection of any additional floor the Vendor of the building or its assigns and all contractors workmen artisans and labourers engaged by it shall have the full and uninterrupted right to use the staircases and landings lifts and other common passage-ways serving the said building and to store building materials required for such construction in the open yard of the premises and to erect and use a hoist for the purpose of conveying the said building materials to the said roof.  Only the Vendor of the building or its assigns shall have the right of access to or to use the roof of the said building with or without such additional floor or floors as aforesaid save that the Manager for the time being of the said building and workmen and artisans employed by him may have access thereto for the purpose only of repairing cleaning and maintaining the water tanks coolling towers if any and pipes thereon.”

85.I do not accept that the demise of the roof was conditional.  On a fair construction of the clause the roof was reserved to Yue Lee and the question of whether an individual floor was added remained outstanding.

86.So far as the determination of the ownership of the roof and parapet wall was concerned, Mr Yeung for the Plaintiff submitted that a different approach should be adopted.

87.He pointed out that the Deed of Mutual Covenant was dated 15 May 1968 and the Assignment from Yue Lee to Kui Fung was dated 31 March 1970.

88.Both of these instruments pre dated the coming into effect of the Building Management Ordinance.  It came into effect on 19 June 1970.

89.It was accordingly necessary to consider the law prior to the enactment of the Ordinance.

90.Mr Yeung submitted that the approach to be adopted was the one referred to by the Court of Appeal and particularly the judgment of Keith JA in Wong Lai Kai v Incorporated Owners of Lok Fu Building 2000 CPR 194.  Keith JA said at p. 203.

“Accordingly, the question is whether the judge was right to conclude that the external wall of the building at that height was not part of the common parts of the building, but was part of the shop which the first to fourth defendants had had the exclusive right to occupy before letting the ship to the fifth defendant.  Whether that part of the external wall was part of the shop which the first to fourth defendants had had the exclusive right to occupy depended on what was originally assigned to them or their predecessors-in-title.  Unfortunately, that assignment was not before the judge.  What was before the judge was the deed of mutual covenant defining the rights and obligations of the various co-owners of the units in the building as between themselves.  But whatever the deed of mutual covenant may have said about what parts of the building constituted the common parts, the deed of mutual covenant could have been no substitute for what was actually assigned to the first to fourth defendants or their predecessors-in-title.”

91.Fortunately in this we have both the Deed of Mutual Covenant and the Assignment to Kiu Fung available.

92.The relevant part of the Assignment is in this form:

“AND THIS INDENTURE FURTHER WITNESSETH that in pursuance of the said Agreement (a) the Vendor in consideration of the grant next hereinafter contained HEREBY GRANTS unto the Purchaser full right and privilege to hold use occupy and enjoy all the main Roofs of the said messuages or buildings save the lift shafts and the machine rooms erected thereon. (which said Roofs are more particularly shown and coloured Pink on the Plan hereto annexed and to receive the rents and profits thereof to the exclusion of the Vendor and others the co-owners from time to time (if any) of the said New Kowloon Inland Lot No. 4412 to the intent that the Purchaser shall have in all respects the rights of an absolute owner thereof and (b) the Purchaser in consideration of the grant hereinbefore contained HEREBY GRANTS unto the Vendor and others the co-owners other than the Purchaser from time to time of the said premises (if any) full right and privilege to hold the occupy and enjoy ALL THOSE the open yards on the Ground Floor and the external walls and the Right of Way on the Roofs and the roofs and flat roofs (if any) of the said premises, the basements, the entrance halls, the car parks, the cinema, the restaurant and those portions used exclusively by or for the cinema and/or the restaurant and the remaining self-contained portions and other portions (not otherwise hereinbefore granted or intended to be used for the common enjoyment of the co-owners and co-occupiers for the time being of the said messages or buildings) comprised in the said messages or buildings save and except the said Roofs hereinbefore granted by the Vendor to the Purchaser.”

93.The rights which were reserved to Yue Lee are contained in Clause 19 of the Deed of Mutual Covenant which has already been cited in this judgment.

94.So far as the subsequent assignments between the various Associated Companies of Yue Lee are concerned for all relevant purposes they are in a similar form to the Assignment to Kui Fung.

95.Mr Yeung contended that the important point to bear in mind is that no where in the relevant deeds has Yue Lee divested itself of either the roof or the parapet walls until the Assignment to Kui Fung who was the predecessor in title of the Plaintiff.

96.All of this was prior to the enactment of the Building Management Ordinance.

97.He went on to argue that this being the case the common law principles were still applicable and when Yue Lee reserved to itself the roof of the building the demise would have included the parapet walls.

98.His authority for this proposition was a passage from the judgment of Diplock LJ (as he then was) in Sturge v Hackett [1962] 1 WLR 1257 at 1265:

“It is, as McNair J accepted, well-settled law that in the absence of provisions to the contrary in a lease a demise of a part of a building divided horizontally or vertically includes the external walls enclosing the part so demised.  The cases which so decide, Carlisle Café Co. v Muse, Hope Brothers Ltd v Cowan and Goldfoot v Welch, all cases at first instance; but they have long stood unchallenged, many thousands of landlords and tenants for the last 65 years have based their mutual relationships upon them, and we see no reason for doubting their correctness.  Mr O’Connor has submitted that the presumption applies only to business premises and has further argued that, in any event, the presumption only extends to that part of the external wall that is structurally necessary to enclose the premises demised.  This further argument was based upon the use of an expression “solely” “appropriated” according to the “Law Journal” report or “solely appropriate” according to the “Law Times” report by Byrne J in the first-mentioned case, but which finds no echo in the two later decisions.  The authorities are in our view clear, and we can find nothing in them or on principle to justify cutting down the presumption in the way Mr O’Connor suggests.

McNair J, as we have said, accepted the correctness of the general proposition that, in the absence of terms in the lease inconsistent therewith, a demise of a flat includes a demise of the external walls of the flat.  He nevertheless held that the demise of the first-floor flat to the defendant did not include any part of the decorative cornice.  As we read his judgment he reached his findings upon two separate and alternative grounds, the first, which he refers to as a conclusion of fact, being that the decorative cornice did not form part of the front wall, the second being that upon its true construction the terms of the lease exclude the decorative cornice from the demised premises.”

99.This passage was cited with approval by Huggins J (as he then was) in Koo Cheuk Son v Tang Wai Chun [1963] HKLR 891 at 901.

100.This approach is also supported by the Final Court of Appeal in Jumbo King Ltd v Faithful Properties Ltd [1999] 4 HKC 707.  Litton PJ had this to say at p 717:

“The description in the First Schedule of the parts of the building retained by the developer was just that: A description.  It could not in anyway affect the property rights as between him and the first purchaser, or as between him and any subsequent parties or between the subsequent parties inter se.  Being the owner of 719/720^th share in the land and building and entitled to possession of the entire building other than those parts allotted to Mr Cheng for his exclusive use Mr Hotung could, subject to the DMC, do with the building as he pleased.  In fact, in the second column of the First Schedule, undivided shares were allotted to various parts of the building.  In relation to the commercial part one sees the following:

SHOP SPACES on the GROUND FLOOR,

SHOP SPACES on the FIRST FLOOR,

OFFICES on the SECOND FLOOR,

OFFICES on the THIRD FLOOR,

OFFICES on the FOURTH FLOOR,

FLAT ROOF on the TENTH FLOOR LEVEL

(482/720^th shares)

There was no specific mention of spaces on those floors such as ‘utility’, storage’, ‘air-handling plant room’, ‘meter’ etc.  It is the appellant’s case that this made the property rights vested in the developer in respect of those floors uncertain: That he cannot be deemed to have retained the right of exclusive possession over the spaces marked ‘utility’.  That submission succeeded at trial.  I would reject that submission.  The allocation of space within the commercial portion was of no conceivable interest to Mr Cheng Ah Loong.  The deed of assignment and the DMC, both dated 1 May 1968, read together were clear: Mr Cheng Ah Loong had exclusive possession of Flat A5 on the sixth floor and portion No 11 on the main roof.  He had easements over portions of the domestic part of J Hotung House for the purpose of passage.  Full stop.  The developer retained the right of exclusive possession over the rest as a legal incident of his 719/720^th share of the land and building.”

101.I have no doubt that the approach contended for by Mr Yeung is the correct one.

102.Yue Lee did have title to both the roof and the parapet walls and this was assigned to Kui Fung the predecessor in title to the Plaintiff.  The subsequent Assignments were also effectual.

103.The result of all this is that I hold that the Plaintiff has the right to the roof and the parapet walls.

104.The next issue which has to be determined is whether the 1^st Defendant has been able to establish adverse possession to the roof and parapet walls.

105.It is common ground between the parties that the relevant limitation period is 20 years from the date of adverse possession commencing.

106.The classic formulation of the legal principles relating to this subject is contained in the judgment of Slade J in Powell v McFarlane [1977] 38 P & CR 452:

“It will be convenient to begin by restating a few basic principles relating to the concept of possession under English law:

(1)    In the absence of evidence to the contrary, the owner of land with the paper title is deemed to be in possession of his land, as being the person with the prima facie right to possession.  The law will thus, without reluctance, ascribe possession either to the paper owner or to persons who can establish a title as claiming through the paper owner.

(2)    If the law is to attribute possession of land to a person who can establish no paper title to possession, he must be shown to have both factual possession and the requisite intention to possess (“animus possidendi”).

(3)    Factual possession signifies an appropriate degree of physical control.  It must be a single and conclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly.  Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time.  The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed.  In the case of open land, absolute physical control is normally impracticable, if only because it is generally impossible to secure every part of a boundary so as to prevent intrusion.  “What is a sufficient degree of sole possession and user must be measured according to an objective standard, related no doubt to the nature and situation of the land involved but not subject to variation according to the resources or status of the claimants”: West Bank Estates Ltd. V. Arthus, per Lord Wilberforce.  It is clearly settled that acts of possession done on parts of land to which a possessory title is sought may be evidence of possession of the whole.  Whether or not acts of possession done on parts of an area establish title to the whole area must, however, be a matter of degree.  It is impossible to generalise with any precision as to what acts will or will not suffice to evidence factual possession.  On the particular facts of Cadija Umma v S Don Manis Appu the taking of a hay crop was held by the Privy Council to suffice for this purpose; but this was a decision which attached special weight to the opinion of the local courts in Ceylon owing to their familiarity with the conditions of life and the habits and ideas of the people.  Likewise, on the particular facts of the Red House Farms case, mere shooting over the land in question was held by the Court of Appeal to suffice; but that was a case where the court regarded the only use that anybody could be expected to make of the land as being for shooting: per Cairns, Orr and Waller L JJ.  Everything must depend on the particular circumstances, but broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.

(4)    The animus possidendi, which is also necessary to constitute possession, was defined by Lindley MR, in Littledale v Liverpool College (a case involving an alleged adverse possession) as “the intention of excluding the owner as well as other people.”  This concept is to some extent an artificial one, because in the ordinary case the squatter on property such as agricultural land will realise that, at least until he acquires a statutory title by long possession and thus can invoke the processes of the law to exclude the owner with the paper title, he will not for practical purposes be in a position to exclude him.  What is really meant, in my judgment, is that the animus possidendi involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow.

The question of animus possidendi is, in my judgment, one of crucial importance in the present case.  An owner or other person with the right to possession of land will be readily assumed to have the requisite intention to posses, unless the contrary is clearly proved.  This, in my judgment, is why the slightest acts done by or on behalf of an owner in possession will be found to negative discontinuance of possession.  The position, however, is quite different from a case where the question is whether a trespasser has acquired possession.  In such a situation the courts will, in my judgment, require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world.  If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the courts will treat him as not having had the requisite animus possidendi an consequently as not having dispossessed the owner.”

107.This passage was cited with approval by the Final Court of Appeal in Wong Tak Yue v Kung Kwok Wai [1998] 1 HKC 1.

108.It is necessary to bear these principles in mind when considering the evidence which was before the Court.

109.I do not think that it has been established that the Plaintiff ever relinquished its rights to the roof or parapet walls.  I accepted the evidence of the 2 junior employees that they did from time to time inspect the roof and that their inspection did not disclose any matters which would necessarily have put them on notice that anyone was attempting to usurp the interests of their employer.

110.Taken in conjunction with this is the paucity of first hand evidence concerning the actions and intentions of the 1^st Defendant.

111.It is difficult not to come to a conclusion that all that the 1^st Defendant claims to have done comes within the ambit of the activities which are normally undertaken by Incorporated Owners.

112.It should also be added that there is little merit in the complaint that work and repairs were undertaken on the roof and that the Plaintiff did not contribute towards the expenses incurred.  In this connection it is relevant to bear in mind the provisions contained in Clause 14 of the Deed of Mutual Covenant:

“14.   The proportion which each of the parties hereto shall be liable to pay or contribute under Clauses 9, 10, 11, 13, 17 and 18 hereof shall be as set out in the Third Schedule hereto and it is agreed that the 16 parts or shares relating to the use of the roof and the right to advertise shall not be liable to contribute to any of the aforesaid expenses and outgoings.”

113.I realise that there are other provisions contained in the Deed of Mutual Covenant which conflict with this clause.  What appears however to be relevant is that the 1^st Defendant appears over the years to except the validity of Clause 14 and according to the available evidence has never made any demand upon the Plaintiff.

114.Before leaving the question of adverse possession it is necessary to make observation upon the recent Court of Appeal case of Chan Tin Shi v Liu Tin Sung & others where judgment was delivered on 19 November this year.  By a majority it held that the New Territories Leases (Extension) Ordinance, Cap 150 had the effect of extending the period for the purposes of the Limitation Ordinance Cap 347.  I understand that this judgment is likely to be the subject of an appeal to the Final Court of Appeal.

115.I do not think that it is incumbent upon me to address the issues which were before the Court of Appeal as I am satisfied for the reasons I have given that the 1^st Defendant did not obtain any right by virtue of adverse possession of the roof or parapet walls.

116.The next issue which has to be considered is whether the Plaintiff has been able to establish that the 1^st Defendant has committed a trespass in granting the licences to the 2^nd to 6^th Defendants.

117.Mr Hung referred to the passage in para 25 of Chapter 18 of the 18^th Edition of Clerk & Lindsell on Torts, Sweet & Maxwell 2000.

“Co-owners  One co-owner of land can only bring an action of trespass against the other if he has been actually ousted or dispossessed of the land.  Each co-owner is entitled to possession of the whole land, so that if one turns the other off the land or part of it, it is a trespass.  If the common property or part of it is destroyed, there is an ouster.  So, trespass lies by one co-owner against another who digs and carries away the soil.  It is not trespass, however, if one co-owner uses the land in the ordinary and natural way, as by cutting grass and making it into hay, or working a coal mine.  In such a case the owner making the hay or working the mine must account for the profits.  When there are co-owners of a wall, such as a party wall, one owner can maintain trespass against the other if there is a destruction of the wall.  But if the wall has been destroyed with the intention of rebuilding it, or the foundations have been temporarily removed with the object of replacing them, there is no trespass.  Trespass will lie if one owner is ousted from possession of the wall, for example, if the wall is height-ened and a building is placed so as to occupy the whole width of the top.  Special statutory procedures exist to facilitate the repair of party structures and the swift resolution of disputes relating to them.”

118.He contended that as between Tenants in Common, one could not be guilty of trespass so far as possession of the land owned by the Tenants in Common was concerned.

119.I do not think that this paragraph makes good this contention.  It is evident that where there has been ouster of one of the Tenants in Common and action in trespass could be maintained.

120.In the present case, the grant of the licences to the 2^nd to 6^th Defendants did constitute an ouster of the Plaintiff’s interest.

121.It is apparent from the Expert evidence that the said equipment encroaches upon both the parapet walls and upon the roof.

122.I have no doubt that the Plaintiff has established that the 1^st Defendant is guilty of trespass.

123.The next issue raised by the 1^st Defendant is that the Plaintiff is estopped from claiming the return of the licence fees by the doctrine of estoppel and or by estoppel by convention.

124.The law on this topic is conveniently encapsulated at paras 165.246 and 170.119 of vol. 11 of Halsbury’s Laws of Hong Kong, Butterworths 2000:

“[165.246] Acquiescence and estoppel  The term ‘acquiescence’ is used where a person refrains from seeking redress when there is brought to his notice a violation of his rights of which he did not know at the time; and in that sense acquiescence is an element in laches.  There may, however, be a case of acquiescence which does not depend on delay at all.  Subject thereto, a person whose rights have been infringed without any knowledge or assent on his part has vested in him a right of action which, as a general rule, cannot be divested without accord and satisfaction or deed of release.

The term ‘acquiescence’ is, however, properly used where a person having a right, and seeing another person about to commit, or in the course of committing, an act infringing that right, stands by in such a manner as really to induce the person committing the act, and who might otherwise have abstained from it, to believe that he assents to its being committed; a person so standing by cannot afterwards be heard to complain of the act.  In that sense the doctrine of acquiescence may be defined as a acquiescence under such circumstances that assent may be reasonably inferred from it, and is no more than an instance of the law of estoppel by words or conduct, the principle of estoppel by representation applying both at law and in equity, although its application to acquiescence is equitable.  The estoppel rests upon the circumstance that the person standing by in effect makes a misrepresentation as to a fact, namely, his own title; a mere statement that he intends to do something, for example to abandon his right, is not enough.  Furthermore, equitable estoppel is not applied in favour of a volunteer.

The doctrine of acquiescence operating as an estoppel was founded on fraud.  As the estoppel is raised immediately by the conduct giving rise to it, lapse of time is of no importance; and for this reason the effect of acquiescence is expressly preserved by statute.  Certain rights have been held not to have been lost notwithstanding long periods of acquiescence.

[170.119] Estoppel by convention  Where parties to a contract put a particular interpretation on it by a course of dealing on the faith of which each of them to the knowledge of the other acts and conducts their mutual affairs, they are bound by that interpretation.  The limits of this type of estoppel are still in the process of being established however, and the following conditions must be satisfied:

(1)    there must be a common mistaken assumption by both parties as to the existence of a state of affairs or as to the construction of a document;

(2)    the mistaken assumption has to have been communicated to each other;

(3)    both parties must have conducted themselves on the basis of such a mistake;

(4)    it must be unjust to allow one party to go back on that assumption; and

(5)    once an understanding has been shown to be mistaken, the estoppel will not apply to future dealings between them.

There can be no estoppel by convention where, although both parties are labouring under a common mistaken apprehension, it cannot be said that they have acted on the basis of that apprehension.  Nor can the doctrine be invoked to deny a party the protection of a statute from the terms of which contracting out is not possible.

Estoppel by convention is not confined to an agreed assumption as to fact, but may be as to law; and the court will give effect to the agreed assumption only if it would be unconscionable not to do so.  Once a common assumption is revealed to be erroneous, the estoppel will not apply to future dealings.  The payment of sums for ‘fluctuation payments’ under a contract with a sub-contractor may preclude a builder from claiming that on the true construction of the contract, no such payments were required.

125.Mr Hung’s submission on this is in my view doomed to failure.

126.No where can it be said that the Plaintiff ever made any representation express or implied to the 1^st Defendant that they were entitled to licence the use of the roof or parapet walls in any way.

127.Over and above this, the Plaintiff made its position clear from 27 April 1999 that it was contesting the 1^st Defendant’s right to receive the licence fees in question.

128.There is also the fact that on the evidence which was before the Court, it has by no means been proved that the licence fees which were received were in fact applied towards the maintenance and upkeep of the building.

129.One of the claims being made by the Plaintiff is for restitution of the licence fees.  This claim is made on the basis that the 1^st Defendant has unjustly enriched itself.

130.This topic was recently the subject of an appeal which was heard in the Final Court of Appeal in the case of Shanghai Tongji Science and Technology Ltd v Casil Clearing Ltd [2004] 2HKLRD 548.

131.The claim for restitution in that case was considered at p 549 by Ribeiro PJ:

“66.   The common law cause of action asserted by the plaintiff for money had and received where consideration has totally failed is now generally regarded as a species of claim for restitution based upon principles of unjust enrichment: see eg, Fibrosa Spolka Akcyina v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at pp. 61-64; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at pp. 255-257; Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at p. 673; David Securities Pty Ltd v Commomvealth Bank of Australia (1992) 175 CLR 353 at p. 375; of Gummow J’s views in Roxborough v Rothmans of Pall Mall (2001-2002) 208 CLR 516 at p 543 et seq, discussed in Birks, “Failure of consideration and its place on the map” (2002) 2 OUCLJ 1; and in Beatson and Virgo, “Contract, unjust enrichment and unconscionability” (2002) 118 LQR 352.

67.    A useful framework for approaching such claims which was adopted by both parties involves asking four questions:

(a)    Was the defendant enriched?

(b)    Was the enrichment at the plaintiff’s expense?

(c)    Was the enrichment unjust?

(d)    Are any of the defences applicable?

68.     This approach was evolved and is generally accepted in academic writings: see eg, Birks, An Introduction to the Law of Restitution (1989 Rev ed.) chap. 1; Burrows, The Law of Restitution (2^nd ed., 2002) p. 15; Goff & Jones: The Law of Restitution (6^th ed., 2002) §1-016; and Hedley and Halliwell, The Law of Restitution (2002) §1.16; Virgo, The Principles of the Law of Restitution (1999) p. 9.  It has received substantial judicial support and will be adopted in this judgment: see eg, Lipkin Gorman v Karpuale Ltd [1991] 2 AC 548 at pp. 559 and 578; Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at p. 75; Banque Financierè de la Citè SA v Parc (Battersea) Ltd [1999] 1 AC 221 at pp. 227 and 234; and Kleinvort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at pp. 408.”

132.The answers to the four questions posed in this passage so far as they relate to the present proceedings are:

(a)    Yes.

(b)    Yes.

(c)    Yes.

(d)    No.

133.It apparent from this that the Plaintiff’s claim is fully justified and that when the question of quantum is considered pursuant to Sakhrani J’s order consideration will need to be given to this.

134.For the reasons which have been given the Plaintiff is entitled to the declaration it seeks that D1 has been guilty of trespass and that the Plaintiff is entitled to possession of the roof and parapet walls.

135.Damages should be assessed on the basis of the unjust enrichment.

136.The 1^st Defendant counterclaim is dismissed and I make an order nisi that the Plaintiff is entitled to its costs.

Mr Yeung Ming Tai, instructed by Messrs Peter Mo & Co., for the Plaintiff

Mr Hung Hing Shok Andy, instructed by Y C Lee, Pang & Kwok, for the 1^st Defendant