Billion Zone Co Ltd v. The Incorporated Owners of May Moon House
Read the full judgment text of HCA 15296/1998 on BabelCite. This High Court CFI judgment was delivered on 11 November 2005.
1. These consolidated actions concern Man Moon House, Nos.97 and 97A Waterloo Road, Kowloon (“the Building”).
Cited by 2 cases · Cites 1 case
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HCA15296/1998 & HCA19488/1998 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NOS.15296 AND 19488 OF 1998 ------------------------------------ BETWEEN
----------------------- (Consolidated pursuant to the Order of Master Ho dated 12 May 2000) Before : Deputy High Court Judge Poon in Court Dates of Hearing : 12 – 16 and 20 – 22 September 2005 Date of Judgment : 11 November 2005 ----------------------- J U D G M E N T ----------------------- Introduction (A) The Building and the land 1.These consolidated actions concern Man Moon House, Nos.97 and 97A Waterloo Road, Kowloon (“the Building”). 2.The Building was erected in 1959 on a piece of land known as Section D of Kowloon Inland Lot No.2145 and Section E of Kowloon Inland Lot No.2145 (“the Lots”). 3.In 1972 and 1973, the Government resumed part of the Lots facing Waterloo Road in order to widen the road. The Lots had since been renamed as the Remaining Portion of Section D of Kowloon Inland Lot No.2145 and the Remaining Portion of Section E of Lot No.2145 (“the Remaining Portions”). After resumption, a new boundary wall facing Waterloo Road was built on the Remaining Portions. 4.The Building consists of twelve floors of residential flats with three flats on each floor (Blocks A, B and C). There are car parking spaces (open and covered) on the ground level within the boundary of the Remaining Portions. (B) The Subject Areas 5.The present disputes arose out of the occupation and use by the Incorporated Owners of the Building (“IO”) of three areas on the ground level of the Remaining Portions. In these proceedings, they are referred to as :
Both the Caretakers’ Room and the Meeting Area fall within the roof-over area on the ground level while the bulk of the Guard House lies in the open space. 6.For identification purpose, these areas are marked on the layout plan annexed to this judgment (“the Plan”). 7.Upon the parties’ invitation, I carried out a site inspection in the afternoon on the first day of the trial (12 September 2005). Among other things, it was observed that a canopy of about 12 to 18 inches in depth, which is not shown on the Approved Ground Floor Plan, surrounds the entire Building at about the level of the ceiling of the roof-over area. The Disputes 8.Billion Zone Company Limited (“BZ”) alleges that it is entitled to the exclusive possession of the entire ground level of the Remaining Portions by virtue of an assignment dated 5 September 1984 (“the 1984 Assignment”). It claims that the IO has been trespassing on the Subject Areas. 9.In respect of the Caretakers’ Room, BZ alleges that the IO’s predecessor, the Building’s Owners’ Committee (“OC”) has been in possession of the Caretakers’ Room under a bare licence granted by its predecessor in title, Madam Wong Yuk, in about the early 1960s. The bare licence was taken over by the IO upon its incorporation on 8 September 1971 but was terminated by virtue of the 1984 Assignment. Since then the IO has been trespassing on the Caretakers’ Room. 10.As to the Meeting Area and the Guard House, BZ alleges that the IO began its occupation in 1998 by respectively erecting a meeting room and a guard house there without BZ’s consent. The IO’s continued occupation constitutes trespass on its property. 11.The IO disputes BZ’s claims on three principal grounds. First, it denies BZ’s entitlement of exclusive possession of the entire ground level of the Remaining Portions. The Subject Areas are common areas of which BZ enjoys no exclusive possession. Second, it alleges that the OC began to occupy the Subject Areas since about 1960 with full knowledge of Madam Wong Yuk. The IO had been continued with the occupation since its incorporation in 1971, which amounts to adverse possession. Third, it relies on the defence of estoppel, including proprietary estoppel. The IO further counterclaims for various relief by virtue of adverse possession and/or estoppel. Background 12.In the 1950s, Mr Chan Ming Fu (“Mr Chan”) and Madam Wong Yuk acquired the Lots from their predecessors. They then erected the Building on the Lots. Mr Chan was then acting as trustee of Madam Wong Yuk. 13.By two assignments dated 6 July 1956, Mr Chan disposed of the interests in Block C on the Third Floor and Block C on the Tenth Floor to one Yu Pui Han (“Yu”) and one Richard Edmund Lee (“Lee”) respectively. (A) The 1959 Assignment and thereafter 14.On 8 April 1959, Mr Chan executed an assignment in favour of Madam Wong Yuk (“the 1959 Assignment”), assigning to her :
15.After the 1959 Assignment, there were three co-owners, namely, Yu, Lee and Madam Wong Yuk, Mr Chan having disposed of all his interests in the Building and the Lots. 16.Madam Wong Yuk then mortgaged her property to Hang Seng Bank. Between July 1959 and May 1960, Hang Seng Bank reassigned all the mortgaged property back to her. 17.Between October 1959 and January 961, Madam Wong Yuk, by various assignments, sold all together 31 equal undivided 42nd shares with the exclusive right to use 31 flats to various purchasers, leaving nine undivided shares and the exclusive right to use the whole of the Ground Floor, Block B on the First Floor, Blocks A and B on the Twelfth Floor and the Roof of the Building. (B) DMC 18.On 17 October 1959, the then 17 co-owners of the Building executed a deed of mutual covenant (“the DMC”). I will discuss the effect of the DMC in a moment. (C) The 1962 Assignment 19.By 1962, Madam Wong Yuk had already disposed of most of the property that she acquired under the 1959 Assignment. On 23 January 1962, for a consideration of HK$170,000, Madam Wong Yuk executed an assignment (“the 1962 Assignment”) assigning to Madam Wong Wai :
It should be noted that insofar as the Ground Floor is concerned, what was assigned was described as “the whole of Ground Floor (Garage)”. The parties have ascribed different meanings and effects to this term, which I will consider in detail below. 20.Subject to the meanings and effects of the term “the whole of Ground Floor (Garage)”, Madam Wong Yuk had by the time of the 1962 Assignment and on the face of the conveyancing documents, disposed of all her interest in the Lots and in the Building. However, it is the plaintiff’s case that Madam Wong Yuk and Madam Wong Wai were the one and same person. Accordingly, despite the 1962 Assignment, there was no actual change in ownership and entitlement of her interests in the property concerned. (D) Incorporation of the IO 21.As noted, IO was incorporated on 18 September 1971. The parties dispute as to when the OC, the IO’s predecessor, first came into existence. (E) Compensation paid under the resumption 22.During the resumption exercise in 1972 and 1973, the Government paid the then co-owners of the Building compensation in accordance with their respective number of undivided shares they owned. Madam Wong Wai was paid 9/42 of the total compensation. (F) The 1984 Assignment and thereafter 23.On 4 May 1984, Madam Wong Wai executed a power of attorney appointing her daughter Ms Mandy Ho Kuai Ieng (“Ms Ho”) to her attorney. 24.On 29 May 1984, BZ, a family company beneficially owned by Madam Wong Wai’s children, was incorporated. Ms Ho was one of its first directors. (BZ’s current directors are Mr William Ho Hou Chiu, who is Madam Wong Wai’s son, and other nominee companies.) 25.By an assignment dated 5 September 1984 and executed by Ms Ho as her attorney (“the 1984 Assignment”), Madam Wong Wai disposed of all her interest in the Building and the Remaining Portions in favour of BZ for a consideration of HK$1,000,000. The subject matter of the assignment is :
In short, the subject matter of the 1984 Assignment is the same as that under the 1962 Assignment. 26.Two days later on 7 September 1986, Madam Wong Wai died. 27.On 17 January 1986, BZ sold Flat 12A together with the Roof of the Building to one Costar Investment Limited. Agreed Issues 28.The parties have agreed on the following as the main issues that require my determination.
29.Issue 1 entails an enquiry into the rights and entitlements that BZ enjoyed under the 1984 Assignment. 30.I will preface the inquiry with one basic principle relating to how property rights in multi-storied buildings in Hong Kong are held, which is the concept of unity of possession. In Jumbo King Ltd v. Faithful Properties Ltd & Ors [1999] 4 HKC 707, Litton PJ said at p.720C–E :
See also Lord Hoffmann NPJ’s speech at p.725F–H. Exclusive rights under the 1959 Assignment 31.The chain of inquiry starts with the 1959 Assignment. The question is : What exclusive right Madam Wong Yuk had under the 1959 Assignment and after the execution of the DMC, which she might assign under the 1962 Assignment? 32.By virtue of the 1959 Assignment, Madam Wong Yuk acquired (a) 40 undivided shares in the Lots and in the Building and (b) the exclusive possession of, inter alia, the whole of the Ground Floor of the Building : see paragraph 14 above. 33.Mr Lee, counsel appearing for BZ, contends that “the Ground Floor of the Building” means the entire ground level of the Lots. I am unable to accept Mr Lee’s contention for a number of reasons. 34.First, on a fair reading, the 1959 Assignment drew a clear distinction between the Lots and the Building. The Ground Floor of the Building obviously means the roof-over area on the ground level. It does not include the entire ground level of the Lots. This construction is consistent with the Approved Ground Floor Plan, which depicts the boundary of the Lots as well as the boundary of the roof-over area on the ground level. If the Ground Floor of the Building were to include the entire ground level of the Lots, the depiction of the boundary of the roof-over area would become superfluous. Incidentally, the Ground Floor of the Building does not include the area underneath the canopy as seen at the site visit. For the canopy does not feature in the Approved Ground Floor Plan. 35.Second, Mr Lee submits that “No.97 and 97A Waterloo Road” refers to “the whole thing”, which is, presumably, a loose description of the entire Lots and the Building. This submission is untenable because in the 1959 Assignment, “No.97 and 97A Waterloo Road” refers to the Building and not the Lots. Mr Lee further refers to the plaque outside the boundary wall in support. But no weight can be placed on the plaque at all. It is no more than an address plaque. It cannot possible become an aid to construing the 1959 Assignment. 36.Third, the cases cited by Mr Lee do not support his proposition. He first relies on Governors of St Thomas’s Hospital v. Charing Cross Railway Co. (1861) J & H 400. That case concerned a sale by the Corporation of London (as Governors of St Thomas’s Hospital) to the Charing Cross Railway Company under the Lands Clauses Act. The issue was whether the garden attached to the hospital formed part of the hospital so that the Railway Company, if intending to take part of the premises, would be bound to take the whole premises which included the hospital and the garden under the legislation. The court held that the garden was part of the hospital. That case is distinguishable for two reasons. It is a case on the construction of a particular English Act, which has no application here at all. Further, the hospital was under a single ownership. The court readily recognized that the position might be different if common ownership were involved. Sir W. Page Wood VC said at p.405 :
37.The distinction drawn by Sir W. Page Wood VC above (with emphasis supplied) tends to support the IO’s case here where there is a multi-storied building standing on the Lots involving common ownership, rather than BZ’s contention. 38.The next case relied on by Mr Lee is Doe d Clements v. Collins (1788) 2 TR 498. It dealt with the intention of a testator under a will and concerned a house under a single ownership and the areas surrounding it. It is entirely distinguishable from the present case. 39.For the above reasons, I find that under the 1959 Assignment, Madam Wong Yuk acquired exclusive possession of the Ground Floor of the Building, namely, the roof-over area on the ground level only, and not the entire ground level of the Lots as contended by BZ. 40.By virtue of the concept of unity of possession, each of the three co-owners after the 1959 Assignment and before the entry of the DMC in October 1959 (Yu, Lee and Madam Wong Yuk) was entitled to possession of the open space on the ground level of the Lots (“the Open Space”) in common with other co-owners on a non-exclusive basis. The position under the DMC 41.What was the position under the DMC? 42.Like the 1959 Assignment, the DMC drew a clear distinction between the Lots and the Building. See, for example, the recital where “the said premises” was used to denote the Lots and the Building whereas “the said building” referred to the Building. 43.Further, Clause 1 of the DMC provided that :
44.It is thus clear that the mutual conferment of exclusive right to use particular areas under the DMC is confined to those in the floor block or flat of the Building and not in the Lots. In Madam Wong Yuk’s case, the Ground Floor referred to in the First Schedule that she was to have exclusive possession must mean the Ground Floor of the Building and nothing more. 45.Accordingly, the Open Space remained under the DMC common area of which all the then 17 co-owners enjoyed non-exclusive possession. Exclusive rights under the 1962 Assignment 46.I next turn to the 1962 Assignment. At this point, I will proceed on the assumption that Madam Wong Yuk and Madam Wong Wai were two different persons. (A) The starting point 47.The starting point is this. Subject to the parties’ debate on the meanings and effects of “the whole of Ground Floor (Garage)”, Madam Wong Yuk could not possibly pass on to Madam Wong Wai the exclusive possession of the ground level on the Lots, something that she did not have. At most, she could only assign the exclusive possession of the Ground Floor of the Building if I were to accept BZ’s contention on the meaning of “the whole of Ground Floor (Garage)”. In other words, Madam Wong Wai could not possibly have any exclusive possession of the Open Space under the 1962 Assignment. (B) Construing the 1962 Assignment 48.I then come to the parties’ dispute over the meanings of “the whole of Ground Floor (Garage). Mr Lee first argues that it means the entire Ground Floor of the Lots. I have already rejected his contention that “Ground Floor of the Building” means “Ground Floor of the Lots”. So there is no substance in this argument. Mr Lee next argues that “the whole of the Ground Floor (Garage) means the entire Ground Floor of the Building. Mr Wong, SC, appearing for the IO, argues that it is expressly confined to the “Garage”, that is, the particular area then used as garage at the time. This debate calls for a proper construction of the 1962 Assignment. 49.The proper way to construe a document of this kind can be found in Jumbo King, supra, at p.726E–F, per Lord Hoffmann :
I will respectfully apply this approach when construing the 1962 Assignment. 50.I first note the change in the description of the subject matter of assignment. In the 1959 Assignment, it was the exclusive right to use and occupation of “the whole of Ground Floor” of the Building. In the 1962 Assignment, it was “the whole Ground Floor (Garage)” of the Building. As a matter of natural and ordinary language, the word “garage” means a building or shed for housing one or more motor vehicles when not in use. It connotes a covered car parking area as opposed to mere car parking spaces in the open. And it is plain that not the entire Ground Floor of the Building was at the material time used for car parking purposes. It follows that the parties must have intended “the whole Ground Floor (Garage) of the Building” to mean the area of the Building which was used for car parking purpose, and not the entire Ground Floor. 51.Mr Lee submits that the insertion of “Garage” did not alter the subject matter of assignment. “The whole of the Ground Floor (Garage)” referred to the entire Ground Floor of the Building. The word “Garage” was inserted merely to describe the then existing use of the Ground Floor. This submission must be rejected for two reasons. First, it is based on the wrong footing that the entire Ground Floor of the Building was used for car parking purposes. As a matter of fact, it was not the case. Second, it is a game with words, which is prohibited, to say that “the whole of Ground Floor” equals “the whole of Ground Floor (Garage)”. In my view, the insertion of “Garage” must have been deliberate. It was clearly intended to confine the subject matter of the assignment to the area of the Ground Floor of the Building which was then used for car parking purposes. (C) Where was the “Garage”? 52.Where then was the “Garage”? 53.It is common ground that before 1962, very few cars were parked at the Lots. The demand for car parking spaces was very low. No cars were parked at the Open Space. It is in my view only natural as all car owners would go for covered car parking spaces when they were available. 54.BZ called a Mr Wong Kee (“Mr Wong”) to give evidence on its behalf. Mr Wong is now in his 70s. He used to work for a Mrs Ho, “the big landlady” of the Building. After her death in the 1980s, he continued to work for BZ to collect rental of car parking spaces that BZ let out. (On BZ’s case, this Mrs Ho was Madam Wong Yuk who was the same person as Madam Wong Wai.) 55.It is Mr Wong’s evidence that in about 1960, he was employed by a Mr Lau, who lived at No.93 Waterloo Road, as driver. He rented a car parking space (the area where Car Park No.17 was according to the Approved Car Park Plan) for Mr Lau at the Lots at a monthly rent of HK$40. Since then, Mr Wong had stayed at the Building very often. He was therefore very familiar with the situation there. According to Mr Wong, in early 1960s, cars were parked at the area where Car Park Nos.11 to 17 (as numbered according to the Approved Car Park Plan) only. He has identified those car parking spaces in green on Exh. P1. Transposed to the Plan, those car parking spaces can be found on the left hand side of the lift lobby and the storage area built by Mr Wong adjacent to the lift lobby (“Area 1”). No cars were parked outside Area 1. 56.Mr Wong’s evidence on where the cars were actually parked back in the early 1960s was consistent with the evidence of the IO’s witness, Mr Mak Ming Kwai (“Mr Mak”). Mr Mak has been living at Block 8B of the Building since 1977. Between 1961 and 1962, a good friend of Mr Mak’s lived at the Building. Mr Mak came to visit his friend very often and he found that cars were parked at Area 1. Mr Mak described those areas as the “Garage”. 57.However, Mr Wong went on to allege that since the early 1960s, there were already markings of 37 car parking spaces on the ground level of the entire Lots in accordance with the Approved Car Park Plan. The point that Mr Wong was trying to make is that the entire ground level was used for car parking purposes. I am unable to accept Mr Wong’s evidence for three reasons. 58.First, it is in direct contradiction of his evidence that back in the early 1960s, cars were parked at Area 1 only. Second, when Mr Wong was asked in chief if there were markings of car parking spaces back in the 1960s, he volunteered this justification : if there were no car parking spaces, no occupation permit would be issued. This justification is not supportable either in law or on facts. It was never a condition that the 37 car parking spaces had to be actually marked before the occupation permit could be issued. Even the occupation permit only stated : Ground Floor – Car Port for non-domestic use. With Mr Wong’s background, I have considerable doubt as to how he could, on his own, come up with such a justification, which is incidentally the same submission advanced by Mr Lee in his opening. It is more probable than not that he was fed with such justification and he just repeated it without prompting. It shows that Mr Wong is amenable to giving evidence to suit BZ’s case. Second, even Mr Wong accepted that the Approved Car Park Plan is unrealistic in the sense that it was simply impossible to park 37 cars at the car parking spaces as depicted there. This is confirmed from the site visit. I fail to see any reason why it was then necessary to incur expenses year after year to mark on the ground car parking spaces according to the Approved Car park Plan. 59.Mr Mak said that there were simply no markings back in the early 1960s. I prefer to accept the evidence of Mr Mak, who has not been shaken under cross-examination. 60.Thus on the evidence before me, I am satisfied that the “Garage” where cars were parked before or at time of the 1962 Assignment was Area 1. For present purposes, the IO also accepts that the car parking space now used by BZ and the storage area erected by Mr Wong adjacent to it (on the right hand side of the Plan) also formed part of the “Garage” (“Area 2”). I therefore find that the “Garage” in the 1962 Assignment referred to Area 1 and Area 2, of which exclusive possession was assigned by Madam Wong Yuk under the 1962 Assignment. (The area outside Area 1 and Area 2 on the Ground Floor of the Building will be referred to as the “Non-Garage Area” below.) (D) Relying on section 16 61.In his construction of the 1962 Assignment, Mr Lee seeks to rely on section 16 of the Conveyancing and Property Ordinance, Cap.219. Section 16(1) reads :
Mr Lee argues that the failure to include the Non-Garage Area in the 1962 Assignment was a mere omission. By the operation of section 16(1), the right to exclusive possession of the entire Ground Floor of the Building had been assigned : Gregg v. Jago [1921] 1 Ch. 322, Hapgood v. JM Martin and Son Limited (1935) 152 The Law Times 72, Silver Carnival Limited v. Longhose Investments Limited, CACV 339 of 2004, unreported, 14 June 2005. 62.Mr Wong submits that the purpose of section 16 is to render unnecessary to the incorporation in an assignment an express clause stating that existing easements and other appurtenant rights, which would pass under common law, would so pass by the assignment. The purpose was to simplify conveyancing and to prevent the passing of appurtenant rights and easements from being defeated by omission to include the deed full description of those rights or easements. Such an implication will give way when contrary intention is expressed in the assignment. 63.Mr Wong further submits that the present case is not one where particular rights appurtenant to the land assigned had been omitted from the assignment. Nor is it a case where the deed assigning a particular piece of land only mentions appurtenant rights A and C, but omitted to mention appurtenant right B. Instead, there is here a clear definition in the assignment as to the area of the land upon which the right exclusive use had been assigned. There was a deliberate change in the description of the subject matter of assignment regarding the Ground Floor of the Building from the 1959 Assignment to the 1962 Assignment. The very area where the right to exclusive use was conveyed was re-written. Section 16 and the Hansford v. Jago line of cases do not apply : see Floyd et al v. Heska et al, Ontario Court of Appeal, 25 July 1977, at page 7 of the transcript of the judgment. 64.I agree with Mr Wong entirely and reject Mr Lee’s reliance on section 16. (E) Madam Wong Yuk and Madam Wong Wai 65.I then come to the dispute if Madam Wong Yuk and Madam Wong Wai were the one and same person. The significance of the point is this. 66.If they were two different persons, Madam Wong Yuk had not assigned the exclusive possession of the Non-Garage Area to Madam Wong Wai under the 1962 Assignment. After the assignment, Madam Wong Yuk had disposed of all her shares in the Building and in the Lots. Thereafter, she could not have retained any exclusive possession to the Non-Garage Area : see Jumbo King, supra, per Litton PJ at pp.719H–I and 720E. The Non-Garage Area then became common area, to which all co-owners were entitled to non-exclusive possession. I will call this Scenario 1. 67.If they were the one and same person, then Madam Wong Yuk / Madam Wong Wai still retained her shares in the Building and in the Lots after the 1962 Assignment. So although the assignment was confined to the “Garage”, she still retained exclusive possession of the Non-Garage Area as an incident of her ownership of the land. I will call this Scenario 2. 68.For present purposes, I do not think it is necessary to find if Madam Wong Yuk and Madam Wong Wai were the one and same person. I will explain why below. Exclusive rights under the 1984 Assignment 69.Proceeding from Scenario 1, Madam Wong Yuk could not have passed on to BZ the exclusive possession of the Non-Garage Area under the 1984 Assignment. In other words, BZ did not have any exclusive possession of the Non-Garage Area. 70.Proceeding from Scenario 2, by using the same description “the whole of Ground Floor (Garage)”, Madam Wong Wai / Madam Wong Yuk had only assigned under the 1984 Assignment to BZ exclusive possession of the Garage, but not the Non-Garage Area. And having disposed of all her interest in the land, Madam Wong Yuk / Madam Wong Wai did not retain any exclusive possession over the Non-Garage Area : Jumbo King, supra, per Litton PJ at pp.719H–I and 720E. The Non-Garage Area then became common area. 71.Thus on both Scenario 1 and Scenario 2, BZ had not acquired any exclusive possession of the Non-Garage Area under the 1984 Assignment. Conclusion 72.Both the Caretakers’ Room and the Meeting Area fall within the Non-Garage Area. The bulk of the Guard House falls within the Open Space, and the rest within the Non-Garage Area. In short, all the Subject Areas fall within the common area. I will therefore answer Issue 1 in the affirmative. In the circumstances, the defence raised by the IO on adverse possession and estoppel and hence Issues 2 and 3 do not arise. And I will simply leave them as they are. 73.For the above reasons, I will dismiss BZ’s claim and make no order on the IO’s counterclaim. 74.On costs, I will make an order nisi that the IO do have the costs of the consolidated actions, to be taxed if not agreed.
Mr Lee Tung Ming, instructed by Messrs Lo & Lo, for the Plaintiff Mr Wong Yan Lung, SC and Mr Jenkin Suen, instructed by Messrs Cheng, Yeung & Co., for the Defendant | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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