Kung Ming Tak Tong Co Ltd v. Park Solid Enterprises Ltd and Another
Read the full judgment text of CACV 227/2005 on BabelCite. This Court of Appeal judgment was delivered on 12 March 2007 before Le Pichon JA, Yuen JA, Chu J.
Property law – multi-storeyed buildings – implied grant of easement – rule in Wheeldon v Burrows – express grant of privilege – s.16(1) Conveyancing and Property Ordinance – Deed of Mutual Covenant – clause 3(a) right of passage – common parts versus exclusively owned areas – Plaintiff owns Shop 2B-B on 1st floor and whole of 2nd and 3rd floors of Fou Wah Centre – Existing Entrance Lobby and New Staircase carved out in 1990 from a shop on 1st floor by developer to provide access from elevated pedestrian walkway near MTR station – tenant of Shop 2B-B sells food across a 13 feet 3 inches counter along the lobby – 2nd Defendant acquired lobby in 2001 and intended to narrow it to create new shop space – whether rule in Wheeldon v Burrows applies in multi-storeyed buildings with co-owners – held no, easements do not apply where co-owners hold land as tenants-in-common in equal undivided shares (per Merrilong) – whether an express grant of a 'privilege' was created by assignments and s.16(1) – held no, right of passage could not be a 'privilege' appertaining only to Plaintiff's units because the lobby and staircase also serve other premises such as the CLP shop – whether clause 3(a) of the DMC gives a right of passage over the Existing Entrance Lobby – held no, the lobby was not in existence at the time of the DMC and was not a common part, being exclusively owned by 2nd Defendant – late application to amend to advance this argument refused – appeal dismissed with costs to 2nd Defendant.
Legal issues: Whether Wheeldon v Burrows implied grant of easement applies in multi-storeyed buildings with co-owners · Whether an express grant of a 'privilege' was created by the assignments and s.16(1) Conveyancing and Property Ordinance · Whether clause 3(a) of the DMC gives a right of passage over the Existing Entrance Lobby
Outcome: Appeal dismissed.
Cited by 14 cases · Cites 1 case
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CACV 227/2005 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 227 OF 2005 (ON APPEAL FROM HCA No. 1926 OF 2001 ) ______________________ BETWEEN:
Before: Hon. Le Pichon and Yuen JJA and Chu J in Court Dates of hearing: 17 February and 23 November 2006 Date of Judgment: 12 March 2007 ---------------- JUDGMENT ---------------- Hon. Le Pichon JA: 1.I agree with the judgment of Yuen JA and the order she proposes. Hon. Yuen JA: Introduction 2.The Plaintiff has since 2000 owned shop premises (2B-B) on the 1st floor as well as the whole of the 2nd and 3rd floors of the commercial portion of a building in Tsuen Wan called Fou Wah Centre (“the Building”) which is now nearly 30 years old. An elevated pedestrian walkway surrounds the entire Building at 1st floor level. When the Building was first constructed in 1978, there was one entrance at 1st floor level providing access to the Building from the elevated walkway. This entrance is at the southern side of the building (in the direction of Castle Peak Road). 3.In 1990 (about 12 years after the Building was completed), another opening at the northern side of the building (in the direction of the MTR station) was carved out of a shop on the 1st floor so that pedestrians on the elevated walkway could also enter the building from there. That part of the 1st floor has been called (in the plan annexed to the Statement of Claim) “the Existing Entrance Lobby”. It is common ground that it is not a “common part” and that the 2nd Defendant is the registered owner. At the same time, there was constructed a staircase (“the New Staircase”) connecting the Existing Entrance Lobby to the two upper floors of the commercial portion. 4.Shop 2B-B adjoins the Existing Entrance Lobby and since 1998, the tenant has been selling food from across a counter running the length of the lobby (said to be 13 feet 3 inches). 5.In 2000, the 1st Defendant assigned to the Plaintiff the premises I have described in para. 2. (As a matter of completeness, I should mention that the Plaintiff actually acquired Shop 2B, which had been partitioned into Shop 2B-A and 2B-B). 6.In 2001, the Existing Entrance Lobby (amongst other parts of the building) was assigned by the 1st Defendant to the 2nd Defendant who intended to reduce the width of the lobby in order to create a new shop space between it and Shop 2B-B. The creation of the new shop space would have prevented the tenant of Shop 2B-B from selling goods across the counter, although customers could still be served from a small entrance to his shop which adjoins the elevated walkway. Proceedings 7.The 2nd Defendant’s intention to restrict the width of the Existing Entrance Lobby caused the Plaintiff to institute proceedings in 2001. The Plaintiff claimed a pedestrian right of way over those parts of the 1st floor coloured yellow on the plan annexed to the Statement of Claim as Annexure A for “ingress and egress to Shop 2B-B and to the Second and Third Floors of Fou Wah Centre including an unobstructed means of access to Shop 2B-B measuring 13 feet 3 inches adjoining the Existing Entrance Lobby”. The colouring on Annexure A was amended by the Plaintiff at the hearing before us on 23 November 2006 to comprise the Existing Entrance Lobby and part of the New Staircase. Trial 8.After a 7-day trial, Recorder J. Leong SC dismissed the Plaintiff’s claims. The learned recorder had a site visit and found as a fact that “there are various other access points into the relevant parts of the building including entry at Ground Floor level and from other points on the First Floor podium level” although the Existing Entrance Lobby was the most prominent for the MTR and the New Staircase was better kept than the other staircase which provided access from street level through to the 3rd floor. There is also a lift which provides access to all floors in the commercial portion but apparently it is poorly kept. 9.The learned recorder set aside an injunction granted by Deputy Judge Longley in July 2001 in favour of the Plaintiff and granted an injunction against the Plaintiff from trespassing upon the Existing Entrance Lobby. The learned recorder also ordered the Plaintiff to pay the costs of the action and of a related District Court action. Appeal 10.The parties first appeared before us on 17 February 2006. After examining the conveyancing documents in more detail, the court considered it desirable to recall the parties for further submissions on two issues to which I will refer later. 11.The hearing was restored on 23 November 2006 when the Plaintiff initially asked for leave to amend the Notice of Appeal to take into account the issues raised by the court, while the 2nd Defendant produced some plans not previously available. As events transpired, the Plaintiff eventually decided not to advance any arguments on the matters raised by the court, but it did ask for leave to amend the Notice of Appeal to argue a new point which I will discuss later. Relevant background facts 12.First it may be helpful to set out some of the relevant facts. The development of the Building was completed in 1978 by Fou Wah Weaving Mills Ltd ("the Developer"). The Building consists of a commercial portion comprising the Ground, 1st, 2nd and 3rd floors and a residential tower block above it. This appeal does not concern the residential tower block. 13.Even before development, mass transit construction was underway nearby (see the plan attached to the Proposed Lease of Tsuen Wan Town Lot No.233 dated 14 June 1974). It was a special condition of the New Grant that the Developer was to construct an elevated pedestrian walkway linking the Building to the MTR and surrounding buildings (see the Modification letter dated 3 March 1977). 14.However, it would appear from the plans produced to the court at the hearing in November 2006 that it was not until 1990 that the Existing Entrance Lobby was carved out of a shop on the 1st floor to enable more direct access from the pedestrian walkway in the direction of the MTR (the other access being in the direction of Castle Peak Road) and a new staircase (the New Staircase) built to connect the new entrance lobby with the upper floors of the commercial portion. DMC : allocation of shares to floors in the commercial portion 15.In 1978 soon after development, the Developer (if I may use shorthand) "sold" the units in the residential portion whilst retaining the whole of the commercial portion. A Deed of Mutual Covenant was entered into between the Developer and purchasers of the residential units. The entire Building was notionally divided into 9,700 shares, of which 5,040 shares were allocated to the commercial portion. Of those 5,040 shares, the DMC provided that the following shares be allocated to each floor:
16.As I mentioned earlier, in 1990 the Developer carved the Existing Entrance Lobby out of a shop on the 1st floor and constructed the New Staircase connecting the Existing Entrance Lobby to the 2nd and 3rd floors. 17.The Developer (if I may use shorthand again) "owned" the entire commercial portion until 1997. Sale of commercial portion by Developer to 1st Defendant 18.In 1997, the Developer agreed to sell the whole of the commercial portion (the Ground, 1st, 2nd and 3rd floors) to the 1st Defendant. Sub-sale by 1st Defendant of parts of 1st floor 19.Before completion however, the 1st Defendant agreed to sub-sell parts of the 1st floor to sub-purchasers, whilst keeping the whole of the Ground, 2nd and 3rd floors. It was thus in 1997 that the commercial portion first fell into multiple ownership and it became necessary to set out the rights and obligations of co-owners by way of a sub-DMC for the commercial portion. What was assigned to 1st Defendant 20.As I have mentioned, 5,040 shares had been allocated to the whole of the commercial portion. As a result of the assignments by the Developer to the 1st Defendant as well as to the various sub-purchasers, the 1st Defendant acquired 4,153 shares and had the exclusive possession of the whole of the Ground, 2nd and 3rd floors and parts of the 1st floor (see the Third Schedule to the Assignment from the developer to the 1st Defendant dated 27 June 1997). Shares allocated to certain areas on the 1st floor 21.When one subtracts from the 4,153 shares acquired by the 1st Defendant the shares allocated to the Ground, 2nd and 3rd floors (2,280 + 720 + 720 respectively), there were 433 shares left for those parts of the 1st floor of which exclusive possession was given to the 1st Defendant. These parts were described in the Assignment from the Developer to the 1st Defendant as "portions of the 1st floor of the Building including the Existing Entrance Lobby, Lavatories, Staircases, Passageways and Shops 1A, 2B, 4B and Storerooms 1 and 2" (see the Third Schedule to the Assignment). 22.When one further subtracts from those 433 shares the shares allocated for Shops 1A (123 shares), 2B (65 shares), 4B (217 shares), Storeroom 1 (1 share) and Storeroom 2 (1 share)(see the Second Schedule to the Sub-DMC), 26 shares are left as shares owned by the 1st Defendant for the "Existing Entrance Lobby, Lavatories, Staircases and Passageways" referred to in the Assignment. The location of these areas can be identified on the plan of the 1st floor attached to the Assignment. Sub-DMC 23.However in the Sub-DMC executed on the same day as the Assignment, some changes were made to the 1st Defendant’s right to exclusive possession of the "Existing Entrance Lobby, Lavatories, Staircases and Passageways" referred to in the Assignment. Relinquishment of right of exclusive possession of lavatories and southern staircase and passageways 24.In the Sub-DMC, the 1st Defendant expressly relinquished its right to exclusive possession of the lavatories and the staircase and passageways at the southern corner of the 1st floor. In clause B-5 of the Sub-DMC, these areas were identified (coloured yellow in the attached plan) as "First Floor Common Areas and Facilities". They were expressly stated to be "now for common use of the Owners of the Shops on the 1st Floor". 25.As a result of this express relinquishment of the right of exclusive possession of those areas (to which no shares were allocated), the 1st Defendant would then have held the 26 shares with exclusive possession of: (a) the Existing Entrance Lobby,
Loss of the 1st Defendant’s right of exclusive possession of New Staircase - not argued 26.One of the matters raised by the court after the first hearing was whether the 1st Defendant had lost the right of exclusive possession of the New Staircase (ignoring the Fire Escape Staircase as this was not in issue in the case). This issue arose from the omission of any reference to the New Staircase in the clauses in the Sub-DMC setting out what the 1st Defendant exclusively used and enjoyed, and the fact that the 1st Defendant’s 26 shares were recorded in the Sub-DMC as relating to the Existing Entrance Lobby only. 27.After the parties were asked to assist the court on this matter, and before the second hearing, the Plaintiff sent written submissions arguing that the 1st Defendant had no right of exclusive possession of the New Staircase and asked for leave to amend the Notice of Appeal. However the Plaintiff subsequently decided not to proceed with the application for leave to make this amendment. Restriction in Sub-DMC on Use of Existing Entrance Lobby - not argued 28.The second matter raised by the court was whether under the Sub-DMC, the use of the Existing Entrance Lobby is restricted as an entrance lobby only, in light of the factual matrix when the Sub-DMC was executed, including the contemporaneous construction of the New Staircase facing it and the fact that the number of shares allocated to the Existing Entrance Lobby was disproportionately smaller than for shops on the 1st floor. However the Plaintiff also did not pursue an appeal along these lines. Plaintiff’s case 29.The Plaintiff’s case was based on an implied grant of an easement of right of way under the rule in Wheeldon v Burrows (1879) 13 Ch. D 31, alternatively an express grant of a privilege existing at the time of the assignments to it. 30.The Statement of Claim sought the following declarations:
31.Then, at the November 2006 hearing before us, the Plaintiff sought to argue that under clause 3(a) of the DMC (not the Sub-DMC), each owner had the right to pass over “entrances” and “staircases” and so there was “a right of passage over the Existing Entrance Lobby in favour of other owners of the Building for the proper use and enjoyment of their parts of the building, including the Plaintiff as owner of Shop 2B on the 1st Floor and the whole of the 2nd and 3rd Floors for access to Shop 2B and access to the 2nd and 3rd Floors via the ... Staircase”. 32.The Plaintiff asked for leave to amend the claim to add the following relief:
No Wheeldon v Burrows implied grant of easement 33.I shall deal first with the argument that there was an implied grant of an easement of right of way under the rule in Wheeldon v Burrows. 34.I should first point out that an implied grant of easement under the rule in Wheeldon v Burrows is a peculiar class of interest in land. It is different from an easement of necessity (as recognised in Wheeler v Saunders [1996] Ch 17, 25) because it goes beyond implying an easement where otherwise it would be impossible to make use of one’s tenement. It has its own particular requirements which are still frequently disputed (eg whether there are two separate conditions, or one interacting condition). But most importantly for present purposes, the interests impliedly granted under the unique rule in Wheeldon v Burrows are easements. 35.However the concept of easements does not apply to multi-storeyed buildings where owners have equal undivided shares in the land. That was held by this court (Cons, Fuad and Kempster JJA) in Chiu Shu Choi v Merrilong Dyeing Works Ltd [1990] 1 HKLR 385, 389, a decision which is binding on us. That an owner cannot have an easement over his own land has been clear doctrine for over two centuries of English law, primarily because of the requirement for separately-owned dominant and servient tenements. In Merrilong, the court considered an argument based on Wheeldon v Burrows and held that co-owners of multi-storeyed buildings in Hong Kong - who own the land as tenants-in-common holding the land in equal undivided shares - can only govern rights and obligations over the use of areas in their exclusive possession through covenants, not easements. 36.On the facts of that case, the court in Merrilong held that the right of passage claimed (the use of the only lift in the building to access 9th floor factory premises) was “implied by necessary implication” into the deed of mutual covenants – not by way of the proprietary concept of an implied grant of easements, but by way of the contractual concept of an implied term. 37.The facts in the present case do not justify implying such a covenant. As the learned recorder found after a site inspection, there are other means of access to the Plaintiff’s premises, albeit less prominent and not as well-decorated. The Existing Entrance Lobby and the New Staircase were only added after 1990. Further as I have pointed out, although goods may no longer be handed over the counter of Shop 2B-B if a shop is created between that shop and the narrowed lobby, customers could still be served from the entrance to the shop which adjoins the elevated walkway. There is no question of a derogation from grant because the Plaintiff’s premises are not rendered unfit or materially less fit for the particular purpose for which the grant was made. 38.The Plaintiff has argued that Merrilong has been disapproved in Jumbo King v Faithful Properties Ltd [1999] 3 HKLRD 757. I do not see anything in the Court of Final Appeal’s judgments that indicates disapproval. In fact, Lord Hoffman reiterated the law in the following way (p.774 D-F):
39.Although Lord Hoffman said that “for practical purposes they were easements” that is not tantamount to incorporating the law of easements (including unique concepts like Wheeldon v Burrows) into the law of covenants. 40.Coming back to the present case, as I understand the argument of the Plaintiff’s leading counsel, he argued that as the right to exclusive possession was part of an owner’s proprietary rights, an owner can grant an easement over the right to exclusive possession only, and that would get over the requirement for separately-owned dominant and servient tenements. With respect, I do not agree. It is well-established law that all co-owners have unity of possession over the whole property. The right to exclusive possession of a particular area derives only from the mutual covenants. Since a co-owner cannot have an easement over his own land for want of identifiable dominant and servient tenements, there is even less reason for the notion of an easement over what is essentially nothing more than a right to sue other co-owners under those covenants, a right which is even less identifiable as a "servient tenement". No express grant of a privilege 41.The Plaintiff also argued that the occupants of Shop 2B-B and the 2nd and 3rd floors had at the time of the assignments to it a licence from the 1st Defendant to use the New Staircase and the Existing Entrance Lobby, which licence became a "privilege" appurtenant to the shares referable to those units and which privilege was incorporated into the express grant to the Plaintiff, either by way of the general words in the assignments and/or by way of s.16(1) Conveyancing and Property Ordinance. 42.The general words in the assignments relied on are:
43.Section 16(1) provides:
44.Clause 1(c) may have expressed a contrary intention to s.16(1) because the word “interests” does not appear in the clause, but I do not think it matters in this case because what the Plaintiff claims is the express grant of a privilege and not an interest. 45.Section 16 is modelled on s.62 Law of Property Act 1925. It has been held that each of the words “liberty, privilege, easement, right or advantage” in s.62 connotes something which is the subject of individual or class enjoyment, as opposed to general enjoyment. In Le Strange v Pettefar (1939) 161 LT 300, it was held by Luxmoore LJ (sitting as an additional judge of the Chancery Division) at p.301:
46.I do not see how the right of passage claimed by the Plaintiff can be a “privilege” that appertains only to the shares carrying the right of possession of Shop 2B-B or the 2nd or 3rd floors. The Existing Entrance Lobby and New Staircase do not serve only those areas. For example, the Existing Entrance Lobby and the descending part of the New Staircase also serve the CLP shop on street level, and a deed was made in 2001 between the 1st Defendant and CLP in respect of a right to pass over part of the Existing Entrance Lobby (that part being identical to the reduced entrance lobby intended by the 2nd Defendant). 47.In any event, I think the court should be slow to find, except in the clearest case, the sort of privilege that is claimed. The need for property rights to be capable of being identified with certainty cannot be overemphasized (London & Blenheim Ltd v Ladbroke Ltd [1994] 1 WLR 31, per Peter Gibson LJ at 37 F -H). The certainty of good title that comes with a thorough checking of title deeds would be destabilized if the court were to be persuaded too easily to accept claims of privileges exercised only by permission and not as of right. 48.In practice, difficulties would be created in the course of conveyancing transactions by allegations of undocumented factual advantages claiming elevation to the status of legal privileges. For instance, in the present case, the “privilege” that the Plaintiff claims in the Statement of Claim is the right of “ingress and egress” to and from Shop 2B-B along a stated length of the Existing Entrance Lobby. That language suggests (as leading counsel for the appellant accepted) that the claim is for the right to enter and exit the shop from the Existing Entrance Lobby. But in fact at the date of the assignments there was no means of such ingress and egress. There was simply a counter over which goods were handed over. “Ingress and egress” to and from the shop were not accurate descriptions of the “privilege” that was claimed. That is simply an illustration of the uncertainties that may be created (and which must be avoided as much as possible) in matters of title to land. 49.I also take the view that, as a matter of policy, the court should not allow acts of neighbourliness to be too readily converted into legal rights which were probably never intended to be created. Clause 3(a) DMC 50.Finally, by a late application for amendment, the Plaintiff sought to advance an argument on clause 3(a) of the DMC which provided:
51.The Plaintiff sought to argue that that clause gave it the express right to use the Existing Entrance Lobby which is the relief it wishes to claim under para. 1(B). With respect, I do not agree. 52.The Existing Entrance Lobby (and the New Staircase) were not in existence at the time of the DMC and so any extension of clause 3(a) to them must be examined with caution. It must be read in conjunction with clause 4(q) of the DMC which provided that entrances and staircases “not included in any part of the building exclusively owned” were common parts. As such, owners had the full right and liberty of passage under clause 3(a) “for all purposes connected with the proper use and enjoyment of his part of the said Building”. The Existing Entrance Lobby is, it is common ground, exclusively owned by the 2nd Defendant. 53.This interpretation of the DMC is supported by the fact that in Clause B-5 of the Sub-DMC, there was an express relinquishment of the right to exclusive possession of those staircases coloured yellow. That would not have been necessary if the effect of clause 3(a) was that there was no right to exclusive possession of entrances and staircases. 54.If the Plaintiff’s argument were correct, that would mean that if a person bought shops on two floors, one on top of the other, and built an internal staircase connecting the two, another shop owner would be entitled under clause 3(a) to demand passage through the staircase to gain access to his own shop. I do not think that could possibly have been the intention of the parties but that is the effect of the Plaintiff’s argument. Quite apart from Mr Kotewall’s objections to the application for amendment based on the need for evidence, I do not think leave should be granted for a late amendment to advance this argument. Order 55.For those reasons I would dismiss the appeal with an order nisi that the Plaintiff pay the 2nd Defendant’s costs of the appeal to be taxed if not agreed. Hon. Chu J: 56.I agree. Hon. Le Pichon JA: 57.Accordingly there will be an order in terms of paragraph 55.
Sir John Swaine SC and Mr Victor Dawes instructed by Peter Lau & Co for the Plaintiff (Appellant) 1st Defendant (Respondent) in person, absent Mr Robert Kotewall SC and Miss Liza Jane Cruden instructed by Lo Wong & Tsui for the 2nd Defendant (Respondent) |
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