Chan Kar Mun Carmen and Another v. China Step Corporation Ltd
Read the full judgment text of HCMP 194/2007 on BabelCite. This High Court CFI judgment was delivered on 7 November 2007.
1. Ms. Lee and Ms. Chan are respectively mother and daughter. They jointly own the 7th Floor and roof on top of No. 11 Liberty Avenue, Kowloon. No. 11 is conjoined with No. 11A Liberty Avenue.
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HCMP 194/2007 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO. 194 OF 2007 ______________________
______________________ BETWEEN
______________________ Before: Hon Reyes J in Court Date of Hearing: 7 November 2007 Date of Judgment: 7 November 2007 ______________________ J U D G M E N T ______________________ INTRODUCTION 1.Ms. Lee and Ms. Chan are respectively mother and daughter. They jointly own the 7th Floor and roof on top of No. 11 Liberty Avenue, Kowloon. No. 11 is conjoined with No. 11A Liberty Avenue. 2.Ms. Lee and Ms. Chan have entered into a Sale and Purchase Agreement to sell their 7th floor unit and roof to China Step. There is no doubt that the 7th floor has been legally vested in Ms. Lee and Ms. Chan. There is no doubt that the roof above belongs to them at least in equity. The question is whether the roof has been validly vested in them at law as well. 3.If the roof has not been so properly vested, Ms. Lee and Ms. Chan cannot pass a good legal title in both the 7th floor and roof to China Step. Ms. Lee and Ms. Chan would then be in breach of the Agreement with China Step. BACKGROUND 4.In the 1960s Mr. Rathsham owned the entire of Nos. 11 and 11A Liberty Avenue in common with Mr. Wu Kwang. They redeveloped Nos. 11 and 11A into units, to each of which was allocated a one fourteenth undivided share. 5.In particular, the 7th floor and roof of No. 11 together constituted a one-fourteenth undivided share in the redeveloped premises. Mr. Matthew Ho (appearing for China Step) has expressed doubts about this. But I think the allocation is evident from a perusal of the Schedule to the Deed of Mutual Covenant dated 4 January 1964 allocating undivided shares to Nos. 11 and 11A and the associated Control Card particularising the allocation. 6.At his death in 1975, Mr. Rathsham had sold all the units owned by him in Nos. 11 and 11A except for a 1st floor unit (itself represented by a one-fourteenth share) and the 7th floor and roof unit in No. 11. He left these remaining units to his wife by will. 7.In 1977 Ms. Rathsham (who was executrix under the will) obtained probate. In December of the same year, she executed an Assent apparently vesting the relevant units in herself as sole beneficiary under the will. 8.Although mentioning the 1st and 7th floor of No. 11, neither the grant of probate nor the Assent expressly referred to the roof. 9.The Assent instead referred to the vesting of:
10.In 1978 Ms. Rathsham assigned the one-fourteenth share represented by the 1st floor unit to a Mr. Chan Chong. 11.In January 1980 Ms. Rathsham assigned the 7th floor and roof unit to Ms. Velasquez (her daughter) by Deed of Gift. 12.In January 1989 Ms. Lee, Ms. Chan and Ms. Chan's 2 younger brothers (collectively, the Chan family) agreed to buy the premises from Ms. Velasquez. 13.The 1989 Sale and Purchase Agreement described the property to be assigned by Ms. Velasquez to the Chan Family as comprising:
14.In the course of preparing the 1989 Agreement, the Chan family's solicitor had noticed the omission of the roof from the grant of probate and the Assent. The solicitor suggested that this omission might be dealt with by way of a statutory declaration from Ms. Rathsham. In any event, clause 29 of the 1989 Agreement further required Ms. Velasquez to apply to the Probate Registry for an amendment to the probate granted so as to mention the roof explicitly. 15.Completion under the 1989 Agreement took place in April 1989. But the Deed of Assignment executed on that day did not expressly mention the roof. The Deed referred rather to:
16.In 1994 Ms. Chan's younger brothers assigned their shares in the relevant premises to Ms. Lee. That assignment did not expressly refer to the roof, but instead used similar (if not identical) terms to those in the 1989 Assignment. 17.These proceedings have arisen as a result of a requisition by China Step's solicitors concerning the absence of express reference to the roof in the grant of probate, the Assent and the 1989 and 1994 Assignments. Ms. Lee and Ms. Chan have by their solicitors maintained that, despite the omission of express reference to the roof, they are the legal and equitable owners of the 7th floor and roof unit. 18.No statutory declaration has ever been obtained from Ms. Rathsham who has since passed away. Neither has the grant of probate ever been amended. 19.The parties to these proceedings have agreed to postpone the completion date of their Sale and Purchase Agreement pending my determination. DISCUSSION 20.In this section, I shall consider the conveyancing effect of the grant of probate, the Assent and the 1989 and 1994 Assignments in turn. The grant of probate 21.Mr. Ho fairly accepts that the grant of probate is not directly relevant to the issue before me. 22.The failure to mention the roof in the grant of probate is not material. The grant of probate does not give rise to a document of title. As its name implies, probate simply proves the contents of Mr. Rathsham's will and the due execution of that will. In addition, the grant confirmed Ms. Rathsham's authority as executrix to deal with her husband's estate. The Assent 23.Under Probate and Administration Ordinance (Cap. 10) (PAO) s. 66(3) an assent "shall operate to vest in [a personal representative] the legal estate to which it relates". The sub-section further provides that "an assent not in writing shall not be effectual to pass the legal estate". 24.Mr. Ho argues that, although it successfully vested the one-fourteenth share representing the 7th floor and roof, the Assent failed to vest the exclusive right to the roof in Ms. Rathsham. This is because (according to Mr. Ho) the exclusive right of enjoying the roof is itself a legal estate within the terms of PAO s. 66(3). In support of this contention, Mr. Ho relies on a dictum of Godfrey J in Lai Wing Ho v Chan Siu Fong [1993] 1 HKLR 319. 25.In Lai Wing Ho 2 of 78 undivided shares were allocated to the 11th floor and roof of premises. The vendor purported to sell the 2/78th undivided shares in the premises "together with the sole and exclusive right and privilege to hold, use, occupy and enjoy the 11th floor of the building, but excluding the roof". The vendor did this because he had previously purported to assign the exclusive right to the use, occupation and enjoyment of the roof to another purchaser (who was not party to the proceedings). 26.Godfrey J held (at 324) that the vendor:
27.Godfrey J continued (also at 324):
28.Mr. Ho focuses on the underscored words of Godfrey J quoted above. He says that the words endorse the possibility of an "ownership" of an exclusive right to a part of a multi-storey building in the absence of any undivided share, even though such right cannot validly be assigned. 29.I am unable to accept Mr. Ho's submission. 30.Mr. Ho reads the underscored words to imply that a right to exclusive possession of the roof constitutes a "legal estate" which must be vested by an assent in writing under PAO s. 66(3). However, I think that Godfrey J is saying the contrary. 31.The confusion stems from the word "being" in the underscored expression. 32.Mr. Ho takes the word "being" as qualifying "the right to exclusive possession of any part only of the premises". On his construction, Godfrey J is describing the right to exclusive possession as "being" something "capable of subsisting as a legal estate in land and binding on co-owners". 33.But such construction would be at odds with what follows in the dictum. For example, at the end of the passage cited, Godfrey J stresses that the bare right to exclusive possession cannot be assigned so as to be binding on co-owners. The assignee of such mere exclusive possession will at best have a personal right against his assignor but that right cannot be asserted against co-owners in a building. Godfrey J goes so far as to suggest that the assignee cannot be described as an "owner" at all. 34.The basis of Godfrey J's reasoning must accordingly be that the assignee of a bare right of exclusive possession obtains no legal estate in the land binding on co-owners. Otherwise, if such an assignee obtained a legal estate, he should be able to assert the same against all the world, including co-owners. This (Godfrey J observes) he cannot do. 35.In my judgment, the word "being" must have been intended by Godfrey J to be equivalent to the word "as". Godfrey J was stating that a tenant in common cannot assign any right to the exclusive possession of any part of a premises "as" a right capable of subsisting as a legal estate. This alternative reading would be wholly consistent with what follows in the dictum quoted. 36.Given my reading, it must be a corollary of Godfrey J's dictum that the legal ownership of the roof in Lai Wing Ho remained vested in the vendor who (at the time of purporting to assign the right to enjoy the roof exclusively) retained the 2/78th undivided shares allocated to the 11th floor and roof. All the vendor did as owner of those 2/78th shares was to give a licence or personal right to his purchaser to enjoy the roof. 37.Apply Lai Wing Ho now to the present case. What has happened to the right of exclusive occupation and use of the roof here? 38.Reading the Assent as a whole, such exclusive possession must have been among the bundle of rights transferred by the Assent when it vested the one-fourteenth share associated with the 7th floor and roof to Ms. Rathsham. With that undivided share would have come (as the Assent acknowledges) all the rights and privileges appertaining to that one-fourteenth share. The right to the exclusive enjoyment of the roof would have been one such right. 39.Consequently, despite the failure to mention the roof expressly, the right to the roof's exclusive enjoyment must nonetheless have passed to Ms. Rathsham by the Assent. 40.Mr. Ho in oral argument very properly acknowledged that, if I were not persuaded by him that the exclusive right to the roof could exist as a legal estate, then China Step’s queries as to title would fall away. 41.For completeness, I should mention 2 cases before moving onto the 1989 and 1994 Assignments. 42.Mr. Ho referred me to Incorporated Owners of Cheong Wang & Cheong Wai Mansion v HKSAR Government [2001] 1 HKLRD 483. There X (a holder of undivided shares in units) reserved to itself the exclusive right to enjoy certain areas of a premises. X then sold all his units and thus his undivided shares. X was later wound-up. The question was what happened to the exclusive rights which X held. The Incorporated Owners said that the exclusive rights to the relevant parts of the premises devolved upon Government as bona vacantia upon X’s dissolution. Government argued that the exclusive rights were extinguished once X sold all his undivided shares and the exclusive rights reverted to the common owners of the building. 43.Deputy Judge Woolley concluded that the exclusive rights were either ancillary to the ownership of undivided shares or were personal rights retained by X. In the former case, the rights would have reverted to common ownership upon sale of all X’s shares. In the latter case, the rights would have ceased to exist upon X’s winding-up. 44.I do not derive much help from this case because it seems to me to hinge on an express reservation of rights by a holder of undivided shares. That is not the position here. Here there has been no such reservation. The question is whether in all the relevant circumstances the assignment of an undivided share also carries with it certain rights in the absence of an express mention of those rights in certain documents. 45.Mr. Yip (appearing for Ms. Lee and Ms. Chan) referred me to Jumbo King v Faithful Properties Ltd. [1993] 3 HKLRD 757 (CFA). 46.Jumbo King concerned the right of the holder of undivided shares in a building to assign his right to the exclusive enjoyment of certain areas of the building to which no undivided shares had been allocated. The Court of Final Appeal held that he could do so. 47.I do not think that Jumbo King is inconsistent with what I have said about Lai Wing Ho and the conclusion which I have reached on the Assent. 48.Nonetheless, ultimately, I also do not derive much direct help from Jumbo King. It dealt with different circumstances. This is not a situation where the roof had no undivided shares allocated to it. Instead, a one-fourteenth share was allocated to both the 7th floor and roof. 49.In any event, in Jumbo King Lord Hoffmann NPJ referred to the situation where (as here) undivided shares are tied to the right to occupy some portion of a premises exclusively. Lord Hoffmann said (at 776B-C):
50.The "extreme unwisdom" of divorcing parts of premises from their undivided shares mentioned by Lord Hoffmann echoes Godfrey J's cautionary remarks on "radical re-thinking" in Lai Wing Ho. The 1989 Assignment 51.In light of my conclusion in Section B and Mr. Ho’s acknowledgement, it is strictly unnecessary for me to consider the 1989 and 1994 Assignments. However, for completeness, I shall deal with them briefly. 52.Mr. Ho submitted that, in light of clause 29 of the Agreement (requiring Ms. Velasquez to rectify the grant of probate), the Assignment could not have been intended to pass legal title in the roof. 53.I do not find that argument compelling. 54.Given my reading of the Assent, the Chan family's solicitor mistakenly believed that the Assent did not vest the exclusive right to enjoy the roof in Ms. Rathsham. If I am right, there never was any need to rectify the Assent, much less the grant of probate, at law. 55.The 1989 Assignment itself conveyed the one-fourteenth undivided share allocated to the 7th floor and roof. In addition it assigned:
56.Assignment Memorial No. 1818867 is the Deed of Gift executed by Ms. Rathsham in Ms. Velasquez's favour. That Deed expressly refers to "the exclusive right to the use occupation and enjoyment" of both the 7th floor and roof as a right appurtenant to the one-fourteenth undivided share being gifted. 57.Accordingly, in all the circumstances, it is plain as a matter of construction that by the 1989 Assignment must implicitly (if not expressly) have come the exclusive right to enjoy the roof. The 1994 Assignment 58.Mr. Ho suggested that Ms. Chan's brothers could not effectively have assigned whatever rights they may had had in the roof to Ms. Lee. He says that this is because the brothers' assignment again does not expressly mention the roof. 59.The 1994 Assignment refers to the subject matter being assigned in identical terms to those in the 1989 Assignment. This includes mention of Assignment Memorial No. 1818867. 60.It follows that, for the reasons stated in connection with the 1989 Assignment, the brothers' right to enjoy the roof must also have been transferred to Ms. Lee by the 1994 Assignment. CONCLUSION 61.The question is whether the failure to mention the roof in the grant of probate, the Assent, and the 1989 and 1994 Assignments has affected Ms. Lee and Ms. Chan's title to the 7th floor and roof. 62.In my judgment, the chain of conveyancing evidenced by the Assent and the 1989 and 1994 Assignments was sufficient to vest the legal estate in the 7th floor and roof to Ms. Lee and Ms. Chan. Such vesting brought with it at law the exclusive right to the use, occupation and other enjoyment of the roof. 63.This summons is therefore determined in favour of Ms. Lee and Ms. Chan. Their solicitors have satisfactorily answered China Step's requisitions. Ms. Lee and Ms. Chan have shown and proved good title to the 7th floor and roof. 64.I shall now hear the parties on costs and other consequential matters.
Mr Paul S L Yip, instructed by Messrs Chong, Fu & Co, for the Plaintiffs Mr Matthew L C Ho, instructed by Messrs Zebra H Y Kwan & Partners, for the Defendant |
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