The Incorporated Owners of Unison Industrial Building v. The Director of Lands
|
DCCJ 2233 OF 2004 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 2233 OF 2004 _____________________ BWTWEEN
__________________________ Coram : H. H. Judge YUNG, District Judge Dates of Hearing: 23rd, 24th, 27th, 28th April and 6th May, 2009 Date of Handing Down of Judgment : 11th May 2009 ___________________________ J U D G M E N T ____________________________ Bona Vacantia 1.The subject matter of dispute relates to three car parking spaces (“the three parking spaces”) in the car park on the ground floor of an industrial building. The developer (“Kingstown”)of the building was wound up without disposing of the title to the three parking spaces. The Government is claiming that by the principle of bona vacantia it has acquired the title to the three parking spaces. Seeking Reliefs for the Purpose of Using the Car Parking Spaces for Loading and Unloading 2.The Plaintiff (“the IO”) alleges that the car parking spaces has always been used as loading and unloading area. This state of affairs is the result of representations by Kingstown and it keeping its words. The IO stresses the necessity or the importance of having the three parking spaces for loading and unloading purpose. By these proceedings the IO is seeking reliefs so that the owners can continue to use the car parking spaces for loading and unloading purpose. The IO contends that it has acquired an equitable interest, in that the three parking spaces have now become a common area. Two Grounds Relied On 3.Mr. Merry has made it clear that there are no issues of prescription or easement or the like. The IO is to rely on two grounds, the provisions in the Deed of Mutual Covenant (“the DMC”) and the doctrine of proprietary estoppel. As to the first ground, it turns on the interpretation of the DMC and in particular its Clause 20. Clause 20 of the DMC---Literal Interpretation 4.Clause 20 of the DMC provides:
Clause 20---Liberal Interpretation---Not Appropriate 5.In effect Mr. Merry relies quite heavily on the liberal interpretation of Clause 20. The tenor of his argument is that Clause 20 is intended, and therefore should be so interpreted, to cover the current situation. In the event of Kingstown failing to dispose of all the units, the “left over” units should form the common parts. The case of IO is that Kingstown had intended the three parking spaces to be common areas for loading and unloading. Mr. Merry argues that on its winding up Kingstown had in fact assigned all his interests etc. giving rise to the application of Clause 20. He in effect submits that the car parking spaces are within the meaning of the words “ parts or shares of and in the said Land”. Even if he is right, there is no answer to the Mr. Law’s point that the Kingstown had not assigned the car parking spaces either. In a nutshell, for Mr. Merry to succeed in this argument, one has to read into the Clause 20 additional words to the effect ‘so intended to assign” before the word “demand”. 6.The meaning of Clause 20 is plain and clear, both by itself and in the context of the whole of the DMC. To qualify the unambiguous provisions of Clause 20 in these circumstances requires exceptional circumstances or justifications. The intention of the parties signing the document and the purpose of document are the only two factors that I can see relevant. 7.The DMC forms a necessary part of a device to enable Kingstown to sell off the building in parts (or more commonly referred to as units). The DMC sets out and identifies each part or unit to be sold, define the use and enjoyment the respective owner can make of them, and most importantly assigning a share of land to each unit. The purpose of the DMC also serves to define clearly the rights and obligations of owners. One of these important rights is the use and enjoyment of common parts and facilities. Therefore it is not surprising that references to these common parts and facilities are made in the DMC. More often than not, some parts of the building is not specifically mentioned or designated as common parts. Technically and before the recent amendments to the Building Management Ordinance in 1993 and in 2007, the right to enjoy and use these parts of the building would remain with the developer as long as he was still holding a share of the land. It would be otherwise when he had assigned his last share to someone else. In that event the use and enjoyment of the land might give rise to all sort of disputes over the fight to use and enjoy such parts of the building which the DMC has left out in referring to it as common parts. Clause 20 is intended to provide for such situation so that undesignated areas would become common area once the developer has disposed of all his shares in the Land. The recent amendments to the Building Management Ordinance make it clear that all this undesignated areas would be deemed to be common parts. Clauses like Clause 20 might not be necessary at the present day but they were useful in 1970’s. 8.At the time Kingstown had every intention to sell all the parking spaces. A clear distinction between units for sale and common parts of the building was made and had to be in the mind of Kingstown. If Kingstown wanted to make provision for its future change of mind, it could have written such provision in a more simple way. In effect it did not even had to put it into writing in the DMC as it could simply assign the units to the IO whenever it felt appropriate. I do find that the Clause 20 was intended to cover the current situation, nor it was its purpose. 9.There are no exceptional circumstances about the signing of the DMC. After considering the intention and purpose of the parties, I hold that Clause 20 should be given its simple, clear and unambiguous meaning. Clause 20 does not apply and the IO does not acquire any right or interest under or by virtue of this Clause on the winding up of Kingstown. Illegality etc. 10.The Government raised a number of defences apart from challenging the credibility of the case of the IO. They related to the duty of IO and breaches of conditions in the Land Grant. 11.The Government alleged that to covert the car parking spaces to other use is against a condition of the Land Grant. The Government insists on the distinction between the use of car parking spaces and loading and unloading area. There is no merit in this argument. It suffices to say “the greater includes the lesser”. Making use of vacant car parking spaces for loading and unloading cannot be taken as so incompatible with car parking use that it is illegal or contrary to the condition requiring the spaces be made used for car parking. I understand that there might be conditions in the Land Grant requiring sufficient number of car parking spaces. Converting the three car parking spaces to other use might have reduced the total number of parking spaces below the required minimum. However this is not the argument put forward by the Government. In fact as Mr. Merry has pointed out, the Government at no time has shown no objection to this conversion. 12.It must follow that the IO is not in breach of its duty, statutory or otherwise, using the car parking spaces for loading and unloading. The Government also argues that the IO is in breach of the DMO in various respects. Without disrespect to Mr. Law who must be at pains to prepare his argument, I do not think it necessary to spell it out in details here. A quote from Mr. Merry is the short, appropriate and general answer: “there is nothing illegal for the IO to pursue proprietary estoppel”. Use of the Car Parking Spaces 13.Witnesses called by the IO are not shaken on the point that the car parking spaces are always used as loading and unloading area. The car parking spaces have never been rented out by the IO or Kingstown. This claim appeared to be contradictory to the content of a written instructions to the building manager. In the said notice, the IO demanded the building manager to take back parking spaces let out. This has been explained by the witness who has direct knowledge about the matter. The incident refers to a time when the staff of the building manager was suspected of malpractice of letting outsiders to park cars inside the car park for money. I accept that this malpractice did not last long. Most probably the malpractice did not concern any particular car parking space. The staff simply allowed outsiders to park their cars in whatever spaces available. 14.I find as a fact that the three parking spaces has been used and regarded as common areas. That at one time or some time during the past it was let out or licensed to others for parking purposes does not alter the fact that it had been used primarily all these years for loading and unloading purpose. Proprietary Estoppel---Representation 15.The representation by Kingstown was made some 30 years ago. It would be too much to expect each witness to recall the exact words of the representation by Mr. Kwok of Kingstown. Witness showing hesitation and confusion at times is not unexpected. However their oral evidence is corroborated by incontrovertible evidence. The car parking spaces have not been charged any management fees. The position of the three parking spaces is the best place for unloading and loading. The site visit shows that the level of loading and unloading activities are high. Kingstown had long sold all his other units. There must be a reason for not selling the three parking spaces. None has been suggested by the Government. According to the tender prices before me, these are valuable property. Valuable property as such would not be easily forgotten by Kingstown, especially on its winding up unless for a good reason. The version given by the witnesses provides a very good reason. Furthermore, the three car parking spaces have never been separately charged for rates. The Government must have had a reason not to levy rates on them. All these lend support to the credibility of the witnesses. I am particularly impressed with Mr. Li. I would have accepted his evidence even without corroboration from other matters. His evidence is straight forward, clear, and spontaneous. 16.I have no doubt a Mr. Kwok on behalf of Kingstown has represented to Mr. Lo about the future use of the three car parking spaces. This is promise which had been acted on by Kingstown till the day of its winding up. This representation must of a solemn nature, not just a sales puff to promote sales of flats. Looking at the conduct of Kingstown it was to its detriment financially if the version contended by the IO is not true. The rights or benefits in respect of the three car parking spaces to be conferred on the owners is not only likely to be of a long term nature, but also of a binding nature, at the very least morally. Furthermore this representation would not just be given to Mr. Lo. It can be inferred that it was sales strategy and was made known to purchasers. Therefore I find that representation have in fact be made to owners at the initial stage of the sale, including Mr. Lo, that the three car parking spaces would be used for loading and unloading and not for sale. This promise had been honoured by Kingstown. Proprietary Estoppel---Reliance and Detriment 17.Mr. Lo and his family acted on this representation. The family relocated their business to the building. It must be to their detriment if they are deprived of the use of the three car parking spaces. Owners who purchased their flats in the second hand market would similarly be affected. It can be inferred that many of them would make reasonable enquiry in particular about loading and unloading. A site visit would be likely. Most likely by this visit and by other means, the intended purchaser would come to know about the history of the three car parking spaces. The intended vendor would be only too pleased to tell it to the purchaser. If the building manager was asked about it, there would be no reason for this information to be withheld. Even if Kingstown was to be asked, Mr. Kwok or other persons of Kingstown, had no reason not to make known the good deed of their company. 18.It is my conclusion that Kingstown had made representations to its purchasers about its intention not to sell the car parking spaces , reserving it for loading and unloading purpose. This representation has been transmitted to subsequent purchasers. Initial purchasers or subsequent ones, they will all suffer detriment if they are deprived the use of the car parking spaces for loading and unloading. \ Relief 19. Without the three car parking spaces, the loading and unloading would be seriously affected to the worse. It is not just merely question of finances. I am not convinced that the IO could not have raised the money. The first important question is whether it would have been unconscionable to let Kingstown to go back on his promise. Certainly it would be most unconscionable. If Kingstown was a party to these proceedings and it admitted it had made such promise and had such intention as alleged by the IO, I could not see how he could resist the IO’s claim without giving some reason why there had been a change of mind. In reality , Kingstown had no reason to offer. 20.The next important question is whether the matter should be different now that the Government has come to the picture. The terms of the tender would have protected the Government if the case is not determined in its favour. In any event it must have known some facts supporting the IO’s claim. Mr. Merry has pointed out certain missing documents. I would add that a simple run on the record with the Rating and Valuation Department would throw considerable light on the intention of Kingstown. The balance should tip against the Government. 21.There are other defences, notably, laches. Suffice for me to say, there is no reasons for IO to formalise the matter. When Kingstown was being wound up, it had just omitted to notify the IO. In any event the so called laches has not caused any prejudice on the part of the Government. 22.In my judgment the IO is entitled to a declaration so that they can continue to use the three car parking spaces. A declaration that they form the common parts of the building is hereby granted. There be order nisi for costs in favour of the IO with certificate for counsel.
Mr. Malcolm Merry instructed by M/S Haldanes for the Plaintiff. Mr. M.C. Law instructed by Department of Justice for the Defendant . |