Chatham Industries Ltd v. The Incorporated Owners of Gold King Industrial Building and Another

HCA 1603 / 2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1603 OF 2007

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Before: Hon Au J in Open Court

Dates of Trial: 10, 12, 13, 16 & 18 August 2010

Date of Judgment: 20 October 2010

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J U D G M E N T

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A. Introduction

1.This is a dispute between the parties on the right to park vehicles on a T-shaped private road (“the Road”) located between two industrial buildings in Kwai Chung.  They are respectively named South China Cold Storage Building (“South China Building”) and Gold King Industrial Building (“Gold King Building”).

2.The head of the Road is on the west-end of the two buildings, with each side of the horizontal head of the T located over the side of each building, and the leg of the T running in between them. 

3.Annexed to this Judgment is a plan (which was annexed to the Statement of Claim)[1] showing the relative location of the Road and the two buildings.

4.In 1989, the Plaintiff became the registered owner and occupier of the premises (“the Premises”) known as Unit A of the 2^nd floor of South China Building.  The Premises is one of the two units on the 2^nd floor.   The Plaintiff has since been carrying on a leather processing business there.

5.The 1^st Defendant is the incorporated owners of Gold King Building, while the 2^nd Defendant is its manager.

6.Stripped of the detailed conveyancing history (which I will later set out), it is common ground that the title of the Road belongs to the owners of Gold King Building, but the various owners of South China Building have been (under various assignments) expressly granted a right of way to use its half side of the Road. 

7.The present dispute arose in mid 2007, when the Defendants imposed measures to the extent of effectively preventing the Plaintiff from parking its lorry vehicles along the Road on the side of the South China Building to load and unload goods.   The Defendants said it was necessary to do so for safety reasons, given the then incidents of falling objects from a nearby overhanging chimney.  They also maintained that they were charged with the duties to ensure proper traffic control over the Road.  

8.After failing to resolve the matter by negotiations, the Plaintiff  eventually issued the present action and applied for, and obtained on 27 July 2007, an interlocutory injunction against the Defendants to restrain them from preventing the Plaintiff from parking vehicles and loading and unloading goods on the Road. 

9.Simply put, the Plaintiff says that, under the right of way over the Road, it has a right to park vehicles along it.

10.By way of this action, the Plaintiff therefore seeks a permanent injunction[2] in the following terms:

“to restrain the 1^st and 2^nd Defendants, whether by their directors, officers, servants or agents, from doing the following acts or any of them that is to say, preventing, prohibiting, stopping, hindering or otherwise interfering with, either directly or indirectly, the exercise of the easement of right of way by the Plaintiff, its servants or agents, by passing, repassing whether by vehicular or human traffic or otherwise, over and upon [the Road] including but not limiting to stopping, waiting or otherwise stationing at or on [the Road] for the purpose of:

(a) loading and unloading of goods; and

(b) picking up and setting down passengers

and for any purpose connected with the Plaintiff’s reasonable and lawful enjoyment of the Plaintiff’s factory premises.”

11.The Defendants however deny that even under the right of way, the Plaintiff has a right to park vehicles on the disputed part of the Road.

12.The Defendants thus in return counterclaim for (a) a declaration that the Plaintiff has been trespassing the Road, (b) damages for trespass, and (c) an injunction to restrain the Plaintiff from using the Road to park vehicles for the purpose of loading and unloading goods.

13.In light of the above, the core issue in this trial is whether the right of way over the Road includes a right to park vehicles along it.  I do not think there is any serious dispute that if there is such a right to park, it includes the right to load and unload goods during parking.

B.      Background

B1.    The relevant conveyancing history and the buildings

14.The following is the objective conveyancing history which gives rise to the right of way over the Road.

15.By a Deed of Exchange dated 16 March 1965, South China Building Materials Ltd (“SCBM”) and Pickford Development Ltd (“PDL”) became the owners of the land delineated and identified as Lot 702 in DD 445. Lot 702 was subsequently divided into Lot 702A, Lot 702B and Lot 702RP.

16.The South China Building was then being constructed on Lot 702B.  However, during the construction, by another Deed of Exchange dated 14 August 1969, SCBM and PDL surrendered Lot 702B and were granted^[3] a new lease over the same area.  The land so granted was identified as Lot 111^[4]. For all intents and purposes, this was the same area in which Lot 702B was previously situated.

17.On 29 October 1969, the Building Authority approved the building plans for the construction of the South China Building. Its construction was completed in November 1969.    The occupation permit for the South China Building was also issued in November 1969.

18.By a series of assignments all dated 5 February 1970^[5]:

(1) Lot 111 was sub-divided into Lot 111A and Lot 111RP^[6]. The South China Building was constructed on Lot 111A.

(2) Both Lot 111RP and the basement and lower ground floor of the South China Building were assigned to South China Cold Storage and Industrial Company Ltd (“SCCSI”). 

(3) The ground floor and the first floor of the South China Building were assigned to Him Wo Paper Product Factory Ltd.

(4) The second floor of the South China Building was assigned to Florist Design Corporation Ltd (“Florist Design”). 

19.By then:

(1) South China Building was erected on Lot 111A.

(2) Next to the boundary of Lot 111A was Lot 111RP. 

(3) And next to Lot 111RP was Lot 702A.  In other words, Lot 111RP was located between Lot 111A and Lot 702A.

(4) There was an existing building erected on Lot 702A. 

20.By a development agreement dated 16 July 1979, SCBM, PDL and SCCSI agreed with Eagle Company Ltd to jointly redevelop Lots 702A and 111RP by demolishing the then existing building on Lot 702A and constructing a new industrial building on both Lots 702A and part of 111RP.

21.Pursuant to the development agreement, Gold King Building (as the new building) was subsequently erected on Lot 702A and part of Lot 111RP in 1987.   The occupation permit was issued on 1 April 1987.

22.Thus by now, the South China Building stood on Lot 111A on the one side, and the Gold King Building on Lot 702A and part of Lot 111RP on the other side, with the Road lying between these two buildings occupying the remaining vacant part of Lot 111RP. 

23.Since then, after a further series of assignments, the Premises (i.e., Unit A of the second floor of the South China Building) was eventually assigned to the Plaintiff on 24 May 1989.

B2.    The physical configuration of the South China Building

24.The relevant uncontroversial configuration of the South China Building at the time when it was built[7], as extracted from the relevant occupation permit, building and assignment plans can be summarized as follows.

25.It has a total of 6 floors consisting of:

(1) 5 cold storage rooms in the basement;

(2) 5 cold storage rooms, a store and a plant room on the lower ground floor;

(3) 2 factory working areas each on the ground, first and second floor; and

(4) A factory working area on the third floor.

26.At its basement, there was a car port (“the Car Port”) consisting of 6 car parks.  There was also a loading and unloading area. 

27.There was (and is) an entrance (“the Entrance”) to the building located at the ground floor.  The Entrance faces directly out to the Road along the leg of the T-shape.  At the Entrance is a direct access to a lift (“the Lift”).  This is the only lift which served (and serves) all the floors of the building from the ground floor. 

28.Further, other than the above, I also accept the Plaintiff’s evidence and found that at the time of the grant of the right of way over the Road, the following were, on balance of probabilities, the physical features and configuration of South China Building:

(1) Lot 111 was about 25,000 square feet and was to be used for “general industrial and or godown purposes”[8];

(2) According to the approved plans of South China Building:-

(a) 8 car parks were allocated for it.  Whilst 6 of such car parks were located within the Car Port area within the building, 2 car parks were located on the Road.  All 8 car parks were specifically marked in the relevant layout plan to satisfy the District Commissioner that they were spaces available for parking of motor vehicles and for loading and unloading purposes[9];

(b) there was a “cargo hoist” on the basement level, which only serviced between the basement and the lower ground floor;

(c) there was no direct access to the Lift from the basement level; and

(d) to access the Lift from the Car Port, one would either have to:-

(i) walk out of the Car Port, and then along the Road and re-enter the Entrance from the front; or alternatively

(ii) walk up two flights of stairs within the building to reach the lower ground floor and enter the Entrance from the back. 

(3) The Entrance directly faces out to the Road. There was one car park located outside the Entrance, which was identified as car park 4, and the another car park situated on the horizontal portion of the junction directly abutting the south side of South China Building, which was known as car park 3;

(4) While there were 3 internal staircases capable of reaching the second floor, none of them led directly to the Car Port; and

(5) A pavement of 4 feet wide was constructed on the vertical portion of the junction directly abutting the Entrance.  A similar pavement can also be seen directly abutting the east side of the Gold King Building.  There is a dispute by the parties concerning the actual original width of the road in between both pavements, it is undisputed however that even if the narrower version is adopted, and when car park 4 is occupied, there remains, at the very least, a width of 9 feet for other motor vehicles to pass[10].  

B3.    The Road

29.As I mentioned above, the Road forms a T-junction with the South China Building and the Gold King Building situated respectively at the left and right hand side of the “T”.  The portion of the Road which forms the subject matter of the dispute is the “leg” of the “T” separating these two buildings.

30.This disputed portion of the Road runs upwards at a steep gradient passing through first, the basement entrance of the Car Port before reaching the Entrance.

B3.    The express grant of the right of way

31.In the respective assignments for assigning the ground to third floors of South China Building to their respective first purchasers by the vendors, the use of certain car parking spaces and the right of way over the Road was granted to these first assignees.  The assignments are effectively of identical terms. 

32.Relevant to the present dispute is the assignment (“the Relevant Assignment”) dated 5 February 1970 with memorial number 84390, whereby the 2^nd floor of South China Building was assigned to Florist Design by SCBM and PDL as vendors.   It is provided that the title and interest of the 2^nd floor with the exclusive right to use it was assigned to Florist Design together with:

“…the right to use the Car Port and any one of the parking spaces more particularly delineated and described on the Basement plan hereto annexed and thereon coloured Pink and Blue marked 1, 2, 3 and 4 AND TOGETHER ALSO with a right of way for the Purchaser or the owner or owners for the time being of the premises hereby assigned their tenants visitors servants workmen and all other persons authorised by them from time to time and at all times hereafter to pass and repass over along and upon ALL Those portions of the said premises intended to be registered in the said Tsuen Wan District Office as the Remaining Portion of Kwai Chung Town Lot No. 111 more particularly delineated and described on the said Block Plan and thereon coloured Yellow hatched Black and marked “Right of Way” [i.e, the South China Building half side of the Road]…”

33.Thus, under the Relevant Assignment, the owner of the second floor (including the Premises) was also assigned with the following rights:

(1)                 The right to use (together with the owners of the premises at the ground, first and third floors of the South China Building) car parking spaces 1, 2, 3 and 4.  I would call this the “Car Parking Right”.

(2)                 A right of way (“the Right of Way”) over the Road to  “pass and repass” over and along it from “time to time and at all times”. 

34.The Plaintiff eventually became the owner of the Premises, and has since been parking its lorry or van along the Road to load and unload goods for the purpose of its business.

B4.    The relevant incidents giving rise to the dispute

35.The parties started to engage in a dispute on the use of the Road as follows:

(1) In July 2006, the 2^nd Defendant closed the gate situated at the left limb of the head of the Road after a metal scrap had fallen from a tall chimney of a nearby building.

(2) Later, in April 2007, the 2^nd Defendant sent a letter to the owners and occupiers of the South China Building saying that it would not allow vehicular access to the Road due to a safety concern of concrete falling off from South China Building.

(3) The Plaintiff then wrote to the Defendants stating that the stopping of vehicular access to the Road would affect the Plaintiff’s operation and business. 

(4) In June 2007, pursuant to a resolution passed by the 1^st Defendant, the 2^nd Defendant issued a notice to the owners of South China Building that with effect from 15 July 2007, all vehicles would be prohibited from stopping or loading and unloading goods on the Road.    The 2^nd Defendant also wrote to the owners and occupiers of the South China Building stating that, pursuant to its legal advice, they only had the right to pass and repass over the Road and thus any vehicles breaching this limited right would be locked and towed away. 

(5) Thereafter, various tenants and owners of South China Building, including SCCSI, SCBM and PDL, also wrote to the Defendants objecting to the above-announced restriction on the use of the Road.

(6) On 15 July 2007, the 2^nd Defendant:

(a) Put up various notices on the Road prohibiting vehicles from stopping or loading and unloading goods on the Road.  They also gave warning that the 2^nd Defendant would lock and tow away any vehicles in contravention of the prohibition.

(b) Placed 3 fibre-glass water-filled barriers immediately outside the Entrance which effectively stopped the Plaintiff’s vehicles from stopping, loading and unloading on the Road, including at the space which represented the space of cap park 4.

(7) Thereafter, the Defendants had been putting measures to restrict the use of the Road for vehicles to stop, park, load and unload goods.

36.On 24 July 2007, the Plaintiff issued the present action against the Defendants.   On 27 July 2007, the Plaintiff obtained an interim injunction to restrain the Defendants until trial from, amongst others, interfering with the Plaintiff’s use of the Road to park vehicles on it for loading and unloading goods.  

C.      The issues

C1.    Does the Plaintiff have a right to park vehicles on the Road and to load and unload goods

37.The Plaintiff’s case is that under the Right of Way, it has a right to park vehicles along the Road, and to load and unload goods therefrom.

38.Whether the Plaintiff has such a right depends on the proper construction of the scope of the Right of Way, and the starting point is always the title instruments:  Moncrieff v Jamieson^[11], para 7 per Lord Hope.

39.As mentioned above, the grant of the Right of Way is expressed in the Relevant Assignment in the following terms:

“…TOGETHER ALSO with a right of way for the Purchaser or the owner or owners for the time being of the premises hereby assigned their tenants visitors servants workmen and all other persons authorised by them from time to time and at all times hereafter to pass and repass over along and upon ALL Those portions of the said premises intended to be registered in the said Tsuen Wan District Office as the Remaining Portion of Kwai Chung Town Lot No. 111 more particularly delineated and described on the said Block Plan and thereon coloured Yellow hatched Black and marked “Right of Way” [i.e, the South China Building half side of the Road]…”

40.Mr Chong, counsel for the Plaintiff, accepts (rightly so) that solely by looking at the express terms of the Right of Way, it does not provide the Plaintiff with the right to park vehicles along the Road.  Counsel however submits that when construing the Right of Way together with the circumstances at the time of grant, an ancillary right to park vehicles along the Road should be implied into the Right of Way to enable the necessary and reasonable enjoyment of the Right of Way. 

41.Applying the trite principles on implication of an implied term to a contract on the ground of necessity or obvious implication, the Court would imply an ancillary right to an express right of way where:

(1) Such right is “reasonably necessary” for the exercise and enjoyment of an expressly granted right;

(2) Where such a right is necessary for the “comfortable enjoyment” and/or “convenient and comfortable enjoyment” of the tenement which is severed. 

See:     Moncrieff, supra, 2657C-F (paras 112 and 113) per Lord Neuberger.

42.Further, in deciding whether a right of way includes any such ancillary right (say for parking vehicles), regards must be had to the circumstances existing at the time of the grant and the use to which the dominant tenement might then reasonably have been expected to be put in th future: Moncrieff, supra, 2623G (para 7) per Lord Hope; Bulstrode v Lambert^[12], at 1067.

43.Applying these principles, Mr Chong submits that on a proper construction of the Right of Way together with the circumstances relating to the configuration and the intended use of the South China Building existing at the time of the grant (as found and set out above in this Judgment), it must be the obvious objective intention of the grantors and the grantees that the right includes the ancillary right to park vehicles along the Road for loading and unloading goods.  This is so because, in gist:

(1) Given that the building was and intended to be an industrial building, it must be objectively and reasonably expected that the owners thereof would have to transport goods to and from the respective units on the various floors of the building.

(2) However, (as accepted and found above), the Lift (which was the only lift that served the 2^nd floor of the building) was only accessible at the ground floor but not the Car Port.  In other words, if parking of vehicles were only permitted within the Car Port but not along the Road, goods belonging to the owners of the building would have to be carried manually between the Entrance (where the Lift landed) and the Car Port by walking along the Road, which was steep. Depending on the volume of the goods, this might involve many return trips each time.  This would be clearly cumbersome, difficult and time-consuming.

(3) In the circumstances, for the “convenient and comfortable enjoyment” of the South China Building (which was the dominant tenement), it would be reasonably necessary for the exercise and enjoyment of the Right of Way to include a right to park vehicles along the Road to enable the owners to have goods delivered to and fro the Premises with reasonable ease, expediency and efficiency.

44.With respect to Mr Chong, I am unable to accept that an ancillary right to park along the Road has to be implied to the Right of Way.   

45.This is so because at the time of the grant, as mentioned above, the owners of the Premises had also been granted the Car Parking Right. According to the plan attached to the Relevant Assignment, car parks 1 and 2 were located within the Car Port while car parks 3 and 4 were located on the Road.  Car park 4 was situated outside the Entrance and car park 3 on the left limb of the head of the “T” next to the South China Building.  

46.The Car Parking Right therefore entitled the owners to park vehicles at car park 4, which was situated right outside the Entrance where direct access could be gained to the Lift.

47.Further, under the Relevant Assignment, the Car Parking Right was assigned to “the Purchaser” (i.e., Florist Design), which was a limited company.  The right to use the car parks can therefore only be properly exercised by its authorized agents or servants.  It must be obvious, or by necessary implication, that the right to use these car parks must also apply to the owner’s authorised agents and servants. 

48.In the premises, in my judgment, notwithstanding the physical configuration and industrial use of the South China Building as put forward by the Plaintiff in evidence (which I have accepted above), when the Right of Way is construed (as it should be) together with the Car Parking Right at the time of grant, I am not satisfied that a further ancillary right to park along the Road should be implied into the Right of Way, as (with the existence of the Car Parking Right) this is not reasonably necessary for the exercise of the Right of Way or for the comfortable and reasonable enjoyment of the South China Building.

49.I would therefore hold that the Right of Way does not provide any right to the Plaintiff to park vehicles along the Road. It also follows that the permanent injunction in the form sought under the Statement of Claim must be refused.

50.However, if I am wrong on my construction of the Right of Way above, and if the owners of South China Building (who have been granted the Right of Way) did not have a separate right to park at car park 4 at the time of the grant:

(1) I would have held that there should be an ancillary right to park on the Road implied into the Right of Way in light of the configuration and intended use of the South China Building.

(2) But I would still have refused to grant the injunction in the form as sought as it was too wide and too vague in its terms[13]. 

C2.    Whether the Plaintiff should be granted the injunction for a limited right

51.On the other hand, given the Car Parking Right, the Court has raised in the trial a question as to whether it is open to me to grant a limited form of injunction against the Defendants in line with the right to park vehicles on car park 4 only.

52.Mr Mak, counsel for the Defendants, objects to the same.  He says it is not open to the Plaintiff to claim a limited injunction based on the Car Parking Right since this is not part of its pleaded case.  Further, if this was allowed to be raised now, the Defendants would be prejudiced in not having a proper opportunity to consider and prepare any defences to the same.

53.On further consideration, I think Mr Mak is right.

54.It is clear from the Statement Claim and the relief sought^[14] that the Plaintiff’s claim relies solely on the Right of Way.   There is no separate or alternative plea on the Car Parking Right.   Mr Chong has also not sought to amend the pleading notwithstanding this point was raised.

55.It is trite that a party is bound by its own pleading, and I do not think it is now open or right to allow the Plaintiff to proceed and succeed on something which does not form part of its case and which it has not sought to rely upon.  Cf: Biss v Smallburgh Rural District Council[15], at 361 per Harman LJ.

56.Moreover, I accept Mr Mak’s submissions that, if the Plaintiff is now permitted to proceed a claim on the Car Parking Right, the Defendants would be prejudiced at least in the following manner in the circumstances of the present case:

(1) The Defendants have not been able to properly consider and prepare any evidence in relation to a potential defence that the Car Parking Right has been extinguished (a defence which Mr Mak first suggested on his feet when the question of a limited injunction was raised by this Court, and which he has managed to developed slightly further in his written closing submissions). 

(2) Mr Mak submits that this potential defence may arise on the fact that in a deed of rectification executed in 1982, which governs the extent of the boundary of the Right of Way, there is no reference to car parks 3 and 4.   Moreover, on the approved building plans of the Gold King Building, these car parks were also not identified on the Road.  Mr Mak contends that these may give rise to a defence (to the Car Parking Right) that the grantors (i..e, the original owners) had by then sought to extinguish or limit the grant^[16]. However, in order to properly consider and run this defence, it is necessary (Mr Mak further says) for the Defendants to investigate and make inquiries into the circumstances and reasons as to why car parks 3 and 4 were not referred to in the deed of rectification and the building plan of Gold King Building.  

(3) The Defendants are unable to do so now, and therefore would suffer a real prejudice if the Plaintiff is allowed to proceed to claim a limited injunction based on the Car Parking Right.

57.On this further basis, I also conclude that it is now not open to the Plaintiff to claim, and for this Court to consider and grant, a limited injunction based on the Car Parking Right.

C3.    The Defendants’ Counterclaim

58.Although I disallow the Plaintiff’s claim, this does not necessary mean that the Defendants should succeed in their counterclaim.

59.The Defendants have the burden in the Counterclaim to prove that they should be entitled to prevent the Plaintiff from parking any vehicles along the entirety of the Road. 

60.This they have failed to show in light of the Car Parking Right[17].

61.I therefore also hold that the Defendants have failed to prove their Counterclaim.

C4.    Miscellaneous matters

62.The parties have filed witness statements and called witnesses at the trial on certain factual disputes.

63.In support of the claim for the permanent injunction as sought, the Plaintiff has adduced evidence given by one Mr Chung to show that (a) it was necessary to obtain the interim injunction in the first place, (b) the Defendants conducts have been unreasonable before the grant of the interim injunction[18], and (c) if without a permanent injunction, the Defendant would continue to interfere with the Plaintiff’s right in light of the alleged breach of the interim injunction by the Defendants in continuing to impose certain road traffic control measures regarding vehicular entrance to the Road.

64.The Defendants have also called a Mr Kwan to give evidence at trial in response to the Plaintiff’s above factual allegations and to support the Defendants’ conducts in imposing traffic control measures in the first place and subsequently.  They also dispute that they have imposed anything which are in contravention of the interim injunction. 

65.This body of evidence is irrelevant to the construction of the Right of Way.  Further, in light of my conclusions above in refusing to grant the permanent injunction as sought by the Plaintiff, the evidence is also irrelevant.  It is strictly speaking unnecessary for me to rule on it.

66.However, if I am wrong above and insofar as necessary[19], I would have preferred the Defendants’ evidence and held that (a) there was a need for the Defendants to impose some road traffic control measures at the time of the dispute in light of the risk of falling objects injuring passers by over the Road, although such measures should not have been a complete ban on parking on the Road by vehicles, and (b) after the grant of the interim injunction, the Defendants had not committed any acts which could be regarded as an intentional breach of that injunction, and thus there is no sufficient evidence to show that, if and after the Court has spoken whether and to what extent are the rights of the Plaintiff to park vehicles on the Road, the Defendants would still have continued to interfere those rights if not restrained by the Court. I would have so preferred the Defendants’ evidence since it is more consistent with the objective evidence of falling objects from the nearby building at the material time, and the fact that the Defendants had caused the removal security guard’s booth, which was installed after the interim injunction, after there were complaints about its presence. 

D.      Conclusion

67.For these reasons, I dismiss both the Plaintiff’s claim and the Defendants’ Counterclaim.

68.I further make a costs order nisi that three-quarter of the costs of the action be to the Defendants to be taxed if not agreed.  The Defendants are successful in defending the claim but have failed in the Counterclaim.  In the circumstances of this case, I think it is fair and just to require the Plaintiff to pay three-quarter of the costs of the action to the Defendants.   The nisi order shall be made absolute 14 days from today unless any of the parties applies to vary it.

Mr. Kai Man CHONG & Mr. Lester H.L. LEE instructed by Messrs Kenneth C.C. Man & Co. for the Plaintiff  

Mr. Andrew Y.S. MAK instructed by Messrs Chung & Kwan for the 1^st & 2^nd Defendants

Appeal by the plainitff to Court of Appeal allowed. Please refer to CACV252/2010 dated 4 May 2011