Tam Sze Man and Another v. The Incorporated Owners of Shan Tsui Court

CACV 30/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 30 OF 2011

(ON APPEAL FROM HCA NO. 989 OF 2010)

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BETWEEN

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Before: Hon Cheung, Fok and Chu JJA in Court

Date of Hearing: 15 September 2011

Date of Handing Down Judgment: 22 September 2011

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J U D G M E N T

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Hon Cheung JA:

1.I agree with the judgment of Fok JA.

Hon Fok JA:

Introduction

2.The appellants are the owners of two adjoining flats in a multi-storey building on an estate.  They wish to remove the partition wall between the two flats to create one larger unit and, indeed, have already done so.  The respondent, the incorporated owners of the estate, object on the ground that the partition wall is a common part of the estate and on the further ground that the appellants’ removal of the partition wall between the two flats was a structural alteration in breach of the applicable DMC.

3.By summons under RHC Order 14A, the appellants sought a determination of the question whether, on a true construction of the chain of assignments, title instruments and the DMC, they are the owners of the partition wall.  They also sought judgment under Order 14 for declaratory relief and an order that the respondent approve their removal of the partition wall.

4.By her decision handed down on 25 January 2011, Deputy Judge Au Yeung held in favour of the respondent that the partition wall is a common part of the estate and that the removal of the partition wall was a structural alteration in breach of the DMC.  From that decision, the appellants appeal to this court.

The facts

5.The 1^st appellant is the registered owner of Flat No. 3, 21/F, Block A, Shan Tsui Court, 200 Tai Tam Road, Hong Kong (“Flat 3”).  Flat 3 was assigned to the 1^st appellant in September 2008.

6.The 2^nd appellant is the registered owner of Flat No. 4, 21/F, Block A of Shan Tsui Court (“Flat 4”).  Flat 4 was assigned to the 2^nd appellant in February 2010.  The sole director and shareholder of the 2^nd appellant is the husband of the 1^st appellant.

7.Flats 3 and 4 are adjoining flats and they share one partition wall.  The partition wall is not a structural wall and the Housing Authority has accepted that its alteration will have no structural impact on the building.

8.The Housing Authority was the developer and first owner of the estate.  The DMC was executed on 4 September 1978 between the Housing Authority as first owner and a Kwan Tack Yin as second owner.

9.In March 2010, the appellants applied to the management office of Shan Tsui Court to carry out decoration works in Flats 3 and 4, including the removal of the partition wall between the two flats.  The work commenced on about 16 March 2010.

10.The respondent objected to the removal of the partition wall and claims that the appellants are liable to reinstate the same as constituting a common part of the estate and that their removal of the partition wall is in breach of the DMC.

The judgment below

11.The Deputy Judge began her analysis by setting out the provisions of s. 2 of the Buildings Management Ordinance, Cap. 344, (“BMO”) which define the term “common parts” as follows:

“(a)  the whole of the building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner; and

(b)  unless so specified or designated, those parts specified in Schedule 1.”

12.She noted that, in Schedule 1 of the BMO, common parts include “boundary walls”.

13.The Deputy Judge then posed the question whether the partition wall was a common part within the meaning of the BMO.  She held that, by operation of s. 2(a) and (b) and Schedule 1 of the BMO, the partition wall was a common part because it is a “boundary wall” that sets apart Flats 3 and 4 (Judgment §16).

14.The Deputy Judge next posed the question whether the partition wall had been specified or designated in a registered instrument as being for the exclusive use, occupation or enjoyment of an owner.  She held that neither the DMC nor the first assignments in respect of Flats 3 and 4 have specified or designated the partition wall as being for the exclusive use, occupation or enjoyment of the owners of Flats 3 and 4 (Judgment §§20-21).  The Deputy Judge held, applying Nation Group Development Ltd v New Pacific Properties Ltd [2000] 3 HKCFAR 428 at 436G, that the description of the properties in the first assignments merely gave the owner of each of the flats the right to the exclusive use of the floor and ceiling surfaces of the property and the airspace between them or, in other words, the entire volume of the floor space (Judgment §22).  She placed weight on the absence of clear descriptive text referring to the partition wall in the assignments (Judgment §§30-34) and concluded that, on a true construction of the first assignments and the DMC, neither appellant was severally or jointly the owner of the partition wall (Judgment §39).

15.On the question of structural alteration, the Deputy Judge noted that the allegation was that the appellants were in breach of clause 3 and paragraph 4 to the Second Schedule of the DMC, the latter of which (paragraph 4) stipulated one of the covenants, provisions and restrictions referred to in the former (clause 3) as being:

“Not to make any structural alteration to any flat of which he is the owner [‘1^st limb’] nor cut injure damage alter or interfere with any part or parts of the Estate in common use [‘2^nd limb’] or any of the sewers drains water-courses conduits pipes cables wiring fixtures equipment apparatus or services of the Estate.”

[Emphasis added]

16.She held, relying on Incorporated Owners of Elite Garden v Profit More Co Ltd [2002] 2 HKLRD 518 that the partition wall was structural in the sense that it was part of the fabric of the building (Judgment §43).  She held that the demolition of the partition wall undoubtedly pertained to the framework and structure of Flats 3 and 4 respectively and affected their visual aspect: it removed one boundary wall of each flat and thus altered their structure.  She therefore concluded that the appellants were in breach of the 1^st limb (Judgment §45).

17.In any event, the Deputy Judge concluded that, in the light of the decision that the partition wall fell within the common parts, its demolition was clearly damage, alterations or interference with the estate in common use in breach of the 2^nd limb (Judgment §46).

Incorporated Owners of Westlands Garden v Oey Chiou Ling

18.After the date of the Deputy Judge’s Judgment (25 January 2011), the Court of Appeal (consisting of Tang Ag CJHC, Cheung and Yuen JJA) handed down its judgment in Incorporated Owners of Westlands Garden v Oey Chiou Ling [2011] 2 HKLRD 421 on 21 February 2011.  That case also concerned a dispute between the owners of two adjoining flats, who had removed an internal non-structural partition wall dividing their flats, and the incorporated owners of the building.

19.The decision of the Lands Tribunal in Westlands Garden (reported at [2010] 5 HKLRD 150) was relied on by the Deputy Judge in this case as an example of a non-structural partition wall which was part of a multi-story building which had not been specified or designated in an instrument registered in the Land Registry for the exclusive use, occupation or enjoyment of an owner and was thus a common part (Judgment §13).

20.As will be seen, the Court of Appeal in Westlands Garden addressed a number of questions which are directly relevant in the present appeal and, on the basis of Solicitor (24/07) v Law Society of Hong Kong (2008) 11 HKCFAR 117 at §45, this court is bound to follow its decision in Westlands Garden and may only depart from it where it is satisfied that it is plainly wrong.

Whether partition wall a boundary wall

21.In Westlands Garden, on the question of whether a partition wall was a boundary wall within Schedule 1 of the BMO, Tang Ag CJHC (giving the judgment of the court) held:

“25. Be that as it may, after the hearing of the appeal, Deputy High Court Judge Au-Yeung’s decision in Tam Sze Man v Incorporated Owners of Shan Tsui Court (unrep., HCA 989/2010, [2011] HKEC 111) was handed down. Tam Sze Man v Incorporated Owners of Shan Tsui Court was also concerned with an internal partition wall between two flats. The learned Deputy Judge, on an O.14A and O.14 application held that the partition wall falls within the common parts, because it was a boundary wall, and hence specified in Schedule 1 to BMO and relying on Incorporated Owners of Elite Garden v Profit More Co Ltd [2002] 2 HKLRD 518, that it was structural in the sense that it was part of the fabric of the building. On the invitation of the Court, both [counsel] made further (written) submission.

26. With respect, we do not believe that the expression ‘boundary wall’ covers an internal partition wall. Rather we believe it refers to a wall at a boundary of a relevant site or development. The Chinese version of ‘boundary wall’ in BMO Schedule 1 is ‘邊界牆’ which supports this view. Moreover given the provisions in paras. 1 and 2, we believe, if an internal partition wall was intended to be included, there would have been an express reference to it. We do not believe the draftsman would have been content to let it be inferred from the expression ‘boundary wall’.

27.       In our opinion, partition wall has not been specified in Schedule 1 of the Ordinance.”

22.In my opinion, the above conclusion of Tang Ag CJHC is correct and it is therefore binding on this court.  It therefore follows that the Deputy Judge’s conclusion that the partition wall was a boundary wall within Schedule 1 of the BMO and therefore a common part cannot stand.  Mr Paul Wu, counsel for the respondent incorporated owners, did not seek to argue to the contrary.

Whether partition wall specified or designated for exclusive use, occupation or enjoyment of an owner

23.Whether the partition wall was “specified or designated … for the exclusive use, occupation or enjoyment of an owner” within s. 2(a) of the BMO is a question of construction of the relevant instruments: Central Management Limited v Light Field Investment Limited [2011] 2 HKLRD 34 at §§17 and 25 (per Cheung JA) and Westlands Garden at §28 (CA).

24.It was common ground that the relevant instruments here are the DMC and the first assignments to the predecessors of the appellants (on which the subsequent assignments to the appellants were based).

25.The relevant provision of the DMC in the present case, clause 13(c), provides:

“For the purposes of this Deed ‘common parts’ means the whole of the Estate except such parts thereof as had been specified or designated in an instrument registered in the Land Office as being for the exclusive use occupation or enjoyment of an owner or owners.”

26.The relevant part of the first assignment in respect of Flat 4 (which was materially the same as that in respect of Flat 3 save as to the description of the property) assigned to the first owner:

“All those Ten equal undivided 8,962^nd parts or shares of and in ALL THAT piece or parcel of ground known and registered in the Land Office as CHAI WAN INLAND LOT NO.92 And of and in all messuages erections and buildings thereon TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT FLAT NO.4 on the 21^st FLOOR of the said building (which said Flat for the purpose of identification only is she coloured pink on the Plan annexed hereto and is hereinafter referred to as ‘the said premises’) … EXCEPT AND RESERVED unto the Vendor and its assigns the exclusive right to hold use occupy and enjoy all other flats and all car-parking spaces open bays management offices and caretaker’s offices under in and of the said building … AND SUBJECT to and with the benefit of the Deed of Mutual Covenant …”.

27.It is pertinent to note that the pink coloured portions on the plans attached to the first assignments of Flats 3 and 4 include the partition wall.

28.Mr Andrew Mak, counsel for the appellants, submitted that under the first assignment of each of Flats 3 and 4, the whole of the areas designated for the flats other than Flats 3 and 4 respectively were reserved to the Housing Authority, as developer.  There was nothing in the first assignments to suggest that the partition walls in any of the domestic portions were to be made a common area.

29.As noted above, the Deputy Judge’s construction of the first assignments proceeded on the basis, applying Nation Group Development Ltd v New Pacific Properties Ltd at 436G, that the description of the properties in the first assignments merely gave the owner of each of the flats the right to the exclusive use of the floor and ceiling surfaces of the property and the airspace between them.

30.In Westlands Garden, at §§47 to 49, Tang Ag CJHC considered the same argument based on Nation Group Development Ltd v New Pacific Properties Ltd that the flat owners were only entitled to use the surface of the partition wall.  He rejected the argument and concluded (at §50):

“Nation Group was not concerned with the ownership of a partition wall. It drew an analogy with a floor slab. It was sufficient for the purpose of Nation Group, for illustrative purpose, to refer to the surface of the floor slab without going on to consider the ownership of the floor slab. Indeed, it is clear from passages quoted above that Ribeiro PJ’s emphasis was that an assignment of a flat on the 7^th floor:

… do not, as a matter of construction, encompass the underside of the 7th floor slab. … (Emphasis added.)”

31.Notwithstanding Mr Wu’s arguments seeking to uphold the Deputy Judge’s reliance on the “surface-only” argument by reference to Nation Group Development Ltd v New Pacific Properties Ltd, I agree with Tang Ag CJHC that that case does not deal with the ownership of a partition wall.  In my opinion, and, with respect, contrary to the view of the Deputy Judge (Judgment §26), its principles are therefore not applicable to the present case.

32.In Westlands Garden, the Court of Appeal considered that, as a matter of construction, the areas occupied by the flats in the building, including the partition walls, were designated under the DMC and first assignment for the exclusive use, occupation or enjoyment of the owners of the flats concerned.  Tang Ag CJHC held:

“34. We agree with Mr Ho that the areas occupied by ‘the flats’ in the building - including the partition walls - were designated under the DMC and the 1^st Assignment ‘for the exclusive use, occupation or enjoyment of the owners’ of the flats concerned. It follows that the wall in the present case falls outwith the first limb of the definition of ‘common parts’ under the BMO (i.e. paragraph (a) of the definition).

35. Metro City Management Limited v Tsui Fee Hung Vincent and Lam Wai Fun (CACV 328/2005 / HCA 4327/2003) supports this view. There, Recorder Edward Chan SC was asked to determine whether the wall over a roof to which the impugned canopies were anchored was part of the ‘Residential Common Areas’. The learned Recorder noted that the description of the property in the assignment did not make express reference to the wall in question (paragraph 45). In coming to the conclusion that the wall was not part of the ‘Residential Common Areas’, he said:

‘50. In the circumstances of this case, while it may well be argued forcefully that the wall in question may be regarded as an external [wall] of Tower 4, I do not think it right to regard it as an external wall of the Defendants’ property. The idea of having a common area within one’s property is an unattractive one. Given that either side of the wall is occupied exclusively by the Defendants it is difficult to see how any other owners of Metro City may properly enjoy and make use of the wall. Hence I am of the view that the wall in question is not part of the Residential Common Areas.’

36. On appeal, Rogers VP agreed with the conclusion of the learned Recorder and said:

‘16. In my view the opening words of that clause are clear. The whole of the flat and the flat roof which appertain thereto has been assigned for the exclusive use of the defendants. Whereas the other external walls of the Tower no doubt come within the term Residential Common Areas the clause should be read as excluding that for the purpose of considering the common areas. As the judge pointed out, it would almost be absurd to consider that any of the other owners should have a right of access to that part of the wall which was otherwise clearly bounded by the defendants’ property.’

37. Yuen JA also noted that:

‘61. In theory I would agree with the learned Recorder that it would be an unattractive proposition to have a commonly-owned wall between areas exclusively occupied by the same owner as one unit. However the unattractiveness in this case is more theoretical than real. As the Recorder noted, it is difficult to see how any other owners could enjoy and make use of the walls in question (para. 50). In contrast, the Defendants would stand to benefit from maintenance of the external walls as a common area at the cost of the co-owners.’

38.  Here, for all intents and purposes, the partition wall is for the sole use and benefit of the owners of Flats E1801 and E1803.  To that extent, it is indistinguishable from Metro City Management Limited.  There, as in the present case, there was no specific reference to the wall.  There, as in this case, although the assignment plan was coloured, the actual wall itself had not been coloured over.  We attach no particular significance to that.”

33.Turning to the present case, in considering the construction of the relevant instruments, I agree with Mr Mak that the context in which they are to be construed includes the following facts.  First, the DMC does not specify the partition wall as common area.  Secondly, the other owners of the building had no right to enter Flats 3 and 4 and there would be no purpose for them to make use of the partition wall.  Thirdly, the assignment plans of both Flats 3 and 4 included the partition wall as the property of their respective flats: the colouring of the partition wall on the plans of both of the two flats provides an indication that the partition wall belongs at least to the owners of those two flats jointly rather than to all the owners of the building.

34.I also agree with Mr Mak that to construe the relevant instruments as not specifying or designating the partition wall as being for the exclusive use, occupation or enjoyment of the owners of Flats 3 and 4 could give rise to the following difficulties and anomalies:

(1)  The respondent incorporated owners and owners of other flats in the building would have the right to enter either Flat 3 or Flat 4 to conduct repairs or works at any time of the day.

(2)  The respondent incorporated owners would have a duty to maintain and be liable to incur expenses to maintain the partition wall, including repairing a hole in the wall for the purpose of hanging a painting or installing an electronic appliance.

(3)  Each of the owners of the other flats in the building would have the right to ask the respondent incorporated owners to repair their partition walls at the expense of all the other owners.

(4)  Driving a nail into a partition wall would damage or interfere with a common part of the building and would thus require the consent of the respondent incorporated owners.

(5)  The other owners might, by resolution of the respondent incorporated owners in a general meeting, or even by resolution of the management committee, resolve to take down any partition wall.

(6)  It would mean that any building works on a partition wall between flatsmight have to be approved by many other owners in the building, notwithstanding the intention of s. 41(3) of the Buildings Ordinance, Cap. 123, which exempts non-structural internal partition works from the requirement of Buildings Authority approval.

35.In the circumstances, in my opinion, the more reasonable construction of the relevant instruments is that each of the flats was assigned together with its partition wall adjoining the adjacent flat, the partition wall to be used by the owner of that flat together with the owner of the adjacent flat.  As in the case of Westlands Garden, for all intents and purposes, the partition wall was for the sole use and benefit of the owners of Flats 3 and 4.

36.It follows that, with respect to the Deputy Judge, I would arrive at a different construction of the first assignments and the DMC, notwithstanding the absence of express reference to the wall in question in the description of the property in the first assignments.

37.In his skeleton submissions, Mr Wu relied on Chi Fu Fa Yuen Ltd v Cho Wai Man Raymond [2008] 1 HKC 59 as a case in which there was no instrument in the Land Registry specifically designating a partition wall between two adjoining flats to be for the exclusive use, occupation or enjoyment of an owner.  The Presiding Officer of the Lands Tribunal held that the partition wall in question was a common part of the residential building.  I do not consider this case assists the respondents since there the partition wall was a load-bearing wall.  As such, it would fall within paragraph 1 of Schedule 1 to the BMO and was therefore clearly a common part.

38.Similarly, I do not consider that Mr Wu’s reliance on the principle of unity of possession regulated by the DMC of a building (referred to in Hollywood Shopping Centre Owners Committee Limited v The Incorporated Owners of Wing Wah Building Mongkok Kowloon, unrep., CACV 185/2010, 4.8.11 at §45) assists him since, in the present case, there was a reservation of all other parts of the building to the Housing Authority in the assignments of the individual flats.

Whether structural alteration in breach of the DMC

39.Since the partition wall was not, in my judgment, a common part of the building, it follows that the appellants could not be in breach of the 2^nd limb of paragraph 4 to the Second Schedule to the DMC.

40.I turn to consider the Deputy Judge’s reliance on Incorporated Owners of Elite Garden v Profit More Co Ltd as supporting her conclusion that the appellants were in breach of the 1^st limb of that paragraph.

41.Here, again, the Court of Appeal’s decision in Westlands Garden provides an answer.  At §46, Tang Ag CJHC held:

“We do not believe Elite Garden has any relevance to an internal partition wall. Unlike an external wall, it could not be said, in the words of Le Pichon JA to be ‘an integral part of the building’. In this context we do not believe an internal partition wall is different from an internal partition wall making a bedroom.”

42.I would respectfully agree with the basis on which Tang Ag CJHC has distinguished the position of an internal partition wallfrom the external wall with which Elite Garden was concerned and I am satisfied this court is bound by the previous decision in Westlands Garden in this regard.

43.It therefore follows that, with respect to the Deputy Judge, her conclusion that the appellants were in breach of the 1^st limb of paragraph 4 to the Second Schedule to the DMC cannot stand.

Conclusion and Relief

44.For the reasons set out above, therefore, I would allow this appeal.

45.The question posed in the Order 14A summons should have been answered in the affirmative.  Further, the respondent has not raised a triable issue on the appellants’ Order 14 summons.  It therefore follows that the appellants are entitled to judgment for the declaratory relief sought in the Amended Statement of Claim, namely a declaration that the appellants are the owners and entitled to exclusive possession to the partition wall shown in Annex A-1 and/or Annex B (to the Amended Statement of Claim).

46.So far as costs are concerned, it was common ground that costs would follow the event, and in the circumstances, the appellants must have the costs of this appeal as well as the costs of the hearing of and incidental to their application below.

Hon Chu JA:

47.For the reasons given by Fok JA, I agree that the appeal should be allowed with the orders proposed in paragraphs 45 and 46 above.

Mr Andrew Mak, instructed by Messrs Adrian Yeung & Cheng, for the Plaintiffs/Appellants

Mr Paul K N Wu, instructed by Messrs Chung & Kwan, for the Defendant/ Respondent