The House of Dior Ltd v. David See Chai Lam and Another
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CACV000011/1973 IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 11 OF 1973 (On appeal from O.J. Action No. 2564 of 1971) -----------------
----------------- Coram: Full Court (Blair-Kerr, S.P.J., McMullin and Pickering, JJ.) Date of Judgment: 1 June, 1973. ----------------- JUDGMENT ----------------- Blair-Kerr, S.P.J.: 1. On 23rd June 1952, The District Commissioner, New Territories caused the following notice to be published in the Government Gazette:-
The notice gave particulars of 11 different lots situated in different parts of the New Territories. One of these lots was no.535 in Demarcation District no. 187. This was to be sold as a "building and garden" lot. 2. The sale plan (Ex.B1) actually consisted of 2 small diagrams on a single sheet. On the lower part of the sheet there was a location diagram 1.6" square. This gave prospective purchasers a general idea of where lot 535 was situated in relation to the 2 villages, Sheung Keng Hau and Hin Tin, in the Shatin District. The other diagram was not much bigger. It indicated that lot 535 was situated south-east of the Kowloon/Shatin Road and that it was north of and contiguous to lot 524 which in turn was north of, and contiguous to, lot 523. No other lot numbers were marked on the diagram. Lot 535 was shaded red; and, so far as one could judge, it was rectangular in shape; but the area shaded red was very small indeed; and I do not see how any one could have been certain that the lot was rectangular. The sides of the shaded area measured 3/10ths. of an inch by 1/10th. of an inch, thereby suggesting that it was exactly 3 times as long as it was broad. However that was not so. The diagram indicated that the lot was 190' long by 71' wide. 3. One could also say from this very small diagram that the longer boundaries of the lot (i.e. the 190' boundaries) ran roughly north-north-west/south-south-east. 4. Below this diagram there appeared the words: "area: 13,490 sq. ft. or. 31 ac. (about)." 5. The sale was subject to various General and Special Conditions. General Conditions 4, 5, 8, 13 and 14, so far as relevant, read:-
6. At the auction on 15th July 1952, lot 535 was sold to Edinburgh Hotels Ltd.; and a house was built by the purchasers on the southern portion of the lot in 1953 or 1954. This southern portion [henceforth to be known as "Section A"] was sold by Edinburgh Hotels Ltd. to one G.B. King on 16th February 1956. An architect acting on behalf of one of the parties, or both, drew a sketch plan for attachment to the conveyance. So far as the evidence goes, the only plan of the lot at this time was the sale plan which I have described; and it appears that the architect must have consulted this plan. Clearly, he assumed that the lot was rectangular in shape [190'x71']; and the net result was that Edinburgh Hotels Ltd. purported to convey to G.B. King a rectangular piece of land 71' by 65' [4,615 sq. ft.]. 7. On 16th February 1956, Edinburgh Hotels Ltd. sold the remainder of the lot to one LI MOK Cheuk-yin. Again, for the purpose of the conveyance, the architect concerned drew a similar sketch plan which purported to indicate that Edinburgh Hotels Ltd. was conveying to the purchaser a rectangular piece of land 71'x125' [8,875 sq. ft.]. 8. On 14th June 1957, LI MOK Cheuk-yin sold half of the 8,875 sq. ft. to one CHAN Yuen-foo. Again, the architect concerned drew a rectangular plan which purported to indicate that the vendor was selling a rectangular piece of land [henceforth to be known as "Section B"] 71'x62.5' [4,437.5 sq. ft.] adjacent to Section A and to the north of it. 9. On 15th July 1958, LI MOK Cheuk-yin sold the Remaining Portion of the lot to the 1st defendant. Again, the architect drew a rectangular plan which purported to indicate that the vendor was selling a rectangular piece of ground 71'x62.5' [4,437.5 sq. ft.]. 10. On 19th August 1965, the executrix of CHAN Yuen-foo sold Section B to the plaintiffs' predecessors in title; and they sold the section to the plaintiffs on 10th September 1970. Finally, on 20th July 1970, the 1st defendant contracted to sell the Remaining Portion to the 2nd defendant. 11. In 1958, the 1st defendant employed and architect to draw up plans for a house on the Remaining Portion. The plans as drawn up included a "block plan" which indicated that lot 535 was a rectangle and contiguous to lot 524. But, the block plan does not purport to give the presumed length of the east and west boundaries of the Remaining Portion or of Sections A or B. Indeed, it would appear that the plan was carelessly drawn. The scale is said to be 50' to 1"; but the east and west boundaries of both the Remaining Portion and Section B are shown as being less than 1" on the plan! 12. However, the plans for the house and the various outhouses (including a septic tank at the south-eastern corner of the Remaining Portion) appear to have been approved as being in accordance with the Buildings Ordinance; and the house was completed in May 1959. The 1st defendant built a wall along what, it is now said, he considered was the southern boundary of his property i.e. between the Remaining Portion and Section B. 13. On 18th June 1959, the District Officer drew the 1st defendant's attention to General Condition 8 and said that a registered owner, within one month of the date of the occupation certificate, was required to apply for the issue of a Crown lease. On 13th July 1959, the 1st defendant did apply for a Crown lease; but he was not given one. It appears that he is also the owner of lot 562 which is situated to the north of lot 535; and that he was occupying certain Crown land between the two lots. The 1st defendant had been in correspondence with the Crown Lands and Surveys Department in regard to the delineation of the southern boundary of lot 562 and the northern boundary of the Remaining Portion of lot 535. Why there should have been such inordinate delay in settling this matter is far from clear. At any rate, on 15th October 1964, an official of the Crown Lands and Surveys Department wrote to 1st defendant enclosing a plan (Ex.B2) and saying:-
The plan does not show that lots 562 and 535 have a common boundary - only "in part" on the western side. To the east of that, there appears to be a wedge of Crown land between the lots. 14. It appears that Section B was never occupied or developed in any way by the plaintiffs' predecessors in title. The plaintiffs did purchase it with a view to development; and their architect (Jacob Wong) first visited the site on 10th August 1970. The agreement for sale and purchase was entered into on 13th August 1970. Jacob Wong again visited the site on 18th August 1970. He made a rough survey of the site during the latter part of August. On 7th September he requested the District Officer Taipo to "set out" Section B; and, as I have said, 3 days later [10th September 1970] the conveyance was signed. 15. According to the plaintiffs, their original intention was to build a 4-unit (2-storey) building on Section B; and they submitted plans (Ex.B12) to the Building Authority for approval on 22nd September 1970. By this date the plaintiffs had been given a Crown permit to occupy the land to the west of Section B, between the section and Keng Hau Road; and the architect was under the erroneous impression that this land formed part of the section; and he prepared his plans for a 4-unit building accordingly. 16. On 2nd October 1970 Jacob Wong wrote to the District Officer as follows:-
The plaintiffs' managing director (Mr. T.V. Koo) is a clerk employed by Peter Mark & Co. (the plaintiffs' solicitors); and on 29th October the Director of Lands and Surveys wrote to him as follows:-
The survey fee was duly paid; and the work of surveying lot 535 commenced about the middle of November 1970. However by 17th November 1970 - indeed by 28th July 1970 - the District Officer Taipo had in his possession plans of lot 535 which were bigger than the small sale plan (Ex.B1); and it is evident from those plans that lot 535 was not rectangular but parallelogrammatic. On 28th July he signed a Crown permit (Ex.E) which authorised the owners of Section A to occupy a portion of Crown land. The plan attached to that permit clearly shows lot 535 as a parallelogram. On 17th November (before the survey), the District Officer forwarded to Mainland Survey Division Taipo a plan (described on its face as "drawing no.TPM 552 .... 12/11/70") showing lot 535 coloured pink. In his covering letter (Ex.N) he said: "I attach herewith copy of plan showing boundaries of the original lot 535 ...". It is obvious from this plan that lot 535 (described as "the original" lot 535) was considered to be parallelogrammatic. It is shown as being contiguous to lot 524 in the south and to lot 562 in the north. The plan is marked "area: 13,490 sq. ft. (about)" and "subject to survey". 17. The survey was done by a survey assistant, Mr. HAU King-chee. He said in evidence that when he visited the site in mid-November he found two boundary stones which delineated the northern boundary of lot 524. One stone was at the south-western corner of lot 535 (the north-western corner of lot 524) i.e. at the point marked C on plan Ex.B8. The other boundary stone was a few feet to the east of lot 535. 18. Having found these two boundary stones, Mr. Hau plotted a line between them. He then plotted a line 190' long in a north-westerly direction between the front of the houses built on lot 535 and Keng Hau Road. That was to be the "west" boundary of the lot. The angle formed by the line joining the 2 boundary stones and this west boundary was not a right angle; but Mr. Hau's object was to maintain the perpendicular distance between the west and east boundaries of the lot at 71'. So, he then plotted a line perpendicular to the west boundary line in such a way that the distance between that line to the point where the perpendicular line intersected the line joining the boundary stones, was 71'. He thereby ascertained the south-east corner of lot 535. It is marked B on plan Ex.B8. Having obtained point B, he then plotted a line 190' long parallel to the west boundary, thereby obtaining the "eastern" boundary of the lot. 19. This survey was said to be "a partial survey". It was partial only in the sense that the Crown Lands and Surveys Department were not sure what was to be the area of lot 535 because the 1st defendant was occupying Crown land between lots 535 and 562. If the two lots were to be contiguous, then lot 535 would be 2,140 sq. feet larger than 13,490 sq. feet - the area which was originally sold in 1952. Consequently, Mr. Hau was unable to delineate with certainty the northern boundary of lot 535. 20. On 4th December 1970, the Chief Land Surveyor wrote to the District Officer forwarding a copy of the plan (Ex.B8) and in this letter he said:-
21. Clearly, the District Officer must have informed the Chief Land Surveyor that there was to be no change in the area of lot 535, because on 18th December 1970, the latter wrote to the former enclosing 2 copies of what he described as "a provisional setting out plan" of lot 535 (Ex.J). He said:-
22. On the plan (Ex.J) there is shown an area of Crown land between the northern boundary (AD) of lot 535 and lot 562. It is also obvious from the line drawn across lot 535 a few feet north of the plotting points, C2 and A1, that the eastern boundary of the Remaining Portion is considerably longer than the western boundary, despite the fact that the plan (Ex.C5) attached to the conveyance of the Remaining Portion in favour of the 1st defendant shows both east and west boundaries as being 62.5'. Actually, in August, Mr. Jacob Wong had formed the view that the 1st defendant had encroached on Section B. His plan (Ex.B6) was drawn up as a result of his rough survey towards the end of August; and, although it is dated 2nd November, he admitted in cross-examination that it was drawn up a few days after that survey and it clearly shows the alleged encroachment. He also said that he reported the results of his survey to the managing director of the plaintiffs (Mr. Koo). 23. The District Officer approved of the plan (Ex.J); and, on the morning of 22nd December 1970, iron spikes in cement were fixed in the ground along the eastern boundary of lot 535 and a red mark was made at the north-western corner (D on the plans). A plan (Ex.B9), which appears to be identical with the plan Ex.J (except that it does not have the word "provisional" endorsed on it), was forwarded to Mr. Jacob Wong on 22nd December. In his covering letter the Director of Lands and Surveys said:
A copy of this letter was sent to the Registrar General, the District Officer, Taipo, the Government Building Surveyor, the Chief Engineer Highways, the Traffic Police and Hong Kong Records. 24. As I have said, the east and west boundaries of the lot as delineated on the plan Ex.B9 are each 190'; the perpendicular distance between the east and west boundaries is 71'; the area of the lot is 13,490 sq. ft.; but, being a parallelogram, in order to get that area, the northern and southern boundaries are not 71' (as per the original sale plan Ex.B1) but 72.45'. 25. The owners of Section A were originally the 3rd defendants. But the plaintiffs very properly withdrew the action as against them. The owners of the section have erected a fence on their northern boundary. Their east and west boundaries are each 65'; and the area occupied by them is 4,615 sq. ft., which was the area conveyed to their predecessors in title by Edinburgh Hotels Ltd. 26. But Section B is no longer 4,437.5 sq. ft. It is in fact 3,940 sq. ft. On the other hand, the Remaining Portion is not 4,437 sq. ft. (the area conveyed to the 1st defendant in July 1958). It is now 4,935 sq. ft. The eastern boundary of the Remaining Portion as measured from the eastern end of the wall built by the 1st defendant in 1959 to the north-east corner of the lot is not 62.5' but 77'. The plaintiffs say that the southern boundary of the Remaining Portion should be a line running parallel to the southern boundary of Section B (i.e. the northern boundary of Section A) thereby making all three sections of the lot parallelograms; but that, as things stand, the 1st defendant has encroached on their land to the extent of 497.5 sq. ft. 27. I find the 1st defendant's arguments relating to the shape of the lot difficult to understand. He says that in the sale plan the lot was shown as being rectangular; that in preparing the various plans for purposes of conveying the 3 sections and in connection with the building of the two houses, the various architects have drawn the lot on their plans in the shape of a rectangle; that the shape of the lot has now been changed from a rectangle to a parallelogram; that he is not to be blamed for this, trusting as he did to the sale plan which, according to him, showed the lot as being rectangular; that he built his wall in 1959 in the position in which it now is, on his architects' advice; and that, so far as he is concerned, it is in the correct position. Indeed, when he filed his defence he alleged in paragraph 2 that the correct shape of the plaintiffs' land is a rectangle, thereby suggesting that the present owners of Section A had encroached on the plaintiffs' land. 28. If his wall is in the correct position, there is no doubt whatsoever that he is now occupying 497.5 sq. ft. more than was conveyed to him in 1958. Naturally, he does not now suggest that the shape of the whole lot should be a rectangle with a base line BC as shown on the plan Ex.B9 because such a rectangle would incorporate a considerable portion of Keng Hau Road and extend over the steep slope to the west of the road. This would have the effect of placing his swimming pool, all his outhouses (including the septic tank at the south-eastern corner of the Remaining Portion) and even part of the main building on the Remaining Portion, outside the lot altogether! What he says is: the base line BC has changed since the lot was sold in 1952. He says the point B in the plan is now further north than it was in those days. This is tantamount to saying that in 1952, and in 1958, the northern boundary of lot 524 ran more in an east-west direction - and that it has now been changed so as to run more north-east/south-west. 29. It is difficult to see how the 1st defendant could ever have thought that. His case is that the sale plan (Ex.B1) depicted the lot as a rectangle. But it is perfectly obvious from this sale plan that the long boundaries of the lot do not run north/south, but more north-west/south-east; and in my view all this talk about the shape of the lot having been changed from a rectangle to a parallelogram is largely a red herring. If one compares the sale plan with all subsequent plans, they all show that the lot runs approximately north-west/south-east. The angle formed by the "east" and "west" sides of the lot with due north varies very little from plan to plan. Therefore, if the 1st defendant had really believed that the lot was rectangular and ran roughly north-west/south-east, he could not have thought that the "southern" boundary of the lot ran more or less east/west, as he now impliedly suggests. 30. But apart altogether from that, I can find no evidence whatsoever to support the defendants' contention that the northern boundary of lot 524 has been changed since 1952. True, no witness was able to say when the boundary stones for lot 524 were laid; but there was no evidence that the northern boundary of lot 524 had ever been changed. Of course, if, formerly, the northern boundary of lot 524 had run in an east-west direction, as suggested by the 1st defendant, a rectangle drawn on such a base line would again have resulted in most of the 1st defendant's house being outside the lot altogether! 31. During the trial, the 1st defendant adopted a somewhat different approach. The plaintiffs called a Mr. Harland, the Senior Estate Surveyor, Taipo; and the defendants chose to rely heavily on one or two answers which he gave in cross-examination. A note of the relevant part of the cross-examination reads:-
32. In view of those answers, counsel for the 1st defendant submitted to the trial judge that, as no boundary stones had been fixed for the northern boundary of lot 535, and as there was still "room for negotiation" as to the area boundaries and measurements of the lot up till the issue of a Crown lease, it could not be said that the plaintiffs had proved the final area boundaries and measurements of the lot; and therefore that they had not proved that the 1st defendant had encroached on the plaintiffs' land. 33. The judge accepted this argument and held that the plaintiffs had failed to establish that the shape of lot 535 should be that of a parallelogram; and that the action was premature. The judge went further. He said:-
34. With respect, I think a great deal too much has been made of these 2 answers by Mr. Harland. The 1st defendant has been occupying Crown land to the north of lot 535 i.e. between that lot and lot 562. The owners of all three sections of lot 535 are occupying portions of Crown land to the west of the lot as delineated on the plan Ex.B9. The owner of Section A has built a swimming pool on Crown land on the east side of the section. There was no evidence that the Crown had been asked to consider the incorporation into the lot of any of those portions of Crown land to the west, east or north of the present boundaries; but, in my view, when Mr. Harland gave those answers, it may well be that he had in mind the possibility that the various owners might ask for the incorporation into the lot of additional portions of Crown land before any Crown lease is actually issued. 35. Be that as it may, this is looking to the future, to the possibility that, in the future, one or more of the sub-owners may enter into some other contract with the Crown. The question for this Court is: Have the exact area, boundaries and measurements of lot 535 been determined by the Crown? Has there been a determination? 36. The answer to that question must surely be "yes". General Condition 14 does not say that the area, boundaries and measurements will be determined by agreement between the parties after negotiation. It says that the area, boundaries and measurements shall be determined; and that means determined by the Crown. And, in my view, there has been a clear determination. It is not for this Court to speculate as to whether the 1st defendant will ask the Crown to incorporate, in any future lease, the strip of Crown land between his Remaining Portion and lot 562; or whether the plaintiffs may ask for the incorporation of land to the east of lot 535 as presently delineated (as was suggested at one stage by counsel for the 1st defendant). The point is: there has been a clear determination by the Crown of the area, boundaries and measurements of the lot. If the question of issuing a Crown lease in respect of lot 535 were ever to arise, on the evidence before this Court, and in the absence of any further contracts between the parties, the plan attached to such a lease would, in all probability, be Ex.B9. Therefore, as matters stand, there can be no doubt but that the 1st defendant has encroached on the plaintiffs' land to the extent of 497.5 sq. ft. 37. Counsel for 1st defendant emphasised that in 1959 the 1st defendant built his wall 128' from point C on plan Ex.B9. That may well be; but why did he not also take steps to ensure that the other end of the wall was also 128' from the northern boundary of lot 524? If one thing seems certain in this case it is that the northern boundary of lot 524 has never changed. On the evidence, there appears to be no reason why the 1st defendant, or his architect, should not have been able to ascertain the direction of that northern boundary. If he had done so, he could not have thought that he was entitled to build the wall in the way in which it was built; and it would also have become apparent to him that any future determination of the boundaries of the lot would not have been on the basis of the lot being a rectangle. As I have said, it would have been obvious to any architect that this would have resulted in the lot incorporating a portion of Keng Hau Road and the steep slope to the west of it. I cannot help wondering whether that wall would have been built in the direction which it was in fact built if Section B had been occupied by its owner in 1959. 38. After developing his land, the 1st defendant applied for a Crown lease. That is all very well. A careful developer would have asked for the lot to be surveyed and for the issue of a setting out plan before he embarked on development of the Remaining Portion - as the plaintiffs did in 1970. 39. As it seems to me, the main difficulty in this case is in deciding whether to grant the reliefs sought by the plaintiffs, that is to say (1) a mandatory injunction that the defendants pull down and remove the wall and the various structures on the 497.5 sq. ft. encroachment, and/or (2) damages. 40. In their defence, the defendants plead thus:
41. At the trial, it was not suggested that the plaintiffs had been guilty of laches after purchasing Section B. They very soon let it be known to all concerned that they intended to develop the land. Their own architect did a rough survey towards the end of August; and they applied for a full setting out plan of the lot. But, of course, if their predecessors in title had acquiesced in the encroachment, the plaintiffs would find themselves saddled with the consequences of such acquiescence; and the way it was put both in the court below, and on appeal, was that CHAN Yuen-foo, who was the owner of Section B in 1959, well knowing that the 1st defendant was encroaching on Section B, had stood by and permitted this without objection. Furthermore, it was argued that the plaintiffs' immediate predecessors in title had been guilty of laches. 42. We were referred to the law rolating to equitable estoppel, laches and acquiescence, and a number of cases were cited. But, as Mr. Litton for the plaintiffs said, acquiescence presupposes knowledge of what was going on; and the 1st defendant's difficulty was that he was quite unable to call any evidence tending to show that CHAN Yuen-foo, or the persons to whom his executrix sold the site, knew what had happened in 1959. It appears that Chan died prior to September 1962 because there was produced in evidence a letter dated 7th September 1962 (Ex.Q) from 1st defendant to Chan's widow. The letter reads in part:-
43. Apart from the fact that CHAN Yuen-foo was registered owner of the Remaining Portion, there was not a scrap of evidence to suggest that he ever visited the site or that he was aware that the 1st defendant had encroached on Section B. This applies equally to the plaintiffs immediate predecessors in title. The evidence suggests the contrary. 44. The grant of a mandatory injunction would cause the defendants considerable expense and inconvenience. It appears that one consequence of a mandatory order would be that the defendants would have to lift a number of their drains and re-site them elsewhere. The straightening out of the boundary might also result in the defendants having to part with a portion of the surrounds to the swimming pool. The septic tank and various other structures would have to be removed and reconstructed elsewhere. Counsel for the defendants submitted that there was nowhere else on the Remaining Portion to put these structures. The learned judge, having visited the site, does not suggest otherwise. However, he did say this:-
45. As I have said, I find it difficult to accept the submission that the 1st defendant and his architect made a genuine mistake in 1959. They did not exercise such care as one might reasonably expect from prudent developers. On the other hand, there was nothing in the evidence to suggest that the New Territories Administration might not accede to any reasonable request by the defendants for additional land to the east or the north. I can see no reason why the Administration should not assist the defendants in this way. 46. If the learned judge had found that the 1st defendant had encroached on the land of the plaintiffs, he would have granted reliefs (1), (3) and (4) as sought in the statement of claim. He said so in his judgment. Having given this matter anxious consideration, I see no reason to differ from the learned judge. In my view, there should be declarations by this Court that Section B, the plaintiffs' land, is that area coloured pink, including the portion hatched black and designated EFG and H on the plan annexed to the statement of claim; that the said Section B has an area of 4,437.50 sq. ft.; that its east and west boundaries measure 62.5'; and that its north and south boundaries measure 72.45' each. Secondly there should be an order for possession in favour of the plaintiffs in respect of the 497.5 sq. ft. on which the 1st defendant has encroached; and thirdly that the 1st and 2nd defendants be ordered to pull down and remove the wall and various structures at present erected on the 497.5 sq. ft. encroachment. I would, myself, be prepared to allow the defendants 2 months within which to comply with this mandatory order. 47. On the question of damages, the case for the plaintiffs is that they had decided to build a 3-unit building; but owing to the encroachment they are able only to build one consisting of 2 units; and that even if a mandatory order for the rectification of the boundaries is made, they will have lost considerable sums by way of rent owing to the delay. On this aspect of the case, I agree with the conclusion to which the learned judge would have come, if he had found that that the plaintiffs had proved the alleged encroachment. The evidence does suggest that the plaintiffs' managing director (Koo) knew full well about the encroachment prior to 10th September 1970. Jacob Wong had surveyed the site towards the end of August 1970 and he had informed Mr. Koo of the results of that survey. True, as counsel for the plaintiffs said:
48. On the other hand, the plaintiffs must have known that the defendants would require time to rectify their mistake (or the consequences of their negligence, depending on how one views the manner in which the Remaining Portion was developed in 1959). Although I do not agree with the learned judge that this unfortunate mix-up was caused entirely by the negligence of the New Territories Administration, nevertheless taking a broad view of the events as a whole, I agree with the learned judge that justice will be done if the boundaries are now rectified and the plaintiffs be granted nominal damages only. 49. For the above reasons I would allow the appeal with costs here and in the court below.
Representation: Litton, Q.C. and D. Chang (Peter Mark & Co.) for appellant R. Mills-Owens (Johnson, Stokes & Master) for respondent. |