The Incorporated Owners of Chung Yuen Mansion v. Fully King Trading Ltd

LDBM 15/2012

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 357 OF 2011

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BETWEEN

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Coram: Deputy Judge YU, Presiding Officer of the Lands Tribunal

Dates of Hearing: 16^th and 17^th July 2012

Date of Handing Down of Decision: 3^rd September 2012

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J U D G M E N T

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1.Chung Yuen Mansion ("the Mansion") is erected on Section A of Kowloon Inland Lot No. 2073 (“the Land”), which is a piece of land straddling between Waterloo Road and Emma Avenue.  The Mansion consists of 2 connected blocks, block A and B which share the same lift lobby, staircase and other common facilities.  A floor plan of the Land and the 2 Blocks is attached to the Application filed herein.

2.The Mansion does not take up all the Land.  It appears from the said plan that to the left and right side of the Blocks, there is each an open area in the form of a long strip of land, which I shall call them Area 1 and 2 and to be discussed further hereinafter.

3.The Applicant is the Incorporated Owner of the Mansion and the Respondent is the registered owner of the First Floor of Block B of the Mansion ("Flat B1"). 

4.On the 2 sides of Flat B1, there are 2 narrow pieces of land, which forms part of the Area 1 and 2.  For this judgment, I would call these Yard 1 and Yard 2 respectively.  The exact position has been marked on a copy of the floor plan produced by the Respondent and thereon marked in green for Yard 1 and red for Yard 2.  The position and form of Area 1 and 2 and Yard 1 and 2 would be considered in details with the evidence of the Applicant's witness. 

5.The Respondent claims that Yards 1 and 2 are part of Flat B1.  The Applicant claims that both Areas include Yards 1 and 2 are common parts and in the control of the Applicant.  The Respondent is not entitled to use the exclusive possession of the Yards or any part thereof.  The Applicant now seeks a declaration that the Yards together with some adjacent areas appearing on the floor plan attached to the Application coloured blue are common areas.

6.In the opening, Mr. Chiu, counsel for the Applicant agrees that there is no specific definition of common parts in the Deed of Mutual Covenant ("DMC") applicable to the Mansion (which DMC is registered in the Land Office by M/N 324971).  Applicant relies on section 2 of the Building Management Ordinance ("BMO") which provides that "common parts" of a building means "the whole of a 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 subject thereto, those parts specified in Schedule 1 of BMO are common parts.

7.It is not disputed that the Respondent is bound by the DMC and the BMO.

Applicant’s case

8.Reading clause 1 of the DMC with its first schedule, the then owners of the Mansion Madam Lo Ng Wai Ching (the major owner which I call “Madam Lo”) and Mr. Set Sam Moy and Madam Wai Fung Moy (joint tenants of second floor of the Mansion and hereinafter called “the first purchaser”) only reserved the exclusive use and enjoyment of the floors and roofs for themselves and their successors.  The Areas are not mentioned in the first schedule. 

9.It is the Applicant's case that Madam Lo does not reserve any exclusive right of possession to the 2 Areas as she has not made such provisions in the DMC.  So it is argued by Mr. Chiu that the right to the use of the Areas must by law be in the joint possession of all co-owners, and would by the definition of BMO be common parts.

10.Mr. Chiu notes that Yard 2 has no boundary line on the building plan.  And Areas 1 and 2 cover both first and ground floors of the Mansion.  Further, Area 1 used to have 2 water tanks for common use, and a water well.  On the building structure of the Areas, they must be intended for common use.  Mr. Chiu also refers to various clauses in the DMC which provides for maintenance and support for the Areas and the common facilities built thereon by all owners.  He submits these further support the Applicant's case that the Areas are common area.

The Respondent’s case

11.As a material background, Madam Lo has assigned by way of mortgage 13 parts or shares in the Land (that she still owned) together with the exclusive right to the use occupation and enjoyment of Block B of the Mansion to Shun Lee Investment Company Limited in 1963, some 3 years after the DMC was executed. The mortgage dated 2 January 1963 is registered in the Land Office by M/N 387808 (“the mortgage”).  There is a plan attached to the mortgage (“the mortgage plan”) which shows that Block B is an area covered pink and included parts of Areas 1 and 2.  I shall come back to the mortgage plan later.

12.The Respondent claims that Yards 1 and 2 have been assigned to it.  The Respondent relies heavily on the plan attached to the mortgage and claims that Yard 1 and 2 are included as part of Flat B1. There is a long history of the assignment of Flat B1 before the Respondent becomes the owner, which I shall analyse later. 

13.Mr. Yuen, counsel for the Respondent submits that I do not have to rule that the Yards have been assigned to the Respondent.  All that I have to determine is whether the Yards are common area.  He submits that Madam Lo has assigned Block B which includes part of the Areas to Shun Lee with the mortgage.  The Yards have been assigned to subsequent purchasers by Shun Lee.  That would be sufficient to show that the Yards are not common parts and the Applicant would not be entitled to the declaration.  Who is the true owner would not be an issue for this Tribunal. 

14.Mr. Yuen mentioned in his submission that the DMC is not clear on which unit was owned by the First Purchaser.  At the closing, the parties have submitted the First Assignment and it is now clear that they own the second floor of Block A.

Evidence

15.I would start with analysing the evidence of the witness for the Applicant, Mr. Koo Kwai Wun, the Chairman of the Applicant. 

16.The evidence of Mr. Koo is not in dispute.  According to the Building Plans produced, there are 2 strips of land to the left and right side of the Block A and Block B.  Mr. Koo has given a detail description of the site formation of these 2 strips of land by reference to a number of photographs taken by him. 

17.According to his evidence, when one walks towards the Mansion entering from Waterloo Road, to the left there is a strip of land appearing as a passage way, first leading to a watchman counter.  On passing the watchman counter, the passage way ends with a glass door.  Passing the door, there is a covered water well, and the passage ends with a wall.  The land continues on top of the wall which is the first floor level of Block B of the Mansion, adjacent to Flat B1.  If we enter the Mansion from Emma Avenue, which can be shown from photograph on page 59 of the Bundle, this part of the land is enclosed by cover and roller shutter. There are pipes and water meters installed or kept on the wall to the side of this part of the land.

18.This part of Area 1 at first floor level of the Mansion is Yard 1 that the Respondent claims that they have exclusive possession.  It is interesting to note that there is no direct access to Yard 1 from Flat B1.  Looking at the photographs, one has to come out of Flat B1 to come onto Emma Road in order he may enter this area.  And Mr. Koo also said that there is no exit direct from Flat B1 to Emma Avenue.  One has to enter Flat B1 by lift or staircase.

19.The second strip of land is to the right side of the Mansion, when one enters the Mansion from Waterloo Road.  From the photographs, the land begins with an area that appears to be a shop and ends with a flight of steps leading to the first floor level of Block B. 

20.According to the photographs on page 99 of the Bundle, after the steps and when one walk towards Emma Avenue, to the left hand side there is a metal gate, being the exit of the rear staircase of Block B.  Just outside the gate, the passage way has  a small curb.  And when one walks on, he comes to a metal frame which is the frame for a door, and the door has been removed.  It is not disputed that the door was removed at the order of Building Department.

21.Passing the frame, there is yet another metal frame with the door removed.  Between these 2 metal frames, a number of utensil including washing machines were placed.  The Respondent claims exclusive possession of the area between the 2 metal frames, together with the area between the curb and the first metal frame.  This is Yard 2.

22.Beyond the 2^nd metal frame, there is another flight of staircases going down to ground floor and end with another flight of staircases leading to Emma Avenue.

23.That is the case for the Applicant.

24.The Respondent has no factual witness and only calls one expert witness, Mr. Michael Yuen (“Mr. M. Yuen”), who is an architect.  There is no dispute as to his qualification as expert witness in this case.  His evidence is contended in a report dated 10 July 2012.

25.Mr. M. Yuen in his report refers to the approved building plans and note that the word “yard” appears in the areas of both Yards.  He said Yard 1 (which he called Left Yard in his report) is marked with the word “yard” and was on the same level and formed part of Flat B1.  The fact that the water tanks, incoming water supply pipes and water meters were found on Yard 1 would not change its nature to be communal area.

26.And he said Yard 2 (which he called Right Yard in his report) is again marked with the word “yard” and was on the same level and formed part of Flat B1.  He also notes that there is access to and from the interior part of Flat B1 to Yard 2.

27.There is no analysis or academic study adduced in the report to support the conclusion of Mr. M. Yuen.

28.On cross examination, Mr. M. Yuen agrees that the door opening from Flat 1B into Yard 2 as appearing in the upper photograph on page 101 of the Bundle  does not exist in the Building Plans.  The access to Yard 2 he mentioned is via the rear staircase.  He also agrees that according to the plan, there are no covers for the 2 Yards.

29.Mr. Chiu asked Mr. M. Yuen that, when he said the Yards belong to Flat B1, it is because they are on the same level.  Mr. M. Yuen agrees.  And Mr. M. Yuen also added that the area/yard outside 1^st Floor of Block would belong to Block A.  But when he was asked on the question again, he agrees that being on the same level does not necessarily means that the area belongs to the adjacent unit.

30.That is the case for the Respondent.

Discussion and Ruling

31.In determining such dispute, the usual starting point is the assignment in favour of the Respondent, and those of her predecessor-in-title in respect of Flat B1.

32.By the assignment dated 16 September 2010 and registered in Land Office by M/N10101201460201, the Respondent has been assigned 1 equal and undivided 26^th part or share in the Land, together with the right to the exclusive right and privilege to hold and use and enjoy all that the first floor of the Mansion as shown “on the block plan annexed to an mortgage registered at the Land Registry by M/NUB387808 and thereon coloured pink and marked Block B”.

33.We have been looking at this plan over and over again at the hearing.  Half of the plan is coloured in pink.  It has a number of dimensional drawing or line and the inner portion is coloured pink and marked Block B. 

34.Assignment plan is for identification purpose.  Mr. Yuen submits that by referring to the plan, it must mean the whole area coloured pink.  I do not agree.  “Coloured pink” and “coloured pink and marked Block B” are 2 different descriptions.  There is no ambiguity in the description.  The reference in the Respondent’s assignment is to the area “coloured pink and marked Block B.”

35.Further, if all the area coloured pink is to be included, it would include part of the staircase, some area of the 2 Areas which is at Ground level, which could not be the case.  The Assignment does not assist the Respondent’s case.

36.If I go back on the earlier assignment, Shun Lee on 6 September 1965 assigned the 13 shares in the Land to Dorothy Jean Le “Together with the right to the exclusive use and enjoyment of the said No. 71B Waterloo Road (which is more particularly delineated on the plan annexed to [the mortgage] and thereon coloured Pink and Marked “Block B”)”.

37.Dorothy Jean Le assigned the 13 shares to Chung Keep Development Limited by an assignment dated 1 February 1985.  The property assigned is described as “All That No. 71B Waterloo Road, Chung Yuen Mansion Kowloon (as shown on the Plan annexed to [the mortgage] and thereon coloured Pink and marked “Block B”).”

38.Pausing, I note that in both assignments, the identification of the area assigned is also by reference to the area on the mortgage plan “coloured pink and marked “Block B”.

39.Chung Keep assigned the Ground Floor and the First Floor of Block B of the Mansion to Gardenia Park Enterprises Limited by an assignment dated 1 July 1985.  It is interesting to note that in the schedule, the description of the 2 units are by reference to the said mortgage plan –

“All That the Ground Floor and the First Floor of Chung Yuen Mansion, No. 71B Waterloo Road, Kowloon as shown coloured Pink and marked “Block B” on the Block Plan annexed to [the mortgage]”

40.Since both floors are referring to the mortgage plan for identification, they must have the same dimension.  There is no suggestion that there are corresponding areas to the Yards at Ground level.  The assignment to Gardenia Park could not have included any part of the Areas or the Yards.

41.By an assignment dated 16 September 2010, Gardenia Park (then came to known as Professional Beauty Products Limited) assigned Flat B1 to the Respondent.  As mentioned, the description of Flat B1 is by reference to the mortgage plan and thereon coloured Pink and marked “Block B”.  

42.In all the above assignment, for identification, the draftsman always refer to the area in the mortgage coloured pink and marked “Block B”.  The intention is clear.  And I only need to add that Gardenia Park, as analysed above, could not have exclusive possession to the Yards and could not validly assign the exclusive possession of the Yards to the Respondent.

43.I am not convinced that the Respondent has exclusive possession to the Yards.

44.But following the argument of Mr. Yuen, I need not determine if the Respondent has exclusive possession to the Yards.   I have to determine if the Yards have been reserved to the exclusive possession of Madam Lo or any owner in the Land. Only if it is not so reserved, then it would be common parts according to BMO.

45.Mr. Yuen relies heavily on the case of Jumbo King Ltd. v. Faithful Properties Ltd & Others [1999] 3 HKLRD 757.  He submits that, for multi-storey buildings, when an area has not been mentioned in the mutual covenant for the exclusive use of a party, the area would be retained by the developer.  Mr. Yuen submits that since the 2 Areas including the 2 Yards have not been mentioned in the DMC for common use or to the exclusive possession of any owner, it has been reserved to Madam Lo.  And as she has mortgaged by way of assignment Block B to Shun Lee.  And in the plan to the mortgage, she has included the Areas (including the Yard) in the area of Block B.  Mr. Yuen submits that shows Madam Lo intended and had reserved the Areas to herself by the DMC and assigned by mortgage to Shun Lee.  And after Shun Lee sold all the units, the Areas would be in the exclusive possession of some owner.  That is sufficient to show that the Yards are not common parts.

46.For the purpose of the finding, I need to take a closer look at the Jumbo King’s case.  I refer to the head notes for the background information :-

“The respondents-vendors agreed to sell various units in the commercial portion of a multi-storey building to the appellant-purchaser (the agreement).  These units included two flat roofs and four utility rooms.  Up until the appellant refused to complete, the parties acted on the premise that the original developer had reserved for himself the right of exclusive use to the utilities rooms and flat roofs. However, the, utility rooms and flat roofs were not allotted any corresponding undivided shares in the building.  Neither did the deed of mutual covenant (DMC) expressly allot the right to exclusive occupation of the utility rooms and flat roofs to any of the parties to the DMC.  At issue on appeal was first, whether the fact that the utility rooms and flat roofs had not been allotted shares prevented the right to exclusive use of these properties from being assigned when the respondents were at the same time assigning other units which had been allotted undivided shares.  Secondly, the appellant argued that because the DMC made no express reservation of the utility rooms and flat roofs to the original developer, those areas became “common parts” and the developer could not have validly assigned any right of exclusive occupation over those areas.  Thirdly, …”

47.I refer to the judgment of the Hon. Litton PJ (as he then was) which give a very detail analysis of the legal structure of multi-storey building in Hong Kong –

“Prima facie, the co-owners of land have the right of possession in common to every part of the land. In relation to a multi-storied building there cannot be a proprietary right to the exclusive possession of part of the building except as an incident of common ownership in the land and building.

Take the instance of the utility rooms located in the commercial portion. Clearly, as between the developer and the first purchaser Mr. Cheng Ah Loong, the developer retained exclusive possession of the whole of the commercial portion as an incident of his 719/720^th shares which he kept after the first sale.

…prima facie the owner is entitled to exert rights of possession to every part of the building, in common with his co-owners. This is what is meant by the expression “unity of possession”. But by the deed of assignment and by the DMC, the rights of exclusive possession to individual parts are marked out as between the co-owners. … so long as the vendors were owners of undivided shares in the land and building, driving title from the developer, they were entitled to assert rights of exclusive possession to parts of the building, such as the utility rooms and the roof spaces.”

48.It must be noted that in Bond Star’s case, the disputed utility rooms are in the commercial portion of the building.  And for our case, the disputed area is outside the only building on the Land.  But the legal principle is of course helpful to the determination of our case.

49.As pointed by the Hon Litton PJ, the rights of exclusive possession to individual parts of the building/land are marked out by the deed of assignment and the DMC.  . 

50.When determining if an area is common area in accordance with the definition of the BMO, I am not ruling on the grant of interest in the land.  What I am ruling on is whether an area is in the exclusive possession of any owner as governed by the terms of the deed of mutual covenant they executed.  Even if the developer has reserved the exclusive right to an area on execution of the first assignment, upon execution of the deed of mutual covenant, he is free to retain such exclusive right, or either designate the area as common area expressly, or make no further reservation to the use and in effect open the right to the possession of such area to all co-owners.  All would be a matter of interpreting the relevant assignment and deed.

51.And for interpretation of deeds, Mr. Yuen also refers to the judgment of Lord Hoffman NPJ –

“The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intend to achieve. Quite often this exercise will lead to the conclusion that although there is no reasonable doubt what the parties meant, they have not expressed themselves very well. Their language may sometimes be careless and they may have said things which, if taken literally, mean something different from what they obviously intended. In ordinary life people often express themselves infelicitously without leaving any doubt about what they meant. Of course in serious utterances such as legal documents, in which people may be supposed to have chosen their words with care, one does not readily accept that they have used the wrong words. If the ordinary meaning of the words makes sense in relation to the rest of the document and factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other. The court is not privy to the negotiation … But the overriding objective in construction is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean. Therefore, if in spite of linguistic problems the meaning is clear, it is that meaning which must prevail.”

52.All parties agree with the able ruling of Lord Hoffman NPJ.  Mr. Yuen further submits that the DMC is not a grant of right, which is so commented by Lord Hoffman NPJ and confirmed by the Court of Final Appeal in Kung Ming Tak Tong Co Ltd v. Park Solid Enterprises Ltd [2008] 5 HKLRD 441.  I respectfully agree. I only need to quote part of the judgment –

“It is accordingly our view that the apparent grant by the DMC to the occupier of a unit of the exclusive use occupation and enjoyment of his unit is properly regarded as a separate contractual undertaking by every other co-owner not to exercise the rights of occupation and enjoyment which he would otherwise be able to do as co-owner over units other than his own. It does not result in the creation of separate tenements capable of sustaining a legal easement.” [my emphasis]

53.It is clear that for the grant of the share or interest in the Land, it is covered by the assignment.  And as between Madam Lo and the first purchasers, the right and interest in the land is granted to the first purchasers with the first assignment.  But the DMC would set out between them, and binding on subsequent purchasers, the right of occupation and enjoyment in the Land by a mutual contract or in the form of a contractual undertaking.

54.With these principles, I turn to the DMC.  Mr. Yuen refers to Clause 1 of the DMC –

“Each of the parties hereto shall for the reside of the said term of years and for the period of renewal (if any) thereof or of the term of years for which the said premises are held from the Crown have the right to the exclusive use and enjoyment of the whole of that floor or roof of the said building which is more particularly described and set out in the Second Column of the First Schedule hereto opposite to the name of such party set out in the First Column of the First Schedule hereto with the appurtenances thereto and the entire rents and profits of such floor”

55.The main argument is the meaning of “floor”. Mr. Yuen submits that there is no ambiguity in the words “whole of that floor” in clause 1 of the DMC.  And for the 1^st floor of Block 1, namely Flat B1, it must include whatever area is on the 1^st floor level.  Given the Yards are at the same floor level, they are part of the 1^st floor of Block 1 and when the DMC refer to the 1^st Floor, it must be referring to all areas on  on the 1^st Floor.  There should not be a distinction between into and outside.  Mr. Yuen also relies on the evidence of Mr. M. Yuen.

56.Mr. Chiu refers to the schedule of the DMC –

FIRST COLUMN	SECOND COLUMN	THIRD COLUMN
Names, addresses and descriptions of owners of the said premises	The floor of the said building to be exclusively used, occupied and enjoyed by the owner whose name appears in the First Column directly opposite to the reference to such floor in this Column	Share and proportion in the said premises
LO NG WAI CHUN of [address] SET SAM MOY and WAI FONG MOY both of [address] (as joint tenants).	All the floors (other than the Second Floor) and the two roofs of the said building with the exclusive right to erect two additional floor or pent-houses on each of the said two roofs. Second Floor of the said building	Twenty-five equal undivided twenty-sixth parts or shares of and in the said premises.one equal undivided twenty-sixth part or share of and in the said premises

57.Mr. Chiu submits that Madam Lo only reserved her right in other floor of the said building but not the remaining area of the Land (which is defined and called “the same premises” in the DMC.)

58.I agree with Mr. Chiu.  The floors reserved to Madam Lo and the first purchasers are “floors in the said building”.  And building is defined in the DMC as follows –

“AND WHEREAS there is now erected on the said premises two Eleven storeyed buildings known at the date hereof as “Chung Yuen Mansion” Nos. 71A and 71B Waterloo Road Kowloon in the Colony of Hong Kong (an exclusive right being reserve for [Madam Lo] and her executors administrators and assigns to erect two additional floors of penthouses on each of the two roofs of the said buildings) (hereinafter referred to as “the said building”)”

59.If the exclusive right and possession of the Land other than those covered by the said building has not been reserved to Madam Lo or the first purchaser, they would be for the joint use of all the co-owners of the said building at the material time.  This is the unity of possession as explained by the Hon Litton PJ in Jumbo King’s case.  And according to the definition of common parts by the BMO, they are common parts.

60.Mr. Chiu also gain support for his argument from paragraph 3(b) and paragraph 6 of the DMC. Paragraph 3(b) of the DMC provides, inter alias, that the parties (representing all the co-owners) shall pay for the costs of keeping in good and tenantable repair and condition the foundation, sidewalks, main walls, support beams, gutters, fences, chimneys and all external parts of the said building and all the drains, well, electric pumps, pipes conduits and all plumbing apparatus intended for the general service of the said building and the common entrance-halls lifts staircase, landings and common passages thereof”.  Paragraph 6 provides that the costs of keeping in good and tenantable repair and condition the interior of each floor and all the fixtures and fittings therein shall be borne by the owner entitled to the exclusive use and enjoyment of such floor.  He submits that supports the interpretation that areas outside the said building including the 2 Areas are for common use and are common parts.

61.Mr. Yuen argues that Clause 2 of the DMC provides for the right of way of all co-owners over “the entrance-halls lifts staircase and landings the common passages of and in the said building.”  He submits that

it would create an absurd result if the distinction between the said building and the said premises is a valid one, as then there is no reservation or provision for right of way over the 2 Areas.

62.I do not agree.  If the Areas are common parts, all owners have the right of access and there need not be any reservation.  On the other hand, if the Areas, or the 2 Yards, are for the exclusive use and enjoyment of a particular owner, then reservation for right of way has to be made. 

63.As for the expert evidence of Mr. M. Yuen, I do not find it helpful.  As an expert, Mr. M. Yuen has to give the reason for his suggested conclusion.  The only reason given why he said the Yards are part of Flat B1 is that they are at the same level.  There is no academic study or research in support.  The facts alone could not conclude if a yard at the same level is also for the exclusive use of the adjacent unit.  And Mr. M. Yuen did response in cross examination that this is not necessarily the case.  I pay no weight to his evidence.

64.I do not agree with Mr. Yuen that the DMC could be interpreted to say that for first floor, it would also include the Yards.

65.Mr. Yuen also argues that by the 1^st Assignment, Madam Lo has not assigned the exclusive possession to the first purchaser and must have reserved the exclusive possession of the Areas to herself.  Following the

above judgment, what has been assigned to the first purchasers is a share in the Land.  Exclusive possession in any area incidental to the right in the land and to be regulated by the DMC.   

66.It is true that Madam Lo only assigned 2^nd Floor of Block B to the first purchasers.  But the first assignment and the DMC are contemporaneous documents and should be read together.  The DMC is the agreement between Madam Lo and the first purchasers (being all the then owners of the Land) on their respective right to the exclusive possession in various part/areas in the Land and/or the Mansion.  Reading both document, I am of the view that the Areas have not been reserved to Madam Lo upon signing of the DMC.  This is permissible as this is not a grant in the land, but part of the mutual covenant on how the parties to the DMC would regulate their possessory right to various parts in the Mansion.

67.Mr. Yuen has submitted in his opening that the orientation and physical layout of the Mansion support that the Yards form part of Flat B1.  Mr. Yuen is not relying on this argument in his closing.  While I need not rule on the point, it is clear from the evidence of Mr. Koo, Area 2 is a passage way, and at least the part of Area 1 at ground level is passage way.  This point would not assist the Respondent in anyway. 

68.And lastly, I should deal with the mortgage.  

69.Madam Lo has assigned by way of mortgage the whole of Block B to Shun Lee.  In the plan attached, part of the Areas being to the left and right hand side of Block B is also coloured pink.  It is the argument of Mr. Yuen that Madam Lo must have in mind that those Areas are in her exclusive possession and hence she included the same in the mortgage.  Mr. Yuen submits that she must have reserved the 2 Areas to her exclusive use.

70.Mr. Chiu submits that, in the mortgage, only block B of the Mansion is mentioned as being assigned to Shun Lee.  So the 2 Areas could not have been assigned to Shun Lee and therefore Shun Lee cannot assign to subsequent purchaser.  And in mortgage plan where it is coloured pink, there are lift lobby and staircases. These areas must be common use.  It could not be the intention of Madam Lo to assign the area for common use to Shun Lee.

71.The mortgage is executed by Madam Lo some time after she has executed the DMC.  What she has reserved would be determined by the DMC and the first Assignment.  If she attempted to assign the possession of a space that she has not so reserved, she simply cannot.

72.Further, according to the mortgage, Madam Lo has assigned to Shun Lee “ALL THOSE thirteen equal undivided twenty sixth parts or shares of the Mortgagor of and in ALL THAT …..SECTION A OF KOWLOON INLAND LOT NO. 2073 Together with the exclusive right to

the use occupation and enjoyment of the Block B of the said building which Block B is know at the date hereof as No. 71B Waterloo Road Kowloon and consists of 10 floors and a roof And all rights right of way (if any) and other rights privileges easements and appurtenances thereto belonging or appertaining And all the estate right title interest property claim and demand whatsoever of the Mortgagor therein and thereto … SUBJECT to and with the benefit of the [DMC]…”.

73.It is clear that the shares and the areas assigned under the mortgage are subject to the DMC.  And if an area is not in the exclusive possession of Madam Lo is assigned, she would be assigned her right to the non-exclusive possession.  I do not think the mortgage would assist the Respondent.

74.Having considered all the argument and evidence, I come to the conclusion that the Applicant has proved the Areas are not in the exclusive possession of any of the owners, and hence according to the BMO are common parts. I would therefore grant the declaration as per prayer 1 of the Application.

75.I make an order nisi that the costs of this application be to the Applicant and  be paid by the Respondent to be taxed according to District Court Scale if not agreed with certificate for counsel for the trial, which shall be made absolute 14 days after the date of the handing down of the judgment.

76.Last, I have to thank both counsels for their able assistance.

Mr. Victor CHIU instructed by M/S Jackson Ho & Co. for the Applicant

Mr. Ross YUEN instructed by M/S Vincent T.K. Cheung, Yap & Co. for the Respondent