Perfect Name Ltd v. Fung Chi Mui

DCCJ 1789/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1789 OF 2008

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BETWEEN

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DECISION

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Introduction

1.This is the Plaintiff’s application for leave to appeal against my Judgment dated 22 October 2012 dismissing the Plaintiff’s claims.  At the end of the hearing, I refused leave and indicated that I will give my written reasons later.  This I now do.

2.The relevant facts of this matter are set out in my Judgment.  Basically, the Plaintiff and the Defendant are the respective owners of a shop and the mezzanine floor above the shop.  The two properties were originally one single unit in 1967 owned by a same person.  I found as facts that the original owner segregated the single unit physically in or about 1967 by construction of some unauthorised structures, converting the cockloft of the shop to the mezzanine floor, and sold the segregated units to the predecessors-in-title of the Plaintiff and the Defendant respectively.   

3.The Plaintiff in this action claimed against the Defendant for, inter alia, a mandatory injunction to force the Defendant to demolish part of the unauthorised structures, namely, the extended concrete floor slab of the mezzanine floor (or the extended ceiling of the front portion of the shop) extending the cockloft to cover the whole shop.

4.At trial, the Plaintiff limited its case to breach of Deed of Mutual Covenant (“DMC”) by the Defendant.

5.In my judgment, I found, inter alia, that “[c]oncerning this concrete segregation, it is unsure as to whether it is to be regarded as a structure of the Defendant’s unit or the Plaintiff’s unit.  In order to establish liability on the part of the Defendant in breach of Clause 8 of the DMC, the Plaintiff must prove that it is an alteration of the structure of the M/F but not the Shop.  Even if it is to be regarded as a structure common to both units, the Plaintiff would be itself also in breach of the DMC and therefore can have no locus to sue the Defendant upon the same breach.”[1]

6.I found further that, even if the Plaintiff can establish liability against the Defendant for breach of the DMC, I would not exercise my discretion to grant the injunction as it would be unjust to do so.

7.Mr. Jeremy Cheung, leading counsel[2] for the Plaintiff,  advanced the following grounds of appeal in the summons:

1.   The learned Judge erred in law in failing to take into account that, the developer (sic Fu) by the second assignment and the deed of mutual covenant, divested of rights and imposed obligations to land (sic the whole building which would affect not only the developer and that purchaser (sic Yu), but also subsequent owners of their units, each of whom may potentially be restrained in making any structural alteration to the floor of which he is entitled to exclusive use.  Demolition of the internal staircase and placing of erections on the open area thus constituted a breach of the deed of mutual covenant.  As such, the negative covenant runs with the land and binds the Defendant who is the current owner even if she did not execute the demolition and erections herself.

See Marina Cove (IO) v. Chu Kam Tai [2012] 2 HKLRD 107(CA)

2.   The learned Judge erred in law in failing to take into account that the annexed plan assigned to Cheung (sic Plaintiff’s predecessor-in-title) depicted the air space of the front portion of the Shop were open.  Thus, any UBWs which were made either before or after the sale of the shop to Cheung constituted a derogation from grant.  The significance of the UBWS (i.e. the extended concrete floor slab together with the structure erected thereon) must have been the extra loading and/or bearing exerted on the main walls of the whole building including that of the shop thereby imposing a potential hazard in respect of the ingress thereto and egress therefrom which would render the property substantially less fit for the user.

See Kung Ming Tak Tong Co Ltd v. Pork Solid Enterprises Ltd & Anor, FACA 1/2008 (CFA), unreported, 8 September 2008

3.   The learned Judge erred in failing to take into account of an undisputed fact that the recital in the assignment to the Defendant referred to the same plan annexed to the previous sale of the cockloft made by Fu to Yu (sic Defendant’s predecessor-in-title) thus made it more probable than not that the extended concrete floor slab and all other UBWs were made after the sale of the cockloft either to Yu or to the Defendant.

See KNM v. HTF, HCMP 288/2011 (CA), unreported, 7 September 2011

4.   The learned Judge erred in law in failing to consider that it is not inequitable and unconscionable to allow the Plaintiff to assert its claim against the Defendant in demolishing the UBWs in respect of the continuing breaches of the deed of mutual covenant that took place after the Plaintiff acquired the Shop in October 2007.

See Hollywood Shopping Centre Owners Committee Limited v. The

Incorporated Owners of Wing Wah Building, HCA 1582/2007 (CA), unreported, 16 August 2010; [2011] 4 HKLRD 623

5.   By reason of the matters set out above, the Defendant is in continuing breach of the deed of mutual covenant and is liable to reinstate the cockloft (as per the plan annexed to the assignment to Yu) at her own costs and expenses.  The Defendant is also liable for the losses and damage suffered by the Plaintiff for being unable to offer the Shop in the open market for the purpose of generating a rental income.

8.As submitted by Mr. John Hui, counsel for the Defendant, my findings as set out under paragraphs 5 and 6 hereinabove are not appealed against under any of the above grounds of appeal.  And this rendered all other grounds advanced academic. 

9.At the hearing, Mr. Cheung tried very hard to expand his ground under item 5 above and suggested that the attempt by the original owner of the single unit, Fu, to sell the shop with the cockloft separately to the predecessors-of-title of the Plaintiff and the Defendant is not allowable in law, at least without the single unit first being legally delineated, or the consent of all parties to the DMC being secured.  Mr. Cheung also submitted that this court should in any event grant leave “for other compelling reasons” as there are areas of law in this case that should be clarified by the Court of Appeal.

10.This issue on title has in fact been canvassed at trial.  I have given opportunity to both sides to do thorough research and address me on the issue.  At that time Ms Lam, counsel for the Plaintiff, maintained a stance that Fu was perfectly entitled to convey 1 of his 2 shares allotted to the whole shop to Cheung, and the other 1 share to Yu, without having first to undergo any form of delineation of the property.  Upon referring me to various legal authorities and clause 11 of the DMC, I was convinced by Ms Lam and adopted her stance in my Judgment.

11.Now, at this hearing for application for leave to appeal, the Plaintiff, through Mr. Cheung, seeks to advance a totally opposite stance.

12.At the hearing, I asked Mr. Cheung what would be the consequence if he was right on the issue.  As apparently if the assignment by Fu of his 1 share to Cheung was defective, that would affect the Plaintiff’s title to his property.  Besides, it raised further doubt as to whether the Plaintiff can enforce against the Defendant of the DMC.

13.Without providing any legal authorities or other basis, Mr. Cheung could only at his best to propose that I should find that the whole 2 shares of Fu had been assigned to Cheung and there was nothing left for Fu to assign to Yu and hence, Yu could only be regarded as a mere licensee. 

14.When I asked whether the Plaintiff is then the licensor, Mr. Cheung replied that it is not.  But when I further asked him to identify, under this proposition, the Plaintiff’s cause of action against the Defendant, Mr. Cheung could only on his feet to suggest that the Plaintiff is a “de facto licensor”.

15.In my view, Mr. Cheung’s proposition could not help advance the Plaintiff’s case to anywhere.  The sole cause of action relied on by the Plaintiff at trial was the breach of the DMC by the Defendant.  And upon this basis the Defendant had not seriously pursued her case on adverse possession.  It would be gravely unjust to allow the Plaintiff now to put forward a new cause of action based on the so called “de facto licensor” idea.

16.Besides, as admitted by Mr. Cheung, the Plaintiff is now attempting to seek remedies against the Defendant on her title to her property, not merely asking her to demolish the unauthorised structures in her property.  This simply could not be right.

17.I am of the view that with the grounds of appeal as they are, the appeal is clearly academic and should not be allowed to be pursued. 

18.There is also no other compelling reason to grant leave as it would be gravely unjust to the Defendant to force her to face these new issues to be raised and to incur substantial costs and efforts in the appeal.

19.For the above reasons, leave to appeal is refused. 

20.Mr. Cheung has rightly agreed that costs should follow the event and I have ordered that costs of this application be to the Defendant to be taxed if not agreed, with certificate of counsel.

Mr Jeremy Cheung, leading Ms Yanky Lam, instructed by Messrs Yeung & Chan, for the Plaintiff

Mr John Hui, instructed by Messrs Cheung & Yip, for the Defendant