Tai Fat Development (Holding) Co Ltd v. The Incorporated Owners of Gold King Industrial Building

CACV 22/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 22 OF 2014

(ON APPEAL FROM HCA NO 104 OF 2006)

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REASONS FOR JUDGMENT

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Hon Barma JA (giving the Reasons for Judgment of the Court):

1.This was an appeal against the judgment of Suffiad J given on 15 January 2014, in proceedings consisting of a claim by original action by the plaintiff, Tai Fat Development (Holding) Co Ltd (“the plaintiff”), against the defendant, the Incorporated Owners of Gold King Industrial Building (“the IO”), and a counterclaim by the IO against the plaintiff (as 1^st defendant to counterclaim) and South China Cold Storage & Industrial Co Ltd, South China Building Materials Ltd and Pickford Development Co Ltd (respectively the 2^nd, 3^rd and 4^th defendants to counterclaim) (“the First Owners”). The plaintiff was the agent of the First Owners. The appeal was brought by the plaintiff and the First Owners against the judgment, by which the Judge dismissed the plaintiff’s claim and gave judgment in favour of the IO on part of its counterclaim against the plaintiff and the First Owners.

2.The proceedings arose out of a dispute over the ownership of 13 car parking spaces in the Gold King Industrial Building (“the Building”) (namely, Car Parking Spaces Nos. 1 & 2 (on the 1^st Floor) and Nos. 4, 5, 11, 12, 13, 14, 20, 36, 37, 38 and 39 (on the 3^rd floor) (“the 13 Car Parking Spaces”).  The plaintiff and the First Owners claimed to be the owners of the 13 Car Parking Spaces, while the IO claimed that the 13 Car Parking Spaces constituted part of the common areas of the Building.  The Judge found in favour of the IO on this key issue.

3.At the conclusion of the appeal, we dismissed the appeal with costs to the IO.  We indicated that we would hand down our reasons for doing so in due course.  These are our reasons.

4.The Building is situated on Tai Lin Pai Road in Tsuen Wan.  It is, as its name suggests, an industrial building, consisting of a single 27-storey block, including a podium of three storeys (the 1^st to 3^rd floors) which can be accessed by cars, vans and lorries.  It was constructed under a joint development agreement between the First Owners (as owners of the land on which it stands) and Great Eagle Company Ltd (as developer).

5.The Building was completed in about 1987.  On 16 April 1987, the First Owners entered into an assignment (“the First Assignment”) in respect of one of the units in the Building with one Wong Mei Kuen (“the First Purchaser”).  On the same date, a Deed of Mutual Covenant (“the DMC”) was executed between the First Owners, the First Purchaser and Selex Properties Management Co Ltd (“Selex”), which was the management company appointed to manage the Building prior to the incorporation of the IO.

6.The IO was incorporated in 1998.  Following its incorporation, the IO entered into a tenancy agreement, pursuant to which it agreed to rent certain parts of the Building, including the 13 Car Parking Spaces, from the plaintiff.  Between 1998 and November 2004, the tenancy agreement was renewed each time it expired.  However, on 6 September 2004, solicitors acting for the IO wrote to the plaintiff, stating that it was considered that the 13 Car Parking Spaces were in fact part of the common areas of the Building, and as such were to be managed by the IO and did not form part of the Building owned by the plaintiff.  Negotiations ensued, following which a new tenancy agreement dated 25 November 2004 was entered into (covering, among other things, 12 of the 13 Car Parking Spaces) at a reduced rental.

7.Thereafter, on 16 September 2005, the IO’s solicitors wrote again to the plaintiff, contending that all previous agreements for the lease by the plaintiff to the IO of the 13 Car Parking Spaces were null and void, and demanding that the plaintiff account to the IO for the rent received from the IO in respect of the 13 Car Parking Spaces under such agreements.  In its solicitors’ response dated 14 December 2005, the plaintiff took the stance that the IO had repudiated the 25 November 2004 tenancy agreement, thus discharging the plaintiff from any obligations thereunder, and called on the IO to deliver up vacant possession of the property covered by the tenancy agreement and to pay up all arrears of rent that had become outstanding.

8.About a month later, on 16 January 2006, the plaintiff issued the writ in these proceedings, seeking delivery up of the 13 Car Parking Spaces together with arrears of rent until the plaintiff’s termination of the lease and mesne profits thereafter.  The IO counterclaimed against the plaintiff and the First Owners, seeking a declaration that the 13 Car Parking Spaces were part of the common areas of the Building, a declaration that all previous tenancies entered into by the parties in respect of the 13 Car Parking Spaces were void, and the return of all rent previously paid by the IO under such tenancies.  The plaintiff applied for summary judgment against the IO, and was successful at first instance. However, on appeal, the IO was given unconditional leave to defend in relation to the plaintiff’s claim for possession of the 13 Car Parking Spaces and for mesne profits in relation to them for the period after 14 December 2005, when the plaintiff terminated the then current tenancy agreement (there were other aspects of the plaintiff’s claim in respect of which the IO’s appeal was unsuccessful, so that the summary judgment stood in respect of these other parts of the plaintiff’s claim, but this is not relevant to this appeal).

9.The proceedings eventually went to trial before Suffiad J, who held in favour of the IO that the 13 Car Parking Spaces were part of the common areas of the building, dismissed the plaintiff’s claims in relation to them, and granted the first declaration sought by the IO in its counterclaim.  However, the Judge refused to grant the second declaration relating to the validity of the tenancy agreements or to order repayment of any of the rent which had been paid thereunder.  The IO did not appeal against the rejection of those aspects of its counterclaim.

10.Thus, the only issue before us was whether the Judge was right to hold that the 13 Car Parking Spaces formed part of the common areas of the Building.  This is a matter of construction of the relevant documents, principally the DMC and the First Assignment.

11.The Judge took the view that properly construed, these documents (and particularly the DMC) made it clear that the 13 Car Parking Spaces were indeed part of the common areas of the Building, because:-

(1)  Section I of the DMC defined “common areas” to include “loading and unloading areas”, and the 13 Car Parking Spaces were listed under the heading “Loading and Unloading Areas” in the First Schedule to the DMC (which set out the allocation of ownership and management shares in respect of the different parts of the Building), thus making it clear that they were part of the loading and unloading areas.

(2)  In contrast to the other parking spaces in the building (for each of which both ownership and management shares were issued), only ownership shares were issued in respect of the 13 Car Parking Spaces.  No management shares were allocated to the 13 Car Parking Spaces, indicating that no management fees were to be paid in respect of them – a fact which suggested that they were intended for common ownership, rather than private ownership.

(3)  The definition of “Parking Space” in the DMC as “each of those spaces intended for separate use and ownership” suggested that while some car parking spaces were intended for separate use and ownership, others (in this case the 13 Car Parking Spaces) were not, and were instead intended for common ownership.

12.The Judge also drew support for his conclusion from the Special Conditions of Grant, clauses 12 and 13 of which required the provision of spaces for parking, loading and unloading of motor vehicles at the rate of not less than one space per 10,000 square feet of floor area or part thereof, and (in any event) not less than one space per 5,000 square feet of site area.  While recognising that this requirement did not deal explicitly with the ownership of such spaces, the Judge considered that for spaces which were designated for loading and unloading (of which there were seven according to the Approved Building Plans), it would be contrary to that purpose for them to be owned by a particular owner so as to give that owner exclusive possession of it.

13.Before us, Mr Chong (who appeared, as he did below, for the plaintiff and the First Owners) contended that the Judge erred in concluding that the 13 Car Parking Spaces formed part of the common areas of the Building.  In his skeleton argument and his submissions before us, Mr Chong grouped his complaints into the following broad areas:-

(1)  A complaint that the Judge had erroneously failed to have regard (or sufficient regard) to the terms of the First Assignment, which, Mr Chong submitted, expressly reserved ownership of all the car parking spaces in the Building (including the 13 Car Parking Spaces) to the First Owners.

(2)  A submission that the Judge’s construction would result in an absurdity in that it would lead to a breach of the Special Conditions of Grant because, on the evidence, 39 parking spaces were needed to comply with the provisions of clauses 12 and 13 of that document, whereas if the 13 Car Parking Spaces were treated as loading and unloading areas, there would only be 26 parking spaces remaining, and this would (according to Mr Chong) be in breach of the Special Conditions of Grant.

(3)  An argument that, assuming that the First Assignment reserved all the car parking spaces in the Building (including the 13 Car Parking Spaces) to the First Owners, the Judge was wrong to say that the First Owners might have changed their minds as to the status of the 13 Car Parking Spaces between the making of the First Assignment and the execution of the DMC, having regard to the facts that:-

(a)  these two documents were executed on the same day; and

(b)  this would involve the breach of the Special Conditions of Grant referred to in sub-paragraph (2) above.

(4)  Arguments that, even if the DMC were to be viewed in isolation, properly construed it supported the First Owners’ argument that the 13 Car Parking Spaces were not common areas because:-

(a)  the only parts not reserved to the First Owners were the portion of the Building assigned to the First Purchaser, the common areas and common service facilities, and the common areas were defined separately from parking spaces – this suggested that common areas and parking spaces were mutually exclusive;

(b)  the Manager only had power under the DMC to manage the common areas, and not other parts of the Building, such as the parking spaces;

(c)  the First Schedule to the DMC (in which the 13 Car Parking Spaces were listed under the heading Loading and Unloading Areas) was not for the purpose of designating those spaces as loading and unloading areas, but for the purpose of allocating ownership and management shares to different parts of the building for the purpose of sale;

(d)  the 13 Car Parking Spaces, like other car parking spaces, were allotted 4 or 5 ownership shares each, whereas a separate item described as “Common Areas” was allotted a single ownership share – if the 13 Car Parking Spaces were truly intended to be part of the Common Areas, there would be no reason for any additional ownership shares to be allocated to them, nor any reason why they were not included as part of the latter item;

(e)  the argument based on the fact that no management shares were allocated to the 13 Car Parking Spaces was inconclusive because Section VII.D.1 of the DMC envisaged that some owners of units or parking spaces might not be required to pay management fees, moreover there were no management shares allocated to the external wall (which was reserved to the First Owner) either, and the Manager had power to reallocate management shares;

(f)  the Judge was wrong to think that the definition of “parking spaces” in the DMC suggested that there might be some parking spaces not intended for separate use and ownership, and insofar as there was any conflict between the definition of “parking spaces” and “common areas” in the DMC, the former should prevail (so that all the parking spaces identified in the DMC, including the 13 Car Parking Spaces) were intended for separate use and ownership, as the DMC itself provided (in Section II.B.1) that the definition of “common areas” was subject to other provisions of the DMC; and

(g)  even if the 13 Parking Spaces were designated by the DMC to be used for loading and unloading, this did not mean that they could not be individually owned.

(5)  An argument that, as the 13 Car Parking Spaces were included for sale in the sale brochure published by the First Owners in respect of the Building, it must have been clear to all that the First Owners were reserving to themselves all the car parking spaces in the Building.

(6)  An argument that, having regard to the way in which the parties had conducted themselves over a number of years, by entering into tenancy agreements under which the IO paid rent for the use of the 13 Car Parking Spaces, the IO were estopped by convention from alleging that the 13 Car Parking Spaces were common areas which were not owned by the First Owners.

14.With respect to Mr Chong, we were not persuaded by his arguments, for the reasons explained below.

15.There was no dispute as to the approach to be taken to the construction of the documents with which we are concerned.  The object of the exercise is to ascertain the meaning of the document – what it would convey to the reasonable man, in the light of the words used and the circumstances reasonably available to the parties when the contract was entered into.  As Lord Hoffman said in Jumbo King Ltd v Faithful Properties Ltd [1999] 3 HKLRD 757 (at 773F-774A):-

“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 intended to achieve.”

16.In commercial contracts, the construction of the contract should generally accord with commercial common sense.  As Longmore LJ pointed out in Barclays Bank Plc v HHY Luxembourge SARL [2010] EWCA Civ 1248 (at [26]):-

“… If a clause is capable of two meanings … it is quite possible that neither meaning will flout common sense. In such circumstances, it is much more appropriate to adopt the more rather than the less commercial construction.”

17.In this case, we consider that the relevant documents consist of the First Assignment, the DMC, the Special Conditions of Grant and the Approved Building Plans.

18.The First Assignment identifies those parts of the Building which were conveyed to the First Purchaser for its exclusive use and occupation, and also identifies those parts of the Building which were reserved to the First Owners as vendors.  The reservation in favour of the vendors is contained in the Third Schedule to the First Assignment, and is in the following terms:-

“EXCEPTING AND RESERVING unto the Vendors and each of them and their respective successors and assigns other than the [First] Purchaser:-

1. The exclusive right to hold use occupy and enjoy each and every part of the Land and the Building other than the Property save and except such areas (if any) as may be designated as common areas in the Deed of Mutual Covenant relating to the Land and the Building or are intended for common use including (but without prejudice to the generality of the foregoing):-

(a) the external walls, main roof and flat roofs of the Building (unless otherwise specifically included in the Property);

(b) all areas within the Land not covered by any building and all open areas under any building which are not included in the specific reservations contained in the following sub-clauses of this Clause;

(c) all those areas as shown coloured green on the plan annexed to the said Deed of Mutual Covenant;

(d) all the/other units in the Building; and

(e) all the/other parking spaces in the Building; and

2.  such other rights of the Vendors or their respective successors in title and assigns other than the Purchaser as are contained in the said Deed of Mutual Covenant.”

19.The Judge noted that there was an ambiguity in the opening words of clause 1 of the Third Schedule, in that the word “including” could refer to either the parts that were reserved, or the exceptions thereto, and agreed with the view of Deputy Judge L Chan (as he then was) expressed in the judgment on the summary judgment application at first instance that it referred to the reserved parts, and that the clause would have been more clearly expressed if the words from “save and except” down to “common use” were placed in parentheses.  This reading of the clause was accepted by both parties before us.

20.It is also relevant to note the definition of “Parking Space” in Clause 3(i) of the First Assignment, which is in the following terms:-

“… that space in the Building for the parking of a motor vehicle, the subject of this Sale and Purchase Agreement.”

As it happens, the First Purchaser did not acquire a parking space along with the unit in the Building which was the subject of the First Assignment.  This appears from Part III of the First Schedule to the First Assignment, where the Unit, Storeroom and/or Parking Space which were the subject of the assignment were identified.  In the case of the First Assignment, the Unit was described in sub-paragraph (a) of Part III as Unit D on the 19^th floor of the Building, but sub-paragraphs (b) and (c) of Part III, which were intended to describe the storeroom or parking space assigned were not filled in, and were struck through.  However, there would have been other purchasers who acquired other units in the Building from the First Owners who did acquire individual parking spaces along with their units.

20.  So far as the DMC is concerned, the following parts of it are material for the purposes of this appeal:-

(1)  The definition of “Common Areas” in Section I, which is in the following terms:-

“‘Common Areas’ shall, subject as hereinafter provided, mean and include:-

(a) the entrances, staircases, landings, lift lobbies, passages and other spaces of the Building which are intended for common use and not for the exclusive use and occupation by an Owner as hereinafter specified,

(b) loading and unloading areas, hoisting platforms, common roadways and driveways,

(c) the lifts intended for use by all the Owners of the Building and not for the use and benefit of a particular Owner, and the motor rooms and accessories of such lifts, and

(d) the roof and flat roofs of the Building (save and except those portions intended for the exclusive use occupation and enjoyment by an Owner).

…”

(2)  The definition of “Parking Spaces” in Section I, which is as follows:-

“‘Parking Spaces’ shall mean all of the spaces in the Building for the parking of lorries or private cars as the case may be as defined in the first Assignments of such Parking Spaces and “Parking Space” shall mean each of those spaces intended for separate use and ownership.”

(3)  Section II.B.1 of the DMC, which states that:-

“The Common Areas shall be deemed to be common areas for the use and benefit and their respective servants agents invitees and licensees subject to the provisions of this Deed and of the House Rules.”

(4)  Section VII.D.1, relating to payment of Management Expenses, which states (so far as relevant) that:-

“Each Owner shall pay to the Manager in respect of his Unit or Parking Space (if any) from the date of the Occupation Permit of the Building the Monthly Contribution apportioned by reference to the number of Management Shares allocated to his Unit or Parking Space (if any) as more particularly set out in the Fourth Column of the First Schedule hereto …”

(5)  The First Schedule to the DMC, which identifies each individual unit in the Building by reference to its floor and unit number, and sets out against each unit the number of Shares (i.e. Ownership Shares) and Management Shares allocated to the unit concerned.  After setting out and dealing with each unit from the Ground to 26^th floors, the First Schedule continues as follows:-

Floor Unit	No. of Shares	No. of Management Shares
Parking Space No. 3 on 2nd Floor	4	1
Parking Spaces Nos. 7, 8, 9, 10, 15, 16, 17, 18 and 21 on 3rd Floor	45 (9 x 5 shares each)	18 (9 x 2 shares each)
Parking Spaces Nos. 6, 19, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34 and 35 on 3rd Floor	64 (16 x 4 shares each)	16 (16 x 1 shares each)
Loading and Unloading Areas: Parking Spaces Nos. 1 and 2 on 1st Floor	10 (2 x 5 shares each)	---
Parking Spaces Nos. 4, 5, 11, 12, 13, 14, 20 and 39 on 3rd Floor	40 (8 x 5 shares each)	---
Parking Spaces Nos. 36, 37 and 38 on 3rd floor	12 (3 x 4 shares each)	---
Common Areas	1	---
External Walls	1	---

21.Turning to the Special Conditions of Grant, the relevant clauses are clauses 12 and 13, which are in the following terms:-

“12. Spaces shall be provided within the lot to the satisfaction of the District Commissioner, New Territories, for the parking, loading and unloading of motor vehicles at the rate of not less than one vehicle for each 10,000 or part of 10,000 square feet of floor area but in any event not less than one vehicle for each 5,000 or part of 5,000 square feet of site area. The space so provided shall not be used for any other purpose.

13.  A layout plan of the parking, loading and unloading spaces to be provided within the lot in accordance with Special Condition 12 shall be submitted to the District Commissioner, New Territories for approval, and after approval shall be registered by guarantee in the District Land Office.  No transaction affecting the lot or any part thereof shall be entered into prior to such registration.  The parking, loading and unloading spaces indicated on the said approved plan shall not be used for any purpose other than the purposes set out in Special Condition 12.”

22.As for the Approved Building Plans, those for the 1^st to 3^rd Floors are relevant.  The following features of these plans may be noted:-

(1)  The 1^st Floor plan shows that there are two parking spaces, numbered 1 and 2 (these are two of the 13 Car Parking Spaces).  We understand that these are the only two spaces in the Building that are large enough to accommodate container trucks.  They back onto an area which is marked “loading & unloading platform”, which opens onto areas marked “loading & unloading” at the lift lobbies.  It is apparent from the plan that goods can only be readily discharged onto the “loading & unloading platform” from the two parking spaces.  If these spaces are occupied, it would be necessary to stop a vehicle on the driveway ramp and carry the goods by the side of parking space no. 2 and up some steps to the “loading & unloading platform”.

(2)  The 2^nd Floor plan shows the continuation of the driveway ramp, and only one parking space, numbered 3. It backs onto an area marked “loading and unloading” from which there is access to one of the lift lobbies.  This parking space is not one of the 13 Car Parking Spaces with which we are concerned. 

(3)  The 3^rd Floor plan shows the continuation of the driveway ramp to its end, with a total of 36 marked parking spaces, numbered from 4 through 39.  The driveway ramp comes up from the 2^nd Floor at the left of the plan, and proceeds in a counter-clockwise direction around a central core where the lifts and lift lobbies are located.  The parking spaces numbered 4, 5 and 39 are on the left of the driveway (going up), and lie lengthwise along the central core, with gaps between the parking spaces to allow for access to the lift lobbies.  These parking spaces (which are part of the 13 Car Parking Spaces) are marked as being for “loading & unloading”.  On the right of the driveway (going up) set perpendicular to an external wall of the building are parking spaces numbered 6 to 19.  Of these, those numbered 6 to 10 and 15 to 18 (which are not part of the 13 Car Parking Spaces) are described as “parking spaces”, whereas those numbered 11 to 14 (which are among the 13 Car Parking Spaces) are described as being for “loading & unloading”, and no particular description is attached to that numbered 19.  As the ramp turns to go around the central core, there is a space numbered 20 (another of the 13 Car Parking Spaces) to the right, although it is not marked as being for any particular purpose.  On the other side of the central core, the layout is similar to that described above, with three parking spaces (numbered 36 to 38 – all included in the 13 Car Parking Spaces) lying alongside the central core, while those numbered 21 to 35 (not part of the 13 Car Parking Spaces) are arranged along the external wall and at the end of the driveway – of these the spaces numbered 22 to 32 (and possibly those numbered 33 to 35) are described as “parking spaces”, while the remaining space numbered 21 appears to be left undescribed.  As with the 1^st Floor, if all the numbered spaces were to be occupied or unavailable for vehicles requiring to be loaded or unloaded, vehicles seeking to load or discharge goods could only do so by stopping on the driveway ramp.

23.In our view, the Judge was clearly right to conclude that the 13 Car Parking Spaces formed part of the common areas of the building.  He rightly regarded the DMC as the most important document for this purpose: the reservation in favour of the First Owners in the First Assignment made it clear that it did not include those areas designated as common areas by the DMC (which it was envisaged would be entered into immediately after the First Assignment – see clause 19 of the First Assignment and the recitals to the DMC).  The First Assignment therefore directs attention to the DMC for the purpose of establishing what the common areas of the Building, not exclusively reserved to the First Owners, are made up of.

24.When one has regard to the provisions of the DMC, it is apparent from the definitions that the “common areas” include “loading and unloading areas”.  This leads one to a consideration of what constitutes the “loading and unloading areas” in the Building.  As to this, the inclusion of the 13 Car Parking Spaces under the heading “Loading and Unloading Areas” in the First Schedule to the DMC (which is as much a part of that document as any other part of it), appears to make it abundantly clear that the 13 Car Parking Spaces form part of such “loading and unloading areas”, and therefore part of the common areas of the Building.

25.We also think, as the Judge did, that this conclusion is supported by the fact that no management shares are allocated to the 13 Car Parking Spaces, in contradistinction to the remaining 26 parking spaces to which either 4 or 5 management shares were allocated for the purpose of levying the monthly management charges in respect of the Building.

26.Further, we would note that having regard to the definition of “Parking Spaces” in the DMC, it does not seem that the 13 Car Parking Spaces come within that definition.  The definition defines “Parking Spaces” as those that are intended for separate use and ownership, and directs attention to the definition of the particular parking space in the first assignment relating to it.  This restricts those parking spaces intended for separate use and ownership to those that have actually been assigned by the First Owners to a purchaser of the particular parking space. On the plaintiff and the First Owners’ case, the 13 Car Parking Spaces remain in the ownership of the First Owners.  It follows that there have been no assignments relating to them, and they are therefore outwith the definition of “Parking Spaces” in the DMC.  This, in our view, is supportive of the conclusion that the 13 Car Parking Spaces are part of the common areas, as opposed to being under private ownership with exclusive rights to possession of them.

27.Moreover, when one has regard to the layout of the 1^st to 3^rd Floors, which we have described above, it is apparent that the consequence of all of the 39 numbered spaces being under private ownership is that it would be possible for all of them to be retained for the exclusive use of their owners, resulting in a situation in which there would be no spaces in which vehicles seeking to load or unload goods (which were not given permission by an owner of a space to park in his space) could remain during the process of loading or unloading, necessitating that they simply stop on the driveway for this purpose.  This appears to us (as it did to the Judge) to be a wholly impractical arrangement, and as such, not one that should readily be accepted as representing the correct interpretation of the DMC and First Assignment.  When this scenario was put to Mr Chong, he was only able to say that if that was what the parties had agreed, they would be bound by that agreement.  With respect, it seems to us that the impracticality of such a state of affairs is in itself a strong pointer against Mr Chong’s proposed construction.

28.As indicated in paragraph 14 above, we do not think that the points made by Mr Chong call for any different conclusion.

29.Dealing first with his complaint that the Judge had failed to have regard (or sufficient regard) to the First Assignment and its terms, in particular the reservation to the First Owners of all the car parking spaces in the Building, while we would accept that the decision of this court (differently constituted) in Chow Sai Ping v Chan Yam King [2013] 2 HKLRD 280 does not require the focus to be on the DMC to the exclusion of the First Assignment (the assignment in that case was not a first assignment, and had been entered into some time after the DMC was executed), as we have explained in paragraph 23 above, in the present case, the reservation in the First Assignment itself directed attention to the DMC as being the document which would supply the answer to the question of what parts of the Building fell within its common areas.  That being so, the Judge cannot be faulted for focussing mainly on the terms of the DMC.  Moreover, as the Judge pointed out, the reservation to the First Owners of all parking spaces was in no way inconsistent with certain areas marked out as parking spaces being designated as part of the common areas of the Building in the DMC, which was entered into almost immediately after the First Assignment was executed.

30.As to the suggested absurdity arising from the Judge’s construction having regard to the terms of clauses 12 and 13 of the Special Conditions of Grant, we do not think that it does.  Those clauses require only that spaces be made available for (in this case) 39 vehicles to be accommodated for the purposes of parking, loading and unloading.  Vehicles that are loading and unloading would necessarily have to be parked for this purpose, and compliance with those clauses says nothing about whether or not such spaces could be designated as part of the common areas.  Even when so designated, they remain spaces in which vehicles can be parked, loaded and unloaded.  There is still space to accommodate 39 vehicles at any time.  Thus, there is no breach of the Special Conditions of Grant, contrary to Mr Chong’s suggestion.

31.As to the suggestion that the Judge erred in positing that the First Owners might have changed their minds as to the status of the 13 Car Parking Spaces between the making of the First Assignment and the execution of the DMC, the fact that the two documents were executed on the same day does not militate against this.  Indeed, we doubt whether it should be characterised as a change of mind, as it might well be thought that it was necessary for the First Owners to reserve to themselves all the parking spaces by the First Assignment, so that they would have the 13 Car Parking Spaces available to provide as common areas for loading and unloading under the DMC.  In reality the DMC would almost certainly already have been prepared and ready for execution at the time that the First Assignment was entered into, so that the question of a change of mind would not really arise. As to the second aspect of Mr Chong’s argument in respect of this point, that the supposed change of mind was highly improbable as it would involve a breach of the Special Conditions of Grant, we have explained in the preceding paragraph why we do not consider that there would be any such breach.

32.As to Mr Chong’s arguments based on the DMC itself:-

(1)   For the reasons explained in paragraph 26 above, while we would be inclined to agree that the definitions of “parking spaces” and “common areas” in the DMC are mutually exclusive, this does not assist the plaintiff and the First Owners, as the 13 Car Parking Spaces do not, in our view, fall within the definition of “parking spaces” in the DMC.

(2)  We would agree that the Manager only had power to manage the common areas and not the parking spaces under private ownership, but for the same reasons, the 13 Car Parking Spaces were not “parking spaces” under private ownership within the meaning of the DMC.

(3)  We do not think that Mr Chong is justified in suggesting that the First Schedule to the DMC could not be relied upon for the purpose of identifying the 13 Car Parking Spaces as part of the loading and unloading areas of the Building so as to form part of its common areas.  While that schedule certainly served the purpose of allocating ownership and management shares to the different parts of the Building, there is nothing to suggest that it served that purpose exclusively and could serve no other purpose.

(4)  While the allocation of 4 or 5 ownership spaces to each of the 13 Car Parking Spaces might be regarded as a factor in favour of Mr Chong’s proposed construction of the DMC, it is not, in our view, sufficient to overcome the matters to which we have referred in paragraphs 23 to 27 above, which provide strong support for the construction which the Judge adopted, and with which we agree.

(5)  We do not think that the point that Mr Chong sought to make on the basis of the wording of Section VII.D.1 of the DMC is a valid one.  It is clear to us that on the natural reading of that section, the words “if any” are intended to refer to a car parking space (as not every unit in the building would be sold with one) rather than the management charges in respect of a unit or car parking space that was in private ownership.

(6)  Similarly, we do not think that Section II.B.1 of the DMC assists Mr Chong.  The reference there to “subject to the provisions of this Deed” is clearly intended to relate to the manner in which the common parts are to be used, rather than to the definition of common parts in the DMC.

(7)  As to the suggestion that there was nothing to prevent the 13 Car Parking Spaces from being individually owned, for the reasons explained in paragraph 27 above, it seems to us that this would lead to a wholly impractical situation, and, for this reason also, the suggestion that the 13 Car Parking Spaces should be regarded as available for individual ownership must, in our view, be rejected.

33.The fact that the 13 Car Parking Spaces were included in the sales brochure in respect of the Building at most shows that the First Owners were of the mistaken view that they were available for them to sell.

34.As for the argument based on estoppel by convention, this was not a matter that was pleaded or investigated at the trial.  It is clearly a matter which, had it been raised, might well have led to additional evidence being put forward by the IO, and it was therefore not an argument which we were prepared to entertain for the first time on appeal.

35.For all of the foregoing reasons, the appeal of the plaintiff and First Owners was dismissed with costs.

Mr K.M. Chong and Ms Emma Wong, instructed by Kenneth CC Man & Co, for the appellants/plaintiff (by original action) and for the 1^st to 4^th defendants (by counterclaim)

Mr Andrew Mak, instructed by Chung & Kwan, for the respondent/defendant (by original action) and for the plaintiff (by counterclaim)