KAU CHUN WING v. MAIN SHINE DEVELOPMENT LTD AND OTHERS

HCA 2525/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2525 OF 2007

____________

BETWEEN

____________

_______________

J U D G M E N T

_______________

Introduction:

1.  By an assignment dated 22 February 1990, Mr Kau became the owner of Units 11 & 12 on the 16^th floor and the roof immediately above those premises, in Yue Fung Industrial Building (the building) in Tsuen Wan. In all the documentation that roof is defined as the Flat Roof, and it is appropriate to maintain that expression throughout this judgment.

2.  Main Shine is the management company appointed under the Deed of Mutual Covenant (DMC) in relation to the building.

3.  As a result of the installation of mobile telephone facilities on the Flat Roof of the building, a dispute has arisen between Mr Kau and Main Shine.

4.  This case turns principally on the interpretation of the conveyancing documents. There was essentially no dispute about the facts, and the facts as I now state them are as I find them to be. The only significant factual issue to be determined is whether or not Mr Kau is the owner of the inner side of the parapet wall surrounding the area of the Flat Roof that he owns. Even that, as will be seen, is not determinative of the final result.

The factual circumstances:

5.  The building is generally oblong in shape, with the long side facing Chai Wan Kok St. At one end of the building is a set of stairs and lift wells. At the other end of the building is another set of stairs. Laterally, through the centre of each floor, parallel to the street, between the lift lobby at one end, and the stairwell at the other end, is a corridor which gives access to a total of 12 units on each floor, six on each side of the centre corridor.

6.  The Flat Roof occupies one half of the top floor of the building, on the side adjacent to the street, above units 7-12, 16/F.

7.  Above the other half of the 16^th floor, (that is above units 1-6, 16/F) is a floor, effectively a 17/F, that floor has been called the Maintenance Floor. The Maintenance Floor is adjacent to the Flat Roof. The Maintenance Floor itself has a roof, that being known as the Top Roof. The Maintenance Floor has an identical corridor to the other floors. One side of the corridor gives access to various rooms comprising the maintenance and plant rooms of the building. Doors on the other side of the corridor, their location corresponding with that of the units below, give access to the Flat Roof. The effect of this is that an owner of units 7-12 on the 16^th floor may use the stairs to access the common corridor above, and the individual doors to access that portion of the Flat Roof which he might own.

8.  At some time in the past, Mr Kau had entered into an arrangement with Hutchison Telecom to permit them to install a mobile telephone antenna, cables and associated equipment on the Flat Roof above Unit 12. Mr Kau receives a monthly fee from Hutchison for that privilege. The antenna is actually installed on the exterior of the parapet surrounding the Flat Roof, with the cables from the antenna leading onto the surface of the Flat Roof, and then to a small structure fixed to the Flat Roof containing as the associated equipment. The legality of that structure, or the location of the antenna or the cables of that arrangement, is not the subject of this trial.

9.  On about 15 November 2005, Mr Kau received a letter from a subsidiary of PCCW known as Sunday. Sunday operates a mobile telephone network in Hong Kong. The letter sought agreement from Mr Kau to license to Sunday part of the Flat Roof above Units 11 & 12 for the installation of a mobile telephone antenna. Mr Kau’s evidence was that he asked Sunday’s representative:

“…to contact (Main Shine) so that arrangements could be made for them to launch the installation at my Flat Roof.”

Mr Kau heard nothing further, and thought that Sunday had abandoned the proposal.

10.  However in September 2007, Mr Kau’s wife visited the premises as a tenant had vacated Mr Kau’s premises. When going to the Flat Roof she noticed that two antennae, and cables and wires had been installed on the inner side of the parapet wall. Photographs taken at the time show that the two antennae and the cables were attached to the inside walls of the parapet surrounding that part of the Flat Roof above Mr Kau’s unit on the 16^th floor. The cables were ultimately routed up the side of the wall of the Maintenance Floor onto the Top Roof, where structures were created to contain the associated equipment.

11.  Enquiries made by Mr Kau through his solicitors revealed that Main Shine had entered into two license agreements, one with Peoples, (the 2^nd Defendant), the other with Sunday, (the 3^rd Defendant), for the installation and operation of antennae and associated equipment for mobile telephone radio stations. The Peoples licence was for 24 months commencing on 1 November 2006 at a licence fee of $24,252 per month. The Sunday licence was for 24 months from 1 June 2006 at a licence fee of $24,252 per month.

12.  On 20 September 2007, Mr Kau’s solicitors wrote to Main Shine asserting that there had been a trespass on his Flat Roof and enclosing photographs showing the subject of the complaint. On 3 October 2007, Main Shine’s solicitors responded saying that they were taking instructions.

13.  A comprehensive reply came from Main Shine’s solicitors on 8 November 2007, in the following terms:

“ We are instructed to put on notice that:-

(1)  Upon our client’s receipt of your letter of enquiry dated 20 September 2007, our client has checked and clarified with the service providers including (Peoples) and (Sunday) and understand that erection of the wires and antennae by them were effected at the inner wall along the boundary of the Roof above the Premises instead of erecting and installing the same at the external wall of the building which are common areas.

(2)  Despite the fact that there is no occupation of your client’s floor area, our client has directed (Sunday) and (Peoples) to immediately remove the wires and antennae which removal works have already been completed.  Further, all the affected areas have also been reinstated……

(3)  Our client did give a licence to both (Peoples) and (Sunday) respectively for them to place wires and antennae at the open area of the roof on the condition that there should not be any occupation of any floor area belonged to others.” (sic)

Photographs were sent with the letter, illustrating the position.

14.  An inspection by Mr Kau’s wife in mid-November 2008 confirmed that the cables and antennae had been removed and reinstalled on the Top Roof. Any damage caused to the inner side of the parapet wall from the installation of the equipment had been made good.

15.  It is appropriate to note that Main Shine does not receive the benefit of the licence fees paid by Peoples and Sunday. These are credited to an account operated by the management company for the benefit of the owners of all the units in the building, consequently the owners of all units receive the benefit. Mr Kau himself is accordingly a recipient of the benefit of the license fees to the extent that the income from the license fees is set off against the general cost of running the building, payable by all unit holders in proportion to their shares in the building.

The causes of action:

16.  Now, Mr Kau sues Main Shine in trespass asserting that Main Shine have wrongly caused or permitted Peoples and Sunday to gain access to the Flat Roof, thereby wrongly interfering with it, wrongly interfering with his quiet enjoyment of the Flat Roof and wrongly trespassing on the Flat Roof causing nuisance and annoyance to him.

17.  Mr Kau also sues in contract and asserts that the acts of Main Shine complained of constitute a breach of the DMC.

18.  Next he asserts that there has been a breach of a fiduciary duty by Main Shine, allegedly owed to Mr Kau. In this respect, Mr Kau asserts that Main Shine caused Sunday not to enter into a licence agreement with Mr Kau in respect of the Flat Roof, but instead to enter into a licence agreement with Main Shine, at the expense of Mr Kau.

19.  Ms Lau accepted that the factual circumstances were such that it could not be argued that this allegation to constituted a tort of unlawful interference in contractual relations causing loss. Rather, she said, that the pleading was made that as part of the allegation, (unparticularised), of a breach of fiduciary duty said to be owned by Main Shine to Mr Kau.

20.  Finally, an assertion is made that the installation of the equipment constitutes a nuisance.

21.  In reliance upon these various causes of action, Mr Kau seeks an inquiry into damages, an account of profits, aggravated and exemplary damages, and an indemnity for all loss and damage suffered by Mr Kau arising from and/or consequential upon Main Shine’s alleged negligence, trespass and/or nuisance.

22.  The statement of claim also sought damages from Peoples and Sunday, relying upon causes of action in trespass and negligence. Mr Kau has compromised those claims, accepting the sum of $38,000 from Peoples, and $30,000 from Sunday. Consequently neither Peoples nor Sunday took any part in the proceedings before me.

The law of trespass:

23.  The tort of trespass to land is defined in the following way in Clerk & Lindsell on Torts, 19^th Edn para 19-01:

“Trespass to land consists in any unjustifiable intrusion by one person upon land in the possession of another.  The slightest crossing of the boundary is sufficient.”

24.  As a landowner is entitled to place structures on his land, and thereby to take possession the airspace above his land. Consequently, interference with that airspace may constitute a trespass. Whether under a lease of the surface, the possession of the airspace will pass so as to render the lessee be proper person to sue for a trespass upon it, depends on the construction of the lease: see Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd [1957] 2 WLR 1007. There is nothing in the assignment or the DMC to indicate that the airspace above the Flat Roof is not the property of Mr Kau, and accordingly capable of being subject to a trespass.

25.  An entry upon the claimant’s land is not a trespass if it is justifiable. Justification may be found in a licence, express or implied, from the owner: see Clerk & Lindsell para 19-45. If justification is sought by a licence, the defendant’s presence on the land is only justified to the extent granted by the licence. If the defendant acts in a way that exceeds the permission granted, his acts will constitute a trespass: see R (on the application of the JC Decaux UK Ltd) v Wandsworth LBC [2009] EWHC 129 (Admin).

Nuisance:

26.  As I have noted, the statement of claim also pleaded nuisance. Ms Lau relied upon Wong Shiu Hung & Cheung v Lai Yun & Anor [2001] HKCU 551, in which it was held that nuisance is defined as an unlawful interference with a person’s use or enjoyment of land, or some right over or in connection with that land. In that case an illegal structure occupying a portion of the land was found to have caused a nuisance. Clerk & Lindsell demonstrates the distinction by noting that trespass differs from nuisance in that it is a direct, as opposed to a consequential, injury and is accordingly actionable without proof of damage. In cases of nuisance, actual damage must be proved: see para 19-08.

Breach of fiduciary duty:

27.  Somewhat vaguely, and without particulars, the statement of claim pleaded a breach of fiduciary duty on the part of Main Shine. I perceive the argument to be a contention that Main Shine, as managers of the building, were in breach of a fiduciary duty to Mr Kau not to take away from him any benefit that might potentially arise from some future use he might make of his portion of the Flat Roof. The contention would be that by taking the advantage of the reference to Main Shine by Mr Kau, of the enquiry by Sunday, and then itself entering into license agreements, Main Shine was in breach of its fiduciary duty to Mr Kau.

28.  The argument, not surprisingly, was not pursued at trial.

Ownership of the inner side of the parapet wall:

29.  There is no doubt at all that Mr Kau is the owner of the portion of the Flat Roof above Units 11 and 12, owned by him. That is plain first, from the Assignment, which specifically refers to:

“including portion of the flat roof adjoining the Mechanical Floor (as defined in the Deed of Mutual Covenant) of the Building as shown and coloured Pink on the Plan annexed hereto.”

30.  It is also plain from the DMC, as the flat roof adjoining mechanical floor is specifically excluded from the common areas: see Definitions, paragraph (1):

“ “Common Areas” and/or “Common Facilities” shall mean

(viii)  the Top Roof, the external walls and the flat roofs (save and except the flat roof on adjoining the Mechanical Floor…..) of the Building.” (My emphasis)

31.  The cables were fixed to the inner portion of the parapet walls. The ownership of the inner side of the parapet walls can only lie with either Mr Kau or with all owners of the building as part of the common area. Ms Lau contended that the inner portion of the parapet wall was owned by Mr Kau. Mr Wu argued that the whole of the parapet walls belonged to all the owners of units in the building.

32.  Ms Lau sought to argue first that, just as the inside of walls of the unit are in the ownership of the owner of that unit, so must the inside of the parapet walls be with Mr Kau, as the owner of the Flat Roof above Units in 11 and 12. The parapet wall, she argued, was a necessary part of the Flat Roof, for the protection of those using the Flat Roof, to protect them from falling from the Flat Roof.

33.  While there is a superficial attraction to the argument, I reject the submission. I am satisfied of ownership of the parapet walls is to be determined by the application of the law, and the interpretation of the DMC.

34.  The mode of ownership of a multi-unit building in Hong Kong is appropriately set out by the following statement by Cheung JA in The Inc Owners of Shatin New Town v Yeung Kui, unreported, 10 December 2009, CACV 45/2009:

“When someone owns a flat or unit in a multi-unit development in Hong Kong, it means in legal terms that he holds a notional share (the amount of which is specified in the original assignment from the vendor to him or in the Deed of Mutual Covenant (DMC)) in the development as tenants in common with the other owners of the development but he is given ‘exclusive possession’ of his own flat to the exclusion of the other co-owners.  In contrast to the specific unit, the common parts of the developments such as entrance, passageways, garden, a utility rooms and exterior walls are not within the exclusive possession of any of the owners but are to be used and enjoyed by all of them.  The ambit of the common parts of the development is usually specified in the DMC.  If not, the Building Management Ordinance BMO Cap 344, will apply and defines the common parts.”

35.  The assignment to Mr Kau of his unit was from the original developer, Early Bright Investments Ltd. Early Bright as vendor assigned to Mr Kau, as purchaser:

“….ALL THOSE 3206 equal undivided 220,387th parts or shares of and in ALL THAT piece or parcel of ground registered in the Tsuen Wan District Land Registry as THE REMAINING PORTION OF TSUEN WAN TOWN LOT NO. 285 (“the land”) and of and in the messuages erection and building thereon now known as “YUE FUNG INDUSTRIAL BUILDING” (裕豐工業大廈) (“the Building”) TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT/THOSE UNIT(S) NO(S) 12 ON THE SIXTEENTH FLOOR including portion of the flat roof adjoining the Mechanical Floor (as defined in the Deed of Mutual Covenant of the Building….”

36.  Those terms are entirely consistent with the statement of the legal position set out in paragraph 34 above. In simple terms, Mr Kau owned an undivided share in the whole of the building in common with all of the other owners, but the exclusive right to occupy unit 12 on the 16^th floor in that portion of the flat roof above unit 12. Those parts of the whole of the building, in which Mr Kau owned an undivided share, which were not reserved for the exclusive use of particular owners constitute the common areas. The extent of the right to use the common areas, as Cheung JA set out, are usually contained in the DMC. If they are not so defined the BMO provides a fallback definition.

37.  In this case, the assignment was both subject to, and with the benefit of, the DMC. There is no doubt that Mr Kau is bound by the terms of the DMC. The DMC contained a definition of the “Common Areas and/or Common Facilities”, including the following paragraphs:

“(i)  the entrances, staircases, lift halls, lift shafts, lift pits, stairways, landings, passages and other spaces of the Building which are intended for common use (other than the Floor Reserved Areas) and not for the exclusive use occupation and enjoyment by the First Owner or the Second Owner as hereinafter specified,

(vi)  such of the sewers, drains, drainage, water courses, pipes, gutters, wells, aerials wires and cables (if any), and other services facilities, with abducted or otherwise which are or at any time may be in, under or over or passing through the Land or the Building, through which water, sewage, gas, electricity and any other services are supplied to the Building or any part or parts thereof,

(viii)  the Top Roof, the external walls and the flat roofs (save and except the flat roof on or adjoining the Mechanical Floor and the flat roofs adjoining units 1 to 6 and unit 12 on the Third Floor) of the Building.

(xi)  any other facilities installed for the use and benefit of the Building and not for the use and benefit of a particular Unit.  ”

38.  The definition of common areas in the DMC does not deal with the parapet walls. But, as Cheung JA points out, anything not dealt with in the DMC is dealt with in the BMO. Section 2, BMO, the interpretation provisions, contains the following definition:

“  “common parts” means-

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

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

Schedule 1 provides:

“COMMON PARTS

1.  External walls…..

4.  Parapet walls,…”

39.  The DMC, which was made between the original developer, (described as “the First Owner”), and a purchaser of Unit 1 on the ground floor of the building, described as (“the Second Owner”), and Main Shine described as (“the Management Company) contained a special reservation in relation to the external walls. It is in the following terms:

“C.  SPECIAL RESERVATIONS

1.  The First Owner and its successors and assigns (which expression for the purpose of this Clause shall exclude the Second Owner) shall have the exclusive right and privilege to, and to permit its or their licensees to install, erect, affix, attach, dismantle, remove, repair, service and maintain to, in, on or from the external walls (including the parapet walls, if any) of the Building or any part or parts thereof one or more flue pipes smokestacks, chimneys and cables Provided always that the First Owner and its successors shall not be required to repair and maintain the external walls (including the parapet walls, if any) of the Building (save as provided in Clause 2(c) and 2(d) of this Subsection) and the Manager shall be responsible for maintaining and repair such external walls (including the parapet walls, if any).” (sic)

Clause 2(c) and 2(d) relates to repair work arising from the attachment of any flue pipes smokestacks, chimneys and cables to a wall, and does not affect the issues in this case.

40.  The effect of the application of the DMC to Mr Kau by virtue of the assignment by which he acquired his units in the building, is that all other owners of the building fall within the expression: “The First Owner and its successors and signs (which expression for the purpose of this Clause shall exclude the Second Owner)”. Mr Kau stands in the place of the Second Owner. Main Shine is the Manager of the building.

41.  Even if the DMC did not contain that provision the assignment operates in an identical way. An effectively identical reservation is contained in the assignment in the following terms:

“(b)  Exceptions and reservations:-

(1)  Excepting and Reserving unto the Vendor its successors and assigns other than the Purchaser:-

(iii)  the exclusive right and privilege to and to permit its or their licensees to install, erect, affix, attach, dismantle, remove, repair, service and maintain to, in, on, or from the external walls (including the parapet walls, if any) of the Building or any part or parts thereof one or more flue pipes smokestacks, chimneys and cables Provided always that the Vendor and its successors shall not be required to repair and maintain the external walls (including the parapet walls, if any) of the Building (save as provided in Clauses 2(c) and 2(d) of Subsection C of Section I of the Deed of Mutual Covenant) and the manager of the Building for the time being shall be responsible for maintaining and repair such external walls (including the parapet walls, if any);”

The effect of the proviso to this clause is that responsibility for the maintenance of external walls, including the parapet walls, falls on the manager of the Building, that is Main Shine, who, pursuant to the DMC, administer the building for the benefit of all owners at the cost of all owners, in proportion to their shares in the building.

42.  The responsibility for maintenance of the parapet walls, falling effectively on all owners of the building, is entirely consistent with ownership of the parapet walls being in all owners in undivided shares.

43.  For the foregoing reasons I am satisfied that ownership of the parapet walls, both inner and outer sides, and the top thereof, lies with all owners of the building in common, and that Mr Kau does not have exclusive rights to the inner side of the parapet walls surrounding his portion of the Flat Roof.

The effect of the reservation in the assignment:

44.  The effect of the reservation in the assignment, and Clause C 1 of the Special Reservations provisions of the DMC is that consent has been given to the installation of cables to the parapet walls. No distinction is made between the external and internal sides of the parapet walls and consequently the consent given by the reservations must extend to both. Mr Kau, were he merely an owner in common with all other owners of the internal sides of the parapet walls, or the sole owner of the internal sides of the parapet walls, cannot complain about the installation of the cables. In both capacities, he has given consent to that installation.

45.  Ms Lau, following a remark by me in the course of argument, submitted that the reference to flues, pipes smokestacks chimneys and cables could only refer to devices of that nature which were designed to serve the building. Cables which were not servicing the building, she said could not be covered by any consent that might be given.

46.  Again, by reference to the documents, the argument cannot stand. First, it will be noted that, unlike paragraph (vi) of the definition of “Common Areas and/or, Common Facilities”, (see paragraph 37 above), there is no limitation requiring those items to be items which supply services to the Building.

47.  Second, Mr Wu drew my attention to the provisions of the DMC setting out the powers and duties of the manager. The relevant parts are:

“B  Powers and Duties of Manager

“1.  The Manager will manage the Land and the Building in a proper manner and in accordance with this Deed and, except as otherwise herein expressly provided, the Manager shall be responsible for and shall have full and unrestricted authority to do all such acts and things as may in its opinion be necessary or requisite for the proper management of the Land and the Building.  Without in any way limiting the generality of the foregoing the Manager shall have the following duties namely:-

(18)  to do all things which the Manager shall in his absolute discretion deem necessary or desirable for the purposes of maintaining and improving all facilities and services in or on the Building for the better enjoyment or use of the Building by its Owners occupiers and their licensees;

(35)  to do all such other things as are reasonably incidental to the management of the Building ”

48.  Mr Wu argued that the powers of Main Shine as the Manager under this clause were sufficiently wide to permit the licensing of mobile telephone radio stations on the building, because the licence fees received went to the benefit of all of the owners. This, he said, assisted in maintaining and improving the facilities and services of the building, by going to meet the cost of maintenance and thereby easing the burden of the owners for that maintenance cost.

49.  The powers are plainly very wide. The reservation to install cables set out in paragraph 39 and 41 above extends not merely to the collective owners but to their licensees.

50.  In these circumstances I am satisfied that the power of the Manager is such that Main Shine was acting lawfully when it entered into the licence agreements with Peoples and Sunday to permit them to install cables on the parapet walls.

51.  That conclusion provides a complete answer to the allegation of nuisance, based as it was, on the occupation of the airspace above the Flat Roof by the cables. If it was lawful for Main Shine to enter into the licence agreements for the installation of the cables, it must be equally lawful for those cables to occupy Mr Kau’s airspace. The claim in nuisance accordingly fails.

52.  However, the conclusion as to the lawfulness of the licences does not completely resolve the matter, because, as Ms Lau pointed out, there is still the question of the alleged trespass to Mr Kau’s portion of the Flat Roof.

53.  It might be possible to install cables or the like on the inner side of the parapet walls, by creating a structure on the external walls which enabled a workman to lean over the parapet and carry out an installation on the inner side. But that could not have possibly been in the contemplation of the parties. It must be that in giving consent to the installation of cables on the parapet walls, Mr Kau was also giving consent to persons to go onto the Flat Roof for the purpose of the installation and maintenance of those cables.

54.  Such a consent provides a complete answer, by way of justification, to an allegation of trespass. The licensees, Peoples and Sunday, were justified in entry onto the Flat Roof by the terms of the licences which permit access in the following terms:

“(Main Shine) shall permit (Peoples) access to and entry into the Licence Area of the said Building to inspect, maintain, adjust, repair, replace, modify, improve or remove the Equipment during normal business hours on all days (except Sunday) and (Main Shine) agrees to grant (Peoples) 24 hours access to the said Building and the Licensed Area with the consent of (Main Shine) in case of a breakdown of the Equipment or emergency.”

The attached plan shows the cables to be mounted on the parapet wall above the Flat Roof.  The Sunday licence is in identical terms.

55.  By giving permission by way of both the assignment and the DMC, to the joint owners of the building, through Main Shine as the manager of the building, to install either by itself or by licensees, cables on the parapet walls, and Main Shine having appropriate authority to determine the terms of the licence, Mr Kau must be taken to have given consent to the licensees to have access to the cables by way of the Flat Roof.

56.  Ms Lau sought to argue that a 24-hour access was unreasonable. There is not the slightest suggestion that workmen from either Peoples or Sunday are on the Flat Roof 24 hours a day. It cannot possibly be argued that the extent of the access required was not reasonable in the circumstances.

57.  It must be borne in mind that this is a commercial building and not a residential building. Other than by licensing a portion of the Flat Roof to Hutchison for exactly the same purpose as the licences to Peoples and Sunday, there is no suggestion at all that Mr Kau had any other use for the Flat Roof. It is not without significance that the licences to Peoples and Sunday were granted in August and November 2006, and it was not until September 2007, when Mr Kau’s wife went on to the Flat Roof that he realised that the cables had been installed. No suggestion at all was made that the cables had in any way interfered with his use of the Flat Roof. His real complaint was that he himself was not receiving the licence fees.

58.  Any entry by Peoples and Sunday to the Flat Roof that might otherwise have constituted a trespass has been justified. The claim in trespass must fail.

59.  All claims having failed, there must be judgment for Main Shine, with an order nisi that Mr Kau must pay Main Shine’s costs on a party and party basis.