THE INCORPORATED OWNERS OF HONG KONG MANSION, CAUSEWAY BAY v. BOTHLINK LTD

CACV 184/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 184 OF 2012

(ON APPEAL FROM HCMP NO. 1814 OF 2010)

____________

____________

______________

J U D G M E N T

______________

Hon Yuen JA (giving the Judgment of the Court):

1. This is the defendant’s appeal from a judgment of Deputy High Court Judge L Chan J (as he then was) declaring in effect that two “voids” were and are common parts of Hong Kong Mansion and ordering the defendant to vacate them and restore them in accordance with approved building plans. The learned judge also ordered the defendant to account and pay to the plaintiff the rents and profits it has received from its occupation of the “voids” for a period commencing from 6 years before the issue of the originating summons to the date of delivery up of vacant possession. The judge also ordered the defendant to pay the costs of the plaintiff with certificate for two counsel.

Background

2. Hong Kong Mansion (“the building”) was built in the 1960s.  The Occupation Permit was issued on 19 March 1966, permitting occupation of 17 domestic flats from the 3^rd to the 10^th floors, 15 domestic flats from the 11^th to 18^th floors, and 8 domestic flats from the 19^th to the 23^rd floors.  The building was set back on the 19^th floor with the result that there was a flat roof at that level. 

The structure on the 19th floor

3. On this flat roof is a rectangular concrete structure (“the 19^th floor structure”). According to the building plans approved by the Building Authority on 20 January 1966 (“the approved building plans”), this structure is 14 ft by 11 ft and we were told that it is about 20 ft high.  The structure, enclosed by concrete walls and roof, is hollow apart from a horizontal slab inside (“the platform”).  This platform divides the structure into an upper level and a lower level, but it does not span the entire space.  In other words, if one were to stand at the lower level and look upwards, one would see a lower ceiling on one side (the underside of the platform) and a higher one at the other (the ceiling of the upper level). 

4. Looking at the approved building plan for the 19^th floor, this ­structure is on the left-hand side of the plan.  The words “Machine Rm” are written inside the drawing of the structure.  A lift shaft is shown within it.  In fact below this structure, there is a lift in the building which serves up to the 18^th floor. 

5. Coming back to the approved building plans, written on the left of the structure depicted are the words “Lift Vent (1.5 sq ft)”, on the right “W.G. Louvres” and at the top “W.I. Cat Ladder”.  The cat ladder (on the exterior of the structure) was for access from the 19^th floor flat roof to an opening in the wall of the structure about 10 feet up – enabling entry to the upper level, there being no opening at all in the walls of the structure at the lower level.  On this upper level there were installed equipment for the lift, such as pulleys and machines.  

6. However at some point in time, the cat ladder was moved, and a steel staircase was erected leading up to a landing for the opening at the upper level.  The louvre was replaced by a “window-type”     air-conditioner.  The lift vent was also blocked up. 

7. More importantly, another opening to the structure was created – cut into a wall at the lower level, thereby enabling entry directly from the 19^th floor flat roof.  A metal gate was installed at this opening.  The area inside this part of the structure was rented out by the defendant for use as a residence.  This is the first “void” referred to in the judgment.

The structure on the main roof

8. Higher up the building, on the main flat roof, there is another structure.  This is of course at a different location from the 19^th floor structure.  We will refer to it as “the Main Roof structure”.

9. This structure is more or less like a reversed “L”-shape with a small vestibule at the bottom as one looks at the plan.  It is bigger than the 19^th floor structure. According to the approved building plan for the main roof, this structure is 18 ft 6 ins across but the length is difficult to read.  It is also about 20 ft high.  Similar to the 19^th floor structure, this structure, enclosed by concrete walls and roof, is hollow inside apart from (a) a platform which divides the structure into an upper level and a lower level and (b) in the vestibule, a wall sealing off the rest of the lower level. 

10. In the approved building plan for the main roof, 4 lift shafts are shown within this structure.  In fact below this structure there are 4 lifts in the building which serve up to the 23^rd floor. 

11. Inside the drawing of the structure are the words “Machine Rm” and written on the left and right of the structure depicted are “Louvres” and at the top “Lift Vent”.  Below the words “Machine Rm” one can make out “W.I. Cat Ladder and Railing”.

12. Unlike the 19^th floor structure, there is an opening in this structure on the lower level.  This door opens into what one might call a vestibule which is enclosed.  Once inside the vestibule, there is a cat ladder enabling access to the upper level where equipment for the lifts are installed.  Behind the cat ladder on the lower level is an internal partition wall sealing off the rest of the lower level (“the sealed off area”).

13. However at some stage, a second opening has been cut into an external wall of the structure at the lower level – enabling access to the sealed-off area.  A metal gate was installed at this opening.  Two split-type air conditioners have also been installed.  The sealed-off area was used by the defendant as 2 rooms.  This is the second “void” referred to in the judgment. 

Proceedings

14. The plaintiff in the proceedings is the Incorporated Owners of the building.  It claims that the entirety of the 2 structures are common areas and the defendant which is occupying parts of the structures – referred to as “voids” in the judgment – is a trespasser. 

15. The defendant admits that the upper levels of the structures (where the equipment for the lifts are installed) are common areas but claim that the lower levels are not.

Judgment

16. After a trial at which both parties called expert witnesses who were authorised persons under the Buildings Ordinance, the judge accepted the evidence of the plaintiff’s expert who emphasized that the floor areas occupied by the “voids” had not been included in the gross floor area and building volume calculations in the approved building plans.  The Occupation Permit also did not include occupation of the two “voids”.  This evidence was not challenged.  The judge also accepted the evidence of the plaintiff’s expert that the structures were of that height so as to house the platforms where lift equipment was installed, because extensions of the lift shafts were necessary for lift overrun.   

17. The judge then considered the terms of the 1^st assignment which was executed on 15 April 1966 (or to be precise, a memorial of the 1^st assignment), before the Deed of Mutual Covenant (“DMC”) was executed on 23 April.  It provided:

“(b) the Purchaser in consideration of the grant thereinbefore and hereinbefore contained THEREBY GRANT unto the Vendor the Confirmor and others the co-owners other than the Purchaser from time to time of the said premises (if any) full right and privilege to hold use occupy and enjoy ALL THOSE remaining self-contained portions flats basements mezzanine floors and shops including the open yards (if any) thereof the exterior walls of the said buildings the flat roofs and other roofs thereof and the driveway and the loading and unloading spaces in the basement thereof and the transformer room of the said buildings and other portions (not otherwise intended to be used for the common enjoyment of the co-owners and co-occupiers for the time being of the said messuages or buildings) comprised in the said messuages or buildings save and except the said Flat ‘I’ on the Thirteenth Floor” (Emphasis added).

The memorial of the 1^st assignment did not define what were intended to be used for the common enjoyment of the co-owners and co-occupiers.

18. The DMC provided that:

“(1) The Vendor shall ... have the full right and privilege to hold use occupy and enjoy to the exclusion of the Flat Owner all those shops basements apartments other portions in the said building (save and except only the said Flat ‘Y’ on the Thirteenth Floor thereof assigned to the Flat Owner) together with the appurtenances thereto and the entire rents and profits thereof and the exterior walls flat roofs and other roofs and the drive way (if any) and the loading and unloading spaces (if any) and car parking spaces (if any) and also the transformer room of the said premises”.

19. The judge held that the portions reserved to the developer did not include the excepted portions “intended to be used for the common enjoyment of the co-owners and co-occupiers for the time being” (para. 33).  He held that the two “voids” were excepted portions because they were intended for use for common enjoyment.  He took into account the fact that (a) as built, they were sealed off from the rest of the 19^th floor flat roof and the main roof and (b) the only purposes they served were to provide for the lift shaft overrun extensions and to support the maintenance platforms (para. 36). 

- The 1981 assignment

20. The defendant had relied on an assignment dated 23 November 1981 which had been executed by the liquidator of the developer in favour of the defendant’s predecessor in title.  This granted to the defendant’s predecessor 3/333 parts or shares of and in the lot together with the right to hold use occupy and enjoy amongst other things, the “Flat Roof on the Nineteenth Floor, the “Whole Roof” etc “(which said Flat Roofs, Roof ... are more particularly shown and coloured Pink on the Plans hereto attached ...)”. 

21. There was no definition of what constituted the “Flat Roof on the Nineteenth Floor” or the “Whole Roof”. 

22. The plan for the 19^th floor showed the flat roof entirely coloured pink except for the lift shaft and a “right of way” at its top.  The words “Machine Rm” did not appear but “P.H.” were written in their place. 

23. The plan for the Main Roof showed the roof entirely coloured pink except for the lift shafts and water tanks and passages for access thereto.  Again the words “Machine Rm” did not appear but “P.H.” were written in their place.

24. The learned judge held that after considering the design and use of the two “voids” as mentioned above, they were obviously for the common enjoyment of the co-owners and co-occupiers and that the pink colouring of the “voids” in the 1981 Assignment and their description as “P.H” (assuming that meant “penthouse”) was erroneous (para.51).  In any event as the “voids” were already common areas in 1966 at the time of the 1^st assignment, they could not have been assigned to the defendant’s predecessor in 1981 (para. 57).

25. The judge accordingly gave judgment in favour of the plaintiff. 

Appeal

26. On appeal the only point taken by the defendant was that “as a matter of conveyancing and proper construction of the relevant title deeds, the voids at the material times had been reserved by the then developer of the Building so that it still had the right to assign the same to the Defendant by way of the 1981 assignment”. 

Discussion

27. It was argued by the defendant that the words in the 1^st assignment (actually the memorial thereof) “intended to be used for the common enjoyment of the co-owners and co-occupiers” meant that the parties expected to agree subsequently in the DMC on what were to be common areas.  We do not agree.  The first purchaser was entitled to access his property as soon as the 1^st assignment was executed.  If the entirety of the building had been reserved to the developer and the parties had not yet agreed on what would be common areas (the DMC being executed more than a week later), that would mean the first purchaser would not even have been able to use the lifts to get to his unit on the 13^th floor.  That could not have been the intention of the parties.  The words “intended to be used for the common enjoyment of the co-owners and co-occupiers” must therefore refer to an intention that was present when the 1^st assignment was executed.

28. The next consideration is whether, at the time of the 1^st assignment, the parties intended the “voids” to be for common enjoyment.  It is common ground between the parties that, notwithstanding the reservation to the developer of the “flat roofs and other roofs” in the 1^st assignment, the “Machine Rm[s]” as depicted on the approved building plans are common parts.  Where they differ is whether “Machine Rm[s]” referred only to the upper levels of both structures where the machines were physically installed. 

29. The factual matrix at the time of the 1^st assignment clearly favours the plaintiff.  None of the floor area covered by the structures (whether upper level or lower level) had been included in the gross floor area and building volume calculations in the approved building plans.  Nor did the plans indicate any distinction in use between the upper and lower levels.  The plans were of course submitted on behalf of the developer.  They show that the developer regarded the structures only as enclosures for the lift machinery (which is agreed to be for common enjoyment).

30. Further, if the intention had been that the lower levels of the structures would be used separately than as enclosures for the lift machinery, one would have expected to see means of access provided to these lower levels.  Instead, for the 19^th floor structure, there was no opening at all at the lower level, and for the Main Roof structure, the “void” at the lower level was sealed off by the walls in the vestibule.  The way these structures were built shows that at the time of the 1^st assignment, there was no intention to use the lower levels separately from use as mere enclosures for the lift machinery.

31. It is clear therefore that the learned judge was entitled to hold that the entire structures (both lower and upper levels) were intended for common enjoyment, that the developer had not reserved them to its own use and hence had no title to assign the lower levels to the defendant’s predecessors. 

Order

32. We accordingly dismiss the appeal.  The parties having agreed that costs should follow the event, we would order that the appellant should pay the respondent’s costs.  We would make an order nisi that there should be certificate for two counsel.