WONG KWOK CHIANG AND OTHERS v. LONGO CONSTRUCTION LIMITED AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HONG KONG

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BETWEEN

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JUDGMENT

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1. The Plaintiffs and the 2nd Defendant company are, and have  throughout all material times been the respective owners of adjoining properties: 73C Waterloo Road belongs to the 2nd Defendant and 73D Waterloo Road belongs to the Plaintiffs. I shall refer to them as 73C and 73D. In 1952, there stood on the sites of these two properties twin three-storyed buildings, sharing a septic tank built under 73C Waterloo Road. A Deed of Grant dated the 16th May 1952 was executed by the 2nd Defendant's predecessor-in-title in favour of the Plaintiffs' predecessor-in-title for the use of the said septic tank and the connection of a drainage pipe from the flushing system of 73D to it along a designated route for a period of 75 years ending 24th June 1997, with a right of renewal for another 75 years. The 2nd Defendant's predecessor-in-title covenanted to keep and maintain the septic tank and all the connecting pipes in good order and not to impede the use of the facilities granted to the Plaintiffs' predecessor-in-title who, in turn, covenanted to pay half of the repair and maintenance expenses. These rights and obligations bound the Plaintiffs and the 2nd Defendant, but they have, since the institution of this action, been abrogated by a decision of the Court of Appeal. It cannot now be argued that the 1952 Deed of Grant could give rise to anything more than a claim in damages by the Plaintiffs. Whatever initial concern the Plaintiffs had over the Defendants' attitude towards mutual lateral support, there is now also no dispute as to the easements of support both for the building and the land annexed to 73C for the benefit of 73D. The provisions in the Deed of Grant and incidences of easements are the two issues, if still alive or joined, which could "affect" 73C in this action.

2. In June 1982, the 2nd Defendant signed an Agreement for Sale and Purchase in favour of one Deltec Enterprises Ltd. with a view to developing 73C into a multi-storeyed building. The lst Defendant was engaged as the building contractor for the development by Deltec Entrprises Ltd. In breach of the Deed of Grant, the septic tank was removed and replaced by a modern flushing system. In alleged breach of these said easements, the Defendants are accused to have withdrawn the right of support to the land and building of 73D.  The Plaintiffs claim to have suffered and continue to suffer damage to their 73D. Shoring had previously been erected, and the Plaintiffs complained of breaches of statutory duty under the Building (Construction) Regulations. The Defendants deny any withdrawal of effective support and dispute the alleged causation, damage and quantum.

3. Paragraph 14 of the Defence of both Defendants has now been struck out, but as it then stood, at one time the Defendants had sought to allege that there was an implied term in the Deed of Grant for the 2nd Defendant to remove and replace the septic tank subject to the installation of an improved substituted system for use by 73D.

4. The events in these proceedings took a checkered course. Apart from the Deed of Grant dated the 16th May 1952, the rest of the material facts are as set out in the judgment of Silke, J A. delivered in the Court of Appeal on the 31st October 1986. It would be sufficient for the purposes of this application to give a bare outline:  the Plaintiffs commenced this action by a Generally Endorsed Writ on the 28th July 1984. The writ was not registered as a lis pendens until the 27th February 1985. The Statement of Claim had earlier been filed out of time by consent on the 16th February 1985 and was registered in the Land Office on the following 1st March. The Statement of Claim was amended on the 9th June 1986 for adding, inter alia, a claim for reinstatement of the septic tank and damages for loss of use pending such reinstatement. On the 23rd July 1986, Jones, J. struck out paragraph 14 of the Defence, declared the Plaintiffs to be entitled to the use of the septic tank and drainage pipes under the Deed of Grant, enjoined the Defendants to reinstate the septic tank and its connecting pipes, ordered damages for the loss of use of the septic tank until reinstatement to be assessed and gave cost of the application to the Plaintiffs. The Order of Jones, J. was also duly registered on the 29th July 1986

5. The Deed of Grant was registered on the 28th May 1952. Therefore, by July 1986, there existed four registrations in the Land Office against 73C namely, the Deed of Grant, the Generally Endorsed Writ, the original Statement of Claim and the Order of Jones, J.

6. From the judgment of Jones, J., the Defendants appealed and were successful in part. The declaration that the Plaintiffs were still being entitled to the use of the septic tank and their drainage connecting pipe under the Deed of Grant was set aside. The order of reinstatement of the septic tank and the drainage connecting pipes was also set aside. However, the striking out of paragraph 14 of the Defence was affirmed. The order for assessing damages for the loss of the use of the septic tank, presumably pending reinstatement was left undisturbed, and the Court of Appeal was invited to and did make an order "that the question of damages in lieu of injunction be assessed". The true purport must be, as it has been accepted to be, that damages in lieu of injunction for the loss of the benefits in the Deed of Grant be assessed.

7. The mortgagee of 73C has commenced mortgage proceedings involving some $15 million against the 2nd Defendant. Refinancing is being sought by the 2nd Defendant, and it is desirable to have these four registrations against 73C in the Land Office lifted. Hence, under inherent jurisdiction and Section 19 of the Land Registration Ordinance, the 2nd Defendant now applies for their vacation. I am not really concerned with the motivation behind the present application. The central issue can only be whether the 2nd Defendant is entitled so to have these four registrations removed.

8. By the time the proceedings reached Jones, J. for  reinstatement of the septic tank and the drainage connecting pipes etc., the whole of the new R.C.C. foundation of 73C had been completed after piling and the proposed superstructure was in the course of being erected. Today, the new building on 73C has reached its nineth storey, more than half-constructed. There is no professional evidence to guide  me as to whether the concrete foundation and part of the new building reaching nine stories high are now providing adequate support. One is very tempted to say that it probably does, although it would be injudicious so to conclude, particularly when the Plaintiffs complain of recent further damage. Counsel for the Defendants, Mr. Mok, was at pains to try to persuade the Court that all the alleged damage in the pleading or recent assertions are exclusively referable to the works necessitated by the construction of the new foundation.

9. As for the septic tank, the terms in the Order of the Court of Appeal bear all the resemblances of a final resolution. There is no hope of ever enforcing any part of the Deed of Grant. The Plaintiffs' remedy under it is totally reduced to a claim in damages.

10. It may well be arguable that the concrete foundation and the partially completed new building reaching to a height of nine stories has not provided a good substitute in lateral support. The Plaintiffs make no specific reference to the new foundation and the partially completed building on 73C. It would seem, as dictated by common sense, that the real question that lies at the heart of this controversy rests with causation, damage and quantum. However, the Plaintiffs maintained that in law, they are entitled to have the four registrations kept alive, at least, until the ultimate determination of this action. It therefore fell upon me to unravel the respective positions at law of the parties to this action. In that exercise, I had the assistance of very thorough submissions from counsel. At the conclusion, I vacated all four registrations. As the 2nd Defendant was willing, I ordered it to acknowledge the Plaintiffs' right to support in writing in the form of a proposed draft deed. I intimated that I would give full reasons for my decision, which I now do.

11. In Thian's Plastics Industrial Co. Ltd. v. Tin's Chemical Industrial Co. Ltd. ⁽¹⁾, Briggs, J., as he then was, endorsed the observation of the trial judge, which is as follows :-

"Before a plaintiff registers an action as a lis pendens it is his bounden duty to ensure that it is an action in which a claim to land or some interest in land is asserted: that there is a claim of right or a claim to charge some specific property.In other words that the landed property mentioned in the memorial is (in the words of section 19) 'in litigation'".

At p.256, Sir Alan Huggins, V P., as he now is, lent his support to an emphasis on a disputed title to land :-

"I do not understand the learned judge in the court below to have construed S.14 in the light of S.19, which was enacted many years later: what he said was that a lis does not 'affect' land within the meaning of S.14 unless that land is 'in litigation' within the meaning of S.19."

12. It has to be constantly born in mind that here in Hong Kong, under the Land Registration Ordinance, we are primarily involved with title and priority. In Thian's case, when title to land was not in dispute, the litigated issue of an exercise of powers not dependent upon the title to land was held not to have rendered the action registrable under the Land Registration Ordinance. The English cases on "a pending land action" must be perused with some caution. Vide Selim Ltd. v. Bickenhall Engineering Ltd. ⁽²⁾ and Greenhi Builders Ltd. v. Allen & Others ⁽³⁾. In the latter, Browne-Wilkinson, J. commented:-

"An action in which the existence or non-existence of an easement over the  land is directly in issue is an action relating to an interest in that land".

That seems reasonably sound to be applied to our Land Registration Ordinance: Any proceedings relating to a disputed existence or non-existence of the right to support over land are registrable under it.

13. Lastly, I need refer to Anstalt Nybro v. Hong Kong Resort ⁽⁴⁾, where it was held that even if the terms of an agreement there under consideration were not uncertain, and the option under it had not been improperly exercised or cancelled, no specific performance could be expected to issue from any court, properly directed as to law. Their Lordships in the Judicial Committee concluded that the remedy of the appellant was adjusted to one of damages and that the alleged agreement and option ceased to "affect" the land so as to remain registrable. Registrations of these documents and the action were accordingly ordered to be vacated.

14. In view of the Court of Appeal decision in this case, there is no likelihood that the subject-matters in or of  the Deed of Grant would be reinstated or enforced.  In the circumstances, the short point is: Except for a claim indamages, is the Deed of Grant now virtually a dead letter? The answer to it must be in the affirmative. 73C Waterloo Road cannot now be "affected" by it. The effect of the Deed of Grant has been overtaken by the turn of events and determined by the Court of Appeal. Plainly, the Deed of Grant has ceased to be registrable, and insofar as this action is founded on this defunct Deed, its registrability has come to an end.

15. As for the claim on withdrawal of support, the easements asserted have been clearly admitted by the Defendants in their Defence. The Plaintiffs' invitation to join issue on the existence of these easements has become spent. Capital was sought to be made of counsel's fear of retraction of an admission contained in a pleading, but so long as an admission is maintained, there exists now no dispute on the easemenhts of support, as interests in land, i.e. 73C. These interests in land cannot now be still "in litigation", and insofar as this action stems from these easements of support, it has clearly shed all its attributes as a registrable lis pendens. The Plaintiffs' claim under these admitted easements now lies exlcusively in damages for withdrawal of support . The once arguably justifiable registration as at the inception should now be removed. I am to be guided by the Defendants' present admission, and I must resist any temptation to be drawn into any other situation where that admission is proposed to be retracted. However, not only do the Defendants not contemplate any withdrawal of their admission to these claimed easements, the 2nd Defendant is willing and prepared to furnish an irrevocable written acknowledgement by deed of the Plaintiffs' claim to them in the event that such formal admission represents the last query to be resolved.

16. There is no mandatory order sought for any specific restoration works in respect to the right of support. Unlike the case of Regan & Blackburn Ltd. v. Rogers⁽⁵⁾, I was not called upon to express any view on a mandatory order of that nature.

17. The injunction claimed in para. (1) of the prayer in the Statement of Claim deals with works then undertaken by the defendants in the course of constructing the new foundation. Indeed, counsel for the plaintiffs conceded that prayer (1) of the Statement of Claim is no longer necessary. Mr. Lee also conceded prayer (8) of the Statement of Claim as being likewise redundant. Prayer (8) claims damages for nuisance, negligence and breach of statutory duty as regards shoring under the Building (Construction) Regulations. Construction on the site of 73C has long passed the stages of excavation and foundation works. These prayers would now serve no practical purpose.

18. With easements as interests in land having been decidedly acknowledged and admitted, any alleged encroachments on these proprietary land rights or interests can only lead to a personal claim for compensation. The Deed of Grant is now also compressed into a personal claim in damages. This action contains no live issues affecting 73C.

19. It is common ground that easements are not registrable but that an action for declarations as to easements of support in terms of prayers (2) and (3) of the Statement of Claim constitutes a claim to real interests over land and is as such prima facie registrable. However, the overriding consideration in the instant case is that the existence of these claimed easements has ceased to be a live issue and is thus no longer a matter "in litigation". Insofar as this action is based on these claimed easements, there exists no further lis for registration. Hence, I need not consider whether prayers (2) and (3) could be granted as bare declarations; nor is it necessary for me to decide whether the portion of the Statement of Claim relating to these claimed, but now admitted easements, not being an originating process, is per se registrable.

20. At the commencement of this action, assertions both on the Deed of Grant and the claimed easements were prima facie registrable. There are now no issues or no issues in litigation affecting land. The order for costs I made was designed to reflect this position. That part of the Order of Jones, J. affirmed by the Court of Appeal does not "affect" land and should also be vacated. It is only right then to order registrations of the Deed of Grant, the Writ, the Statement of Claim as well as the Order of Jones, J. to be vacated.

21. Strictly speaking, it would be sufficient to register the Order of the Court of Appeal with regard to the Order of Jones, J.  But for the sake of clarity and easy reference, it is desirable that I should make a more sweeping order to have the entire Order of Jones, J. vacated so as to keep the public better informed.  The Order I made met with no objection.  For all these reasons, all four registrations were vacated with an appropriate order for costs.

(1)    [1971] H.K.L.R. 249 at 252

(2)    [1981] 1 W.L.R. 1318

(3)    [1979] 1 W.L.R. 156 at p.159B

(4)    [1980] H.K.L.R. 76

(5)    [1985] 1 W.L.R. 870