LI CHUN BON AND ANOTHER v. CHINA MOBILE HONG KONG COMPANY LTD

CAMP 344/2023, [2024] HKCA 865

On appeal from [2023] HKDC 466

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 344 OF 2023

(ON AN INTENDED APPEAL FROM DCCJ NO 617 OF 2017)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  This is a renewed application for leave to appeal against the judgment of His Honour Judge Ko on 25 May 2023, given after a five-day trial in February and March 2023 (“Judgment”)[1]. The case involves a building comprising three storeys and a roof (“Building”) at No 67 Lok Lo Ha Village, Shatin, New Territories.

2.  Some antennas and equipment had been installed by the defendant (“China Mobile”) on the inner side of the parapet walls and the walls enclosing the staircase of the Main Roof, pursuant to the licence agreements between China Mobile and the owner of 2/F and Main Roof of the Building (“2/F Owner”).

3.  The plaintiffs are the owners of the G/F premises of the Building. They commenced proceedings against China Mobile for damages and/or mesne profits by virtue of section 34I of the Building Management Ordinance, Cap 344 (“BMO”), claiming that China Mobile had installed equipment on the inner side of the parapet walls and the walls enclosing the staircase of the Main Roof[2] which are the common parts of the Building without the consent of all the owners.

4.  The parties’ dispute is whether “the inner side of the parapet walls” and “the walls enclosing the staircase” (collectively “Disputed Parts”) have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of the 2/F Owner[3].

5.  There is no mention of the Disputed Parts in the assignment of 2/F (“2/F Assignment”) or the deed of mutual covenant of the Building (“DMC”). The term “Main Roof” is also not defined in these instruments.

6.  The judge dismissed the plaintiffs’ claims. He considered that a reasonable person reading the 2/F Assignment and the DMC would have understood them to mean that the 2/F Owner had been granted exclusive use, occupation or enjoyment of the entire roof, including the Disputed Parts. He held that the Disputed Parts are not “common parts” as defined in section 2 of the BMO. Therefore, there was no trespass on the common parts of the Building by China Mobile in respect of the antennas and equipment installed by them on those parts. He also found against the plaintiffs for their claims in nuisance as well as for breach of special condition 5(a) in the New Grant and clauses 8 and 12 of the DMC.

7.  By way of an obiter, the judge gave his views of the valuation of the market rental value of the external wall near the ground floor entrance and the inner side of the parapet walls of the roof of the Building for the relevant period from February 2011 to August 2012. He preferred the valuation of the defendant’s expert and stated that he would have awarded the plaintiffs $41,867 had they succeeded on their claims of trespass and breach of the DMC[4].

8.  By a decision given on 2 November 2023 (“Leave Decision”)[5], the judge refused to grant leave to the plaintiffs to appeal against the Judgment. On 15 November 2023, the plaintiffs filed their renewed application for leave to appeal with the Court of Appeal.

Grounds of appeal

9.  The grounds of appeal in the draft Notice of Appeal may be summarised as follows:

(1)  The judge erred in law and in principle in holding that the 2/F Assignment and the DMC have granted the 2/F Owner the exclusive use, occupation or enjoyment of “the inner side of the parapet walls” and “the walls enclosing the staircase” and in dismissing the plaintiffs’ claim for trespass;

(2)  The judge further erred in law and in principle by generally preferring the defendant’s expert’s valuation of the market rental value.

10.  These grounds are substantially the same as the ones advanced before the judge in the leave application.

Legal principles

11.  Under section 63A (2) of the District Court Ordinance, Cap 336, leave to appeal shall not be granted unless the Court is satisfied that the intended appeal has a reasonable prospect of success, or that there is some other reason in the interests of justice that the matter should be heard by the appellate court.

12.  Reasonable prospect involves the notion that the prospects of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable”[6].

Analysis

13.  Having considered the plaintiffs’ written statement, the defendant’s statement in opposition and the materials placed before the court, we think it is appropriate to determine this application without a hearing on the basis of the written submissions only, pursuant to Order 59 rule 2A(5)(a) of the Rules of the High Court.

Ground 1

14.  Under the 2/F Assignment, the 2/F Owner has the right to exclusive use occupation and enjoyment of all that the second floor and the Main Roof of the Building. The DMC also provides that the 2/F Owner shall have the sole and exclusive right and privilege to the use occupation and enjoyment of the whole of the second floor and the Main Roof of the Building. However, the term “Main Roof” is not defined in the 2/F Assignment and the DMC.

15.  In deciding that the Main Roof should include the Disputed Parts, the judge has considered, among other things, the following[7]:

(1)  the general principles of construction of documents in 黎偉雄 v 信和物業管理有限公司 [2020] HKCA 448 and Achieve Goal Holdings Limited v Zhong Xin Ore-Material Holding Company Limited [2020] HKCA 51;

(2)  the natural and ordinary meaning of the expression “Main Roof” would encompass the Disputed Parts; there is nothing to exclude the Disputed Parts on the roof from the 2/F Owner’s entitlement in the 2/F Assignment and the DMC;

(3)  if the drafter of the instruments had been minded to apply the “default position” under the BMO[8] to the Disputed Parts on the roof, he could have easily qualified the term “Main Roof” to exclude those parts from it for the statutory scheme to kick in; hence, the default position is not engaged and the Disputed Parts do not come within the definition of “common parts” in the BMO;

(4)  the plaintiffs’ contention is inconsistent with the holding of the Court of Final Appeal in Nation Group Development Ltd v New Pacific Properties Ltd (2000) 3 HKCFAR 427 at 436F to G that as a matter of construction, the grant of exclusive use of an entire floor would give the grantee the entire volume of the floor space of that floor.

16.  We are not minded to deal with the submissions on both sides in detail, as we are of the view that this point of construction is reasonably arguable and leave to appeal should be granted for this ground for the arguments to be properly ventilated. These are some of the contentions that we consider reasonably arguable:

(1)  it may be straining the ordinary and natural meaning of “Main Roof” to construe the expression as including the Disputed Parts;

(2)  based on the wording of section 2 of BMO, Schedule 1 of the BMO should come into play except where such parts 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, rather than where such parts have been specifically excluded in the registered instruments. It may be problematic to infer that the drafter intended not to have the default position in the BMO to kick in when he had not expressly excluded the Disputed Parts in the instruments;

(3)  applying Nation Group in the present case may not be appropriate as the Main Roof is not an enclosed space while the space concerned in Nation Group (ie the entire first floor) is enclosed;

(4)  it may be artificial to interpret the term “Main Roof” to cover “the walls enclosing the staircase” when the staircase itself is not within the exclusive use, occupation or enjoyment of the 2/F Owner in the present case (See Recitals (a), clauses 1(b) and 9 of the DMC).

Ground 2

17.  Under this ground, the plaintiffs submitted that:

(1)  the judge failed to have due regard to the criticism of the plaintiffs’ expert that the existing licence fee of the subject property should not be used to conduct the valuation as it is not considered as an independent comparable;

(2)  the judge failed to have due regard to the omission of the defendant’s expert to account for the fact that the defendant’s licence agreements also covered the use of the main roof;

(3)  the judge failed to have due regard to the arbitrariness in the methodology of the defendant’s expert of taking a simple average of the licence fee and rateable value of the subject property to arrive at the market rental value.

18.  It was submitted that had the plaintiffs’ valuation evidence been accepted, they should be awarded damages of $67,992 instead of $41,867 as assessed by the judge.

19.  We do not think the contentions in Ground 2 are reasonably arguable. We reject the contention that the judge had failed to explain his reasons satisfactorily for preferring the defendant’s expert over the plaintiffs’ expert. The adequacy of a judge’s reasoning must be looked at in context and in the particular circumstances of the case. He is not required to deal with every contention raised, only important ones that would have material bearing on his conclusion. We consider the judge’s reasoning on the valuation evidence adequate, bearing in mind that his views were given as obiter statements. We see nothing to criticise in the way he addressed the plaintiffs’ criticisms that he had failed to take into account various aspects of the evidence in §39 of the Leave Decision. What matters ultimately is whether his reasoning in §39 is sound.

20.  In §99 of the Judgment, the judge has considered the reason why the defendant’s expert based his valuation on the existing licence fee information (and the rateable value assessed by the Rating and Valuation Department). He also responded to the criticism of the plaintiffs’ expert in this respect. Furthermore, in §§97 and 98 of the Judgment, the judge also explained why he considered the bases relied on in the valuation of the plaintiffs’ expert are not valid. The plaintiffs’ complaint about the judge’s failure to have due regard to the criticism of their expert is without merit and the judge’s reasoning for preferring the bases of the valuation of the defendant’s expert is justified.

21.  The defendant’s expert had criticised the plaintiffs’ expert about the inclusion of the main roof in her comparables. The plaintiffs contended that the defendant’s expert failed to give a satisfactory explanation for the inclusion of the main roof in the licence agreement and rateable value relied on by himself[9]. The plaintiffs now challenge the judge’s decision for his failure to have due regard to the omission of the defendant’s expert to account for the fact that the defendant’s licence agreements also covered the use of the main roof.

22.  Even though this issue was not discussed in the Judgment, this cannot be taken to show that the judge’s assessment on the experts’ valuation of expert evidence is wrong because:

(1)  the defendant’s expert’s criticism on the comparables used by the plaintiffs’ expert is not only about the inclusion of the main roof. He criticised that the nature of the comparables is rooftop plus external wall, and this is different from the subject property they are instructed to evaluate[10];

(2)  the judge has already set out in §§97 and 98 of the Judgment why he considered the comparables adopted by the plaintiffs’ expert invalid. Under these circumstances, it is not wrong for the judge not to further discuss whether the defendant’s expert has given a satisfactory explanation concerning his criticism against the plaintiffs’ expert’s comparables;

(3)  there is no dispute between the experts that the main roof is a crucial part for the access and use of the parapet walls and it is impossible to isolate the subject parapet walls from the main roof under normal valuation practice[11]. The plaintiffs’ expert also admitted that the parapet walls would be valueless if access of the main roof is not allowed[12].

23.  In any event, the plaintiffs’ expert failed to sufficiently explain the reduction of 20% as adjustment for the exclusion of the main roof in her valuation which is disproportionate to the percentage of area occupied by the main roof[13]. On the other hand, the defendant’s expert has provided sensible justification to challenge that the said adjustment is not suitable (ie the external wall and/or the parapet walls would have no commercial value if they are isolated from the roof without accessibility of the roof and there is no sufficient data or evidence to support the 20% adjustment when the main roof forms a major part of the comparables[14]). Under these circumstances, the plaintiffs’ argument concerning this issue does not have reasonable prospect of success.

24.  As for the methodology of the defendant’s expert, the methodology of taking a simple average was not challenged by the plaintiffs’ expert in the joint statement by the experts and the plaintiffs’ expert also took the simple average from the adjusted unit rates of the two comparables to arrive at the adjusted unit rate of the subject property in her valuation[15]. The plaintiffs’ criticism of the arbitrariness of the defendant’s expert’s approach in taking the average of the licence fee and the rateable value is not supported on any valid basis.

25.  For all the above reasons, we refuse to give leave to appeal for ground 2.

Disposition

26.  We make an order as follows:

(1)  leave is granted to the plaintiffs to appeal from the Judgment in respect of ground 1;

(2)  the plaintiffs shall file a notice of appeal within 14 days from the handing down of this judgment.

27.  As the plaintiffs have failed to obtain leave to appeal for ground 2, we make a costs order nisi that they do pay 50% of the defendant’s costs of this application and that the costs attributable to the leave application in respect of ground 1 be in the cause of the appeal.