1628 LTD v. POWER CYCLES LTD

LDBM 35 of 2006

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 35 OF 2006

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J U D G M E N T

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Background

1. The Applicant is the owner of “the Units A, B, C & D on 1/F. and the Staircase facing Pak Tai Street leading to the said Units (“the Staircase”), Park View Building (“the Building”), Nos. 29, 31, 33 & 35 Pak Tai Street, Kowloon (hereinafter collectively called as “the Applicant’s Premises”) whilst the Respondent is the owner of a portion of the ground floor of the Building known as the Ground Floor, Park View Building, No. 35 Pak Tai Street, Kowloon (“the Respondent’s Premises”). 

2. It was common ground that both the Applicant’s Premises and the Respondent’s Premises were assigned to the Applicant and the Respondent respectively subject to and with the benefit of, inter alia, the Deed of Mutual Covenant registered in the Land Registry by Memorial No. UB1252454 (“the DMC”) as a result of which both parties, being the owners holding undivided shares of the Building are bound by the terms and conditions contained in the DMC.  According to the Occupation Permit No. K6/76 dated 15^th January 1976, the occupation of both the Applicant’s Premises and the Respondent’s Premises were permitted for the same purpose of “Restaurant for non-domestic use”.

3. By a Notice of Application made on 21 February 2006, the Applicant pleaded that “before the Applicant applied to the Food and Environmental Hygiene Department (“FEHD”) and Liquor Licensing Board for a General Restaurant Licence and a Liquor Licence respectively for the Applicant’s Premises, it was discovered in or about January 2005 that there has been a metal sheet erected between the Applicant’s Staircase and the Respondent’s Premises (“the Metal Sheet”) as a substitution for the 4 inches brick/concrete separation wall (“the Wall”) approved by the Building Authority which has rendered the width of the Staircase below the approved staircase width of 4 feet 6 inches”.  And, despite repeated requests and demands by the Applicant through its former solicitors, “the Respondent has failed, refused and/or neglected to reinstate the brick/concrete separation wall and the Staircase in accordance with the approved building plans.”  The Applicant added that because of this substitution/alteration, the Applicant failed to obtain a full General Restaurant Licence and Liquor Licence when applying for these in or about February 2005, and has therefore suffered loss and damages.  Hence, the Applicant applied and claimed against the Respondent the following: -

“	(1)	a declaration that the erection of the Metal Sheet between the Applicant’s Staircase and the Respondent’s Premises :-
		(a)	was building works carried out without the prior approval of the Buildings Department in contravention of Section 14(1) of the Building Ordinance (Cap. 123) whereby Clause 9(a) of the DMC has been breached;
		(b)	was carried out not in accordance with the plans approved by the Buildings Department whereby Clause 9(c) of the DMC has been breached;
		(c)	constitute a structural alteration and/or unauthorized alteration works of the Park View Building which has damaged, interfered with and affected the legitimate use and enjoyment of the Applicant’s Premises as a restaurant and has interfered with and affected the rights of the Applicant whereby Clause 9(a) of the DMC has been breached;
		(d)	has, by reasons of the matters set out in paragraphs 5 to 9, cause nuisance, annoyance, inconvenience and damage to the Applicant whereby Clause 9(c) of the DMC has been breached.
	(2)	A mandatory injunction order ordering the Respondent to dismantle and remove the Metal Sheet and re-instate the brick/concrete separation wall to its original condition and in accordance with the approved building plans; and upon the said re-instatement to allow the Applicant, Mr. Cheung and their Authorized Person(s) to inspect the same at the Respondent’s Premises.
	(3)	An injunction order to restrain the Respondent, whether by itself, its agents, servants, tenants, licensees, directors, shareholders, employees or otherwise however from :-
		(a)	installing or erecting metal sheet or other structures between the Applicant’s Staircase and the Respondent’s Premises or causing or permitting structural alteration to the brick/concrete separation wall between the Applicant’s Staircase and the Respondent’s Premises which may damage or interfere with or affect the legitimate use and enjoyment of the Applicant’s Premises or which may interfere with or affect the right of the Applicant or which may cause nuisance or annoyance or inconvenience or damage to the Applicant or to the occupiers of the Applicant’s Premises or which may render the obtaining of the full General Restaurant Licence and the Liquor Licence for the Applicant’s Premises by the Applicant or its authorized representative(s) or the occupiers of the Applicant’s Premises unfeasible;
		(b)	cutting, injuring, damaging, encroaching, altering or interfering with any part or parts of the Applicant’s Premises.
	(4)	Damages to be assessed;
	(5)	Costs of these proceedings; and
	(6)	Such other appropriate orders or reliefs as this Honourable Tribunal deems fit.”

4. The Respondent opposed the Applicant’s Application.  It contended that “the Respondent purchased the Respondent’s Premises in 1994 on an ‘as is’ basis and since then has made neither alteration to the staircase nor installed any metal sheet or brick/concrete separation as alleged.”  Put simply, the Respondent pleaded that none of the existing physical structures erected between the Applicant’s Staircase and the Respondent’s Premises (including the erection of the existing Metal Sheet as alleged by the Applicant) resulted from any work or alteration undertaken by the Respondent or its agent.  In addition, the Respondent denied that the substitution of a 4 inches brick/concrete wall by a metal sheet as referred to in paragraph 5 of the Particulars of Application would result in any reduction in the width of the staircase.  Furthermore, the Respondent said that “so long as the Respondent’s property rights to enjoy its premises are respected, the Applicant is at liberty to take such steps or carry out such works as are proper or necessary to comply with the requirements of the authorities for its own business purpose” but the Applicant “has no legal basis to compel the Respondent to carry out any such works.”

Factual witnesses called by the parties

5. Mr. Wan Ho Hin, a director of the Respondent gave evidence that the Respondent had purchased the Respondent’s Premises in 1994 on an “as is” basis and since then the Respondent had made neither any alteration to the staircase nor installation of metal sheet in place of the original brick/concrete separation as alleged by the Applicant.  He had not given any specific instruction to anyone or given consent to anyone for dismantling or even alteration of the original Wall.  Also, he noticed no visible difference of the Respondent’s Premises including the Wall separating it from the stairs to the 1/F since the Respondent bought the Premises in 1994.  And he received no complaint from anyone in connection with any building alteration work carried out by any of his tenants since 1994.  On being questioned by the Tribunal, Mr. Wan said that he often visited the Respondent’s Premises from time to time since he himself resided nearby.  The Respondent did not seek to challenge any of the factual evidence of Mr. Wan as the Respondent frankly admitted that there was no evidence to substantiate any such challenge.

6. Similarly, Mr. Cheung Cheung Lam, an authorized representative of the Applicant gave evidence.  In his written Affirmation, he stated that the Applicant has become the registered owner of the Applicant’s Premises by an Assignment dated 1 November 2004.   He said that soon after the completion of the purchase of the Applicant’s Premises, the Applicant intended to decorate the said Premises for the purpose of commencing the business of a restaurant.  He was dully authorized by the Applicant to make applications to FEHD and Liquor Licensing Board for a General Restaurant Licence and a Liquor Licence respectively for the Applicant’s Premises.  It was in or about January 2005 that he first discovered that there was a metal sheet separating the Staircase and the Respondent’s Premises, which made him to have a suspicion that both “the original brick/concrete separation wall was removed and the width of the Staircase might have been reduced by the owner/tenant of the Respondent’s Premises” (quoted from the Affirmation of Mr. Cheung Cheung Lam).  For this reason, he sought advice from Mr. Chan Cheuk Pan, the Authorized Person appointed by the Applicant and the Applicant’s former solicitors, namely, Messrs. Tai, Mak & Partners.  The latter was later instructed to issue a letter dated 18 January 2005 to the Respondent, stating the following: “ our client intended to decorate the said property for restaurant purpose and discovered that there was an illegal structure in that the wall downstairs is one foot away from the original position upon inspection.  We are instructed that your client shall remedy the situation to comply with the relevant building regulations and/or compensate our client for the loss of business.  Otherwise, we are instructed to commence legal proceedings without further notice.” 

7. It was clear from Mr. Cheung Cheung Lam’s evidence that other than his sheer suspicion, he had no first hand evidence or even information from either the Applicant’s predecessor in title or from any one else as to when the existing metal sheet partition was built, who instructed its erection and under what circumstances was it erected.  

Expert witnesses called by the parties

8. The Applicant called for the evidence of Mr. Chan Cheuk Pan, Anson (“Mr. Chan”) who gave on 19 July 2006 a written response to the expert report dated 29 May 2006 prepared by another expert Mr. Cheung Kwok Ho, Richard (“Mr. Cheung”), who was called by the Respondent.  They each submitted their own report and commented on that of the other.  At the end, they came to narrow down their differences considerably.  I first summarize below what they agreed and what they disagreed regarding the Staircase including the original Wall and the existing Metal Sheet wall separating the stairs and the Respondent’s Premises.

9. Both experts could agree on the dimensions of various parts of the staircase as existing today and that some of these dimensions differed from what were shown in the approved record plans kept by the Building Authority.  The details of the agreed existing dimensions were shown in the Sketch Plan produced as Exhibit AR-2.  In particular, they agreed that the existing Metal Sheet wall was positioned on the stairs but not outside the stairs, and that the width of the lower flight of stairs was much narrower than what was approved with the critical part being the stairs next to “Column C13”.  Both agreed that the Staircase (excluding the Metal Sheet wall) might not have been altered or modified since the Building was completed.  As for the Metal Sheet wall, they both agreed that it was unlikely in existence at the time of the issue of the Occupation Permit as it would contravene the Buildings Ordinance and should not have been accepted by both the Authorized Person in charge of the development of the Building and the Building Authority at that time.  So, they also agreed that the original Wall was subsequently removed and replaced by the existing Metal Sheet wall at times unknown to both.

10. However, they differed in opinion as to the positions of the original Wall, which was removed subsequent to the issue of the Occupation Permit.  Mr. Cheung determined that the original 4 inches brick / concrete separating Wall, like the existing Metal Sheet wall, was positioned and built on the left end of the existing stairs but not outside the stairs.  He supported this opinion by his finding from the record plans that the staircase was supposed to be a monolithic structure and that the deviation of the width of the lower flight of the Staircase was because the upper flight had been constructed wider than it should have been.  On the other hand, Mr. Chan opined that contractor built the original Wall outside the stairs after discovering that the width of the lower flight was insufficient.

11. The experts also differed in their opinion as to what should be done to the existing Metal Sheet wall in order to (i) give the said separating wall one-hour fire resistance and (ii) serve its original designed purpose as an exit staircase with a minimum width of 3 feet and 6 inches.  Mr. Chan said that it was impossible to comply with both requirements by either (i) putting fire resistance material on top of both surfaces of the existing Metal Sheet wall or (ii) replacing the Metal Sheet wall with a new solid brick or concrete wall entirely resting on the stairs.  In any event, Mr. Chan opined that as the original wall prior to the existing Metal Sheet wall was likely to be erected outside the stairs, based on the dimension of the approved record plans, any replacement wall should be erected outside the existing stairs.  On the other hand, Mr. Cheung opined that the Staircase could have been constructed differently from the dimensions shown on the approved record plans and that “deviations from design dimensions were common and generally accepted by the industry”.  Also, Mr. Cheung suggested that there would be no need to take down the existing Metal Sheet wall in order to comply with the fire resistance and minimum width requirements.  As an alternative to reinstatement of the original Wall, certain approved fire resistance material could be sprayed or cladding be added onto the surfaces of the existing Metal Sheet wall.

12. Summing up, the experts differed in their opinion as to the position of the original approved Wall which was removed and replaced by the existing Metal Sheet wall by unknown persons at time unknown to both parties.  They also differed in the options opened to whoever required to make the alteration and/or addition in order to comply with the requirements of providing one hour fire resistance and sufficient width to enable the Staircase serving its original designed purpose as an exist staircase.  But whether or not I have to decide on these issues, the question of liability has to be dealt with first.  And before deciding on whether, as pleaded by the Applicant, that the Respondent should be held responsible for removing the original separating Wall and should therefore be ordered to reinstate the said Wall, I have to answer the question as to whether the left enclosing wall of the Staircase belongs to the Applicant, the Respondent, jointly to the Applicant and the Respondent, or to the Common Part of the Building.

Ownership of the original concrete / brick separating Wall which was removed at times unknown to the parties

13. The Applicant in the written final submission submitted that the original Wall might be owned by the Applicant or co-owned by the Applicant and the Respondent but could not be a common part of the Building.  On the other hand, the Respondent submitted that the original Wall was either part of the Applicant’s Premises or part of the common parts of the Building.  It could not be part of the Respondent’s Premises.

14. Counsel for the Respondent summed up in her submission the history of ownership of the subject units, as follows:

“Briefly the G/F and the 1/F units of the Building were originally owned by one party, who later transferred the same to another common owner.  Then the ownership of the G/F and 1/F units was split on 29.10.1981 when the last common owner transferred the G/F unit to another party, keeping the 1/F units until his mortgagee transferred them to another party on 30.4.1985.  In this latter assignment, the premises transferred were referred to as “Units A, B, C and D on the FIRST FLOOR of the said building and the staircase (facing Pak Tai Street) leading to the said units” (emphasis added).  These premises were subsequently transferred to the Applicant by assignment dated 1.11.2004.”

15. The Respondent noted that, “the description of the premises in either the original assignment of the 1/F units, or in the subsequent assignments to the Applicant did not refer to the Wall”.  Hence, in the title instruments, the Wall is not assigned to the Applicant.  In addition, the Respondent submitted that in the First Schedule of the DMC of the Building (under which “Names of owners”, “Part for Exclusive Use” and “Shares allocated” were set out), there was no mention of the Wall (or for that matter, even the Staircase) in the column of “Part for Exclusive Use”.  Therefore the Respondent drew the conclusion that by virtue of the absence of reference of the Wall in (i) the title instruments for the assignment of the 1/F premises as well as (2) the First Schedule of the DMC giving the rights of exclusive possession to any party, the Wall was a common part of the Building under Section 2 and the First Schedule of the Building Management Ordinance (Cap. 344) (“BMO”), which provides that Common Parts of a building include: “Walls enclosing passageway, corridors and staircases.”

16. However, the Applicant submitted that (i) both premises of the parties were found under the Second Column (with the heading: “Part for Exclusive Use”) of the First Schedule of the DMC, an instrument registered in the Land Registry by memorial no. 1252454; (ii) para. 14 (k)(i) of the said DMC provided that “the common parts services and facilities referred to in this Deed shall include the entrances lavatories yards staircases landings passages which are not included in any part of the Building exclusively owned by one owner or several co-owners as specified in the First Schedule hereto” and (iii) according to section 2 of the BMO, common parts means “(a) the whole of a 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 or specified or designated, those parts specified in the First Schedule”.  It therefore follows that both premises of the parties, being parts originally designated for “Exclusive Use” under the DMC, could not be a common part of the building.  Although there was no mention of the Staircase or the Wall in the First Schedule of the DMC, this was not needed as since the completion of the building until the assignment of the G/F unit in 1981, both premises of the parties were under single ownership.  When the Applicant’s Premises was assigned to another party separate from the owner of the 1/F units, it was specifically provided in the description of the premises to include the Staircase.  Besides, the whole staircase and the enclosing walls have been designated or specified for exclusive use, occupation or enjoyment in the earliest assignment and assignment plans.  Therefore, the Applicant submitted that it would be inconceivable that such an exclusive area could later become a common part.

17. After consideration of both parties’ submission, I agree with the Applicant’s reasoning.  The Respondent paid particular attention to the point that there was no reference of the word “the Wall” in both the description of the Assignments of the Applicant’s Premises and in the First Schedule of the DMC.  However, I take issue with this argument.  According to the Shorter Oxford English Dictionary, the word “staircase” means:

“A flight (or occasionally a series of flights) of stairs and the supporting structure including the framework, balusters, etc; the walls, doors, etc. enclosing this.  (Underline added)

18. Therefore, even though the word “the Wall” was missing in the Description of the Assignments of the Applicant’s Premises, I find that the common meaning of the word “Staircase” as appeared in the Description already include the original separating Wall of the Staircase.  For this reason, I concur with the Applicant that the Wall is not a common part of the building.

19. Although the Applicant submitted that the original Wall might be either owned by the Applicant or co-owned by the Applicant and the Respondent, there was no evidence or clear argument from the Applicant that whether it was solely owned by the Applicant or co-owned by the two parties.  However, as set out above, it was the Applicant’s case that the Applicant owned the Staircase (including the Wall) exclusively, by virtue of the description of the “Part for Exclusive Use” under the DMC and the Assignment document of the Applicant’s Premises.

Provision under the DMC against structural alteration

20. The relevant parts of the DMC against any party making alterations of the Wall in the Building are Clause 9(a) and 9(c) which read,

“	9.	Each party hereto hereby covenants with the others as follows:-
		(a)	Not to make any structural alterations in his part of the said Building which may damage the other parts thereof or cause any inconvenience to the other occupiers…
		(b)	…
		(c)	Not to use his part of the said Building for any illegal or immoral purpose nor do or permit anything therein or thereupon which may create unnecessary noise or may be a nuisance or annoyance to or may cause damage or inconvenience to the other occupiers of the said Building or of the premises in the neighbourhood.”

Who should be held responsible for the structural alteration?

21. The Respondent reminded us that “by the Applicant’s own admission, it did not know when or by whom the Wall was removed and the Metal Sheet put in its place” and that “the Applicant makes no claim that it was the Respondent who was responsible for the said removal (of the Wall) or replacement (by the Metal Sheet).”  Hence, the Respondent could not be made liable to reinstate the Wall.

22. Most importantly, the Applicant also conceded in the final submission that there was no evidence to prove that Respondent did breach Clause 9(a) of the DMC, “apart from the unqualified adoption by the Respondent’s expert of his expert report including para. 3.1.4 which agreed to para. 12 of affirmation of App’s expert.”  But is the “adoption” of the experts’ statement in the said report sufficient for the Applicant to say that she has proved the case, that it was the Respondent who had breached Clause 9(a)?

23. I do not think so.  Notwithstanding the expertise of the experts who are entitled to give expert opinions, I cannot agree that the mere assertion of either expert or even both experts as to some factual matters (such as actual removal of the original Wall and the replacement of the existing Metal Sheet wall as asserted by Mr. Chan in para. 12 of his Statement, page 36 of Exhibit AR-1) which happened in the past and were beyond their personal knowledge should be accepted as the facts of the present case.  I in fact find that the experts’ evidence do not relate to the issue of liability.  I certainly will give much more weight to the evidence of factual witnesses regarding these past events. 

24. The said extract of the Statement of Mr. Chan is reproduced below for a better understanding of what he asserted:

“

12.

The removal of the Separation Wall and the erection of the Metal Sheet were “building works” within the definition of Section 2 of the Building Ordinance (Cap. 123) (‘the BO”) and therefore they were exempted under Section 41(3) of the BO.  Accordingly, the Respondent has been in breach of Section 14(1) of the BO as it has failed to obtain the approval from the BA in respect of the removal of the Separation Wall and the erection of the Metal Sheet.  Further, the removal of the Separation Wall and the erection of the Metal Sheet were carried out not in accordance with the Approved Plan and the Approved Structural Plan which has constituted an unauthorized alteration works.”   (underline added)

25. Similarly, even though Mr. Cheung said in his para. 3.1.4 of his Expert Report dated 29 May 2006 (page 44 of Exhibit AR-1) that “there was no dispute over paragraph 12”, there was no basis for which Mr. Cheung could conclude that it was the Respondent who removed the original Wall and erected the Metal Sheet.  Also, it was clear from their viva voce evidence that these 2 experts could not know which party was responsible for the removal of the original Wall and the erection of the Metal Sheet.

26. In addition, the Respondent submitted that given the substantial nature of the work involved in removing the original Wall and the erection of the Metal Sheet, it would be very unlikely that such alteration works had been done without the knowledge, consent or acquiescence of the 1/F owner of the Building at the time.  Alternatively, the works might have been done when the Applicant’s and the Respondent’s Premises were owned by a common owner in which case it would be assumed that consent would have been given by the common owner.  In either scenario, there would be either consent or acquiescence from the owner of the 1/F Premises as a result of been given by the common owner.  In either scenario, there would be either consent or acquiescence from the owner of the 1/F Premises as a result of which he would have been estopped from claiming against the party carrying out the alteration works, or any subsequent owner of the said party.  

27. Therefore, I agree with the Respondent that the Applicant has completely failed to make out the case that it was the Respondent who breached Clause 9(a) and/or 9(c) of the DMC in that the Respondent is liable for the re-instatement of the Wall.

What should be reinstated and at what position?

28. Since I have decided that the Applicant failed in her application for an injunction order requiring the Respondent to remove the Metal Sheet and to reinstate the original Wall, I do not find it necessary to decide on the type of wall to be reinstated and its position.  As to the other application made by the Applicant, I also find that it is not appropriate or necessary for this Tribunal to make the various declarations in connection with the existing Metal Sheet.  Rather, I think these are within the mandate of the Building Authority under the Buildings Ordinance.  If either party wishes to seek clarification from the Building Authority, she should take up the matter directly with the Authority.  

Orders

28. All the applications made by the Applicant be dismissed.  I make a costs order nisi that the costs of the Application be to the Respondent, to be taxed at District Court Scale if not agreed, and with Certificate for counsel.  The costs order shall become absolute if neither party applies to vary the order within 21 days from today.