HARVEST RISE DEVELOPMENT LTD. v. LING YAU YUNG

HCMP109/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.109 OF 2002

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REASONS FOR DECISION

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Background

1. The plaintiff is the registered owner of the property known as the Remaining Portion of Section A of Kowloon Inland Lot No.1157 ("the Property"). The question before the court is what precisely that Property comprises.

2. The relevant part of Section A of Kowloon Inland Lot No.1157 in the present case comprises :

(1) Subsection 12 of Section A;

(2) Subsection 13 of Section A (Subsections 12 and 13 are adjacent to each other);

(3) An area adjacent to Subsection 12 of a trapezoid shape ("the Assigned Remaining Portion" it will be clear later why I have termed it thus). These three areas formed a larger trapezoid shaped area;

(4) An area which envelops the above three areas on two sides abutting onto Kwong Yung Street and Yin Chong Street. This area ("the Subject Portion") is the focus of the present Originating Summons before the court.

3. For convenience only, I will refer to the four areas I have just described as "the Old Remaining Portion".

4. By an assignment dated 31 March 1954, one Mr Watt Mo Kei ("Mr Watt") purchased the Property then known as the "Remaining Portion of Section A of Kowloon Inland Lot No.1157". This Property consisted of the Old Remaining Portion. On the plan annexed to this assignment, the Old Remaining Portion is marked in pink and green : the pink equating to what is now Subsections 12 and 13 and the Assigned Remaining Portion and the green corresponding to the Subject Portion.

5. This assignment also placed on Mr Watt the obligation to pay the Crown rent of $62.55 in relation to the Old Remaining Portion.

6. Mr Watt built three four-storey buildings on the Old Remaining Portion. These buildings came to be known as No.2 Kwong Yung Street, No.4 Kwong Yung Street and No.22 Yin Chong Street. Each building contained four units, which, as will be seen, were sold between March and August 1955.

7. The construction of the buildings and the sale of the units resulted in the sub-division of the Old Remaining Portion. The Old Remaining Portion was sub-divided into two new subsections and a remaining portion. Each of these areas contained one of the three buildings. These areas became known as Subsection 12 of Section A of Kowloon Inland Lot No.1157, Subsection 13 of Section A of Kowloon Inland Lot No.1157 and the Remaining Portion of Section A of Kowloon Inland Lot No.1157. This is the position today. Each purchaser of a unit in the buildings was assigned one equal undivided fourth part or share in the subsection or remaining portion relevant to his unit.

8. By an assignment dated 16 March 1955, the second floor unit at No.2 Kwong Yung Street was sold by Mr Watt. What was assigned was described as "ALL THAT one equal undivided fourth part or share of the Vendor of and in ALL THAT portion of ALL THAT the said piece or parcel of ground situate at Ho Mun Tin aforesaid and registered at the Land Office as The Remaining Portion of Section A of Kowloon Inland Lot No.1157 which said portion with its abuttals and dimensions is more particularly delineated and described on the plan hereunto annexed and thereon coloured Pink, Blue and Yellow and is intended to be registered at the Land Office as SUBSECTION TWELVE OF SECTION A OF KOWLOON INLAND LOT NO.1157". It was also stated in the assignment that the purchaser was to be responsible for and pay one-quarter of the annual sum of $9.20 (i.e. $2.30) being the Crown rent referable to Subsection 12.

9. This was the first assignment of any unit at No.2 Kwong Yung Street (indeed of any unit in the three buildings) and also (as is clear from the Land Registry records) the first time that Subsection 12 was registered in the Registry.

10. Accordingly, when the assignment of the other three units at No.2 Kwong Yung Street took place, what was assigned was stated to be "ALL THAT one equal undivided fourth part or share of the Vendor of and in ALL THAT the said piece or parcel of ground situate at Ho Mun Tin aforesaid and registered at the Land Office as SUBSECTION TWELVE OF SECTION A OF KOWLOON INLAND LOT NO.1157 which said piece or parcel of ground with its abuttals and dimensions is more particularly delineated and described on the plan hereunto annexed and thereon coloured Pink, Blue and Yellow". These assignments similarly referred to the obligation on the purchaser to pay one-fourth of the Crown rent. The assignments for the three units were dated 17 March 1955 (for the first and third floors) and 26 April 1955 (for the ground floor).

11. What is also to be noted is that in none of the assignments was there a reservation by the assignor (Mr Watt) of any part of Subsection 12 to himself (apart of course from any remaining unsold unit and one-quarter share referable to that unit).

12. The assignments of the units at No.4 Kwong Yung Street followed the same wording as in the case of the assignments of No.2 Kwong Yung Street. Thus :

(1) The assignment of the first unit sold (third floor) stated the assigned one-quarter share as being of that "portion" in the land described as Subsection 13. This was therefore in different terms to the three assignments that followed since, again, it represented the first time that Subsection 13 was registered in the Land Registry.

(2) All the assignments referred to the purchaser's obligation to pay one-quarter of the Crown rent of $9.20 (i.e. $2.30).

(3) The assignor did not reserve to himself any part of Subsection 13 (apart again for any remaining unsold unit and one-quarter share referable to that unit).

13. I now deal with the sale of the units in the building situate at No.22 Yin Chong Street, the assignments of which form the subject matter of the present Originating Summons.

14. The one-quarter share assigned in respect of the four units in No.22 Yin Chong Street were described in the following way in the assignments, "ALL THAT one equal undivided fourth part or share of the Vendor of and in ALL THAT the said piece or parcel of ground situate at Ho Mun Tin aforesaid and registered at the Land Office as THE REMAINING PORTION OF SECTION A OF KOWLOON INLAND LOT NO.1157 which said piece or parcel of ground with its abuttals and dimensions is more particularly delineated and described on the plan hereunto annexed and thereon coloured Pink, Blue and Yellow".

15. It is important to note the following in relation to these assignments :

(1) The term "portion of ... The Remaining Portion of Section A of Kowloon Inland Lot No.1157" (emphasis added) was no longer used. What was assigned was simply a quarter share of "The Remaining Portion of Section A of Kowloon Inland No.1157". The significance of the words "portion of " will presently become apparent.

(2) The obligation on the purchaser to pay the Crown rent was to pay one-quarter of the annual sum of $44.15. It will be recalled that the original figure for the Crown rent for the Old Remaining Portion was $62.55. With the deduction of $18.40 being the combined Crown rent in respect of Subsections 12 and 13, this produces the said figure of $44.15. This figure therefore represented the whole of the area covered by the Old Remaining Portion less Subsections 12 and 13.

(3) Again, there was no reservation by the landlord to himself of any remaining part of the Property (apart from of course any remaining unsold unit and one-quarter share).

(4) In the plan annexed to the assignments, the area coloured Pink, Blue and Yellow did not, however, cover the Subject Portion. The coloured area only covered the Assigned Remaining Portion. It is this omission that has given rise to the Originating Summons before the court.

16. Eventually, all the twelve units in the three buildings became assigned to the plaintiff and that is the position today.

The issue

17. By the present Originating Summons, the plaintiff seeks a declaration in the following terms :

"1. That a declaration be made that : -

'(a) All That portion of The Remaining Portion of Section A of Kowloon Inland Lot No.1157 as shown and coloured Pink on the Plan annexed to this Originating Summons ("the Subject Portion") formed part of The Remaining Portion of Section A of Kowloon Inland Lot No.1157 at the time of execution of Assignments Memorial Nos.233677, 235213, 238140 and 238141 and had been validly assigned by the Vendor therein, Watt Mo Kei (deceased), under the said Assignments Memorial Nos.233677, 235213, 238140 and 238141 notwithstanding that the Subject Portion had not been coloured on the plan annexed to the said Assignments Memorial Nos.233677, 235213, 238140 and 238141; and

(b) the Plaintiff is the owner of the Subject Portion'. "

18. The area coloured Pink is the Subject Portion. The Memorials Nos.233677, 235213, 238140 and 238141 referred to the four assignments made by Mr Watt in relation to the sale of the units at No.22 Yin Chong Street. I have referred these assignments in paragraphs 13 to 16 above.

19. The problem in relation to these four assignments, as I have said, is that on the annexed plans, the Subject Portion was not included so that all that appeared to be assigned were the one-quarter shares in the Assigned Remaining Portion.

20. Mr Benjamin Chain for the plaintiff submits that on a true construction of the four assignments, the assignor (Mr Watt) must have intended and did assign the Subject Portion as part of the Remaining Portion of Section A of Kowloon Inland Lot No.1157. At the hearing before me on 15 March 2002, I agreed with this submission and therefore made the declarations sought in the Originating Summons.

21. Before going into the Reasons for this, I would just like to make some brief observations about the parties before me at the hearing.

The parties before the court

22. I have found that Mr Chain is correct and the plaintiff is therefore entitled to the declaration sought. If, however, he was not correct, then it would have followed that Mr Watt's estate would be entitled to the Subject Portion. The estate is the defendant in the present proceedings, represented by Mr Bernard Man.

23. It was at first unclear to me what the defendant's position was. In the affirmation of Lee King Yue (a director of the plaintiff), served in support of the Originating Summons, it was said that the estate did not consider the Subject Portion as being an asset of the estate and would therefore not contest the present proceedings.

24. If this meant that whatever the outcome, the defendant would not consider the Subject Portion as being an asset, a possible question arises as to bona vacantia, in which case the Secretary for Justice might have had to be joined as a party to the proceedings.

25. However, Mr Man said that if I were to find against the plaintiff, the estate would then consider what would be the appropriate course to take with regard to the Subject Portion. I was therefore in these circumstances satisfied that there was no necessity to join the Secretary for Justice as a party. I would, however, only say this : if there had been any real possibility that the Subject Portion would have been disowned by the defendant in the event that the court was not in favour of the plaintiff, I would have been minded to order the joinder of the Secretary for Justice.

The true construction of the four assignments

26. In my judgment, on a true construction of the four assignments, it is clear that the Subject Portion was intended to be included as part of the Remaining Portion of Section A of Kowloon Inland Lot No.1157. I am of this view from the following reasons :

(1) In none of the four assignments (or for that matter in the eight assignments in respect of No.2 Kwong Yung Street and No.4 Kwong Yung Street) did the assignor reserve to himself any part of the Old Remaining Portion. Of course, there were reserved the unsold units and shares but once they were sold, no part of the Remaining Portion of Section A of Kowloon Inland Lot No.1157 was stated to be retained by the assignor. If it had been intended that the assignor would retain the Subject Portion or any part thereof, this would and should have been expressly stated in the assignments.

(2) Not only that, the absence of any part of the Remaining Portion being renamed or further sub-divided, lends weight to the conclusion that the assignor did not intend to retain any part of the Remaining Portion of Section A of Kowloon Inland Lot No.1157 including the Subject Portion when he made the assignments.

(3) The obligation placed on the assignee purchasers to pay the whole of the balance Crown rent payable in respect of the Old Remaining Portion ($44.15) is a very strong indication that the whole of the Remaining Portion was intended to be transferred, including the Subject Portion.

(4) Of less significance but nevertheless a factor is the absence of the words "portion of ... The Remaining Portion of Section A of Kowloon Inland Lot No.1157". This is again an indication that the assignor did not intend to retain any part of the Remaining Portion.

27. Taking into account the factors I have just set out, I have been guided by the following principles of construction relevant to the present case :

(1) The object of the exercise in construing conveyances, just as in the case of any other contract, is to ascertain what the parties intended. In Secretary for Justice v. Wing Lung Wai Community [1999] 3 HKC 580 at 588B, Chan CJHC said, "If there is a dispute with regard to what is actually conveyed, that is a matter of construction of the whole conveyance, including the parcel clause and the plan, in the light of other relevant surrounding circumstances. The object is to ascertain what the parties intended to be passed under the document and what is passed". This approach is entirely consistent with that adopted in relation to all contracts : regard must be had to the actual wording of the relevant clause, to the rest of the contract and the surrounding circumstances or "factual matrix".

(2) In giving effect to the parties' intention, the court may modify or even supply words in a contract : Chitty on Contracts, (28th Edn), Vol. 1 at paras.2-070 and 2-074. In the present case, in order to give effect to what I have found to be the parties' intention, it is necessary to modify the plans annexed to the four assignments by supplying or adding to the Pink, Blue and Yellow coloured areas, the Subject Portion.

(3) I have not forgotten that the assignments expressly provide that the Property assigned was as "more particularly delineated and described" in the annexed plan. I accept that, generally, where such or similar words are used, if there exists any conflict or uncertainty between words of description and the plan referred to, the latter would prevail : Neilson v. Poole (1969) 20 P & CR 909, 915-6. However, this is not to say that where the court is of the view that the wording in an assignment, when seen as a whole, clearly expresses what the parties intended to be assigned (as in the present case), the court is then bound somehow to follow the plan regardless if the words "as more particularly delineated and described" in a plan are used. In my view, cases like Neilson v. Poole are not authorities for this proposition at all. Upon analysis, they merely provide useful tools to enable the court arrive at a correct interpretation. The basic rule is that as expressed by Chan CJHC in Secretary for Justice v. Wing Lung Wai Community. Afterall, in Lintock Co. Ltd v. Attorney General [1985] 2 HKC 555, Hunter J construed a Crown lease containing those words of reference to a plan contrary to what was represented in that plan.

Decision

28. As I have said, I made the declarations sought at the conclusion of Mr Chain's arguments. Mr Man, for his part, did not oppose the making of these declarations. Further, as agreed, I also made an order for costs in the defendant's favour to be paid by the plaintiff, such costs to be taxed if not agreed.