ABERDEEN SHOPPING PLAZA LTD v. THE INCORPORATED OWNERS OF ABERDEEN KA NING MANSION

HCA9319/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9319 OF 2000

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J U D G M E N T

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1. The Incorporated Owners of Aberdeen Ka Ning Mansion, the defendant herein, was registered under the Multi-storey Buildings (Owners Incorporation) Ordinance, Cap. 344 on 10 July 1981. They will, for ease of reference, be referred to hereinafter in this judgment as "the Incorporated Owners".

2. The Aberdeen Shopping Plaza Limited (hereinafter referred to as "ASP") became the registered owner of the 1st floor and Flat Roof ("the Premises") of Aberdeen Ka Ning Mansion ("the Building") on 15 April 1980 by an assignment of the same date registered in the Land Office. The Premises were assigned to ASP together with the benefit of a Deed of Mutual Covenant relating to the Building dated 14 February 1980 ("the DMC") which is binding upon all the owners for the time being.

3. PP Management Consultants Co. Ltd ("the Management Co.") was employed by the Incorporated Owners to manage the Building since 1989 and continued to do so up to the present.

Background

4. Since 1988, ASP had leased the Premises to be used as a kindergarten under the name of Sun Island English Kindergarten. The kindergarten surrendered its lease and vacated the Premises at the end of January 1998.

5. On 13 March 1998, a new lease of the Premises was entered into between ASP as landlord and Liu Shun Chun and three other individuals all four of them trading as Old Chi Oi Home for the Elderly ("the Old Age Home") as tenants to commence on 11 March 1998 until 10 March 2003.

6. Towards the end of 1998, there was a change in the partnership of the Old Age Home such that the four individuals (including Liu Shun Chun) making up the present 2nd defendant by counterclaim became the new partners. The lease, dated 13 March 1998, was surrendered by agreement and a new lease, dated 15 November 2000, was entered into between ASP as landlord and the Old Age Home as tenant for the period from 11 October 2000 until 10 October 2003. For ease of reference, I shall in this judgment refer to the 2nd defendant by counterclaim as "the Tenants"

7. In both the leases involving the Old Age Home and relating to the Premises, there is an express clause that the Tenants should comply with the terms of the DMC.

8. As early as around the end of 1997, when the Management Co. got wind of the fact that the Premises may possibly be let to operators of a home for the elderly, they had, by letter dated 27 November 1997 addressed to Chan Lap Man and Chan Tak Fai (being the representatives of ASP as registered owner), drawn their attention to the user restriction contained in the DMC.

9. At a meeting of the Management Committee of the Incorporated Owners held on 11 May 1998, the Committee passed a resolution objecting to the change of user of the Premises as a home for the elderly.

10. At an annual general meeting of the Incorporated Owners held on 16 June 1998, it was unanimously decided not to agree to the Premises being used as a home for the elderly as it was not in conformity with the terms of the DMC. At this meeting, the representative of ASP was present (although he was invited to temporarily withdraw when the decision was taken by the members) but the result of that decision was made known to him immediately after the decision was made.

11. Despite such objections by the Incorporated Owners, the decoration of the Premises for use as a home for the elderly was completed in June 1998 and the approval of the Director of Social Welfare was sought and obtained in November 1998. Since then, if not earlier, the Premises had been used continuously up till the present for the operation and running of the Old Age Home.

The main issue

12. The main issue in this matter arises from the counterclaim brought by the Incorporated Owners against ASP and in which the Tenants have been brought in as 2nd defendant by counterclaim, wherein the dispute is whether there has been a breach of Clause 7(f) of the DMC as a result of the Premises being used for operating and running the Old Age Home. The Incorporated Owners seek injunction relief against both ASP and the Tenants in respect of the alleged breach of the DMC.

13. The relevant part of Clause 7(f) of the DMC reads as follows :

"No owner shall use his part and/or unit in the said building or allow the same to be used for any purposes other than those specified in the Occupation Permit and in this respect the owners for the time being of those parts and/or units on the ground floor and first floor of the said building shall use or allow the same to be used for non-domestic purposes....and in addition no owner shall use his part and/or unit on the ground floor and first floor of the said building or allow permit or suffer the same to be used for the treatment of mental disease or for psychiatric practice or for the following types of business namely boarding house, dance halls funeral parlour coffin shop blacksmith or metal beater's shop temple garages Buddhist hall for the performance of the ceremony known as 'Ta Chai (打齋)' or any similar ceremony or for any other noisome trades and no owner shall use his part and/or unit on the second to twenty-fourth floors (inclusive) of the said building or allow permit or suffer the same to be used as an inn hotel boarding house apartment house lodging house factory dancing hall night clubs temple Buddhist hall for the performance of the ceremony known as 'Ta Chai (打齋)' or any similar purpose or for any noisome and noxious trades or for any illegal or unlawful or immoral purposes."

14. The Incorporated Owners, being the plaintiff by counterclaim, says that the use of the Premises for the Old Age Home is a breach of Clause 7(f) of the DMC in that the Old Age Home comes within the meaning of a boarding house which is expressly prohibited by that clause.

15. In so submitting, the Incorporated Owners rely on a number of cases which had to deal with the word "boarding house". In all those cases, it was held that the usual and natural meaning of "boarding house" necessarily required the provision of food as well as lodging for a charge.

16. In The World Apartments v. Lai Bun [1962] HKDCLR 97, Huggins J (as he then was), after referring to the Shorter Oxford Dictionary for the ordinary meaning of the words "board" and "lodge" said, at page 99 :

"If there is one thing which appears clearly from these definitions it is that food is the very essence of a boarding house. It is to be distinguished from a lodging house and indeed the common expression in the English language is 'board and lodging', distinguishing on the one hand the provision of food and on the other the provision of accommodation."

17. A similar meaning was ascribed to the word "boarding house" in the decision by the Court of Appeal in the case of Lam Man Yuen v. Lucky Apartments, Civil Appeal No. 17 of 1964.

18. In Maidstone Investment Ltd v. Chu Mei Kam [1985] 1 HKC 475, D'Almada Remedios J followed the decision in World Apartments v. Lai Bun (ibid) to say that :

"In a guest house food is not provided which distinguishes it from a boarding house where lodging and food are provided usually at a fixed rate."

19. In Park Kit Investment Ltd v. Cheung Wai Ping, HCA No.5349 of 1998, Sakhrani J. had to decide whether premises used as an elderly care home was used "other than as a dwelling" within the meaning of section 115A of the Landlord and Tenant (Consolidation) Ordinance. After referring to the Oxford English Dictionary as to the meaning of "boarding house" and "lodging house", the judge accepted the plaintiff's submission that the premises were being used as a boarding house as well as a lodging house and as such the use is "other than as a dwelling" within the meaning of section 115A.

20. The Incorporated Owners also rely on the dictionary definition of "boarding" which includes :

"The supply of stated meals; the obtaining of food, or food and lodging at another person's house for a stipulated charge."

21. Moreover, the Incorporated Owners have pointed to the Code of Practice for Residential Care Homes for Elderly Persons which has been produced in evidence, and which provides for, inter alia, provision of services, health and care services and nutrition diet for the elderly persons residing at the home. It is also clear from the Code of Practice, to which the Old Age Home was subjected to comply with its contents, that it is obligated to provide meals and that there should be at least three meals each day for the elderly inmates residing at the Old Age Home.

22. On such authority the Incorporated Owners submit that it is clear that the operation of the Old Age Home at the Premises is a clear breach of Clause 7(f) of the DMC because the supply of meals and the provision of accommodation by the Old Age Home to its inmates clearly bring it within the ambit of a "boarding house".

23. On the other hand, counsel for the defendants by counterclaim has submitted that the Old Age Home does not come within the meaning of the word "boarding house" as it is used in Clause 7(f) of the DMC.

24. The argument runs as follows. Firstly, it is not disputed that the natural and ordinary meaning of "boarding house", as was decided in the cases to which I have been referred, can encompass the Old Age Home since it has not been disputed that the Old Age Home provides both meals and accommodation.

25. It is however submitted that when construing Clause 7(f) of the DMC, which is in effect a private contractual document between individuals, a court will have to ascertain the intention of the parties when they entered into that document.

26. In this case, the term "boarding house" in the DMC should be narrowly construed and Clause 7(f) should be read in the context of the particular mischief the drafter of the DMC sought to address. It is suggested by counsel that when the whole Clause 7(f) is read, it will be seen that the clause sought to prohibit certain "types" of business which could generally be regarded as undesirable, repugnant, irritating, creating nuisance, bringing in undesirable characters or leading to high volume of pedestrian traffic to the Building.

27. It is further submitted that the DMC came into existence in 1980, but that the Residential Care Home (Elderly Persons) Ordinance did not come into effect until 1 April 1995. Moreover, the Code of Practice provided for under section 22 of that Ordinance did not come into existence until some time after the Ordinance itself. The Code of Practice produced in evidence in this case was revised in September 1999. Therefore, it is argued, the drafter of the DMC most likely did not have in mind the prohibition of a privately run old age home when the DMC was drafted in 1980.

28. To apply the wider meaning of "boarding house" to Clause 7(f) of the DMC would lead to absurd and repugnant results since the wider meaning of the term "boarding house" would include a hospital, a rehabilitation home, a boys' or girls' home, a sheltered home, or even a prison since all these institutions would likely provide both meals and accommodation to its inmates.

Decision

29. It is clear that there is only one issue here in dispute, namely whether the Old Age Home operating at the Premises is caught within the prohibition in Clause 7(f) of the DMC as coming within the meaning of "boarding house" as it is used in that clause.

30. Undoubtedly this involves the construction of a private document in the nature of a contract. As such, it is for me to determine the intention of the parties when the DMC was signed.

31. In this respect, I have been referred in submission to the principles to be applied when construing contracts. What is sought to be achieved by a court when construing a contract is to ascertain the mutual intentions of the parties from the words used by the parties in the contract by which they sought to express their intention.

32. Also, the court is not concerned with what was the actual intention of the parties when it was entered, but what would have been the intention of reasonable people placed in the same position as the parties to the contract and in using the words used by them in that contract. In that sense the exercise is an objective one.

33. However, the most important principle is that the intention of the parties must be ascertained from the language use by them in the contract considered in the light of the surrounding circumstances and the object of the contract.

34. I shall deal with each of the argument put up by the defendants (by counterclaim).

35. Firstly, it was argued that absurd results would come about if the wider sense of the meaning of "boarding house" was applied to Clause 7(f) of the DMC. I am unable to see how the first floor of such a multi-storey building with 24 floors of residential units above it can ever be suitable to be used as a hospital. In so far as a prison is concerned, I doubt very much that a prison can come within the meaning of "boarding house" since the prisoners are not there by choice and do not pay for the privilege of being in a prison both for the accommodation and the food. Therefore, leaving aside a hospital and a prison, I cannot see how it would be absurd if a youth hostel, a rehabilitation centre, a boys' or girls' home or even a sheltered home is prohibited from being operated on the first floor of the Building because of Clause 7(f) of the DMC if they come within the meaning of "boarding house".

36. This point was so strained in its argument that at one stage counsel even suggested that a kindergarten or nursery may even be caught by the wider definition of "boarding house", because snacks may be provided to the students who may also be allowed to take afternoon naps thereby bringing a kindergarten within the meaning of "board" and "lodging". Afternoon naps are of course not accommodation since the students do not sleep there overnight.

37. The other reason for asking me to construe the word "boarding house" in its narrower sense is based on the submission that the Residential Care Home (Elderly Persons) Ordinance did not come into existence until 1995. Whilst that may be so it does not follow from that that old age homes or care and attention homes were unknown before that date. It simply means that the Government decided that there should be legislation to regulate such institutions if they are operated privately and for gain and that Ordinance was brought about for that purpose.

38. I have also been provided a detailed table by counsel for the defendants (by counterclaim) detailing the differences between a boarding house and an old age home. However, once the ordinary dictionary meaning of "boarding house" is kept in mind, then all those differences detailed in that table do not take an old age home outside of that definition.

39. Having heard all the arguments put forward by the defendants (by counterclaim), I have not been persuaded in the least that any meaning other than the natural ordinary meaning of "boarding house" should be applied to that word used in Clause 7(f) of the DMC.

40. Clause 7(f) of the DMC is a prohibition clause as to the user of the various floors of the Building. One of the prohibited businesses for the first floor is that of "boarding house".

41. By its natural and ordinary meaning, the Old Age Home is a boarding house albeit restricted to elderly persons. The fact that there is an age restriction does not take it out of the normal ordinary definition of a "boarding house". Nor can the further and additional services (such as medical, health or nutritional) provided in the Old Age Home take it out of that definition.

42. As such, I have come to the conclusion that the Old Age Home is a boarding house within the meaning of that word as used in Clause 7(f) of the DMC and is thereby caught by that prohibition clause as to user.

43. From the facts of this case as set out in the background in this judgment, it must be clear that when ASP let the Premises to the Tenants, ASP knew only too well that it was to be used as a home for the elderly. Therefore it cannot be disputed that ASP had caused, permitted or allowed the Premises to be used as a "boarding house" and is thereby in breach of Clause 7(f) of the DMC. It goes without saying that the Tenants must likewise be liable for the same breach by reason of the fact that under the Tenancy, they are under a duty to comply with all the terms of the DMC.

The other issues

44. So far I have only dealt in this judgment with the main issue in dispute between the parties. That main issue arises from the counterclaim by the Incorporated Owners.

45. There are other side issues which are connected and related to the main issue. These other issues were in fact raised in the main claim brought by ASP against the Incorporated Owners.

Gas installation

46. In June 2000, ASP informed the Management Co. that it proposed to apply for the installation of gas pipes for the supply of gas to the Premises.

47. The Management Co., by letter of 14 July 2000, wrote to the Hong Kong and China Gas Co. Ltd objecting to the installation of pipes for the supply of gas to the Premises.

48. ASP claims against the Incorporated Owners that the Incorporated Owners are in breach of the DMC by objecting to the installation of pipes for the supply of gas to the Premises.

49. The stance taken by the Incorporated Owners is that since the actual use of the Premises is one prohibited under the DMC, and therefore not a proper use of the Premises, it is within the rights of the Incorporated Owners to object to the installation of gas pipes to the Premises. In this respect, the Incorporated Owners rely on Clause 2 of the DMC which provides :

"Each party hereto hereby grants unto the other of them and his/their ...tenant...in common with the other of the parties hereto and all having the like right) for all purposes connected with the proper use and enjoyment of his/their parts and units of and in the said building to which the grantee/grantees is/are entitled as aforesaid the following easements rights and privileges:-

.....

The free and uninterrupted passage of ...gas...from and to his part or unit of the said building through ...pipes...which now are or may at any time be in or under or passing through the said land and/or the said building." (my emphasis)

50. In the light of the wording contained in Clause 2, counsel for ASP has conceded that the claim by ASP stands or fall with the main issue in this case.

51. In the circumstances and by reason of the decision which I have come to in the main issue in this matter, it follows that this claim by ASP cannot succeed.

The signs

52. When the Premises was occupied by the Sun Island English Kindergarten, the kindergarten erected two signs, one on the external wall of the Building and one on the ledge of the 1st floor on the external wall. Both signs had the name of the kindergarten on them.

53. Clause 7(h) of the DMC provides :

"Save as provided in the preceding sub-clause, no owner or occupier of any part of the said building shall display paint or affix any sign notice or other thing in or redecorate the corridors staircases landings entrance or any other part of the said building in common use or the exterior of any part of his unit inside the said building or any part of the outside of the said building unless he had obtained the previous written consent in writing of the Corporation and/or Management Committee who shall be entitled to withhold its consent without giving any reason therefore."

54. The preceding sub-clause (i.e. Clause 7(g)) allows an owner to display or affix any sign to the door of his unit provided that it does not project onto the common area, and also to display any sign outside the Building provided that the sign is within the limits of his unit and does not breach any government regulations.

55. The Incorporated Owners and/or Management Co. did not object to either of the two signs erected by the kindergarten although there was no written consent given by them at the time.

56. The kindergarten vacated the Premises at the end of January 1998 but left behind the two signs which it had erected.

57. As early as 22 September 1997, the Incorporated Owners had written to the representatives of ASP asking for those two signs to be removed when the kindergarten vacated the Premises but that was not done.

58. In about August 1997, without the knowledge of the Incorporated Owners and/or Management Co., the name on those two signs were changed from the name of the kindergarten to the name of the Old Age Home. No consent of the Incorporated Owners or that of the Management Co. was obtained either by ASP or by the Old Age Home for that change in name in so far as the signs were concerned.

59. On 22 September 1998, at a meeting of the Management Committee of the Incorporated Owners, it was resolved that the Management Co. should write to ASP to demand the removal of the two signs. This was done by letter dated 11 December 1998 to the representatives of ASP. The signs were not removed.

60. At a further meeting of the Management Committee held on 27 January 1999, it was resolved that the Incorporated Owners would engage its own contractors to remove the signs. By letter dated the day after that meeting, the Management Co. informed both ASP and the Tenants that if the signs were not removed within seven days, the Incorporated Owners would arrange for their removal at the cost of ASP and the Tenants. The signs were not removed.

61. By letter dated 1 March 1999, solicitors acting for the Management Co. wrote to ASP and threatened to institute legal proceedings for injunction if the signs were not removed within seven days. Nothing was done to the signs.

62. On 12 April 1999, ASP wrote to the Management Co. indicating that the Tenants wished to re-site the signs and sought the approval of the Incorporated Owners for the signs and to designate a location for the signs. This letter and request was tabled at a meeting of the Management Committee held on 22 April 1999. The Committee resolved not to give its consent as sought. By letter of 27 April 1999, the Management Co. informed ASP of the outcome of its request and again demanded the removal of the signs. This letter was copied to the Tenants.

63. In July 1999, the staff of the Management Co. engaged a contractor to remove the signs. As the contractors were attempting to remove the signs, the Tenants resisted such removal and the police was called. In the light of such objection by the Tenants, the Incorporated Owners quite properly decided to withhold any further action to remove the signs by self-help.

64. The stance taken by ASP now is that the Incorporated Owners have acquiesced in the breach of the DMC by the kindergarten for all the 10 years or so that the signs have been there with the name of the kindergarten. It is argued that by reason of such acquiescence the Incorporated Owners are now not in a position to object to the signs with the name of the Old Age Home.

65. I cannot agree with such submission. Even if the Incorporated Owners have acquiesced to the signs with the name of the kindergarten, such acquiescence cannot in any way bind them in so far as signs with the name of the Old Age Home is concerned. In any event, the Incorporated Owners have never consented to the signs with the name of the Old Age Home from day one. This has at all times been made known to ASP as well as the Tenants.

66. Moreover, the letter of 12 April 1999 from ASP to the Management Co. asking for approval for the signs clearly showed that even then ASP accepted that the consent of the Incorporated Owners and/or the Management Co. was needed for the signs or for their relocation. That is inconsistent with the stance taken by them now in saying that the Incorporated Owners have acquiesced in the signs and are now estopped from objecting to them.

67. For these reasons, I find that the Incorporated Owners had never acquiesced in the signs with the name of the Old Age Home, and has at all times declined to give their consent which consent was necessary for the signs to be erected under Clause 7(h) of the DMC.

The lifts and damage to the external wall

68. These are no longer issues which need to be adjudicated upon since there are no longer any dispute between the parties on them. They are only relevant in so far as costs in relation to this matter is concerned. I therefore do not propose to deal with these matters in this judgment but will deal with them when I hear the parties on costs.

Conclusion

69. Accordingly, ASP's claim in the main action is dismissed.

70. There will be judgment for the Incorporated Owners on its counterclaim as follows :

(a) An injunction restraining ASP and the Tenant whether by themselves or by their agents or servants or otherwise howsoever from allowing or carrying on at the Premises the business of a boarding house in the form of the Old Age Home in breach of the DMC.

(b) An order that ASP and the Tenant do forthwith pull down, demolish and remove the signs from the exterior wall of the Building on which appear the name of the Old Age Home.

71. I shall now hear the parties as to costs and/or any consequential order they seek or arising from the orders made herein.