CHAN KWOK HING AND ANOTHER v. THE INCORPORATED OWNERS OF CHE WAH INDUSTRIAL BUILDING Defendant

DCCJ 3781/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3781 OF 2008

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D E C I S I O N

1.  This is the dispute between the Chan’s, the Plaintiffs, and the IO, the Defendant, in respect of the right to possession of a First Aid Room and 5 car parking spaces on the Ground Floor of the industrial building in question.  On 2 October 2009, I handed down my written decision (“the Decision”).

2.  The background of the case and the parties’ respective case, as pleaded and argued during the last hearing, are set out in the Decision: see paras.2-8.  I should just recapitulate that the First Aid Room was used by the IO for various purposes.  Of the car parking spaces, there are 15 spaces designated for lorries (“L-Parking Spaces”) and 14 spaces designated for private cars and small vans (“S-Parking Spaces”).  The ones in question are S-Parking Spaces Nos. S-2, S-3, S-4, S-5 and S-6, in other words, not designated for lorries.

3.  In respect of the First Aid Room, I ruled that the IO’s contentions as pleaded do not constitute valid defence to the Chan’s claim: see paras.13-52 of the Decision.

4.  In respect of the 5 S-Parking Spaces, I ruled that the IO’s counterclaim of right over these premises is bound to fail: see paras.53-77 of the Decision.

5.    I gave summary judgment of the Chan’s claim in respect of the First Aid Room and struck out the IO’s counterclaim in respect of the car parking spaces.

6.  The IO applies for leave to appeal and, if leave is granted, stay of execution of this court’s order pending the determination of the appeal.

Leave to appeal

7.  Leave to appeal shall not be granted unless this court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard: see section 63A(2) of the District Court Ordinance.

8.  During the hearing, Miss Chan for the IO put forward a revised draft notice of appeal.  It contains the following 5 grounds of appeal:

(1)  This court erred in law in not taking into account or not giving sufficient weight to the terms of the New Grants.  This court ought to have construed that both the First Aid Room and 5 S-Parking Spaces in question are common parts and the Chan’s are not entitled to exclusive possession of the same.

(2)  Alternatively, this court erred in law in not construing that the 5 S-Parking Spaces in question are subject to a quasi-easement implied by contract and/or into a grant which are necessary to the reasonable enjoyment of the co-owners of the building.

(3)  This court erred in law in not finding that the title of the predecessors of the Chan’s to the First Aid Room and the 5 S-Parking Spaces in question has been extinguished by reason of adverse possession of the same by the IO for over 30 years.

(4)  Alternatively, this court erred in law in not finding an issue to be tried in the Defence and a cause of action in the Counterclaim, in the light of the facts of the case which may justify a claim for adverse possession.

(5)  There ought to be trial in the interest of justice and all the circumstances, namely, the breach of the terms of the New Grants and the real risk of enforcement action by the Government against all the owners in relation to the failure to provide sufficient car parking spaces for loading and unloading as a direct result of the Chan’s recovering possession of the same.

9.  Apparently, grounds (1), (3) and (4) above relate to both the First Aid Room and the 5 S-Parking Spaces in question while grounds (2) and (5) relate to the S-Parking Spaces only.  For the purpose of this application, the IO is expected to explain how they intend to argue these grounds of appeal.

The Claim – the First Aid Room

Ground 1

10.  I do not see how the terms of the New Grants assist in the determination of whether the Chan’s have or their predecessors in title had exclusive possession of the First Aid Room.  There is, to start with, no requirement of a first aid room or restriction of such user in the New Grants: see para.41 of the Decision.

11.  Whether the First Aid Room is a common part is indeed a matter of construction of the 1^st Assignment and the DMC.  As such, this court concluded that the developer did reserve the sole and exclusive right and privilege to hold use occupy and enjoy the First Aid Room.  By successive assignments, the Chan’s have become owner of the First Aid Room together with such right: see paras.17-44 of the Decision.  It is not demonstrated how the IO may reasonably argue otherwise on appeal.

12.  In her submissions, Miss Chan did not really argue this ground in respect of the First Aid Room.

Grounds 3 & 4

13.  Undisputedly, the defence of adverse possession is not pleaded.  The defence was not mentioned in the affidavits or submissions of counsel for the IO.  This court was never ever asked to consider if this was an issue to be tried.

14.  The IO cannot hide from the fact that they are seeking to raise a new point on appeal.  Mr Leung for the Chan’s relied on Flywin v Strong (2002) 5 HKCFAR 356 at paras.37-38 and submitted out that the IO:

“…… will be barred from doing so unless there is no reasonable possibility that the state of the evidence relevant to the point would have been materially more favourable to the other side if the point had been taken at [the first instance].”

15.  I agree with Mr Leung that there is no basis to assume that had the issue been raised before, the Chan’s could not have investigated and collected evidence tending to undermine the IO’s allegation of the 2 essential elements of adverse possession: factual exclusive possession and animus possidendi, i.e., the requisite intention to exclude the true owner.

16.  Mr Leung referred to the leading authorities in this area of the law, namely, Powell v McFarlane (1979) 38 P&CR 452 at 472 and Wong Tak Yue v Kung Kwok Wai (1998) 1 HKCFAR 55 at 69B.  He emphasized the heavy burden on a party claiming adverse possession.  Any ambiguity shall be construed against the party claiming to have dispossessed the true owner of his land.

17.  Could the issue of adverse possession of the First Aid Room have been raised on the basis of the current state of evidence?  The answer is in the negative.

18.  The IO’s case and evidence is that it has been occupying the First Aid Room by virtue of the agreement, consent or acquiescence of the developer.  This is in direct contradiction against any contention that over the entire period of occupation of the room, the IO had the requisite intention, and has made it plain to the world at large, that it intended to exclude the owner as best it could.  Acknowledgement of occupation by the consent or acquiescence of the owner is fatal to the claim of adverse possession: see J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419.

19.  The IO is clearly aware of the impossibility of its situation so much so that it sees the need to radically change its pleaded case and evidence.  For that purpose, the IO proposes to seek leave to adduce fresh evidence by way of 2 new affirmations.  If the intended appeal is allowed, the IO also proposes to amend the pleading.

20.  It is trite that leave to adduce fresh evidence on appeal will not be given unless the conditions set out in Ladd v Marshall [1954] 1 WLR 1489 are satisfied:

(1)  The evidence could not have been obtained with reasonable diligence at the first instance.

(2)  The evidence, if adduced, would probably have an important influence on the outcome of the case.

(3)  The evidence must be such as is presumably to be believed.

21.  The above rule is strictly adhered to in the case of an appeal from a final judgment, including one given summarily: see Hong Kong Civil Procedure 2010, Vol.1 at 14/4/2; 59/10/8-10.  The rule applies in a hearing for leave to appeal: see Ting Wai Kwong v Incorporated Owners of Wah Fat Industrial Building HCMP 1827/2007 at para.6.

22.  What the IO now seeks to say is that the developer has in fact never agreed or consented to its occupation of the First Aid Room.  It has allegedly been occupying the room, and with the intention, to the exclusion of the developer and its assignee.  What was pleaded and stated in the affirmations was “mistake of fact”.

23.  For the purpose of the Ladd v Marshall test, the IO has failed to explain in the new affirmations when it discovered the “mistake”.  It was Miss Chan who suggested during the hearing that the “mistake” was discovered only after the change of the legal team.  This implies that the “mistake” was not discovered at any time prior to and during the hearing.  Nor was the “mistake” discovered at any time during this court’s deliberation prior to the handing down of the Decision.

24.  When saying that this was a “mistake”, the IO is not suggesting a mistake inadvertently made by it or its legal advisors.  The IO seeks to explain that its previous solicitors and counsel have failed to take proper instruction from it.  The defence was filed without the IO’s confirmation.  The solicitors have allegedly caused the deponent on behalf of the IO, who understands no English, to affirm the affirmations without the same being interpreted or explained to him.  Counsel also made submission during the last hearing with the effect of allegedly misrepresenting the IO’s instruction.

25.  These are serious accusations tantamount to alleged blantant dereliction of professional duty on the part of the IO’s previous solicitors and counsel.  Yet the IO’s previous solicitors and counsel are not heard.  The “mistake” is also not apparent from the other circumstantial evidence.  The credibility of such accusations simply cannot be tested for the purpose of the Ladd v Marshall test.

26.  In the circumstances, I am not satisfied that leave to adduce the above fresh evidence should and would be given.  There is no basis for allowing the new plea of adverse possession of the First Aid Room.

Conclusion

27.  The intended appeal against the summary judgment has no reasonable prospect of success.

The Counterclaim – the 5 S-Parking Spaces

Grounds 1 & 5

28.  The IO contends that the 5 S-Parking Spaces were and are for all the owners to use for loading and unloading, rather than parking by the Chan’s.

29.  Contrary to what the IO says, this court did embark on discussing the 5 S-Parking Spaces in question by referring to the terms of the New Grant.  This court found that Special Conditions 13 and 14 of the New Grants are not concerned with ownership or distinction between individually owned units and common areas.  They simply imposed on the grantee/developer minimum requirements for parking spaces: see paras.56-57 of the Decision.  It cannot be reasonably argued otherwise.

30.  The terms of the New Grants do not assist the IO’s case.  Not only that, but they also tend to undermine the IO’s case.  Special Condition 13(a), (d) and (e) distinguish loading/unloading from parking.  The S-Parking Spaces, as opposed to the L-Parking Spaces, were designated for parking of private cars and light vans.  It cannot be reasonably argued that the S-Parking Spaces, or the five ones in question, were and are supposed to be kept open for loading and unloading (of vehicles of whatever types) by all the owners: see paras.58-59 of the Decision.

31.  Miss Chan suggested that since the 5 S-Parking Spaces in question are in front of the cargo lifts, they have to be used for loading and unloading; otherwise this will contravene Special Condition 13(c).  This cannot be right.  Special Condition 14 requires a layout plan indicating the parking, loading and unloading spaces provided within the lot in accordance with Special Condition 13 to be approved by the Building Authority.  It cannot be denied that the present layout is indeed such an approved layout: see para.65 of the Decision.

32.  The risk of enforcement action by the Government for the alleged contravention of the Special Conditions suggested by Miss Chan is artificial and unreal.  Contrary to her argument, using the S-Parking Spaces as if they were L-Parking Spaces, as the IO advocates, would contravene Special Condition 14 which requires the layout and use of the parking spaces to be maintained in accordance with the approved plan.

Ground 2

33.  The argument relating to the alleged right of way by necessity and quasi-easement dominated Miss Chan’s submissions to an extent beyond that of her predecessor appearing for the IO at the last hearing.

34.  For easement or a right of way to arise by necessity, Mr Leung submitted, and I agree, that it must be shown that the land granted would otherwise be inaccessible or useless without the access.  It is insufficient to show that such access would be more desirable or convenient or necessary to the reasonable enjoyment of the land granted: see MRA Engineering v Trimster Co (1988) 56 P&CR 1 at 6.

35.  In the approved layout, there are indeed L-Parking Spaces on both sides of the 5 S-Parking Spaces in question in front of the cargo lift area.  There are also L-Parking Spaces in front of the warehouse area on the other side.  As mentioned above, the current layout has been approved to be in accordance with the various requirements stipulated under Special Condition 13.  It is not reasonably arguable that such layout per se renders the area or any part of the building inaccessible: see para.65 of the Decision.

36.  It should be noted that when alleging the difficulties faced with by the owners if they do not have the right to use the 5 S-Parking Spaces freely for loading and unloading, the IO was silent as to the various manners in which loading and unloading has been carried out by different owners over the past decades.  The IO never bothered to say anything about the various sizes of the vehicles involved in the loading and unloading relative to the specified dimensions of the vehicles contemplated under Special Condition 13(d).  What the IO demands is simply unobstructed access through the 5 S-Parking Spaces in question, apparently irrespective of these considerations.

37.  There is quasi-easement in the Wheeldon v Burrows (1879) LR 12 Ch D 31) sense.  On the grant by the owner of a tenement of part of that tenement as it is then used and enjoyed, there will pass to the grantee all those continuous and apparent easements which are necessary to the reasonable enjoyment of the property granted, and which have been and are at the time of the grant used by the owners of the entirety for the benefit of the part granted: see Kung Ming Tak Tong Co Ltd v Park Solid Enterprises Ltd (2008) 5 HKLRD 441 at 460 (para.45).

38.  This involves taking into account the purpose for which the land granted is to be used.  But it is essential for this purpose that the parties, i.e., the grantor and the grantee, should intend that the subject of the grant or the land retained by the grantor should be, as opposed to may or may not be, used in some definite and particular manner: see Kung Ming Tak Tong Co Ltd (above) at 461 (para.47).

39.  Mr Leung submitted that there is no suggestion or evidence of such continuous and apparent easement (in the form of a right of way or right to use as loading and unloading) over the 5 S-Parking Spaces in question at the time of the grant by the developer to the factory unit owners of the building.  He submitted that there is also no evidence of intention on the part of the developer and its grantees that these 5 S-Parking Spaces should be used in this definite and particular manner as opposed to parking.  I agree.

40.  The peculiar facts of Kung Ming Tak Tong Co Ltd (at 463 (paras.52-60)) is that this was about the entrance lobby of the building which the final court had no difficulty in finding to be such a right of way providing access to pedestrians from the outside to the shops and restaurants on the upper floors, the tenancies over which were transferred to the grantee.

41.  The IO seeks to adduce additional evidence of alleged promise or intention by the developer to the first owners of the building at the time of their purchases of the industrial units that the 5 S-Parking Spaces are for temporary parking for loading and unloading purpose.  Clearly such evidence could have been obtained with reasonable diligence by the time of the last hearing.  Condition (1) in Ladd v Marshall (above) is therefore not satisfied.

42.  In any event, as mentioned above, what the IO advocates is effectively that the owner of the 5 S-Parking Spaces in question could not use the spaces for parking, whether temporarily or not, in order to ensure unobstructed loading and unloading (of apparently any type of the vehicles) there by all the other owners.

43.  Lastly, in the context of contractual quasi-easement, i.e., whether there is a contractual quasi-easement in the nature of a right of way over the common area or over certain other parts of the building, the question is one of construction of the DMC: see Kung Ming Tak Tong Co Ltd v Park Solid Enterprises Ltd (above) at 462 (para.50).  This court held that the provisions of the 1^st Assignment and the DMC do not support the alleged right.

Grounds 3 & 4

44.  The IO claims possession of the 5 S-Parking Spaces in question adverse to the right of the developer and its subsequent assignees.

45.  What is discussed above in relation to the alleged adverse possession of the First Aid Room applies.  The IO’s pleaded case and current evidence is that the developer agreed or consented to or acquiesced in the IO’s managing the car parking spaces.  This leaves no room for the claim of possession adverse to the developer’s right with the requisite intention: see paras.70-75 of the Decision.

46.  I dismiss above the IO’s attempt to adduce fresh evidence of alleged promise by the developer to the first owners of the building that the S-Parking Spaces in question would be used for temporary parking for loading and unloading by all the owners.  In any event, by seeking to rely on the alleged promise by the developer to make the S-Parking Spaces in question available for use by all the owners, the IO could not at the same time allege possession of the parking spaces with an intention to dispossess the developer.

Conclusion

47.  The intended appeal in respect of the counterclaim has no reasonable prospect of success.

Events after the Decision

48.  The IO seeks to adduce evidence of the situation of the car parking spaces after the Decision.  In essence, the IO complains about how the Chan’s are using the 5 S-Parking Spaces in question after the Decision in their favour.

49.  Whether the Chan’s use of the S-Parking Spaces in question other than for parking private cars or light vans may be criticised (for non-compliance with the approved layout) is not reason for, and cannot be resolved by, depriving them of their right to possess the spaces.  I do not see how the evidence of such alleged post-decision events could be relevant.  Condition (2) in Ladd v Marshall (above) is not satisfied.

Order

50.  The IO’s application is dismissed.  It follows that the application for stay of execution must be refused.  The Chan’s shall have the costs of and occasioned by this application.  Costs shall be taxed, if not agreed, with certificate for counsel.