DOVERIDGE CO. LTD. v. FUNDSCORE DEVELOPMENT LTD.

[The rights of a building owner and the adjoining owner in relation to party structures are regulated by the provisions of the Second Schedule to the Buildings Ordinance, Cap. 123 to the exclusion of their common law rights]

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

-------------------

BETWEEN

------------------

JUDGMENT

------------------

1. On 12th October 1991 Nazareth, J. granted the plaintiff, on its application ex parte, an injunction over 21st October 1991 restraining the defendant from demolishing or damaging the party wall at the lot boundary of 93-99 and 101-105, Hennessy Road, Hong Kong. On 21st October 1991 Gall,  J. continued that injunction to a date to be fixed for the hearing of the plaintiff's application inter inter partes. The date eventually fixed was 18th November 1991, when that application came on before me. On that day, after a full day's hearing, I held that the injunction ought to be continued until after judgment in the action or until further order in the meantime, the plaintiff's costs to be costs in the cause. I said that I would reduce my judgment into writing, to be given at a later date. This is that judgment.

2. The material facts are as follows.

3. The properties 93-99 Hennessy Road ("the plaintiff's property") and 101-105 Hennessy Road ("the defendant's property") are adjoining properties. The 4-storey buildings erected pre-war on each property were served by a common staircase between the two buildings. The plaintiff redeveloped the plaintiff's property in or about 1968. It replaced its own 4-storey building with a 16-storey building. The staircase was left in place although the plaintiff's new building was developed without making any use of the staircase or of the wall separating the plaintiff's property and the defendant's property, which is a wall at the level of the top 3 floors of the pre-war buildings and which extends over the pavement to a pillar at the edge of that pavement on Hennessy Road.

4. The defendant recently acquired and decided to redevelop its property, too; and it entered into negotiations with the plaintiff about its proposals. The plaintiff expressed interest in a joint redevelopment of both properties; but this came to nothing and eventually the negotiations centred on the plaintiff's claim to rights of way over the staircase (the negotiations do not seem to have been concerned to any or any significant extent with the wall). The plaintiff made it clear that the defendant was not to demolish the staircase without the plaintiff's consent.

5. Correspondence between the parties' solicitors reveals that by 2nd May 1991 the defendant had decided to demolish the staircase and to resist any application made by the plaintiff for an injunction to restrain the defendant from doing so. The plaintiff indicated on 9th May 1991 that it had no intention of obstructing the defendant's redevelopment but that it did want to protect its own interests. There was a meeting between the parties on 13th May 1991. On 14th May 1991, the defendant threatened to demolish the staircase the next day. On 15th May 1991, the plaintiff reiterated that if this was attempted without the plaintiff's consent, an application for an injunction would be made. On 21st May 1991, the defendant invited the plaintiff to apply for such an injunction inter partes. The plaintiff did not, at that stage, do so, and the defendant, taking the view (with some justification) that the staircase no longer served any legitimate purpose of the plaintiff, applied for the permission of the Building Authority to proceed with its proposed redevelopment, which included demolishing at least that part of the staircase which stood on the defendant's property. In this connection, the Buildings Ordinance Office appears to have required the demolition of the pillar supporting that part of the wall which extended over the pavement.

6. The defendant's next step was to apply to the Buildings Ordinance Office for permission to erect shoring works for its redevelopment. As the defendant's solicitors themselves stated, in a letter to the plaintiff's solicitors dated 5th September 1991 enclosing plans of the shoring works, "the planned shoring works would affect the common staircase ...." and "it is the plan of our clients to implement the shoring works forthwith". The defendant obtained approval from the Buildings Ordinance Office to this being done (although the planitiff had not consented to this course) and threatened to and indeed did obtain a warrant to force the plaintiff to permit the shoring works to be carried out. The plaintiff protested; but the defendant went ahead with the shoring works; demolished the part of the staircase standing on the defendant's property; and threatened to demolish the wall. In these circumstances, the plaintiff, not before time, and by now no doubt thoroughly and rightly incensed by the belligerent, offensive and high-handed attitude of the defendant, on 14th October 1991 instituted these proceedings.

7. The law cannot allow one of two owners of adjoining properties to write roughshod over the other's legal rights. Nor, on the other hand, and especially in a densely built up area, should it allow one such owner to frustrate, from motives of greed or obstinacy or both, a reasonable development of the other's property. In Hong Kong (as in London: see in particular the London Building Act 1894 which seems to have provided the model for the local legislation) the legislature has intervened to strike a balance between the competing interests of building owners and the owners of adjoining properties. The position locally is now regulated by the provisions contained in the Second Schedule to the Buildings Ordinance, Cap. 123. The statutory scheme is this. A building owner who wants to redevelop his property is given certain rights to pull down and rebuild party walls or structures. But he may not exercise these rights, without the consent of the adjoining owner, unless at least 2 months before doing so he has served on the adjoining owner notice stating the nature and particulars of the proposed work and the time at which the work is proposed to be commenced. If the adjoining owner does not, within 14 days after the service on him of any such notice, consent thereto, the parties are to be treated as having differed. The difference (including any questions as to the right to do work) is to be referred to arbitration.

8. Mr Edward Chan, Q.C., in his excellent argument on behalf of the defendant, submitted that this legislation does not affect the defendant's common law rights in relation to the wall and serves only to confer on the defendant additional rights. But this submission is untenable. In the leading case, Standard Bank of British South America v. Stokes (1878) 9 Ch.D 68, Sir George Jessel, M.R. took the view, of the legislation there under consideration and then in force, that whatever the building owner's rights at common law might have been, such rights, by virtue of the legislation, no longer existed (see p.73). He said that it was "the manifest intention of the legislature that these party structures should not be interfered with without due notice to the person or persons other than the building owner interested in the party structure, and without its being referred to the [arbitrators] to decide how the work should be performed"( see p.76). This view was followed by Warrington, J. in Lewis v. Charing Cross Euston and Hampstead Railway [1906] 1 Ch. 508 and I propose to follow it here.

9. Mr Chan further submitted that because the defendant had notified the plaintiff on 5th September 1991 of its intention to do the shoring works by reference to plans which, incidentally, indicated an intention to demolish the wall, sufficient notice had been given to the plaintiff to satisfy the statutory requirement of 2 months notice so that (he said) the work could start in November. This submission is equally untenable. In my judgment, you cannot start the work, once a difference has arisen, until an award is made resolving that difference. But in any event the notice to be given pursuant to the statutory requirements, although no particular form is prescribed by the statute, must be a formal notice. Not only must it be a notice stating the nature and particulars of the proposed work and the time at which the work is proposed to be commenced; it must be sufficiently clear and intelligible to enable the adjoining owner to see what counter-notice he needs to give to protect his own interests: see Hobbs, Hart & Co. v. Grover [1899] 1 Ch. 11. Nothing in the correspondence between the parties and their solicitors comes remotely near satisfying these requirements. (It may be helpful if I suggest that solicitors involved in these matters should consider using the form of notice for which a precedent is provided in the Encyclopaedia of Forms and Precedents, 5th Edn., Vol. 16, Title "Fences, Boundaries and Party Walls" at p.184.)

10. However, there are circumstances here in which, if and when it decides to act lawfully rather than unlawfully, the defendant will or may be entitled to demolish this wall. I therefore accept Mr Chan's submission that I should not treat this case as a case for granting an injunction as a matter of course. I accept that I must exercise a discretion in the matter, according to the principles now well-settled in this connection: compare Patel v. W.H. Smith (Eziot) Ltd [1987] 1 WLR 853.

11. Clearly, there is a serious issue to be tried. There may be some uncertainty as to the exact status of the wall; what rights at common law the plaintiff and the defendant have in the wall, and indeed, perhaps, whether it is a party wall at all. But these are not matters to be decided now. For the present, I must proceed on the footing that the plaintiff has made out a case for claiming rights in or over the wall which, at this interlocutory stage of the case, do require protection. The defendant is entitled to say that, on the evidence before the Court, there is precious little to suggest that this wall is of the slightest, if any, use to the plaintiff; but that cannot, I think, justify the Court in allowing the defendant to proceed with its redevelopment, however convenient that might be for the defendant, in derogation of the rights of the plaintiff under the Second Schedule to the Buildings Ordinance. The case of the defendant at the trial, if the matter gets that far, may well be a strong one. If it turns out (I do not say that it will, but only that it may) that this action is a blackmailing action, designed not to protect any legitimate interest of the plaintiff in this wall but to screw as much money as possible out of the defendant as the price of the plaintiff's consent to the defendant's redevelopment, the judge at the trial might well refuse to grant the plaintiff an injunction. But that is not a decision which I can or should pre-empt at this stage. Further, although the injunction has now been continued until after judgment in the action or until further order in the meantime, the defendant must of course be at liberty, if and when an award is earlier made in its favour under the relevant provisions of the Second Schedule to that Buildings Ordinance, to apply to have the injunction lifted.

12. Finally, Mr Chan submitted that I ought not to continue the injunction because the relief which the plaintiff had obtained ex parte had been obtained improperly. The plaintiff had not, he said, pointed out to the Court that, insofar as part of the wall extended over the pavement (that is to say, over Crown land) the plaintiff could have no rights in the wall; and, he said, the plaintiff had misled the Court by not revealing its interest in a joint redevelopment of both the plaintiff's property and the defendant's property. There is nothing in either of these points. The weighing operation which the Court had to make in deciding whether or not to grant the relief claimed ex parte by the plaintiff was not one in which, in my judgment, either of these points would have assumed any significance.