CHONG CHI TING CHRIS v. THE INCORPORATED OWNERS OF KIN ON BUILDING AND OTHERS

DCMP 3617/2021

[2023] HKDC 325

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 3617 OF 2021

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

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

BETWEEN

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

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

REASONS FOR DECISION

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

Background

1.  On 2 March 2023, after hearing an amended originating summons (the “AOS”) in the absence of the defendants, I granted an order in terms of the AOS as the Plaintiff has duly proved his case. I now give my reasons for the said decision and orders.

2.  This action concerned a residential property known as Flat A (“Flat A”) on 1/F & a portion of Flat Roof (“Flat Roof”) & Roof (“Part Main Roof”) of Kin On Building, 16-20 Kennedy Street, Hong Kong (“the Property”). Kin On building is referred to as the Building.

3.  The very first assignment of a unit of this Building was executed on 10 November 1980 (the “First Assignment”) between the then developer Leibowitz Investment Ltd (the “Developer”) and the first purchaser named Tang Kwok Hung (the “First Purchaser”). The Developer and First Purchaser executed a Deed of Mutual Covenants and Grant (the “DMC”) on the same date as the First Assignment.

4.  D4 was the first purchaser of the Property. He acquired it from the Developer by an indenture executed on 15 December 1980 under Memorial No UB2028614 (the “1980 Assignment”).

5.  The Plaintiff is the current registered owner of the Property, with D5-D15 being the previous owners. The Plaintiff acquired the Property from D15 by an assignment executed on 4 June 2021 registered with Memorial No 21070902170027 (the “2021 Assignment”).

6.  Including the 1980 Assignment and the 2021 Assignment, there were in total 10 Assignments (collectively known as the “Property’s Assignments”) executed in respect of the transfer of the Property between 15 December 1980 to 4 June 2021.

7.  D1 is the incorporated owners of the Building and was made a defendant here since it owes the duty to manage common parts under s 16 of the Building Management Ordinance (Cap 344) (“BMO”).

8.  As submitted by the Plaintiff and agreed by this Court, the reason why D3, the Secretary for Justice was made a defendant in this case was due to the Developer’s dissolution on 26 May 1987. Any interest or right the Developer might have would become bona vacantia that the HKSAR Government may assert a claim for, see section 752 of the Companies Ordinance, Cap 622. The Department of Justice who acted for D3 in this case confirmed by a letter dated 14 September 2022 that they have the authority to act on behalf of the Government and would not assert a bona vacantia claim.

The Issue

9.  The Plaintiff submitted that all the Property’s Assignments purported to assign the Plaintiff and all predecessors-in-title an exclusive right and privilege to use, occupy and enjoy (the “Exclusive Right”) the Part Main Roof as described on page 2 of the 1980 Assignment.

10.  With reference to the preamble (3) of the DMC, 1180 equal undivided parts or shares have been notionally divided from the Building where 30 undivided shares have been allotted to Flat A and Flat Roof but not the Part Main Roof. The Plaintiff submitted that no undivided shares were allotted to any part of the main roof.

11.  In light of the above, this action arose due to the conflicting provisions in the DMC vis-à-vis the assigned Exclusive Right. The Court was tasked to determine whether the Part Main Roof formed part of the Property or part of the common area of the Building. It was the Plaintiff’s stance that the Part Main Roof is a common part of the Building and the Plaintiff contended that the Exclusive Right had been purportedly assigned as an incident of ownership of, and together with the transfer of, undivided shares.

12.  By the AOS, the Plaintiff claimed, inter alia, the following reliefs:

(i) A declaration that the “Part Main Roof” is a common part of the Building;

(ii) A declaration that, in all the Property’s Assignments, each of the purported assignment of the Exclusive Right over the Part Main Roof to the purchaser is null and void and of no legal effect;

(iii) An execution of confirmatory assignment to rectify the error as to the title of the Part Main Roof;

(iv) An order that all descriptions of the address of the Property in the records on the land register be rectified such that any reference to the Part Main Roof is removed.

13.  The Court referred to paragraphs 25 to 44 of the Plaintiff’s skeleton submissions and was satisfied with the substituted service of the AOS served upon D5 to D14. The Court was also satisfied with the service of the AOS upon D1. The Court took note of the neutral stance D3 and D15 took where D4 indicated that he would not contest the proceedings. D3, D4 and D15 had all been excused from attendance of all hearings in this action.

14.  In light of the above and having reviewed the evidence filed on behalf of the Plaintiff, I considered that it would be appropriate to deal with the matter summarily pursuant to Order 28 rule 4 of the Rules of the District Court, which provides that the court by whom an originating summons is heard may, if the liability of the defendant to the plaintiff in respect of any claim made by the plaintiff is established, make such order in favour of the plaintiff as the nature of the case may require. Such power of the court to dispose of the matter summarily is explained in Hong Kong Civil Procedure 2023, at paragraph 28/4/2:-

“At the hearing of an originating summons, the action may be disposed of summarily where the court is satisfied that there are no trial issues.

Order 28 rule 4(1) approximates the rights of a plaintiff in an action begun by originating summons to those under O.13, O.14 and O.19 of a plaintiff in an action begun in writ. There is no equivalent of a “snap judgment” under O.13 rr. 1-5 or O.19 rr.1-6 in the originating summons procedure. However, if the defendant files no evidence under O.28 r. 1A(4), or the plaintiff considers that the defendant’s evidence discloses no triable issue, he may seek a summary judgment under r. 4(1).”

Legal Analyses

15.  The Plaintiff referred to requisition raised in the course of acquiring the Property where D15’s solicitors confirmed that the Part Main Roof was a common part and D15 had no title to it.

16.  The Plaintiff’s Counsel Mr. Tam also drew the Court’s attention to the First Assignment where the assignment of the shares and interests to the First Purchaser was subject to an express reservation onto the Developer of the Exclusive Right over the main roof.

17.  While the DMC did not contain any express definition of any parts of the Building as common parts, clause 4 prohibited all owners of the Building from accessing the main roof unless in the event of fire or inspection and/or repair of water tanks and/or lift machine room. Clause 16 of the DMC imposed duty of all owners to contribute the costs for maintaining the main roof, water tanks and lifts etc. There was no mention of “Part Main Roof” in these relevant paragraphs.

18.  It was the Plaintiff’s contention, which was agreed by this Court, that the Part Main Roof could not be used or accessed by any owner for any purpose other than in limited situations of common good, clauses 4 and 6 of the DMC had effectively designated the main roof (including the Part Main Roof) as a common part of the Building.

19.  The Developer’s reservation in the First Assignment was therefore wholly inconsistent with such common-part designation in the DMC. To resolve such inconsistency between the DMC and the First Assignment, the Plaintiff invited the Court to construe the combined effect of the common-part designation in the DMC and the Developer’s reservation in the First Assignment and to ascertain the meanings the parties intended to convey.

20.  The Court viewed that the First Assignment was executed subject to the terms of the DMC and thus the Developer lost its Exclusive Right to the Part Main Roof after the execution of the DMC and the First Assignment. Since the main roof has been designated as a common part of the Building under the DMC and it is an implied term pursuant to s 34I (1)(a) and (b)(i) of the BMO that no person shall convert any part of the common parts of the Building to his own use, any attempt to grant the Exclusive Right to any owner in the Building and to convert the Part Main Roof into exclusive user, occupation or enjoyment is a breach of both the DMC and implied term.

21.  The Court therefore agreed with Mr. Tam that all the purported assignment of the Exclusive Right over the Part Main Roof from the Developer to the Plaintiff’s predecessors-in-title are all null and void and of no legal effect for lack of title.

Declaration

22.  Despite the Plaintiff is seeking for declaration without a trial, the Court took into consideration of the principle cited in Wai Kwai Nam Petrus v. The Estate of Li Yau, Deceased [2020] HKDC 619 and decided that based on the merits of the Plaintiff’s case and his genuine need for such relief, the declarations sought under the AOS were warranted.

Covenants for title

23.  D5-D15 were expressed to assign the Property as beneficial owners per the 1980 Assignment and all the Property’s Assignments. The Court was satisfied that the Plaintiff has benefit of each of the covenants from all these predecessors-in-title and was entitled to enforce all the express and implied Covenants for Title in the Property’s Assignment against the Developer (now through the Secretary for Justice). The Court was ready to grant the Plaintiff’s relief that D3 - D15 do execute confirmatory assignments to rectify the error in the title of the Property, i.e. the Part Main Roof is a common part of the Building. In terms of execution, the Plaintiff suggested to have the Court to nominate the Registrar of the District Court to sign and execute such confirmatory assignments on behalf of D5 - D14 in the event that they could not be located.

24.  Under section 38A of the District Court Ordinance, the court may order a conveyance, contract or other document to be executed by such person as the court may nominate for that purpose in the event that the defendant does not execute the same pursuant to the judgment made by the court.

25.  As such, the appointment of the Registrar is merely a mechanism to deal with the contingency of the Plaintiff not being able to obtain necessary cooperation from the defendants, and thus to effect a valid conveyance of the Property in favour of the Plaintiff. The Registrar is not the only person that the Court is entitled to nominate, and in fact the current practice is that the Court would not appoint the Registrar to execute the document unless for special or exceptional circumstances. See Chen Yuen Ngai Kenneth and Chan Mei Mei v Ho Yuk Wah David [2021] HKCFI 1113, Kwok Lai Kwan Rosena v Kwok Biu & Anor [2023] HKCFI 17

26.  The Court therefore decided to appoint a partner of the Plaintiff’s solicitors firm to carry out all the necessary execution for the confirmatory assignments on behalf of D5 - D14. D4 and D15 have entered appearance and remained a neutral stance in this case and there was in theory, no need to make any nomination, the Court nonetheless made the same order for appointing the Plaintiff’s solicitors to carry out the confirmatory assignment in the event that the D4 and D15 cannot effect the execution in a timely manner. Furthermore, since I agreed that the Secretary for Justice should be made a Defendant in this action due to the dissolution of the Developer (see paragraph 8 above), I also nominated the D3 to execute the confirmatory assignment for and on behalf of the Developer.

27.  It follows from the above that all descriptions of the Property in the records of the Land Registry should also be rectified such that any reference to the Part Main Roof is removed.

28.  I therefore granted an order in terms of the Amended Originating Summons with amendments to reflect nomination of executors as discussed in paragraph 26 hereinabove.

29.  I made no order as to costs between the Plaintiff and D1, D4 - D15. As submitted by Mr. Tam, costs were incurred from some correspondence between the Plaintiff and D3, and the Plaintiff is obliged to pay such costs. The Court therefore ordered that costs of and occasioned by this action be payable by the Plaintiff to D3, to be taxed if not agreed.

30.  I thank Mr. Tasman Tam for his assistance.