SUPERENE LTD v. METRO FAIR LTD

CACV 230/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 230 OF 2013

(ON APPEAL FROM DCCJ NO. 3025 OF 2008)

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REASONS FOR JUDGMENT

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Hon Barma JA (giving the Reasons for Judgment of the Court):

1. This was an appeal against the judgment of H H Judge Alex Lee in the District Court dated 3 May 2013, by which he dismissed the plaintiff’s claim against the defendant, and the defendant’s counterclaim against the plaintiff, arising out of a dispute over ownership of a small part of an external wall of a building in Tsim Sha Tsui. Other than awarding to the defendant the costs of a summons which the plaintiff had issued but subsequently withdrawn, the Judge made no order as to the costs of the proceedings. By this appeal, the defendant appealed against the dismissal of its counterclaim. At the conclusion of the hearing, we dismissed the appeal, and ordered that the costs of the appeal be paid by the defendant to the plaintiff, with certificate for two counsel, leaving the costs order below undisturbed. We indicated that we would hand down the reasons for our judgment later, and now do so.

2. Zhongda Building, formerly known as Siberian Fur Building, is situated on Haiphong Road in Tsim Sha Tsui.  It is a multi-storey building which was built in about 1973.  On its ground floor, facing onto Haiphong Road, there is a shop, the main entrance to the building, and the entrance to a restaurant called the Spaghetti House.  Viewed from Haiphong Road (i.e. by a person standing on the road and facing the building), the shop is to the left, the entrance to the building is to the right of centre, with the restaurant entrance at the far right.  Between the shop and the entrance to the building there is what appears to be a column, of which two faces are visible (“the Column”).  These are the front of the Column, which faces Haiphong Road, and the right hand side of the Column (viewed from Haiphong Road), which is perpendicular to the front of the Column and extends into the building towards the entrance lobby or hallway.  There is also an external wall across the top of the entrance, which meets the top right hand side of the Column, in line with the front of the Column.

3. These proceedings are concerned with the ownership of the front of the Column (i.e. the part of it that faces Haiphong Road).  The defendant claims to be the owner of the whole of the front surface, while the plaintiff contends that the defendant only owns approximately half of it, namely the half that is on the left, closer to the shop.

4. When it was first built, the Building was owned by a single owner.  This remained the case until about 30 May 1994, on which date the then owner of the building, a company called Universal Triumph Limited (“Universal”), executed a Deed of Mutual Covenant (“DMC”) with the first purchaser of part of the building from it.  Although the assignment to the first purchaser post dates the DMC by a few days, the parties have throughout proceeded on the basis that the DMC is valid.

5. Thereafter, in 1995, the defendant purchased the shop premises from Universal, entering into a Memorandum of Agreement for Sale and Purchase in respect of the shop premises (signed by the defendant and Universal on 25 and 26 April 1995 respectively), a formal Sale and Purchase Agreement on 9 May 1995, and an Assignment dated 10 July 1995.  The defendant has remained the owner of the shop premises since then.  Prior to the purchase, the defendant had been provided with a tender document which described the shop premises that were being sold.

6. The plaintiff, for its part, acquired from various vendors during 2006 the 2^nd, 3^rd and 4^th floors of the Building, and the undivided shares in the land relating to the Building Common Areas as defined in the DMC.

7. In May 2008, the plaintiff granted licences to two of its tenants to affix signs in the form of plastic laminate light boxes on the right half of the front of the Column (that is, the part of the front closer to the main entrance to the Building).  The defendant objected to this, claiming to be the owner of the whole of the front of the Column, and demanded that the tenants in question remove the signs.  This led the plaintiff to bring these proceedings against the defendant, claiming a declaration that it is the registered owner of the right half of the front of the Column (recognising that the defendant is the owner of the left half), and an injunction to restrain the defendant from trespassing on the signs erected by its tenants.  The defendant, claiming to be the owner of the whole of the front of the Column, counterclaimed for a declaration that it is the registered owner and entitled to possession of the whole front of the Column, an order requiring the plaintiff to remove the signs, and an injunction restraining the plaintiff from erecting any signs on, or otherwise trespassing on the front of the Column.

8. The natural starting point from which to ascertain what it was that was assigned to the defendant is the Assignment of 10 July 1995.  The parcel clause in the Assignment is set out in the Schedule, and is (so far as material) in the following terms:­

“The Property:

(a) Lot number, sections, undivided shares, description and address, etc.:

ALL THOSE 13 equal undivided 148^th parts or shares of and in ALL THOSE pieces or parcels of ground respectively registered in the Land Registry as The Remaining Portion of Kowloon Inland Lot No. 10158, The Remaining Portion of Kowloon Inland Lot No. 9161 and Kowloon Inland Lot No. 8151 And of an in the messuages erections and buildings thereon now known as SIBERIAN FUR BUILDING, Nos. 38, 39 and 40 HAIPHONG ROAD, Kowloon, Hong Kong (“the said Building”) TOGETHER with the exclusive right and privilege to hold use occupy and enjoy ALL THAT

(a) Ground Floor and Rear Yard of the Building (“the Premises”) as shown and coloured pink on Plan I annexed hereto;

(b) Portion of the Exterior Part of the Canopy (the width of which is equivalent to the width of the frontage of the Premises) erected between the Ground Floor and the 1^st Floor of the Building (“the Canopy”) outside the Premises facing Haiphong Road as shown on the Plan II hereto annexed and thereon coloured Pink;

(c) the ceiling under the Canopy (the width is equivalent to the width of the frontage of the Premises) outside the Premises facing Haiphong Road shown on the Plan III hereto annexed and thereon coloured Pink;

(d) Portion of the External Wall of the Main Entrance to the Building facing Haiphong Road as shown on the Plan IV hereto annexed and thereon coloured Pink.

…”

9. Sub-paragraph (d) of the parcel clause relates to the Column (which forms part of the external wall of the main entrance to the Building).  Unfortunately, owing to what was no doubt an oversight on the part of those responsible for the preparation of the Assignment, Plans I to IV referred to in the parcel clause were not in fact annexed to the Assignment, there being instead a single annexure consisting of a Block Plan and Ground Floor Plan in respect of the building, which appears to show the premises that were assigned coloured in pink.  The parties, however, were agreed that what was intended to have been attached as Plans I to IV were documents so marked which had been attached to the Agreement for Sale and Purchase of 9 May 1995, in which the property being sold was described in terms that were identical to the parcel clause in the Assignment.  The parties therefore agreed (as they had in the court below) that the court should have regard to those documents in construing the Assignment, and we have done so.

10. Plan IV annexed to the Sale and Purchase Agreement consists of a black and white copy of a colour photograph of the Column and its immediate surroundings, on which part of the Column (which immediately adjoins the shop front to its left) is coloured pink.  The copy is not of particularly good quality or definition, and it is this that has resulted in the dispute between the parties.  The defendant contends that the part of the Column coloured pink represents the whole of the front of the column, and that the adjoining part of the Column (which is not coloured pink, but appears a grainy grey in the document) is the right side of the Column which extends into the entrance area of the building.  The plaintiff, however, says that the part that has been coloured pink is only about half of the front of the Column, and that the uncoloured (grey) part represents the other half of the front of the Column, the right side surface of the Column being represented by the section immediately to the right thereof (which appears on the document as a much lighter colour).

11. In the court below, the Judge considered the evidence before him, which included oral evidence from two witnesses for the defendant, and found that the photograph which had been copied as Plan IV was taken for the purpose of the Sale and Purchase Agreement, and depicted the condition of the shop, the column and the main entrance area at the time that the Sale and Purchase Agreement was entered into.  He went on to find from an examination of the photograph that the pink coloured part was only about half of the front of the column, a conclusion for which he found support in a building plan that had been lodged in 1994.  He rejected the evidence of the defendant’s witnesses (in particular, their contention that the uncoloured grey part of the Column was not part of the front of the Column but represented its right side surface) as being unreliable, for reasons which he explained in his judgment.

12. Before us, Mr Anderson Chow SC, appearing for the defendant (who did not appear below), submitted that Plan IV was of such poor quality that it was not possible to determine from an examination of it whether or not the portion of the Column coloured pink represented the whole or only a part of the front of the Column. He submitted that in those circumstances, the court could and should have regard to extrinsic evidence in order to determine this issue, and suggested that there was such evidence in the form of a Public Tender document inviting offers for the purchase of the shop premises which had been issued and seen by the defendant prior to the defendant entering into the Memorandum of Sale and Purchase or the Sale and Purchase Agreement.  This document stated in several places that the shop had a frontage “of approximately 33 feet”.  He went on to submit that in order to have a frontage of 33 feet, the whole of the front of the Column had to be included in what was conveyed to the defendant, and that the portion coloured pink on Plan IV should be held to be the whole of the front of the Column.  As we understood his submissions, Mr Chow also contended that the information in the tender document should be taken into account in any event, as part of the factual matrix in which the sale and purchase agreement had been concluded.

13. For the plaintiff, Mr Edward Chan SC (who also did not appear below) disagreed, submitting that having regard to the terms of the Assignment, it was only necessary to have regard to Plan IV, which depicted clearly enough what was to be conveyed to the defendant – that being only part of the front of the Column.  He submitted that there was no real ambiguity about this such as would call for reference to extrinsic evidence.  He further submitted that the tender document was in any event of no assistance, first because it was clear from the assignment (and in particular, paragraphs (b) and (c) of the parcel clause) that the frontage of the shop did not include the Column, so that it was not legitimate to try to refer to a measurement of the frontage which included the width of the front of the Column, and secondly because it spoke only of an approximate measurement of 33 feet in respect of the frontage, a description which was apt to cover any of the possible measurements of the shop’s frontage, whether excluding altogether the front of the Column, including only half of it, or including the whole of the front of the Column.

14. Mr Chow accepted that if the court were satisfied from Plan IV that the part of the Column coloured pink did not represent the whole of the front of the Column, this would be determinative of the appeal against the defendant.

15. We have given careful consideration to Plan IV, and are satisfied from our own examination of it that the Judge was right to conclude that the portion coloured pink represents only about half of the front of the Column and not the whole of it. In coming to this conclusion, we have taken into account the poor quality of the copy that constitutes Plan IV, but are nonetheless of the view that it can safely be discerned from it that this is the case.

16. If one examines Plan IV, it is possible to see two steps towards the bottom right hand side of the copy of the photograph, immediately to the right of the foot of the Column.  It seems to us to be quite clear that the front surface of the riser of the first step is in a plane that is flush (or very nearly flush) with the right side of the base of the Column, to the right of the uncoloured grey portion.  That, in our view, is strong evidence that the steps immediately abutted the Column, and that as the front surface of the steps faced Haiphong Road, so too did both the pink coloured and grey uncoloured surfaces of the Column, such that all were in the same plane, with the consequence that the pink and grey sections of the Column must both represent parts of the same surface – i.e. the front of the Column.  This is in essence what the Judge found at paragraph 43(a) of his judgment, where he also observed (rightly) that this was consistent with a former building plan prepared in 1983 which depicted two steps at the front of the entrance, showing a building line which remained unchanged up to 1994, when a further plan was prepared.  As the Judge correctly observed, this is contradictory of the defendant’s case that the uncoloured grey surface was the side surface of the Column, at ninety degrees to its front.

17. This is, in our view, sufficient to conclude that what was conveyed to the Defendant under the Assignment was only part of the front of the Column – in particular, the left half thereof closer to the shop.  However, we would also point out some other features of Plan IV which, to our mind, support this conclusion.  First, it seems to us from looking at the foot of the Column that the parts coloured pink and left uncoloured in grey are on the same plane (and on the same plane as the front of the lower step to the right and the bottom of the shop window to the left).  Second, it also appears to us that the lighter coloured portion immediately to the right of the uncoloured grey portion is the right side surface of the column, particularly as it is possible to see that the steps go up and inwards along the bottom part of it.

18. In the light of this, we are satisfied that the Judge was right to find that the uncoloured grey portion formed part of the front of the Column, and that the defendant did not have conveyed to it the whole of the front of the Column, and accordingly was also right to reject the contrary evidence of the defendant’s witnesses.

19. We would also add that, even if we had been left in a state of uncertainty as to what exactly was depicted by Plan IV, we would not have been satisfied by reference to the extrinsic evidence of the tender document (even assuming, without deciding, that such evidence was admissible) that the pink coloured portion represented the whole of the front of the Column, essentially for the reasons advanced by Mr Chan which we summarised in paragraph 13 above.

20. The aspect of the tender document relied upon was the reference to the shop having a frontage of “approximately 33 feet”.  It was the defendant’s evidence that in order to have a frontage of almost exactly 33 feet, it was necessary for the front of the Column to be included as part of the shop’s frontage.  If the pink coloured portion represented only half of the width of the front of the Column, including it as part of the shop frontage would yield a frontage of slightly in excess of 32 feet (about 10 inches short of 33 feet).  If the whole of the front of the Column were excluded from the frontage, the frontage would be just under 31.5 feet.  In our view, all of these measurements (and certainly the first two) can fairly be said to fall within the description of “approximately 33 feet”.  This being so, we do not think it possible to derive assistance from this statement in seeking to establish whether the whole or only part of the front of the Column was conveyed to the defendant under the Assignment.  Additionally, we think that the terms of sub-paragraphs (b) and (c) of the parcel clause, when read in conjunction which the copy photographs in Plans II and III to which they refer, make it clear that the frontage of the shop does not include any part of the Column, as the whole of the Column is clearly to the right of that portion of the front and underside of the Canopy assigned to the defendant.  For this reason also, it is not possible to derive from the statement that the shop had a frontage of approximately 33 feet the conclusion that the whole of the front of the Column must have been conveyed to the defendant.

21. We are therefore satisfied that the pink coloured portion shown in Plan IV that was conveyed to the defendant was only the left hand half of the front of the Column.  It follows from this that the Judge correctly dismissed the defendant’s counterclaim, and that this appeal should also be dismissed, with costs to the plaintiff.