WEALTH TREASURE CORPORATION LTD v. HING FAT HONG AUTO AIR CONDITIONING CO LTD AND OTHERS

HCA 1658/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1658 OF 2012

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D E C I S I O N

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1.  The plaintiff seeks an interim injunction restraining the 1^st to 4^th, 6^th, 7^th and 9^th defendants (collectively “the defendants”)[1] from trespassing the plaintiff’s property and interference with its right to reinstate part of an external wall.

BACKGROUND

2.  The Morlite Building (“the Building”) is a multi-storey building that stands on 40 Hung To Road, Kwun Tong.  The plaintiff is the registered owner of the external walls of the Building.  The defendants (except D9) are owners of some workshops.

3.  The Building has a front entrance referred to in the pleadings as “the Void” which is linked up with a corridor (“the Corridor”) leading to the common facilities and the rear exit that opens up to a scavenger lane.

4.  On 19 July 2012, the plaintiff gave notice to, amongst others, the defendants, of its intention to reinstate the external wall to fill the Void.  There appeared to have been no written reply to this notice.

5.  On 22 July 2012, the plaintiff filled the Void with bricks.  On the following day, the reinstated part (“the reinstated part”) was pulled down.  The plaintiff claims that the defendants were responsible and that the defendants’ agents/servants (one Mr Ting) had assaulted the then chairman of the incorporated owners (“the IO”) of the Building (“the 1^st incident”).  The incident was reported to the police but no one was prosecuted.

6.  On 26 July 2012, the Fire Services Department (“FSD”) issued a fire abatement notice.  The notice stated that the plaintiff’s works constituted obstruction of means of escape and the construction materials had to be removed within 24 hours.

7.  On 2 September 2012, the plaintiff again attempted to brick up the Void but was obstructed by people acting in an intimidating and violent manner (“the 2^nd incident”).  The plaintiff again says that the defendants were responsible. 

8.  The plaintiff seeks an injunction pending trial.  The defendants oppose the reinstatement on the ground that bricking up of the Void would constitute unlawful obstruction of a route of escape.

9.  There is no dispute that the principles in American Cyanamid v Ethicon Ltd [1975] AC 396 apply, so that the plaintiff has to show a serious question to be tried and balance of convenience in its favour.

SERIOUS QUESTION TO BE TRIED

10.  The summons fails for want of particularity.  It seeks to restrain the defendants from entering remaining or trespassing on the plaintiff’s property at the Building.  The plaintiff has not identified what constituted its property until the 2^nd affirmation of Wong Fung Kuen (para 8) states that the present application only relates to the Void.  The draft order submitted at the hearing, however, seeks an injunction relating to the plaintiff’s property referred to in para 2 of the Statement of Claim, ie the external walls and the “non common area”.  One part of the non common area seems to be the Corridor.

11.  The core issue is whether the plaintiff has ownership of the Void and the Corridor.  The plaintiff relies on (i) the assignment; (ii) expert reports to prove its ownership; and (iii) approved building plans which show that there should have been an external wall at the reinstated part.

(i)  The assignment

12.  As a matter of law, a land owner’s right is determined by the assignment and not approved building plans.  Building plans merely tell how a building should have been built but they do not confer title on a person.

13.  In this case, the assignment dated 24 February 2012 gives to the plaintiff exclusive right to:

“hold use occupy and enjoy ALL THOSE all the stair-case heads, all the external walls and all other areas that are not intended for common use of the said Building to which the Vendor (as the original developer) is entitled under the Deed of Mutual Covenant.”

Mr Albert Poon, counsel for the plaintiff, confirms that the assignment does not have a floor plan identifying the part of the Building purchased by the plaintiff.

14.  There is no dispute that when the plaintiff purchased the external walls, the Void was already in existence.  The ordinary English meaning of the term “external walls” in the assignment could not have included a non-existent external wall.

15.  The DMC cannot assist in the definition of “external walls” either.  Paragraph (2) of the preamble to the DMC provides that one “developer’s share” is allotted to various rooms and areas in the Building including all the external walls and all other areas that are not intended for common use of the Building.  Clause 2 gives the First Owner the exclusive rights to the use and enjoyment of the external walls.

16.  One cannot assign to another what he does not have.  The plaintiff cannot have title to the Void unless the reinstated part had existed at the time the developer assigned the external walls to the plaintiff’s predecessor-in-title. 

17.  The evidence shows that the Void has been in existence before the plaintiff’s predecessor-in-title acquired the developer’s share:

(i)   The DMC indicates that, at least since its execution on 31 December 1977, individual shares were to be allotted to 2 separate workshops on G/F (para 2 of the preamble to the DMC).  That suggests that the Corridor in between was also in existence at that time and when the developer assigned the rights to the plaintiff’s predecessor-in-title.

(ii)   The First Owner was expressly given the right to amend plans approved by the Building Authority provided the necessary approvals have been given: clause 12(a)(vii) DMC.  Nothing precludes the First Owner from creating the Void.

(iii)   D2’s predecessor-in-title acquired Workshop B on G/F from the First Owner on 30 January 1988.  The G/F floor plan shows that the Void and Corridor were already in existence at that time.

(iv)   The plaintiff’s predecessor-in-title acquired rights to the external walls in September 1988, after Workshop B was assigned by the First Owner.

(v)   It makes no sense for there to be a Corridor between Workshops A and B if there never was a Void intended and there would have been no point for the Corridor to extend all the way from the front to the rear of the Building.

The plaintiff’s predecessor-in-title who has never owned the Void could not have assigned the non-existent external wall to the plaintiff. 

18.  Mr Albert Poon claims that the plaintiff owned that strip of land which should have accommodated the reinstated part.  With respect, there is nothing in the assignment to this effect nor is there anything to show the dimensions of the reinstated part.

19.  Insofar as the Corridor is concerned, the plaintiff will not have title to it either, unless it can show that the Corridor was not intended for common use of the Building to which the original developer was entitled under the DMC.

20.  Being a “passage”, the Corridor should form part of the common parts of the Building, and not the developer’s share, over which all the owners have the right to enjoy and duty to maintain: sub-clauses (a) and (b) of the Second Schedule to the DMC, clause (1) to the Fourth Schedule to the DMC, and clause 7(e) and (h) of the DMC.

21.  The plaintiff’s right over the Corridor was thus doubtful. This is reinforced by paragraph 7(iv) of the Statement of Claim wherein the plaintiff explains why it wants to reinstate the external wall:

“Once the External Wall is reinstated, the Plaintiff’s land would become enclosed once again and could be used for other purposes including storage; in any event, the land should have been an enclosed area belonging to the Plaintiff (please carefully check the Plaintiff’s rights?);” (emphasis added)

The Plaintiff itself was not sure of its rights over the Corridor.

(ii)  The expert reports

22.  The views expressed in the expert reports that the Void and Corridor fell within the plaintiff’s ownership was not supported by evidence other than the assignment and the DMC analyzed above.  I have already expressed doubts on ownership.

23.  According to the expert report of Wong Him Sun (which was commissioned by the IO in another context) but produced by the plaintiff), the Corridor and removal of the external wall at the G/F of the Building are all unauthorized building works (“UBW”).  The Corridor cannot be treated as a proper passage whether under the Buildings Ordinance or the DMC.  There was no provision in the DMC to allow any owner to convert a parcel of property into common area that contravened the Buildings Ordinance. The illegal act of the occupants should be stopped by the IO.

(iii) The building plans

24.  The plaintiff relies on the approved building plans in 1970 which show that the Void should have been occupied by external walls.  The plaintiff claims that the Void was created contrary to the approved building plans and the DMC; that contrary to the defendants’ assertion, the Void has never been intended to be used as a fire escape, as the mandatory fire escapes are adjacent to the Void (identified as the area B1 in Exhibit B to the expert’s report) and to the rear of the Building.

25.  The plaintiff’s position seems to be that as there had not been applications for alteration or additional plans submitted to the Buildings Department (“BD”) after 1970, the Void must have been UBW.  This was refuted by BD's letter dated 2 November 2012:

(i) Building works which do not involve the structure of the Building are considered exempted works under section 41 of the Buildings Ordinance which may be carried out without the need for obtaining approval from BD.

(ii) The approved building plans indicate the G/F is primarily open-plan layout for the use of workshops.  Subdivisions into different workshops and passageway has no material deviation from the original designed use and causing no obstruction to the means of escape in case of fire. (This directly contradicts the expert’s views in para 23.)

(iii) The external wall at G/F is non-structural and its removal does not cause structural danger to the Building.

(iv) As removal of the external wall was done prior to the end of 2009[2] before implementation of the Minor Works Control System (“MWCS”), the removal may be carried out without the need for obtaining approval or consent from the BD, and are considered exempted works under the Buildings Ordinance.

(v) Any proposed building works to be carried on in relation to the Void must be implemented through meeting the requirements under the MWCS.  Applications will have to be made to the BD and the proposed works must tally with fire and structural safety standard in accordance with the Building Regulations.

26.  The totality of the evidence is that BD takes the view that the Void and the Corridor are lawful and the FSD has issued a fire hazard abatement notice when the Void was purportedly bricked up.

27.  Without proof of ownership, or that the Void/Corridor was UBW, the plaintiff’s case does not even get off the ground.

IDENTITY OF THE TRESPASSERS

28.  The evidence on the identity of the trespassers is tenuous.  The defendants (apart from D9) are limited companies.  Apart from one Mr Ting of D6 who had allegedly assaulted the chairman, there is no evidence to show who were involved in the acts of trespass, intimidation, or obstruction and why it is said that they were servants/agents of each of the defendants.  The defendants have expressly put this matter in issue:

(i) D1 claims it had no knowledge of the 1^st incident and denied participation in it.  For the 2^nd incident, one Mr So acting on its behalf arrived at the Building after the police had arrived.  He, as a committee member of the IO, asked the workers present for work permits but was refused.  He left shortly afterwards. 

(ii) D2 and D4 had not obstructed the work or damaged the reinstated part or performed any illegal act.

(iii) D3 and D7 say that the bricks were removed by unknown parties and that the plaintiff’s workers ceased work because of police intervention.

(iv) Mr Ting of D6 admitted having a heated argument with the chairman when the latter (who sided with the plaintiff) ignored the danger and let the plaintiff block up the Void.  Mr Ting denied any unlawful act.  The police has confirmed that there would be no prosecution against Mr Ting.  His written “apology” was not addressed to the plaintiff and was far from being an admission of trespass or other illegal act.

D1 and D6’s acts could be a valid defence to obstruction of the plaintiff’s work.  The plaintiff has not even started to rebut these.

29.  Mr Albert Poon submits that it does not matter because the unidentified trespassers would have come within the definition of D9 anyway.  With respect, that is a most irresponsible way of litigating.  

30.  It is of course permissible to sue trespassers described not by name but by reference to his conduct provided that the description is sufficiently certain to identify only those who are necessarily included and exclude those who are not: Billion Star Development Ltd v Wong Tak Chuen [2012] 2 HKLRD 85, at para 54.  However, Billion Star is not a carte blanche that spares a plaintiff from making proper investigation of the identity of the wrongdoer before issuing a writ. 

31.  The circumstances in Billion Star were peculiar.  There was potentially a large number of persons who have been wearing masks to hide their identity and they engaged in activities of different and changing nature to infringe the plaintiff’s right over the property: para 56 of the decision.

32.  In the present case, the plaintiff is only talking about 2 incidents over a confined area alleged to be its property.  The plaintiff has chosen to refer to persons who claimed to be owners of the Building and the defendants (para 18 of Wong Fung Kuen’s 1^st affirmation) and those entities have to engage lawyers to contest this case.  The plaintiff ought to set out sufficient bases to support its claim against each defendant.

33.  For lack of particularity in the summons, lack of proof on ownership of the Void and/or the land that it occupies, lack of proof of ownership of the Corridor, and lack of proper identification of the wrongdoers, the plaintiff has not shown serious issues to be tried.  That is sufficient to dispose of this application.

34.  There are other defences put forth by the defendants (such as adverse possession and easement) but even if they are resolved in favour of the plaintiff, they will not affect the outcome of this application. 

BALANCE OF CONVENIENCE

35.  For completeness, I also deal with the question of balance of convenience.  The plaintiff was an investment vehicle formed on 27 January 2012 in the BVI to hold the interests in the Building.  It purchased those interests at the price of HK$125,000.  The purposes of the reinstatement are (i) to avert fire hazards to the Building; (ii) to rent out the external walls for advertisement; (iii) to use the enclosed area (effectively the Corridor) for storage and leasing; and (iv) to paint the external walls in the same colour as the adjacent building owned by a related company for better aesthetic effect and enhanced value of both buildings.  The Plaintiff is willing to fortify its undertaking as to damages by payment of a sum of HK$500,000.

36.  With regard to (i), the evidence from the defendants is that the Void has existed for 35 years.  There is simply no urgency in closing it.  FSD issued a fire abatement notice.  Although the Void is not in accordance with the approved plans, the BD has not yet approved the reinstatement.

37.  With regard to (ii), it is doubtful whether, with the windows and air-conditioners on the upper floors, it is realistic to expect people to put up advertisements in the external walls of the Building in an old industrial district. 

38.  With regard to (iii), the plaintiff is not even sure of its rights over the Corridor. 

39.  With regard to (iv), aesthetic value carries no weight in this case.  The Void and Corridor have been used for years for transport of goods.  The stairs and passenger lift do not permit the access of goods.  If the Void and Corridor are closed, the defendants will be forced to use the rear exit which can hardly accommodate large trucks.  It will reduce the value of the Workshops.

40.  The plaintiff’s reasons for filling the Void and seeking an interim injunction were contrived. 

41.  The defendants claim that the real motive behind the plaintiff’s acts is to force the other owners to sell their units to the plaintiff’s associates at low prices.  If found to be true, I agree it certainly constitutes bad faith on the part of the plaintiff, but it is not necessary to make any such findings at this stage.  What is important is that any loss that the plaintiff may suffer without an interim injunction may be compensated for by damages.

42.  In my view, the balance of convenience is plainly in favour of keeping the Void in use until resolution of this action.

CONCLUSION

43.  I am not satisfied that the plaintiff has shown serious issues to be tried on ownership of the Void and Corridor, and trespass by the defendants. The balance of convenience is in favour of maintaining the status quo.  I therefore dismiss the application for an interim injunction.

44.  The court notes the plaintiff’s willingness to continue its undertaking not to reinstate or continue its reinstatement of the external walls as stated in the preamble to the order dated 21 September 2012.

45.  As this is a distinct application, costs nisi (including the call over hearing on 21 September 2012) should follow the event and be to the defendants.  I summarily assess the costs as follows:

(i) D1: costs of $43,996 allowed in full.

(ii) D2 and D4: only 2 short affirmations were filed; costs claimed go beyond the bounds of an interim injunction application. Excessive perusal time was incurred having regard to the fact that counsel was involved in both hearings.  Costs of $140,000 allowed.

(iii) D3 and D7: costs of $120,000 allowed.

(iv) D6: costs of $100,000 allowed.