THE INCORPORATED OWNERS OF HUNG WAI BUILDING v. SUNNY ELEGANT LTD AND OTHERS

CAMP 164/2024, [2025] HKCA 685

On Appeal from [2024] HKLdT 43

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 164 OF 2024

(ON AN INTENDED APPEAL FROM LDBM NO 76 OF 2019)

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J U D G M E N T

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Hon Au JA (giving the Judgment of the Court):

A. BACKGROUND

1.  This is a renewed application of the 1^st to 4^th Respondents (collectively “Rs”, and individually “R1” to “R4”)  for leave to appeal against part of the judgment dated 6 June 2024 (“the Judgment”)  of Deputy District Judge S H Lee (“the Judge”).  The Judge’s reasons for judgment are set out in the written judgment of the same date ([2024] HKLdT 43)  (“the Reasoned Judgment”).

2.  By the Judgment, the Judge allowed the applicant’s claim for declaratory and injunctive relief against Rs’ occupation of an external wall facing west (“the External Wall”)  as well as various areas[1] of G/F and 1/F of Hung Wai Building (“the Building”), and dismissed Rs’ counterclaims.

3.  By a subsequent decision on 13 August 2024, the Judge refused Rs’ application for leave to appeal and stay of execution against the Judgment ([2024] HKLdT 67)  (“the Leave Decision”).

4.  Rs then reapplied to this court for leave to appeal solely against the Judge’s ruling that the Disputed Areas are common parts.

5.  By a judgment of this court dated 11 April 2025 ([2025] HKCA 336)  (“the Interim Stay Judgment”), this court granted (by consent)  an interim stay of the execution of part of the Judgment in relation to the Disputed Areas pending the determination of this leave to appeal application, but refused to stay the execution of the other part of the Judgment relating to the External Wall.

6.  Having considered the papers and the written submissions, we are of the view that it is appropriate to determine this application without a hearing on the basis of written submissions only, pursuant to Order 59, rule 2A(5)  of the Rules of the High Court (Cap 4A)  (“the RHC”). This is our decision.

B.  BACKGROUND

7.  The factual background of this case has been set out in detail at [1] ‑ [26] of the Reasoned Judgment as well as [2] ‑ [6] of the Interim Stay Judgment and need not be repeated here.  For present purpose, we will only highlight the following relevant facts.

8.  The applicant is the Incorporated Owners (“the IO”)  of the Building.

9.  The Building comprises (a)  a commercial podium with 13 shops on G/F and 19 office units (“the Offices”)[2] on the 1/F; and (b)  two residential blocks atop the podium with units on the 2^nd to 24^th floors.

10.  By an assignment dated 28 May 2004, R1 becomes the registered owner of Shop No 8 on the G/F (“the Shop”)  and the Offices.  R2 is the principal tenant of the Shop and the Offices, and R3 and R4 are both subtenants from R2.

11.  At the material time, the Shop and the Offices, together with the External Wall[3] and the Disputed Areas, were used to operate a Chinese restaurant and a café by R3 and R4 respectively.

12.  It is the IO’s case that both the External Wall and the Disputed Areas are common parts of the Building, and Rs have wrongfully converted and occupied them for their own use to the exclusion of other owners without the IO’s permission or consent.

13.  The IO thus commenced this action against Rs in the Lands Tribunal for (a)  declarations that the External Wall and Disputed Areas are common parts of the Building; (b)  a mandatory injunction to restore the External Wall and Disputed Areas; (c)  a prohibitory injunction against further or future breaches of the DMC and/or BMO over the Disputed Areas and the External Wall; and (d)  damages to be assessed.

14.  Rs defended and sought various declarations by counterclaim against the IO on the basis that those are not common parts of the Building, and R1 as the owner of the Shop and Offices has exclusive right to occupy and enjoy the External Wall and the Disputed Areas.  They also alleged that the IO had by misrepresentation induced R1 to sign a Chinese undertaking for use of the Disputed Areas, and further argued that the IO was estopped from denying R1’s exclusive right to use, occupy and enjoy the Disputed Areas.

C.  THE JUDGMENT

15.  After trial, the Judge ruled in favour of the IO on all issues and granted the relief as sought with costs to the IO.

16.  Relevant to the present application, in particular, the Judge held that, on a proper construction of the relevant provisions of the Deed of Mutual Covenant of the Building dated 14 November 1984 (“the DMC”)  and the Building Management Ordinance (Cap 344)  (“the BMO”)  in the proper context, the Disputed Areas are common parts of the Building[4]. See: [40] ‑ [93] of the Reasoned Judgment.

17.  Accordingly, the Judge declared, among others, that the Disputed Areas are common parts of the Building and ordered Rs to remove all existing structures erected on the Disputed Areas and restore them to their original state, and be restrained from using and occupying these spaces.  The Judge also awarded damages in the sum of HKD100 against Rs.

18.  By the Leave Decision, the Judge, inter alia, refused leave to appeal against the Judgment, as there is no reasonable prospect of success on appeal.

D.  THIS APPLICATION

19.  By a summons dated 26 August 2024 (“the Summons”), Rs reapplied for leave to appeal to this court against part of the Judgment relating to the ruling that the Disputed Areas are common parts of the Building.

20.  In Rs’ Written Statement (“Rs’ Written Statement”)  in support of this application and the draft Notice of Appeal (“Draft NOA”)[5], Rs in gist contend that in ruling that the Disputed Areas fall within the meaning of “Common Areas” under the DMC:

(1)  The Judge had erred in law in failing to properly consider whom the Disputed Area are “common to”, in that:

(a)  The Judge had failed to consider the DMC (i)  as a whole with regard to Clause A(a)  of Section II of the DMC (“Clause A(a)”), and (ii)  in the proper context of the specific design and layout of the Building and the Disputed Areas.

(b)  Had he done so, the Judge ought to have held that the Disputed Areas are intended to and could only be used for purposes relating to the proper use and enjoyment of the Offices.  They are therefore not common areas for the use of all the owners of the Building as contended by the IO.

(“Intended Ground 1”)

(2)  Further and alternatively, given that the Disputed Areas are intended and could only be reasonably used for purposes relating to the proper use and proper enjoyment of the Offices, the Judge further erred in law in failing to find that they are therefore “appurtenances” to the Offices as described under the relevant assignments, and thus have been assigned to the owners of the Offices exclusively.  (“Intended Ground 2”)

21.  The IO filed its written statement in opposition on 10 September 2024.

D1.  Legal principles

22.  Section 11(2)  of the Lands Tribunal Ordinance (Cap 17)  (“the LTO”), so far as relevant, provides that any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law.

23.  Section 11AA(1)  of the LTO provides that, subject to sub‑section (2)  (which has no application in the present case), no appeal may be made under section 11(2)  unless leave to appeal has been granted by the Tribunal or the Court of Appeal.  Section 11AA(6)  further provides that leave to appeal shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success or that there is some other reason in the interests of justice why the appeal should be heard.

24.  A “reasonable prospect of success” means an appeal with a prospect that is more than fanciful without having to be probable: SMSE v KL [2009] 4 HKLRD 125 at [17].

D2.   Discussion

25.  At the outset, it is pertinent to note that the intended grounds of appeal and counsel submissions are largely a repeat of the same arguments made before the Judge, which had been considered and rejected by the Judge.  It is trite that an appeal is not the occasion for regurgitating arguments advanced and rejected by the judge or for running arguments which could and should have been raised but were not raised before the judge: Progetto Jewellery Company Ltd v Lau Chiu Ying & Another [2022] 2 HKLR 845 at [16].  This alone is sufficient for this court to refuse leave to appeal.

26.  In any event, we see no merit in Rs’ intended grounds of appeal.

D2.1. Intended Ground 1

27.  It is plain that the Judge was fully aware of the relevant legal principles in 黎偉雄 v 信和物業管理有限公司 [2020] HKCA 448 that the DMC must be construed as a whole and in light of the factual and legal background of its execution: [43] ‑ [46].  Applying those principles, in considering whether the Dispute Areas are “Common Areas” within the meaning of the DMC, the Judge then considered in detail:

(1)  The design and layout of the Building with reference to the approved plans, giving specific consideration as to the location of and the access to and from the Disputed Areas: [54] ‑ [68] of the Reasoned Judgment.

(2)  The whole of the DMC, including having regard to relevant provisions dealing with, among others, the allocation of undivided shares, the definition of “Common Areas and Common Facilities”[6] and the owners’ easement rights under Clause A(a): [70] ‑ [85] of the Reasoned Judgment.

28.  There is therefore no question that the Judge had considered the meaning of “Common Areas” under the DMC as a whole with reference to the other relevant provisions and the context of the design of the Building.

29.  In the premises, this ground therefore in substance seeks to challenge the Judge’s two specific rulings that:

(1)  Each of the Disputed Areas by reference to their design and layout can be reasonably used and enjoyed also by the owners of the residential units: see [86(5)-(6)(i)-(iii)] of the Reasoned Judgment.

(2)  Under Clause A(a), there is no distinction between the residential and commercial owners in relation to the easement right to go pass and repass the “Common Areas”, and whether or not any particular manner of exercise of the “right of way” on “Common Areas” in a given case by any particular owner (or group of owner)  of undivided shares of the Building is for a purpose “connected with the proper use and enjoyment thereof” is not an issue in this case: see [86(6)(iv)-(v)] of the Reasoned Judgment.

30.  In relation to the first challenge, Mr Chong submits that the Judge had erred in the way he looked at those areas:

(1)  Regarding the Entrance Space, the Judge erred in law in placing reliance on the term “entrance lobbies” under the DMC and/or the BMO, and failed to consider factually where the Entrance Space in the Building would lead to.  If it only leads to a place where only a single owner would have exclusive right to use and possess, it should not be considered as “common part”.  In the present case, the Entrance Space effectively only leads to the Offices, which are all owned by R1.  It therefore cannot be intended for the proper use and enjoyment of a residential unit.[7]

(2)  Regarding the Staircases, Stair Landing and the Corridor, the Judge erred in law in failing to consider that these areas are ancillary to and designed for the benefit of the Offices.  The Judge should consider whether the Offices are exclusively owned or intended for shared use, and whether these areas are to be utilised for collective benefit of all units or solely for the Office, in particular, when the Offices are under a unified ownership.[8]

(3)  Regarding the Toilets, the Judge erred in law in failing to consider that they are designed and built to cater solely for the use of the Offices.[9]

31.  These complaints are effectively a disguised challenge against the Judge’s findings of fact.  It is trite that this court will not interfere with the Judge’s findings of fact unless it can be shown that such findings are plainly wrong, the Judge had failed to take into account relevant matters or had taken into account irrelevant matters.

32.  However, the Judge had properly and in detail considered all the relevant factors and evidence relating to the Disputed Areas at [60] ‑ [63] and [86(5)] of the Reasoned Judgment:

“60. An ‘office entrance hall’ separates, I find, the Shop from the pavement of Fa Yuen Street to its South (one must go past the said hall to enter the Shop). The said hall is one out of five of the Disputed Areas i.e. the Entrance Space.

61. The said hall also leads one to two staircases and one stair landing adjacent to the Shop leading to 1/F i.e. the Staircases and the Stair Landing, another two out of five of the Disputed Areas.

62. Summing up, at the making of the DMC, there are, I find, 3 entrances for one to enter the Building from pavement of Fa Yuen Street i.e. 1)  entrance hall to lift lobby of Block 1 allowing one to go to 1/F and 2/F to 24/F of Block 1, 2)  entrance hall to lift lobby of Block 2 allowing one to go to 1/F and 2/F to 24/F of Block 2, and 3)  the Entrance Space allowing one to enter the Shop or to go to 1/F through the Staircases and Stair Landing. Of coure, one can equally go out the Building in the opposite direction or manner.

63. At the same time, if one want to exit at service lane to the West of the Building, one can, I find, go downstairs through the 2 pairs of criss-crossing staircases found repectively to the West of the 2 lift lobbies of Block 1 and Block 2. Of coure, one can equally go in the Building in the opposite direction and manner.

...

86. ...

...

(5)  I disagree with Mr Chong’s submission at paragraphs 6, 8 to 10 of his final submissions that the Disputed Areas were designed and built as part and parcel of the Offices as a tenement separated from the rest of the Building with the Disputed Areas (save the Toilets)  as its only [practical] means of access to such single tenement and the Toilets the only means of convenience to such single tenement, with the residential owners having no interference with the commercial owners in the design of the Building as a whole.

(i)  While the Developer owned the Offices and the Shop at the time of the DMC, the Offices and the Shop are, in terms of undivided shares allocated to each of them, 20 separate and individual tenements at law (and they could be separately assigned by the Developer to different purchasers after the making of the DMC)  and they are also separate and individual tenements physically separated from each other by partitions and floor at the time of the DMC.

(ii)  Post-DMC commom ownership of the Offices (and the Shop)  and post-DMC destruction of such physical partitions between the Offices and the Corridor (to be discussed below)  is, on authorities in sections F1 and F2, wholly irrelvant to our construction exercise for Issue 1, as the DMC must be construed at the time of its making and not later.

(iii)  Notwithstanding marking of the Entrance Space as ‘Office Entrance Hall’, existence of 2 entrances halls to 2 residential G/F lift lobbies, and presence of internal toilet facility to each residential unit, 2 passenger lifts of the Building do stop at 1/F of the Building such that owners and occupants of 2 residential blocks can access the Offices and the Toilets through the Corridor, make use of the Toilets, and go out to Fa Yuen Street through the Corridor, the Staircases, the Stair Landing and the Entrance Space. Owners and occupants of the Offices and the Shop can also, I think, access the Building, including Block 1 and Block 2, in the opposite directions.

(iv)  The 2 pairs of criss-crossing staircases, one for Block 1 and one for Block 2, also allow owners and occupants of 2 residential blocks to access the service lane to the West of the Building, the Toilets and the Offices through the Corridor, make use of the Toilets, and go out to Fa Yuen Street through the Corridor, the Staircases, the Stair Landing and the Entrance Space. Owners and occupants of the Offices and the Shop can also, I think, access the Building, including Block 1 and Block 2, in the opposite directions.

(v)  Hence, the design of the Building at the time of the DMC does allow, I think, exchange and interaction between residential owners and commercial owners.”[10]

33.  After taking into account all the above, the Judge, disagreeing with Rs’ contentions, concluded that the Disputed Areas could and were intended under the DMC to be reasonably used and enjoyed by the residential owners.

34.  In our view, for the reasons explained by him, it is plainly and reasonably open to the Judge in light of the evidence before him, including the design and access of the Building and the Disputed Areas, to conclude that the Disputed Areas are intended to and can be reasonably used and enjoyed also by the owners of the residential units.  The Judge had committed no arguable error of law in this finding.

35.  As to the second challenge, the principal submissions advanced by Mr Chong are as follows:

(1)  It is trite that the DMC must be construed as a whole together with all relevant clauses.

(2)  In the present case, it is Rs’ case before the Judge that[11]:

(a)  When the definition of “Common Areas” under Clause 5 of Section VIII of the DMC is read together (as it should be)  with Clause A(a), it means that the easement right of an owner over the relevant “Common Areas” is limited and restricted to uses that are connected with the proper use and enjoyment of the owner’s respective own units.

(b)  At the same time, the design of the Building and thus the intention of the DMC is to separate the use and enjoyment of the residential units and the commercial units of the Building.

(c)  In the premises, on a proper construction of the DMC together with Clause A(a)  and in the context of the design of the Building, the Disputed Areas can only be intended for the proper use and enjoyment of the commercial units but not the residential units.

(d)  In other words, the Disputed Areas are only “common areas” in the meaning of the DMC for the reasonable use of owners of the commercial units but not any owners of the residential units.

(3)  The Judge therefore erred in law in ruling at [86(6)(vi)  and (vii)] that whether the Disputed Areas is for the purpose “connected with the proper use and enjoyment thereof” is not in issue in this case as this is irrelevant to the question of whether a particular part of a building is common part of exclusive use area.  He had therefore failed to properly deal with this issue and thus erred in his proper construction and application of the meaning of “Common Areas” under the DMC in relation to the Disputed Areas.

36.  There is also no merit in this argument.

37.  Mr Chong’s submissions rely principally on Clause A(a), which provides as follows:

“SECTION II

EASEMENTS RIGHTS AND PRIVILEGES THE BENEFIT OF WHICH IS HELD WITH EACH EQUAL UNDIVIDED 1,440^TH PART OR SHARE OF AND IN THE SAID LAND AND THIS SAILD BUILDING.

A. Rights

Subject to the House Rules and subject to the payment by the Owner of his due proportion of the Management Fees as hereinafter provided the Owner of each said undivided share shall have the benefit of the following easements rights and privileges:-

a)  Full right and liberty (in common with all other persons having the like right)  to go pass and repass over and along and use the Common Areas and Common Facilities of the said Building for all purpose connected with the proper use and enjoyment thereof.” (Emphases added)

38.  Fundamental to Mr Chong’s contention under this ground is that this specific clause properly construed restricts the use of the Common Areas to purposes relating only to the “proper use and enjoyment of one’s own unit”.  The underlying plank of this contention is that the word “thereof” in the phrase “for all purpose connected with the proper use and enjoyment thereof” in this clause should refer to the particular unit (residential or commercial)  of the specific “Owner” who is exercising the right to “go pass and repass” the “Common Areas and Common Facilities” of the Building[12].

39.  Even assuming (without deciding)  Mr Chong’s above construction as to the meaning of Clause A(a)  is a correct one, given the Judge’s unchallengeable ruling that the Disputed Areas are intended to and factually can be reasonably used and enjoyed by the residential owners, the reliance of this clause does not assist Rs as it would not exclude the residential owners to exercise their easement rights to go pass and repass the Disputed Areas.

40.  Further, we also agree with the reasons given by the Judge at [86(6)] of the Reasoned Judgment in holding that Clause A(a)  does not impose any distinction between the residential owners and commercial owners in relation to the easement right over the common area, which conclusion reinforces his finding that the Disputed Areas are intended and can be reasonably used by the residential owners for proper enjoyment:

“(6)  Neither do I agree with paragraphs 11 and 12 of Mr Chong’s final submissions that the terms of the DMC support or reinforce the alleged design concept above. Indeed, the position is, I think, to the contrary. R1 to R4 are by their submissions on Issue 1 seeking, I agree with Ms Wong, to re‑write the DMC.

(i)  The DMC has, I note, not made one set of detailed provisions for the commerical podium (or commercial owners)  and a different sets of separate provisions for the 2 residential blocks (or residential owners).

(ii)  The DMC has only made provision for ‘Common Areas’ and not, as in some other deeds, ‘Residential Common Areas’ for common use by owners and occupants of Block 1 and Block 2, and ‘Commercial Common Areas’ for common use by owners and occupants of G/F shops and the Offices.

(iii)  The DMC makes it clear that the lifts of the Buiding are to enjoyed, and paid for, by 1/F to 24/F owners (see [80] and [81] above)  and not by, say, 2/F to 24/F owners.

(iv)  The DMC had not provided for specified rights of way (or specified routes)  for owners and occupants of the 2 residential blocks distinct from different rights of way (or different routes)  to be enjoyed by owners and occupants of the commercial podium.

(v)  The right, or benefit, to go pass and repass Common Areas and to use Common Facilities in [76] above is, I would stress, an ‘easement’, ‘right’ and ‘privilege’ to be enjoyed by every ‘owner’ of each undivided share, with no distinction between residential owners or commercial owners.

(vi)  Whether or not any particular manner of exercise of the above right of way on ‘Common Areas’ in a given case by any particular ‘owner’ (or group of owners)  of undivided share of the Building is for a purpose ‘connected with the proper use and enjoyment thereof’ is not in issue in this case. It is not within Issues 1 to 5. It is a separate issue to be considered if disputed after one first determine whether particular areas are ‘Common Areas’ or not on the applicable statutory definition and case law principles.

(vii)  On the authorities in sections F1 & F2 above, ‘proper use and enjoyment’ is, I agree with Ms Wong, not the test or criteria for determining whether a particular part of a building is common parts or exclusive use areas. Mr Chong produced no authority to support such submissions. His submissions to this effect are also contrary to the statutory definition of ‘common parts’ in BMO.

(viii)  Ms Lam gave much subjective views of hers on such ‘non-issue’ of ‘proper use and enjoyment’ of ‘right of way’ of different owners of the Building in the box under cross-examination of Mr Chong. I think all her answers are, contrary to paragraph 16 of Mr Chong’s final submissions, neither here nor there for our case.

(ix)  The facts that iron grills had, after the making of the DMC, been erected between 1/F level and 2/F level of the 2 pairs of criss-crossing staircases to allow one going down only (but not going up)  cannot assist us in our construction exerise of the DMC for Issue 1: see [53] above. The reason is simple. This case is not about whether such erection infringes one’s (or amounts to)  proper use and enjoyment of one’s right of way over such staircases.”

41.  Intended Ground 1 is therefore not arguable.

D2.2  Intended Ground 2

42.  Under this intended ground, Mr Chong has submitted that, as the specific design and layout of the Disputed Areas show that they are only necessary for the reasonable use of the Offices, the Judge ought to have further held that they are “appurtenances” to the Offices as provided under the relevant assignment, and thus have been assigned together with the Offices to the owner for its exclusive use and possession.[13]

43.  We do not agree.  As discussed earlier, the Judge had properly construed the DMC against the design and construction of the Disputed Areas and the Building, and correctly held that the Disputed Areas are intended to and could be reasonably used by the residential owners of the Building.  In the premises, the underlying plank of Mr Chong’s contention under this ground falls away.

44.  Intended Ground 2 is similarly unarguable.

E.  CONCLUSION

45.  For the above reasons, the intended appeal is not arguable at all nor is there any other reason in the interests of justice why the appeal should be heard.  The Summons is dismissed with costs to the IO, to be summarily assessed.

46.  In this respect, the IO in their statement of costs dated 10 September 2024 claimed for the amount of HK$132,384 as their costs.  The amount claimed appears to us to be reasonable, and is thus allowed in full.  The above costs order and the assessment of costs are made on a nisi basis, which shall become absolute unless an application is made by any party to vary the same within 14 days from the date of this judgment.

47.  As Rs’ application is totally without merit, we further make an order under Order 59, Rule 2A(8)  of the RHC that no party may request the determination be reconsidered at an oral hearing inter partes.