THE INCORPORATED OWNERS OF MAN FUK BUILDING v. TAI SHANG INVESTMENT CO. LTD.

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM 29 of 1999

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J U D G M E N T

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1. The applicant is the Incorporated Owners of Man Fuk Building. The applicant was registered on 21st October 1994. Man Fuk Building (the building) is situated at 40 Yuet Wah Street, Kwun Tong, Kowloon.

2. The respondent is Tai Shang Investment Company Limited, the grantee of Lot KTIL 396, and the developer of the building.

3. Under LDBM 29/99, the applicant applies for a declaration that the children playground, on the 2nd Lower Ground Floor (LG2) of Block A in the building, is a common part of the building.

4. The applicant asks for an injunction to restrain the respondent from occupying this area, and that the respondent should reinstate the playground.

5. Under LDBM 246/99, the applicant applies for a declaration that the caretaker quarter, on the Ground Floor of Block B in the building, is a common part of the building.

6. The applicant also asks for an injunction to restrain the respondent from occupying the caretaker quarter, and a passage on the 1st Lower Ground Floor (LG1) of Block A, and to reinstate them.

7. The applicant asks for the right to remove all obstructions in these areas, and for the respondent to pay for the related expenses, if the respondent do not so reinstate.

8. The applicant applies for damages and mesne profits.

The facts

9. There are three blocks of flats on the Lot, known as Blocks A, B and C.

10. On 1st March 1970, when the first assignment and the Deed of Mutual Covenant (DMC) were signed, Blocks A and B had been completed. Block C was still under construction.

11. In the first assignment to a purchaser, the respondent, as the vendor, reserved to it "the exclusive right to hold use occupy and enjoy the remaining flats and car parking spaces of the said Building and the roof thereof."

12. Under the DMC, shares were allotted to the flats and car parking spaces in the completed Blocks A and B. Shares were also allotted to the flats and car parking spaces, with 20 shares allotted to a Caretakers' room and 20 shares for the Children Playground, listed in the First Schedule to the DMC, as "(now under construction) (Block C)".

13. According to the Approved Plans, a Children Playground was designated on the 2nd Lower Ground Floor (LG2) of Block A. There is a Caretaker Quarter designated on Ground Floor of Block B.

14. There is no Caretakers' room or Children Playground identified as such in the Approved Plans for Block C. There is no evidence that there is a Caretakers' room or Children Playground in Block C.

15. The passage on LG1 Block A is a common part of the building.

16. These are not in dispute, and are found as facts of the case.

The DMC

17. Clause 3(b) of the DMC stated that

"Each owner shall hold his part of the said building and the said premises subject to and with the benefit of the following rights privileges and obligations namely: -

(b) Full right and liberty to use the open yards gardens and children playground of the said premises (except any part thereof allotted to any owner) for the purposes of recreation only."

18. Under Clause 10(j) of the DMC, the owners covenanted with each other

" Not to place anything in or to occupy to the exclusion of the other owners of the said building any part of the said building intended for common use and not to use such parts of the said building otherwise than for access to and from his flat."

The BMO

19. Under Section 2, the definition of "common parts" reads -

(a) the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner, and

(b) unless so specified or designated, those parts specified in the First Schedule.

20. The First Schedule of the BMO specified the common parts, and included caretakers' flats, passageways and playgrounds.

21. Section 34 I of the BMO provided that

(1) No person may --

(a) convert any part of the common parts of a building to his own use unless such conversion is approved by a resolution of the owners' committee (if any);

(b) use or permit to be used the common part of a building in such manner as-

(i) unreasonably to interfere with the use and enjoyment of those parts by any owner or occupier of the building; or

(ii) to cause a nuisance or hazard to any person lawfully in the building.

(2) Any person who contravenes subsection (1) shall be deemed to be in breach of an obligation imposed on him by the deed of mutual covenant in respect of the building.

The applicant's case

22. The applicant's case was that the respondent had unlawfully occupied the Children Playground on LG2 of Block A, and the Caretaker Quarter on Ground Floor of Block B, claiming to be the owner of these places. The respondent also wrongfully occupied the passage on LG1 of Block A. It is the applicant's contention that these are all common parts of the building.

23. The applicant relied on the DMC, the first assignment and the Building Management Ordinance Cap.344 for the contention.

The applicant's first witness

24. The applicant's first witness (AW1), Mr. Lam Kwok Chai, was the vice-chairman of the applicant management committee. He has been residing at the building since 1976.

25. AW1 was not aware that an area at LG2 Block A was designated as a children playground, until 1996. He was under the impression that it was the respondent's godown for building material. When there was complaints of lice and rats infection in 1996, the applicant asked the respondent to deal with the matter. The applicant was ignored until the applicant took legal actions. The respondent had removed the building material from that area in January 1999.

26. There is an area in the common part of the building on Ground floor of Block B that is now used as a children playground.

27. AW1 gave evidence that there was a room known as Room 212, at Ground Floor of Block B when he moved in. The respondent rented it out. In 1997, because of a Building Authority notice posted up on the door of the room, he came to know that it was a caretaker quarter, and a common part of the building. The room was left vacant from the time of the notice in 1997 up to 1999, when it was renovated and inhabited again. The applicant decided to ask the respondent for the return of the room, which the applicant considered to be a common part of the building.

28. AW1 testified that an area forming part of the passage or hall at LG1, with blocked windows, had been used for storage, from the time he moved in. The building material stored in that area was removed after the applicant was formed in 1994. A staff of Dah Keung Godown Management Co. Ltd. returned the key to the area to AW1 in September 1999. The company was formerly known as the South China Estate Management Company Limited, and was the manager of the building until the applicant was incorporated. The directors in this company are the same as those in the respondent's.

29. AW1 agreed that the building material stored in that area could have been intended for the maintenance of the building. AW1 did not witness the respondent sending workers to wall up the tie beams on the slope on which the building was situated.

The applicant's second witness

30. The applicant's second witness (AW2) Mr. Choi Ping Chow, has been the superintendent of the caretakers at the building since November 1995.

31. There is an area in the common part of the building on Ground floor of Block B that is now used as a children playground.

32. There is no children playground in Block C.

33. AW2 first attended at the area marked as "children playground" on the Approved Plan, at LG2 of Block A, around March 1996. He obtained the keys to the entrance, from the South China Estate Management Company Limited, to carry out repairs to a damaged water pipe. He was then aware that the area was used as a godown. To gain access for cleaning the light well adjacent to this area, AW2 obtained the keys from the respondent.

34. In the beginning of 1999, after the applicant instructed solicitors, the building material stored in the area was removed.

35. There is a room in LG2 of Block C used as the caretaker quarter for many years. This was identified as part of a passage on LG2 Block C (behind car parking space 41) on the Approved Plan.

36. There is no other quarter for the caretakers.

37. There is an area marked as "caretaker quarter" in the Approved Plan on the Ground Floor of Block B. The caretakers never had access to this area. When AW2 went to take photographs of the entrance to this area, he saw a number "212" on the doorbell. The number was no longer there after the applicant's recent owners' meeting. The respondent used to pay the management charges for this unit until February 1997, after a notice was posted up. The unit was left vacant since then, until the end of 1999, when it was again occupied after renovation was done.

The respondent's case

38. The respondent's case was that while most of the applicant's evidence was not in dispute, the applicant had not been able to prove its case against the respondent.

The actual locations of the children playground on LG2 of Block A, the caretaker quarter on Ground Floor of Block B and the enclosed passage on LG1 are not in dispute.

39. While the respondent had no dispute with the legal position under Section 2 and the first Schedule to the Building Management Ordinance, Cap.344, its position was that they could not prevail over the express provisions in the DMC.

40. It is the respondent's case that it had been allocated the exclusive possession of the children playground on LG2 of Block A, and the caretaker quarter on Ground Floor of Block B, under the DMC. The DMC should be construed as at the date of the execution, 1st March 1971.

41. It is submitted that there is an error in the First Schedule to the DMC, that described the children playground and the caretaker quarter to be in Block C, then under construction. There is no evidence that as at 1971, there were such areas that could be described as the Caretakers' room and a Children Playground in Block C. It was submitted that, it was not clear that the First Schedule placed the children playground and caretaker quarter within Block C only. The respondent contended that on the true construction of the DMC, the children playground and the caretaker quarter, referred to in Block C, should be the children playground on LG2 of Block A, and the caretaker quarter on Ground Floor of Block B. The respondent's case was that any doubt should be resolved in the respondent's favour. There are Land Registry records that showed the respondent to be the owner of a "children playground" and a "caretakers' room" in the building.

42. The respondent contended that the applicant's case: that the respondent enjoyed exclusive possession of a playground and a caretaker quarter with undivided share, but that had never been built, made no sense.

43. The respondent pointed to the fact that, under the DMC, no shares were allotted to the common part, but were allotted to the playground and the caretaker quarter. The respondent relied on this to prove that the description in the First Schedule of the DMC, of the playground and caretaker quarter to be in Block C, to be an error. It was proved by extrinsic evidence, in the form of the Occupation Permit, and the Approved Plans, to be otherwise. The sizes of the playground and the caretaker quarter, when compared to the other units, were said to be indicative of the real intention in the DMC, in addition to the fact that there was no mention of such facilities mentioned in the sales brochure.

44. The respondent had undisturbed possession of these areas until the 1990s. The respondent considered that this fact, in addition to the DMC, proved its right of possession.

45. There is no dispute that the passage on LG1 is a common part of the building. The respondent's case was that it should not be responsible for the enclosure and occupation of the passage on LG1 by the former manager, South China Estate Management Company Limited, now known as the Dah Keung Godown Management Co. Ltd.

The respondent's first witness

46. The respondent's first witness (RW1) was Mr. Chong Kai Hung. RW1 has been an administrative assistant since 1981, and a director, of the respondent's since 1989.

47. The respondent was the developer of the building. The respondent caused the DMC to be prepared. It was entered into between the respondent and a first owner. There was no plans attached to the DMC.

48. RW1 confirmed that the children playground on LG2 of Block A and the caretaker quarter on Ground Floor of Block B are the only children playground and caretaker quarter in the building. The applicant and the respondent were referring to the same areas in the applications.

49. RW1 referred to the Occupation Permit dated 27th March 1972. There was no other children playground and caretaker quarter in the building, except the children playground on LG2 of Block A and the caretaker quarter on Ground Floor of Block B. The respondent had the exclusive use and enjoyment of these areas since 1971. The sales brochure did not mention the provision of such facilities.

50. The Land Office records showed the respondent to be the registered owners of "children's playground" and "caretaker's room", each with 20 undivided shares.

51. The respondent had used the children playground on LG2 of Block A for the storage of building material. These were removed in January 1999, after the applicant's complaint of nuisance. It had been left vacant since.

52. The respondent had never taken possession of the passage at LG1 of the building. The former manager of the building, South China Estate Management Company Limited, now known as the Dah Keung Godown Management Co. Ltd., was the actual occupier during its terms as the manager. RW1 denied that the respondent had stored building material in the passage in LG1, or asked his staff to remove them.

53. While the respondent and the former manager have the same company directors, they have independent management. The two companies are engaged in different businesses. As the owner of any unit in a building that South China or Dah Keung was the manager, the respondent would pay management fees to the manager.

54. RW1 did not know if the respondent had paid management fees in respect of the caretaker quarter on Ground Floor of Block B. Had South China or Dah Keung asked for use of the caretaker quarter on Ground Floor of Block B, the respondent would charge South China or Dah Keung a rent. RW1 was not aware of any notice from the Building Authority relating to the caretaker quarter on Ground Floor of Block B. It had been left vacant when there was no tenant. It is now used as a staff quarter.

Judgment

55. The respondent, as the developer of the Lot on which the building was constructed, had divided it into equal undivided shares, and assigned the shares to subsequent purchasers. At the time of the First Assignment, the DMC was entered into between the respondent and the first owner (purchaser). The first owner was granted exclusive possession of his unit. The other undivided shares and the exclusive right "to hold use and occupy and enjoy the remaining flats and car parking spaces of the said Building and the roof thereof" were reserved to the respondent.

56. All other areas, which are not the subjects of exclusive possession, remain common areas.

57. All co-owners are entitled to the common possession of each part of the land and building, except those with exclusive possession granted.

58. Section 2 and the First Schedule of the BMO, and paragraph 3 (b) of the DMC are of importance in the present situation.

59. The first assignment and the DMC have to be construed with care to ascertain if the respondent had reserved the areas of the existing playground and caretaker quarter to itself.

60. The respondent relied on these two documents. The respondent contended that there was an obvious error in the DMC, in the reference to Block C, in submitting that the reference to the playground and caretaker quarter in Block C must refer to the existing playground and caretaker quarter.

61. The respondent also referred to the Land Registry records, the control cards, the Approved Plans and sales brochure, as documents from which inferences might be drawn as to the true intention of the parties at the time of the first assignment and the DMC.

62. In Hong Kong, there is no registration of title. The Land Registry is a register of documents, documents that affect interest in land. The registration itself does not confer any rights to a property. The two Land Registry records relating to the playground and the caretaker quarter do not confer any rights. The control cards are similar in effect.

63. The Approved Plans showed the Building Authority's approval for the building to be built in accordance with the plans. It is not a document of title. There were no plans attached to the DMC. The sales brochure is not a document of title.

64. At the time of the entering into of the DMC and the first assignment, Blocks A and B had been completed. Undivided shares had been granted to the playground and caretaker quarter, in Block C, then under construction. The admitted fact was that these areas do not physically exist in the building, although they had been granted undivided shares, with reserved and exclusive possession. They cannot be identified in any part of Block C.

65. The existing playground and caretaker quarter in these Blocks were already completed, at the time of the entering into of the first assignment and the DMC. For reasons unknown, these areas were not included in the first schedule of the DMC. They had not been reserved to the respondent.

66. In fact, these areas were not referred to anywhere in the DMC or the first assignment. They do not exist in any of the documents of title. They have not been granted any undivided shares.

67. The combined effect of the law, the documents of title and the existing facts is that, all areas that are not the subject of exclusive possession would remain common parts.

68. There is no evidence that the respondent was in possession of the enclosed passage on LG1 Block A. The evidence was that the ex-manager occupied the passage. The Tribunal accepts this to be the fact.

69. There is undisputed evidence that the passage had been vacated and possession returned to the applicant. There is no nuisance to be abated.

70. The children playground, on the 2nd Lower Ground Floor (LG2) of Block A in the building, had been vacated. There is no nuisance to be abated.

Declaration

71. It is hereby declared that:

72. The children playground, on the 2nd Lower Ground Floor (LG2) of Block A in the building, is a common part of the building.

73. The caretaker quarter, on the Ground Floor of Block B in the building, is a common part of the building.

Injunction

74. The respondent, its servants or agents are restrained from the continual occupation and conversion to their own use of the children playground, on the 2nd Lower Ground Floor (LG2) of Block A in the building.

75. The respondent, its servants or agents are restrained from the continual occupation and conversion to their own use of the caretaker quarter, on the Ground Floor of Block B in the building.

76. The respondent, do within two months repair and reinstate the children playground and the caretaker quarter and return them to the applicant.

77. If the respondent fail to do so, the applicant do have the right to remove the doors, walls, and anything which blocked or enclosed the caretaker quarter and to remove anything inside the caretaker quarter, and to repair and reinstate them. The respondent do pay the applicant all the expenses (if any) for and relating to doing so.

78. The applicant has not substantiated nor quantifies its claims for damages and mesne profits. There is no order as to damages and mesne profits.

Costs

79. The respondent do pay to the applicant costs of and occasioned by this application, to be taxed if not agreed.