THE INCORPORATED OWNERS OF PROVIDENT CENTRE v. PROVIDENT COMERCIAL INVESTMENTS LTD

CACV 79/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL No. 79 OF 2005

(ON APPEAL FROM THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 15 OF 2004)

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CACV 80/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL No. 80 OF 2005

(ON APPEAL FROM THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 247 OF 2004)

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REASONS FOR JUDGMENT

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Hon.  Yeung JA:

1.  I agree with Yuen JA’s reasons for judgment.

Hon. Yuen JA:

2.  Provident Commercial Investments Ltd (“PCIL”), which is the  Applicant in LDBM 15/2004 and the Respondent in LDBM 247/2004, applied for an order in each of those proceedings that the proceedings be transferred to the Court of First Instance.  Judge Louis Chan, sitting as Presiding Officer of the Lands Tribunal, refused the applications. PCIL appealed.

3.  At the conclusion of the hearing, the appeals were dismissed.  My reasons are as follows.

PCIL’s applications

4.  The application in each case was made under s.45(3) of the Building Management Ordinance Cap. 344 and s.8A of the Lands Tribunal Ordinance Cap.17.

5.  Section 8A of the Lands Tribunal Ordinance provides:

“	(1)	The Tribunal may transfer to the Court of First Instance or the District Court any proceedings instituted before the Tribunal which are within the jurisdiction of the Court of First Instance or the District Court, but which –
		(a)	are not within the jurisdiction of the Tribunal; or
		(b)	the Tribunal considers should in the interests of justice be so transferred”.

6.  PCIL’s summonses did not specify whether the applications were  made on the ground that the proceedings were not within the jurisdiction of the Lands Tribunal, or on the ground that (although the Tribunal did have jurisdiction) it should nevertheless in the exercise of its discretion transfer the proceedings to the Court of First Instance.

7.  It was however clear from the transcript of the hearing before Judge Chan and from his judgment that the lawyer representing PCIL on that occasion sought an order for transfer on the former ground only, i.e. that the Tribunal had no jurisdiction in the proceedings.  The judge was not asked to exercise his discretion to transfer the proceedings.  I shall return to this aspect of the case later in this judgment.

The dispute

8.  Essentially, the issue in dispute between PCIL of the one part and the Incorporated Owners of Provident Centre (“the IO”) and its managers and agents of the other part is whether certain areas in the commercial portion of the large development known as Provident Centre are common parts, or are areas over which PCIL enjoys exclusive possession.   

9.  The determination of such an issue normally requires the interpretation of the first assignment (and perhaps also subsequent assignments) and the Deed of Mutual Covenant, as well as the application of the Building Management Ordinance.

10.  Proceedings involving interpretation of a deed of mutual covenant are prima facie within the jurisdiction of the Lands Tribunal.  Section 45(1) Building Management Ordinance provides:

“	The [Lands] tribunal shall have jurisdiction to hear and determine any proceedings specified in the Tenth Schedule“.

The Tenth Schedule provides:

“	HEARING AND DETERMINATION OF SPECIFIED PROCEEDINGS BY TRIBUNAL
	(2)	Proceedings relating to the interpretation and enforcement of the terms and provisions of a deed of mutual covenant ...
	(3)	Proceedings relating to the use, occupation, enjoyment, possession or ownership of the common parts or any other part of a building in which the owners have a common interest”.

11. Section 2 of the Building Management Ordinance defines "common parts" to mean

"	(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".

12. In the present case, the first assignment reserved to the developer

"	the exclusive right to hold use occupy and enjoy ... the whole of the [commercial portion of the development] (other than those areas and facilities of the Estate intended for common use) ..." (emphasis added). /td>

13. In the DMC, "common areas and facilities" are defined as:

"

those parts ... which, subject to the provisions of this Deed, are intended for the common use and enjoyment by two or more owners and occupiers thereof and so far as practicable are as shown coloured Green and Green hatched Black on the Plans registered in the Land Office by Memorial No.2371835" (emphasis added).

14. Although the areas in dispute have not been coloured on the Plans, the IO’s case is that the coloured Plans only show common parts "so far as practicable" and that the areas in dispute were nevertheless intended for common use and enjoyment. 

15. PCIL’s case is that the fact that those areas were not coloured on the Plans shows that they were not intended for common use and enjoyment. 

16. Obviously the ultimate determination of the issue will involve questions such as (1) whether the location, and/or design, etc. of the areas show that they were intended for common use and enjoyment; and (2) whether it had or had not been practicable for the areas to have been coloured Green or Green hatched Black on the Plans.  At the appeal, we were informed that directions for expert evidence have been given, but I express no views on the extent to which expert evidence can affect the determination of the issue beyond showing the factual matrix. 

17. One possible decision - which may rest inconveniently between the IO’s case and PCIL’s case -  may be that the location and design etc. of the areas indicate that they were intended for common use and enjoyment, but they had not been coloured on the Plans even though it had been practicable to do so. 

PCIL’s jurisdiction argument

18. PCIL submitted that if this were to occur, and if the Tribunal were to hold that the areas were nevertheless common parts, that would mean that the Tribunal would be making an order that would have the effect of substantially “varying or rectifying” documents registered in the Land Registry.  PCIL says that the areas not coloured have been assigned on the basis that they were not common parts.

19. PCIL submitted that this took the proceedings out of the jurisdiction of the Lands Tribunal, as s.45(3) Lands Tribunal Ordinance provides:

“

Subject to the provisions of this Ordinance, nothing in this section or the Tenth Schedule shall be construed to vest in the tribunal any jurisdiction other than civil jurisdiction or any jurisdiction to make any order which would, if made, have the effect of rendering void, negativing or substantially varying in whole or in part any contractual or proprietary right enjoyed by any owner or occupier or otherwise referred to in the terms and provisions of an instrument which is registered in the Land Registry including a deed of mutual covenant (if any)”.

20. Judge Chan held that even if the Tribunal were to find that common parts had not been coloured on the Plans, that would only involve the Tribunal in an interpretation of the DMC, and not in making an order varying any contractual or proprietary rights. 

Discussion

21. In my respectful view, that must be right, because the Tribunal would only be interpreting the deeds to find out what had been intended - from Day 1 - as common parts.  If the areas in dispute were found to be common parts, the fact that a party may have purported to assign them as “private” property would not change their status as common parts - over which no private contractual or proprietary rights could have been created or assigned.

22. If the Tribunal were to find that some common parts had not been coloured when they could or should have been, at most what could be said is that the Plans were liable to be rectified, but rectification of documents is different from variation of contractual or proprietary rights.  Rectification is only a procedural method (used to correct documents in order that they may reflect the parties’ intentions accurately), whereas variation is a substantive alteration of parties’ rights (in spite of their original intentions).  It is the latter that the Tribunal has no jurisdiction to effect under s.45(3) Lands Tribunal Ordinance.  Insofar as rectification of documents and variation of rights were mentioned in the same breath by Yam J in Mass Transit Railway Corp v Lam Kai Fai and others unrep. HCA 1796/1994, [1996] HKLY 1132 as if s.45(3) applied identically to both concepts, that was with respect incorrect.

23. PCIL’s submission that the Tribunal had no jurisdiction in the proceedings was therefore groundless.  Although various submissions were made to us on the situations to which s.45(3) might apply, it is not for the court on this occasion to define the situations where the Tribunal may be asked to make an order “rendering void, negativing or substantially varying ... contractual or proprietary rights”.  As with an elephant, it is probably easier to recognize the situation when one is confronted with it, rather than to describe it before one sees it.  This case did not present such a situation. 

Exercise of discretion

24. I then come to PCIL’s submission that this court should exercise its discretion to order that the proceedings be transferred to the Court of First Instance.  The Tribunal does not have exclusive jurisdiction over the proceedings specified in the Tenth Schedule (see this court’s decision in Wong Hing Cheong and another v Wah E Investment Ltd and another [2002] 2 HKLRD 175), so it was certainly open to PCIL, on the summonses issued,  to ask the Tribunal to exercise its discretion to transfer the proceedings to the Court of First Instance.  However the Tribunal was not asked to do so. 

25. Although this court has all the powers of the tribunal below (O.59 r.19(1) and (3) Rules of the High Court), we declined to exercise the discretion as (a) the applicant had chosen not to advance that argument to the Tribunal; (b)  no explanation has been given for that and (c) it has not been suggested that there has been any change of circumstances since then.  The point was not raised in the Notice of Appeal either, and although this court can exercise the powers of the tribunal below even though the point was not raised in the Notice of Appeal (O.59 r.19(4) RHC), it was inappropriate to do so in light of the matters I have just mentioned, particularly since the point involved the exercise of a discretion to transfer proceedings, a procedural decision best made by the tribunal itself.   

Licence

26. As for the submission in Mr Ismail’s skeleton of a licence in favour of PCIL, this was (a) based on unpleaded facts; (b) contrary to PCIL’s pleaded case that it owned the areas in dispute, and (c) not raised in the grounds of appeal.  Accordingly, we declined to permit Mr Ismail to raise it for the first time on appeal. 

Order

27. The appeal was therefore dismissed with costs.  I would only record that an application was made for costs on an indemnity basis but we saw no grounds for that higher scale of costs.

Hon. Sakhrani J:

28. I also agree.