SNOWLAND LTD v. TOPLAND HOLDINGS LTD AND ANOTHER

LDBM 124/2005

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM 124 of 2005

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JUDGMENT

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Background

1. The Applicant is the owner of the premises known as Ground Floor and 1^st Floor of Chun Yee Building (“the Building”), No. 733 Nathan Road, Kowloon, Hong Kong (“the Applicant’s Premises”).  The 1^st Respondent is the owner of the Basement of the Building (“the Basement”).  The 2^nd Respondent is the tenant of the Basement.

2. The Applicant’s application is in relation to the signboards erected and projected at the external wall immediately above the front entrance to the Basement.  It is the Applicant’s case that the external walls surrounding and bounding the Applicant’s Premises, including the part where the signboards were erected, are for the exclusive use occupation and enjoyment of the Applicant and do not form part of the common parts of the Building, and that the Respondents had erected the signboards without the Applicant’s consent or permission.

3. The Applicant contends that the Respondents were in breach of Clause 22 of the Deed of Mutual Covenant of the Building (“the DMC”), which has the following provision:-

“No party hereto shall be permitted to erect or project a signboard (with or without neon lights or other lights) on and from the exterior wall under his own floor level or above his ceiling level or beyond these limits.”

4. The Applicant therefore claims for a declaration that it has the right to the exclusive use, occupation and enjoyment of the external walls surrounding and bounding the Applicant’s Premises and that the Respondents were in breach of the DMC together with damages to be assessed.  The Applicant also claims for an order that the Respondents do remove the signboards and an injunction to restrain the Respondents from erecting the signboards or any other signboard or notice on or from the external wall of the Applicant’s Premises.

5. The 1^st Respondent contends that the signboard allegedly erected by it was in fact demolished in early June 2005 and the Applicant was  notified about the demolition by letter on 15 June 2005.  The 1^st Respondent also contends that only the Incorporated Owners of the Building (“the IO”) can enforce the DMC and the Applicant has no legal capacity to commence proceedings under the DMC.  Similarly, the 2^nd Respondent contends that only the IO can enforce the DMC and the Applicant does not have any exclusive right to the external wall of the Building.

6. As conceded by the Applicant, the crux of the matter in this case is whether the external wall in question forms part of the common parts of the Building, and if so, the Applicant would have no claim against the Respondents at all.

Whether the external wall is a common part

7. Section 2 of the Building Management Ordinance (“the BMO”) provides that “common parts” means:-

“(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;”

8. The First Schedule of the BMO specifies that external walls are common parts of a building.  Thus, according to section 2 of the BMO, unless the external walls in question are specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner, the external walls will be regarded as common parts of a building.

9. The Applicant’s Premises were assigned by one Kasos Limited as vendor to the Applicant as purchaser.  In the Deed of Assignment dated 18 July 1990 (“the Deed of Assignment”), the Applicant’s Premises are described as:-

“ALL THOSE 4 equal undivided 36th parts or shares of and in ALL THAT piece or parcel of ground registered in the Land Office as THE REMAINING PORTION OF KOWLOON INLAND LOT NO.2180 And of and in the messuage erections and buildings thereon now known as No.733 NATHAN ROAD (“the Building”) TOGETHER with the sole and exclusive right to the use occupation and enjoyment of ALL THOSE the GROUND FLOOR and the FIRST FLOOR of the Building which are respectively shown and delineated on the Ground Floor Plan and 1st Floor to 2nd Floor Plan annexed to the Deed of Mutual Grant of Right of Way and thereon marked R.P. of K.I.L. No.2180 (save and except those common area coloured yellow thereon and referred to in the Deed of Mutual Grant of Right of Way).”

10. There is no express provision in the Deed of Assignment specifying or designating that the external walls of the Applicant’s Premises are for the exclusive use, occupation or enjoyment of the Applicant.  Thus, by virtue of section 2 of the BMO, the external walls surrounding and bounding the Applicant’s Premises are common parts of the Building.

11. However, the Applicant contends that the Deed of Assignment was expressly made subject to and with the benefit of the Deed of Mutual Grant of Right of Way dated 21 November 1966 (“the Deed of Mutual Grant”), and that in the Ground Floor Plan and the 1^st Floor to 2^nd Floor Plan attached to the Deed of Mutual Grant, the Ground Floor and the First Floor properties, i.e. the Applicant’s Premises, are delineated in red, which clearly shows that the Applicant’s Premises include the external walls.  The Applicant also relies on the fact that the common area identified by the part coloured in yellow excludes the external wall and submits that the assignment to the Applicant must have included the external walls because the external walls are parts and parcels of the Ground Floor and First Floor properties.

12. I do not agree with the Applicant’s interpretation in this regard.  The red lines in the Ground Floor Plan and the 1^st Floor to 2^nd Floor Plan merely denote the boundaries of the floors in question, but they do not show clearly whether the external walls are included or excluded.  The common area coloured in yellow is not the same as the common parts of the Building.  The Building was in fact built on two adjoining lots, i.e. 731 Nathan Road and 733 Nathan Road.  The primary purpose of the Deed of Mutual Grant was to give rights of way and rights of common use of certain areas in each lot to the owners of the adjoining lot.  The area coloured in yellow is in fact such common area that can be used by the owners of the adjoining lot.  It is totally different from the common parts of the Building.

13. There is also no provision in the Deed of Mutual Grant specifying or designating that the external walls in question are for the exclusive use, occupation or enjoyment of the Applicant.  The Applicant submits that prima facie the demise of a unit bounded in part by an external wall includes both sides of that wall, unless there be an exception or a reservation or something in the context to exclude it: see Wealthy China Trading Ltd. v. Huie Man & ors. [1999] 3 HKC 832, Hope Brothers Ltd. v. Cowan [1913] 2 Ch 312, Goldfoot v. Welch [1914] 1 Ch 213 and Sturge v. Hackett [1962] 1 WLR 1257.  However, I do not think that the principle derived from these common law cases can override the statutory provisions in the BMO.  As aforesaid, section 2 and the First Schedule of the BMO clearly stipulate that external walls are common parts unless they are specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner.

14. There is also no provision in the DMC reserving the exclusive use, occupation or enjoyment of the external walls to any owner and there is no undivided share allotted to the external walls.  Nevertheless, by reference to Clause 2 and Clause 22 of the DMC, the Applicant contends that on a proper construction of the DMC, the shares allocated to the Ground Floor and the First Floor must carry the right to the sole and exclusive use, occupation and enjoyment of the external walls under the ceiling level and above the floor level of each of the respective floors.

15. Clause 2 of the DMC stipulates that:-

“Each owner and all persons authorised by them shall in common with all others having the like rights have access to and be entitled in common with the owner of No.731 Nathan Road to use the entrances staircases landings passenger lifts and lift wells pumps, wells and tanks in the said building and the said No.731 Nathan Road (as the case may be) for all purposes connected with the proper use and enjoyment of the part of the said building of which the party is entitled to the exclusive use occupation and enjoyment and for the purpose of ingress to and egress from each part subject to and with the benefit of Deed of Mutual Grant Memorial No.563895 PROVIDED ALWAYS that none of the owners shall use nor allow nor permit to be used the said entrances staircases landings passenger lifts and lift well in any manner so as to cause obstruction nuisance or annoyance to the other or others of them.”

16. The Applicant submits that Clause 2 sets out the common parts of the Building and does not include the external wall, and that there can be no conceivable reason as to why Clause 2 should not include the external wall if it was indeed truly intended by the parties to constitute a common part of the Building.  The Applicant’s submission in this regard is totally misconceived.  Clause 2 actually concerns with the common area used by the owners in the adjoining lots as discussed above.  It does not refer to the common parts of the Building at all.  There is in fact no provision in the DMC defining which parts of the Building constituted the common parts.

17. As to Clause 22, the Applicant submits that it contains an express prohibition upon the co-owners against the erection or projection of signboards on or from the exterior wall under his own floor level or above his ceiling level or beyond those limits, and by making specific provisions for the erection of signboards, the parties to the DMC must be taken to have expressly contemplated that each owner has the exclusive right to use, occupy and enjoy the external wall within the limits of his floor and/or the exclusive right to erect or project signboards on or from the external wall within the limits of his floor.  According to the Applicant, this is reinforced by the fact that the Ground Floor and the 1^st to 3^rd Floor are intended for non-domestic use, and if the parties to the DMC did not intend to confer such rights, Clause 22 would be rendered superfluous.

18. I do not accept the Applicant’s contention in this regard.  As submitted by the Respondent, Clause 22 is a prohibitory clause and it does not confer any positive right on an owner to have exclusive right to use the external wall within the limits of his floor.  The owner would still need to get approval from the IO to erect signboards at the external wall within the limits of his floor if the external wall is a common part of the Building, but Clause 22 would prohibit the IO to permit an owner to erect signboards that is beyond the limits of his floor.  So Clause 22 is not superfluous.  The fact that the Ground Floor and the 1^st to 3^rd Floor are for non-domestic use cannot support the Applicant’s argument at all.  Clause 22 is applicable to all the floors of the Building, which include many residential flats.  If the Applicant’s argument is correct, it means that the other floors with residential flats can also have the right to have signboards erected at the external wall outside the flats without approval from the IO.  This clearly cannot be the intention of the DMC.

19. Furthermore, the Court of Appeal in The Incorporated Owners of Goa Building v. Wui Tat Company Limited, CACV 349/2002, has held that although a developer was given rights in respect of various matters such as the erection of signs and signboards and flu pipes at the external walls, it was not given either the exclusive possession of the external walls or the exclusive right to the use, occupation or enjoyment thereof.  Likewise, even assuming the Applicant had the right to erect signboard at the external wall within the limits of his floor, it does not mean that the Applicant has the exclusive possession of the external wall or the exclusive right to the use, occupation or enjoyment thereof.

20. In fact, contrary to the Applicant’s contention, Clause 3(b) and Clause 15 of the DMC show that the intention of the DMC is to have the external walls to be regarded as common parts of the Building.  Clause 3(b) stipulates that:-

“Subject to Clause 4 hereof, each owner shall pay his due proportion of the cost of keeping in good and tenantable repair and condition of the foundation side walks walls supports beams gutters fences and chimneys and all the drains walls pumps pipes electric conduits… for the general services of the said building…”

21. Clause 15 stipulates that:-

“Each owner shall not…cut or injure any of the floors walls or beams of the said building.”

22. If the external walls were not common parts of the Building, there would be no need to ask all the owners to contribute to the cost of maintaining the walls, and there would be no need to prohibit the owners from causing damages to the walls.

23. The Applicant further contends that under Clause 1 of the DMC, each of the co-owners covenanted with the other that the First Owner would be entitled to the full right and privilege to hold use occupy and enjoy to the exclusion of the Second Owner All Those units in the Basement, the Ground Floor, the 1^st to 13^th Floors, the front portion of the 14^th Floor, the 15^th to 17^th Floors (including the Roof) in the Building.  In other words, the First Owner retained the full right and privilege to the exclusive use, occupation and enjoyment of the entire building, save and except the rear portion of the 14^th Floor.  The Applicant submits that apart from the common areas as defined by the Deed of Mutual Grant, the foregoing right to the entire building must necessarily include the external walls.

24. This submission is again based on the misconception that the common areas are the same as common parts of the Building.  As aforesaid, they are totally different.  If the Applicant’s argument is correct, i.e. the First Owner retained the entire building including the external walls, then how about all the other supporting structures like the foundations, columns and beams?  It does not make any sense to suggest that these structures are still retained by the First Owner and do not form the common parts of the Building.

25. The Applicant also refers to the other previous deeds of assignment concerning the subject lots and the Deed of Grant of Rights of Way dated 21 March 1990, but I do not find anything useful in this regard.  It is not even clear whether the earlier assignments concern the same building.  The Applicant has clearly mistaken the common areas as the common parts of the Building.

26. The Applicant submits that the IO also takes the view that the Applicant has the right to the exclusive use and occupation of the external walls, but the IO’s view can be wrong too and certainly cannot be used to reinforce the Applicant’s arguments.

27. No doubt, as submitted by the Applicant, the question of whether a particular area in a building constitutes a common part turns on a proper interpretation and construction of the relevant registered instruments: see Jumbo King Ltd. v. Faithful Properties Ltd. & ors., (1999) 2 HKCFAR 279, The Incorporated Owners of Wah Tat Industrial Centre v. Yick Fung Holdings Ltd., HCA 4580/2003 and Wealthy China Trading v. Huie Man Kit, supra.

28. However, having considered all the relevant instruments and factual backgrounds of this case, and with the reasons aforesaid, I come to the conclusion that the Applicant does not have the exclusive use, occupation or enjoyment of the external walls surrounding and bounding the Applicant’s Premises and the external wall in question is part of the common parts of the Building.

Locus standi

29. Section 16 of the BMO provides that:-

“When the owners of a building have been incorporated under section 8, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners, and accordingly—

(a) …

(b) any proceedings in the tribunal in respect of any of the common parts of the building may be brought and pursed by or against the corporation.”

30. It is clear that section 16 operates to remove the right of an individual owner to bring proceedings against another owner in respect of the common parts of a building: see Chau Mei Lee Fragance & anor. v. Ng Yee Tim, CACV 97/1996 and See Wah Fan v. The Incorporated Owners of Ki Tat Garden (Phase I), CACV 389/2002.

31. As I have found that the external wall in question is part of the common parts of the Building, the Applicant, as an individual owner, cannot bring the present proceedings against the Respondent, another individual owner.  This action should have been brought by the IO instead.

32. Thus, by virtue of section 16 of the BMO, I find that the Applicant does not have any locus standi to bring the present proceedings against the Respondents and the Applicant’s claims must all be dismissed.

Other matters

33. I should mention here that apart from breach of the DMC, the Applicant has also relied on trespass as a cause of action.  However, trespass is a common law cause of action and the Lands Tribunal does not have jurisdiction to deal with such common law claims.  Thus, I will simply dismiss such claims based on trespass for want of jurisdiction.

34. The 1^st Respondent has relied on the demolition of the signboard as a defence.  It is not necessary for me to deal with this defence as the Applicant’s claims will in any event be dismissed for lack of locus standi or for want of jurisdiction.  However, for the sake of completeness, I do find that the 1^st Respondent cannot rely on this defence.  Even though all the previous signboards had been demolished, the one erected by the 2^nd Respondent is still there.  From the evidence of the Respondents, it is clear that the 1^st Respondent is well aware of the erection of the signboard by the 2^nd Respondent, but did not take any action to stop the 2^nd Respondent from doing so or to ask the 2^nd Respondent to remedy the situation.  It is clear that the 1^st Respondent had consented to the erection of the signboard by the 2^nd Respondent, and the 1^st Respondent would also be liable for breach of the DMC in respect of this signboard.

Conclusion

35. By reason of the aforesaid, I order as follows:-

(1) The Applicant’s application herein be dismissed; and

(2) Costs Order Nisi: The Applicant do pay costs of this application to the Respondents, to be taxed on District Court Scale if not agreed.  If there is no application for costs by any party within the next 14 days, this costs order nisi shall become absolute.