THE INCORPORATED OWNERS OF WAH TAT INDUSTRIAL CENTRE v. YICK FUNG HOLDINGS LTD

HCA4580/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4580 OF 2003

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J U D G M E N T

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INTRODUCTION

1. Wah Tat Industrial Centre, No.8 Wah Sing Street, Kwai Chung, New Territories (“the Centre”) is an industrial building.  It stands on Kwai Chung Town Lot No.335 (“the Land”) and comprises a podium of two levels at G/F and 1/F and three factory buildings, Blocks A to C.

2. The defendant was first owner and developer of the Centre.  The development was completed in two phases.  The first phase took place in 1985 upon the completion of Block C and the podium, and the second phase in 1988 upon the completion of Blocks A and B.

3. The plaintiff is the Incorporated Owners of the Centre.  It was registered under section 8 of the Building Management Ordinance, Cap.344 on 29 May 1995.

4. The core dispute between the parties is whether certain areas of the Centre (“the Subject Areas”) are common areas or whether the defendant is entitled to exclusive possession thereof[1].  They are :

(1) The Passageway, which is the portion of the passageway beneath the main staircase at the main entrance of the Centre.

(2) The BTM Room on the G/F.

(3) The Transformer Room on the G/F.

(4) The Transformer Room Extension on the G/F.

(5) The exterior walls of Blocks A to C (“the Exterior Walls”).

For identification purpose, a plan depicting the Subject Areas, except the Exterior Walls, is attached to this judgment (“the Plan”).

THE PARTIES' CASE

5. The parties' respective case is detailed below.

(1) The Passageway

6. In about 1985, the defendant boarded up the Passageway for its own use to the exclusion of other owners of the Land.  Prior to 26 September 2005, there were two booths being placed by the defendant within the boarded up area.  The area concerned is now being used as a booth for collecting car parking fees.  The carpark is on the G/F and 1/F of the podium.  It has been operated by the defendant since about 1985.

7. The plaintiff contends that the Passageway is a common passageway and hence part of the common areas.  The plaintiff claims for declaratory relief and an order for delivery up.  The defendant asserts that it is entitled to the exclusive use occupation and enjoyment thereof.  It counterclaims for a declaration that it is the owner of the Passageway and/or is otherwise entitled to exclusive possession thereof.

(2) The BTM Room

8. The BTM Room is partitioned into two portions.  Since about 1985, one portion (coloured yellow in the Plan) (“the Yellow Portion”) has been used for storage of BTM gas cylinders for fire fighting purpose.  The other portion (coloured orange in the Plan) (“the Orange Portion”) has been occupied by the defendant to the exclusion of other owners of the Land as its sales office for the sale of those unsold units in the Centre owned by the defendant.  This sale office is also used for the purpose of issuing tickets to car park users.

9. The plaintiff’s case is that both the Yellow and Orange Portions fall within the BTM Room, which forms part of the common areas.  It claims for declaratory relief and an order for delivery up.

10. The defendant’s primary case is that only the Yellow Portion is the BTM Room.  The Orange Portion is never part of the BTM Room but an area reserved for the exclusive use occupation and enjoyment of the defendant as first owner.  The defendant’s alternative case is that if the BTM Room includes both the Yellow and Orange Portions, then only the Yellow Portion had been intended for common use whereas the Orange Portion had been reserved for the exclusive use of the defendant as first owner.  It counterclaims for a declaration that it is the owner of the Orange Portion and/or is otherwise entitled to exclusive possession thereof.

(3) The Transformer Room

11. Since about 1985, the Transformer Room has been used for the sole purpose of housing electricity transformers, which are the facilities of China Light & Power (“CLP”).  The Transformer Room is locked up with clear notice at the entrance indicating that it is a sub-station of CLP at the Centre.

12. The defendant’s case is that it is entitled to exclusive use of the Transformer Room and that since 1985 it has been rendered for common use by all owners at the defendant’s expense.  The defendant claims mesne profit against the plaintiff for such use.  The plaintiff denies the defendant’s entitlement as alleged.

(4) The Transformer Room Extension

13. In about 1990, the transformers in the Transformer Room were found to be insufficient to serve all owners of the Centre.  Additional transformers were required to be installed at the Centre to ensure adequate and uninterrupted electricity supply to the Centre.  The Extension was built on the original car park parking spaces Nos.41 and 42 (“CP 41 & 42”), which were adjacent to the Transformer Room, for the purpose of housing the additional facilities.  The entrance to the Extension is, as is the case of the Transformer Room, locked with clear notice indicating that it is a CLP sub-station at the Centre.

14. The defendant claims that CP 41 & 42 had been rendered for common use by all owners at the defendant’s expense.  The defendant is therefore entitled to claims mense profit against the plaintiff for such use.

15. The plaintiff denies the defendant’s entitlement and avers that the Extension was built by or rendered with the defendant’s consent as developer because the capacity of the Transformer Room was insufficient to meet the demand for electricity in the Centre.  The Extension was intended and formed part of the common areas and as such the defendant is not entitled to the exclusive use occupation and enjoyment of that area.

(5) Exterior Walls

16. At various locations of the Exterior Walls, spilt-type air conditioners were installed, presumably by the owners or occupiers of the units concerned.  At some locations, the walls had been opened up and some opened up areas had since been closed again.

17. The defendant’s primary case is that it was entitled to the exclusive use of the Exterior Walls but since 1985 the Walls had been rendered for common use at the defendant’s expense.  It claims mense profit against the plaintiff.  The defendant’s alternative case is that the Exterior Walls are common parts and the plaintiff has the duty to maintain them.  Since 1985, the defendant has expended on maintaining, repairing and cleaning the Walls and the plaintiff has failed to reimburse the defendant for such expenses.  The defendant’s further alternative case is that only the two dimensional external surface of the Exterior Walls falls within the residual parts of the Land, leaving the rest as part of the common area.  The defendant is therefore not liable to maintain the walls except the two dimensional surface.

18. The defendant counterclaims for various forms of declaratory relief and reimbursement of expenses incurred by the defendant on the Exterior Walls to be assessed.

19. The plaintiff does not admit that the defendant has such entitlements as alleged, and even if the defendant were entitled to exclusive use of the Exterior Walls, such rights would be subject to easements, rights and privileges of the other owners.

unity of possession

20. The parties’ disputes have to be resolved primarily by the basic principle regarding how property rights in multi-storied buildings in Hong Kong are held, which is known as the concept of unity of possession.  In Jumbo King Ltd v. Faithful Properties Ltd & Ors [1999] 3 HKLRD 757, Litton PJ explained the concept at p.767C-J :

“…Prima facie, the co-owners of land have the right of possession in common to every part of the land.  In relation to a multi-storied building there cannot be a proprietary right to the exclusive possession of part of the building except as an incident of common ownership in the land and building…Any person who acquires an undivided share can acquire the exclusive use of any space in the building and exercise proprietary rights over such space.

…

As mentioned earlier, the proprietary right of a co-owner in a multi-storied building is the right to an undivided share in the land and building : prima facie the owner is entitled to exert rights of possession to every part of the building, in common with his co-owners.  This is what is meant by the expression ‘unity of possession’.  But by the deed of assignment and by the DMC the rights of exclusive possession to individual parts are marked out as between the co-owners...[The] true analysis is that an undivided share may ‘carry’ a right to exclusive possession of a defined space.  Not the other way round.”

21. In short, ownership of undivided shares by itself gives no right to exclusive possession of any part of the land or building.  It is the assignment and the deed of mutual covenant that confer exclusive possession to individual owners.

The First Assignment and the DMCs

22. The application of the above principle calls for a proper interpretation of the relevant assignment and the deed of mutual covenant.

23. The assignment is the one made between the defendant and the first purchaser, Mr Mak Wing (“Mr Mak”) on 23 September 1985 (“the First Assignment”), which was made subject to the benefit of the deed of mutual covenant of the same date (registered under Memorial No.363146) (“the DMC”).  (The DMC was subsequently re-registered three times on 5 February 1986 (Memorial No.372583), 13 February 1988 (Memorial No.491363) and 30 June 1988 (Memorial No.513747).)  Upon the completion of the Centre, a further Sub-deed of mutual covenant was registered on 15 April 1988 (Memorial No.500685) (“the Sub-DMC”).

(1) The First Assignment

24. At the time of the First Assignment, only Block C had been completed.  Under the First Assignment, for the purpose of sale of the Land, Blocks A, B and C had been notionally divided into 6,385 equal undivided shares and 2,058 equal undivided 6385^th shares of and in the Land have been allocated to Block C.  Mr Mak was assigned 6 equal undivided 6385^th shares together with the full and exclusive right and privilege to hold use occupy and enjoy Unit No.5 on 9/F of Block C (“Unit 5”).  The defendant expressly reserved unto itself the right to the exclusive use occupation and enjoyment of :

(a) the outer walls of, inter alia, of Block C (unless otherwise specifically included in Unit 5);

(b) all areas within the Land not covered by any building and all open areas under any building (which are not car parking spaces) save and except areas designated in the DMC as common areas or are intended for common use;

(c) all other units in Block C; and

(d) all other car parking spaces on the Land.

I will refer to this clause as “Reservation Clause” below.

(2) The DMC

25. Turning to the DMC, I would first make one preliminary observation.  In paragraph (7) of the Preamble, the term “the said Building” is defined to mean “the podium, Block A, Block B or Block C or a combination thereof when fully constructed” and accordingly, the reference as at the date of the DMC (25 September 1985), the reference to “the said Building” meant “the podium and Block C” only.  Blocks A and B were completed later in 1988.  Thus, for present purposes, the reference to “the said Building” in the DMC means “the podium, Block A, Block B or Block C or a combination thereof”.

26. The DMC was made between the defendant as the first owner, Mr Mak as the second owner, The Yien Yieh Commercial Bank Ltd as the Mortgagee and Hop On Management Company as the manager.  Under the 2^nd Schedule, the defendant and Mr Mak held their respective undivided shares in the Land as tenants in common.

27. According to the 6^th Schedule of the DMC, the 6,385 equal undivided shares are allocated as follows :

28. Exclusive possession of the said Building is dealt with in Clause 1 of the DMC read together with the 1^st Schedule.  There, it is provided that the defendant is entitled to the exclusive possession of Block C, with the exception of Unit 5, the exclusive possession of which belongs to Mr Mak.

29. Under Clause 4 of the DMC, the owners of the undivided shares are bound by and shall observe and perform the covenants and provisions set out in the 4^th Schedule, in particular :

“8.   Not to use or cause to be used the entrance hall, the lift hall, staircase, landings and corridors, loading and unloading platform space or any other common part of the said Building for the purpose of drying laundry or hanging anything thereon or therein AND not to erect any racks or lines for drying laundry on any part of the exterior walls of the said Building and not to use the windows of the said Building for the said purpose.

…

13.  Not to alter the colour or the shape of the exterior walls of the said Building except in accordance with a resolution passed under Clause 10 of this Deed.”

30. Under Clause 6(b)(1), the manager is to represent all the owners in all dealings with Government in respect of, inter alia, all common parts of the said Building as specified in the 5^th Schedule, namely, (1) the entrance-hall, lift-hall, common passages and corridors, driveways (if any), staircases and landings; (2) the loading and unloading platforms; (3) the lifts; and (4) the water tanks on the roof. 

31. Under Clause 8(g), the owners shall on demand pay to the manager, inter alia, “the cost of keeping in good and tenantable repair and condition (i) the foundations, the side walks, main walls, supports, beams, gutters fences, smoke lobby (if any) and the protected lobby (if any) and all external parts of the said Building and all the drains, wells, water tanks, electric pumps, pipes, conduits and all plumbing, fire fighting and other apparatus intended for the general service of the said Building and (ii) those common parts of the said Building as specified in the 5^th Schedule hereto and all other parts of the said Building intended for common use by all the owners.” 

32. The defendant, as the first owners, has the exclusive rights as set out in Clause 14.  Those rights include the right to erect signboards to the external walls of the said Building with the obligation to repair and maintain the same and the external walls of the said Building and to indemnify the other owners all loss and damage resulting from the installation, repair and maintenance of the signboards and the external walls of the said Building.

33. As noted, the DMC was subsequently re-registered three more times.  The second and third version of the DMC dealt with certain minor typographical errors, which are inconsequential for present purposes.  The change purportedly introduced by 4^th version, registered on 30 June 1988 and after the completion of the entire Centre, was however more significant.  Additions were made to the 2^nd column of the 1^st Schedule, which deal with exclusive possession (“the Additions”).  Pursuant to the Additions, the defendant is to have exclusive possession of the whole Block A, the whole Block B, the 202 carparks and :

“the exterior wall, transformer rooms, switch room, staircases, spaces udnerneath (sic), the open yard, common path, the lift hall, the machine room, water tanks, pump room, corridor, private lane, refuse chute, meter room and public lane.”

The paragraph in quotes is a substantial reproduction of the Residual Parts in the 6^th Schedule.  The only difference is the reference “spaces udnerneath (sic), the open yard ”.  In the Residual Parts, it reads “spaces underneath the open yard”. 

34. It should be noted that the Additions was countersigned by representatives of the defendant and the manager but not Mr Mak.  Nor is there any evidence to suggest that Mr Mak had consented to the Additions.

(3)     The Sub-DMC

35. Clause 14(e) of the DMC envisages that the Sub-DMC is to be made upon the completion of Blocks A and B.  The principal purpose of the Sub-DMC is to allocate the undivided shares in Blocks A and B and re-allocate the undivided shares pertaining to the car parking spaces (reducing the number of car parking spaces from 200 to 127).

36. The parties do not rely on the Sub-DMC for present purposes.

THE DEFENDANT’S ENTITLEMENT UNDER THE RESERVATION CLAUSE & THE DMC

37. The defendant relies on the Reservation Clause and the DMC to support its claim of exclusive possession.  On the Reservation Clause, Ms Po, counsel for the defendant, submits that the effect of a reservation clause is to exclude the first purchaser from use of the rest of the land on which the first unit was assigned : Goodtex Land Company Ltd v Lung Kwong Emporium Company Ltd [1993] 1 HKC 645.  Thus, by virtue of the Reservation Clause, the defendant had expressly reserved to itself “everything” but Unit 5, which included exclusive possession of the Centre other than Unit 5.

38. In my view, the reliance on the Goodtex case is misplaced.  That case involved a vendor and purchaser summons.  The title in question had derived from a series of transactions with the subject land, a floor of a multi-storey building.  The assignment of the first sale of the 3^rd floor by the original owner of the building did not reserve exclusive rights to the remaining floor not being sold.  The purchaser, who was buying one of the later sold floors though that the failure to reserve rights means that the vendor was not able to show good title on the basis that the owner of the 3^rd floor retained exclusive rights over the 3^rd floor and other floors.  Godfrey J (as he then was) said at 648C-E:

“The purchaser maintains its objection to the title before me.  The answer given by the vendor is that the right to exclude the first purchaser and all other purchasers is t be treated as impliedly reserved.  While I accept that it is a strong thing to imply a reservation in a conveyance on sale, I have no doubt that this argument is correct.  The whole scheme of the conveyances on sale effected from 1952 to 1961…involves not only that a purchase should obtain the exclusive use of the floor which is granted to him together with his undivided share, but that he should be excluded from the use of the other floors.  It is quite true that no such reservation or exclusion is expressed, but I have no doubt that as a matter of commercial necessity, it does have to e implied.  The conveyances on sale could not be made to work without such an implied reservation.”

It can be readily seen that Godfrey J was dealing with the special factual circumstances then before him and in light of such circumstances, he concluded that a reservation clause which had the effect of excluding the first purchaser must be implied.  The Goodtex case, when properly understood, does not lay down the wide proposition, as contended by Ms Po, that the effect of a reservation clause is to exclude the first purchaser from the use of the rest of the land upon the first assignment.

39. In my view, the effect of a reservation clause, as a matter of general principle, must depend on its terms and effects upon a proper interpretation against the relevant factual matrix : see the Jumbo King case, per Lord Hoffmann NPJ at p.773F-G.

40. I have already set out the terms of the Reservation Clause in paragraph 24 above.  Exclusive possession of four specific categories of areas or parts had been reserved by the Reservation Clause to the defendant.  To recap, they are :

(1) The outer walls of Block C.

(2) Subject to any designation as common area in the DMC and any area which is intended for common use, (a) all areas within the Land not covered by any buildings or building, that is, open space; and (b) all open areas within the Land under any buildings which are not car parking spaces.

(3) All other units in Block C.

(4) Car parking spaces on the Land.

41. The wording of the Reservation Clause is beyond doubt.  It only reserves to the defendant the exclusive possession of the four specific categories of areas or parts referred thereto and no more.  Any reliance on the Reservation Clause to justify the defendant’s claim for exclusive possession of areas or parts that fall outside its scope must fail.

42. On the DMC, Ms Po first relies on her argument of the effect of the Reservation Clause and submits that notwithstanding the reference in the 1^st Schedule (before the Additions) only to “the whole of Block C”, the 1^st defendant must have the exclusive possession of “everything” other than Unit 5.  This submission must fail in light of my conclusion on the effect of the Reservation Clause.  Further, it will do violence to the very clear wording used in the reference “the whole of Block C” to say that it in fact included the entire Centre.  Viewed objectively, the reason why only “the whole of Block C” is referred to is this.  The 1^st Schedule (before the Additions) did not make reference to Blocks A and B because at the time (23 September 1985) they had not come into existence yet.  It did not make reference to the Residual Parts either.  Insofar as those parts or areas included in the Residual Parts that are within or parts of Block A and B, such as the lift hall and staircases to be built in those two Blocks and the outer walls, the absence of any reference is again due to the same reason that they had yet to come into existence.  However, for those parts included in the Residual Parts that are within or parts of Block C or the podium, they had already come into existence, Block C and the podium having been completed by then.  The absence of any reference to such areas or parts in the 1^st Schedule is, no doubt, deliberate and significant.  The effect is plain.  The defendant had not, by virtue of the 1^st Schedule, reserved exclusive possession of those areas or parts[2].  This view is consistent with the description used for some of the areas or parts in the Residual Part, which indicate that they are either common areas (e.g., common path, public lane) or intended for common use (e.g., transformer room, switch room, machine room, water tanks and pump room which serve or house common facilities serving the Centre).  This is also consistent with the fact that some of the parts or areas described in the Residual Parts such as lift-hall, corridors and staircases have in fact been designated as common areas in the 5^th Schedule of the DMC.[3]

43. When the Reservation Clause and the 1^st Schedule (before the Additions) are considered together, the position is this.  The defendant is entitled to exclusive possession of (1) the outer walls of Block C, (2) all other units in Block C (other than Unit 5), (3) car parking spaces on the Land and (4) all open spaces within the Land and all open areas under any building which are not car parking spaces, other than those areas which are defined in the 5^th Schedule of the DMC as common areas or are intended for common use.  Unless an area or part falling within the Residual Parts is covered by the Reservation Clause (like outer walls of Block C), the defendant has not derived any exclusive possession thereto under either the First Assignment or the DMC (before the Additions).

44. Naturally, Ms Po then relies on the Additions.  She submits that the Additions reflects the true positions as have always been intended by the parties, that is, the defendant is entitled to exclusive possession of the Residual Parts.  As I have demonstrated above, the position before the Additions is that unless any area or part falling within the Residual Parts is covered by the Reservation Clause, the defendant did not have exclusive possession thereof.  It follows that the Additions could not have “reflected” the true positions as have always been intended.

45. A more fundamental objection to the Addition is this.  Prior to the Additions, the defendant under the 1^st Schedule of the DMC enjoyed exclusive possession of Block C (other than Unit 5) only.  The Additions was introduced after the completion of Blocks A and B.  It purported to confer on the defendant exclusive possession of Blocks A and B, the 202 carparks and the Residual Parts (subject to the difference, if any, introduced by the reference “spaces udnerneath (sic), the open yard”).  Plainly, the Additions materially affects the parties’ rights under the DMC.  But as noted above, there is no evidence to suggest that Mr Mak, the first purchaser, had consented to it.  I therefore find that the Additions was unilaterally introduced to the DMC by the defendant and the other parties countersigning against it.  In the absence of the consent of all the parties to the DMC, the Additions is ineffectual.  No reliance can be placed on it at all.

46. Ms Po argues that the Additions must be given its full effect.  Otherwise, owners of Blocks A and B (deriving title from the defendant who did not have exclusive possession of those two Blocks) would have to share possession of their units with owners of Block C.  This particular question does not arise in this case as none of the Subject Areas concerns Block A or B.  It is not necessary for me to come to a view on it in determining the parties’ disputes in this action.  I will say no more other than suggesting that if such question does arise, it is open to the defendant to argue that, as a matter of commercial reality and necessity, the parties under the First Assignment must have intended to exclude Mr Mak from exclusive possession of Blocks A and B.

47. Having determined the defendant’s entitlement under the First Assignment and the DMC, I now turn to consider the Subject Areas in turn.

The Passageway

48. I will begin with the Passageway.

49. Ms Po first relies on the Additions to argue that the defendant has exclusive possession of spaces underneath the staircase.  In light of my ruling on the Additions above, this submission must fail.

50. Ms Po next argues that the Passageway falls within part (b) of the Reservation Clause under the First Assignment.  For it is an area “within the said Land not covered by any building or buildings” or part of the “open areas under any building or buildings which are not car parking spaces included in the specific reservations”.  And the Passageway has not been designated as a common part in the DMC or is intended for common use.

51. I accept (and without deciding) that the Passageway is either (i) part of the Land not covered by any building (assuming that the main staircase is not part of a building) or (ii) part of the open areas under a building not included as car parking spaces (assuming that the main staircase is part of a building).  But I cannot accept that the Passageway is not part of the common passages within the meaning of the 5^th Schedule of the DMC.  As confirmed by the site inspection, the Passageway is located near the main entrance, next to the main driveway.  Plainly, but for the boarding up and erection of the booth, the Passageway forms part of the footpath leading from the main entrance to the G/F.  Alternatively, if it does not form part of the footpath, given its proximity to the main entrance and the fact that it was located right next to the footpath, I am of the view that the Passageway must have been intended to be used as if it was an extended portion of the footpath.  It is thus intended for common use.

52. Ms Po argues that the Passageway occupies a strategic position in that it is at the main entrance of the car park that the defendant has operated since 1985.  Thus, it is within the intention of the parties under the First Assignment that the defendant was to use the Passageway exclusively for operating the car park.  I am unable to accept this submission.  There is nothing in the First Assignment that supports such an intention.

53. I therefore find that the Passageway is part of the common areas to which the defendant does not have exclusive possession.

The BTM Room

54. I next turn to the BTM Room.

55. Ms Po argues that the BTM Room was originally a “Generator Room” according to the original building plan dated 13 May 1980 and the first approved plan dated 8 January 1986.  It was only re-designated as a “BTM Room” in the amended approved layout plan dated 7 March 1987.  A generator is “a machine for converting mechanical into electrical energy, a dynamo” : Oxford Concise Dictionary (1995).  Hence it falls within the definition of “machine room” as part of the Residual Parts.  The defendant is therefore entitled to exclusive possession by virtue of the Additions.  I have already ruled that the Additions is ineffectual, this argument must fail.

56. Ms Po next argues that the BTM Room is a reserved area within the Reservation Clause under the First Assignment.  She takes three points.

57. First, Ms Po submits that the BTM Room is on an “area not covered by any building or building” within the terms of the Reservation Clause.  I doubt if this is correct.  The BTM Room is a room on the G/F of the podium.  It is not an open space.

58. Second, she submits that the BTM Room has not been designated as common part in the 5^th Schedule of the DMC.  I agree.

59. Third, she submits that the BTM Room has not been intended for common use.  Rather it has been intended for the defendant’s exclusive possession because it occupies a strategic location as exit to the car parks.  She again deploys the “strategic location” argument.  The BTM Room situates at the exit of the defendant’s car park.  Thus it would have been understood and intended by the parties to the First Assignment that the defendant was likely to use the areas around the car parking spaces, including the BTM Room for the operation of the car park.  However, as noted above, there is nothing in the First Assignment that supports such an intention.  The “strategic location” argument must fail.  Further, as its name suggests, the Room is clearly intended for common use.  When it was called a “Generator Room”, it meant to house a generator, which plainly was intended to serve the Centre for the benefit of all owners.  When it was re-designated as a BTM Room, its purpose was to house BTM gas and facility for fire fighting purpose, which is also for the benefit of all owners.

60. Accordingly, I reject Ms Po’s submission that the BTM Room falls within the Reservation Clause under the First Assignment.

61. Ms Po then argues that only the Orange Portion was intended for common use.  It was sufficient for such purpose.  I am unable to accept this submission either.  As I have already found, the entire BTM Room is intended for common use.  It does not lie in the defendant’s mouth to say that its wrongful occupation of the Orange Portion is justified because the Yellow Portion is sufficient for the common purpose.

62. For the above reasons, I find that the BTM Room comprising both the Yellow and Orange Portions is a common part.

The Transformer Room

63. I now come to the Transformer Room.  It falls within the Residual Parts.  The defendant again relies on the Additions to make good its claim for exclusive possession.  This must fail in light of my ruling the effect of the Additions.

64. The Transformer Room houses electrical facility which serves the entire Centre.  It is plainly intended for common use and hence a common part.  And I so find.  The defendant’s claim for exclusive possession fails.  Its allegation that the Transformer Room has been rendered for common use at its expense does not even get off the ground.  It follows that its claim for mesne profit must fail.

The Transformer Room Extension

65. Turning to the Transformer Room Extension, I note that it is common ground that the defendant allowed CP41 & 42 to be converted into the Extension when electricity demand for the Centre increased.  I find that by such act, the defendant had voluntarily abandoned the exclusive possession of two car parking spaces and rendered the same for common use by all owners. 

66. Ms Po argues that there can be no variation of the defendant’s rights under the DMC in the absence of consideration.  I doubt if consideration if required for the defendant to relinquish its exclusive possession of CP41 & 42.  A voluntary abandonment of exclusive possession will suffice.  However, assuming that consideration is required, I am of the view that it had been provided to the defendant.  For it is not disputed that in return of the defendant giving up CP41 & 42, two additional car parking spaces were created in the available spaces on the G/F and 1/F of the podium as a form of compensation.

67. I find that the Transformer Room Extension, since it came into existence in 1990, has been intended for common use.  The defendant having abandoned its exclusive possession to CP41 & 42, its claim for mesne profit fails.

The Exterior Walls

68. Finally, I come to the Exterior Walls.  Two main questions arise here :

(1) whether the defendant is entitled to exclusive possession of the Exterior Walls, and

(2) if so, whether the Exterior Walls have been rendered for common use and occupation by all owners of the Centre at the defendant’s expense.

69. I will first look at the question of exclusive possession.

70. Again, the defendant relies on the Additions to make good its claim for exclusive possession.  This must now fail.

71. Under the First Assignment, exclusive possession of the exterior Walls of Block C had been clearly reserved to the defendant by virtue of the Reservation Clause.  Ms Po counters this position by arguing that the defendant’s rights of exclusive possession had been qualified by the DMC under Clause 8(g), Clause 14(a) and the 4^th Schedule.  She in effect argues that by virtue of those provisions in the DMC, the exterior walls of Block C had become common parts. 

72. Mr Chow, counsel for the plaintiff, argues that the Reservation Clause confers exclusive possession on the defendant.  The above provisions in the DMC, on a proper interpretation, qualify the rights of the defendant in exercising or enjoying such exclusive possession.

73. I do not propose to dwell on counsel’s submissions.  Suffice it to say that I have already considered them carefully.  I agree with Mr Chow.

74. Thus insofar as the exterior walls of Block C are concerned, the defendant is entitled to exclusive possession thereof.  There is no evidence before me to suggest that the position in respect of the exterior walls of Blocks A and B is different.  Indeed, as I understand counsel’s submissions, they do not differentiate between the exterior walls of Block C and that of Blocks A and B.  Their submissions on the effect of the relevant provisions of the DMC apply to Exterior Walls as a whole.  My conclusion on the effect of those provisions thus applies equally to the exterior walls of Blocks A and B.  I therefore find that the defendant is entitled to exclusive possession of the extension walls of Blocks A and B as well.

75. For the above reasons, I find that the defendant is entitled to exclusive possession of the Exterior Walls, although I arrive at the same conclusion as the defendant has contended for by a different route.

76. I next turn to the second question if the Exterior Walls had been rendered for common use.  In my view, the mere fact that some of the owners had installed air conditioners at the exterior walls outside their units or had used the exterior walls in a way inconsistent with the defendant’s exclusive possession is not sufficient to render the Exterior Walls for common use.  The defendant did not accept it to be the case either.  Otherwise, it would not have issued demand letters to those owners who had so acted in breach of its rights over the years.

77. I therefore find that the Exterior Walls had not been rendered for common use.

78. The remaining question is whether the defendant is only obliged to maintain and repair the two-dimensional surface of the Exterior Walls under Clause 14(a) of the DMC.  I am unable to accept this submission.  In my view, the distinction between the so-called two and three-dimensional surface of the walls as contended by Ms Po is artificial.  The obligation under Clause 14(a) is not so restricted.

Conclusion

79. For the above reasons, I will enter judgment for the plaintiff for :

(1) A declaration that the BTM Room and the Passageway form part of the common parts of the Land.

(2) An injunction restraining the defendant from occupying the Orange Portion of the BTM Room and the Passageway to the exclusion of the other owners of the Land.

(3) An order that the defendant do deliver up vacant possession of the Orange Portion of the BTM Room within 42 days after the handing down of this judgment.

(4) An order that the defendant do within 42 days from the handing down of this judgment :

(a) remove the booth placed on the Passageway;

(b) remove the boarding erected at or on the Passageway; and

(c) deliver up vacant possession of the Passageway.

80. The plaintiff claims for mesne profit for the defendant’s occupation of the Orange Portion and the Passageway to be assessed.  There is no order for a spilt trial and the plaintiff has adduced no evidence in respect of this claim.  In the circumstances, I will make no order on it.

81. On the defendant’s counterclaim, I will make a declaration that the defendant is entitled to exclusive possession of the Exterior Walls.  The balance of the counterclaim is dismissed.

82. On costs, I will make an order nisi that the plaintiff shall have the costs of the action, to be taxed if not agreed.

[1] At the parties’ invitation, I carried out a site inspection on 21 December 2005.  Some of the observations made during the site inspection are included in the description of the Subject Areas below.

[2] For those areas or parts that fall within the Reservation Clause, the defendant derives exclusive possession thereunder.  No reliance on the 1^st Schedule is required.  An example is the outer walls of Block C.

3 See paragraph 30 above.