SINO CHANNEL HOLDINGS LTD v. VAST FAITH INVESTMENT LTD

LDBM 211/2015 and LDBM 117/2016 (Heard Together)

[2018] HKLdT 95

LDBM 211/2015

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 211 OF 2015

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LDBM 117/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 117 OF 2016

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JUDGMENT

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The Main Issue and Background

1.  The main issue in these proceedings is the proper construction of the term “exterior side walls” in the context of the Deed of Mutual Covenants (“DMC”) of Grandmark (formerly known as Prosperity House) (“the Building”) which is situated at 10 Granville Road, Tsim Sha Tsui, Kowloon, Hong Kong.  The Building was completed in about 1973 and the DMC was executed on 16^th June 1973.

2.  By a memorandum of sale and purchase dated 22 February 2013 and an assignment dated 11 June 2013 (“Walls Assignment”), Sino Channel Holdings Limited (“Sino Channel”) became the registered owner of the “exterior side walls” of the Building which was more particularly described in the First Schedule of the DMC as:-

“The exterior side walls of the said building and the area and space lying between the western exterior wall of the said building and the adjoining lot Section D of Kowloon Inland Lot No. 6014 (1/139th share). (emphasis added)

3.  The incorporated owners of the Building (“IO”) is the applicant in LDBM 117 of 2016 (“BM117”) and Sino Channel is the respondent.  The IO is seeking a declaration against Sino Channel that, on a proper construction of the DMC and the Walls Assignment, the exterior walls facing Granville Road (to the north) and the Cameron Road direction (to the south) of the Building (namely the facade and the back wall facing north and south respectively) (“the Facades”) are common parts of the Building.  In other words, according to the IO, these 2 sides of the exterior walls were not part of the “exterior side walls” mentioned in the DMC and theWalls Assignment.  In short, the IO argued that Sino Channel was never the owner of the Facades and had no exclusive use and possession of them.

4.  Sino Channel, on the other hand, seeks, by way of counterclaims, for a declaration against the IO that Sino Channel is entitled to the exclusive use, occupation and enjoyment of the 4 sides of the exterior walls of the Building, including the Facades.  Originally, Sino Channel also asked for an injunctive relief against the IO but it was abandoned subsequently.

5.  Sino Channel, apart from being a respondent in BM117, is also an applicant in LDBM 211 of 2015 (“BM211”) and Vast Faith Investment Limited, who is the registered owner of the 3^rd Floor of the Building (“3/F Owner”) is the respondent. In this application, Sino Channel alleged that the 3/F Owner built and erected various unauthorized building works including air-conditioners together with their pipes and duct works (“UBW”), wrongfully occupying the Facades.  Sino Channel therefore seeks a similar declaration as in BM117 that it has exclusive use, occupation and enjoyment of all 4 sides of the exterior walls including the Facades together with an injunctive relief to prohibit the 3/F Owner in building and erecting the UBW.

6.  The issue in these 2 applications is almost identical, namely what are the meaning of the term “exterior side walls” in the context of the relevant documents mentioned above and does Sino Channel own the Facades?  Or the Facades are, in fact, the common parts of the Building as argued by the IO.

7.  In BM211, the 3/F Owner took a further point that even if Sino Channel owns the Facades, they only mean “the external surface of the protruding columns”, namely the architectural fins, of the exterior walls of the Building and not the windows in between.  The 3/F Owner therefore argued that the right of displaying or affixing signs by Sino Channel should be limited to the external surface area of the architectural fins in between the windows and not the entire exterior walls.

New Evidence

8.  Shortly before commencement of the trial, Sino Channel has indicated that it intended to adduce some new evidence at the trial:-

(1)    the tender notice for the sale of the “exterior side walls”;

(2)    2 occupation permits of the neighbouring properties, namely 8 and 12-16 Granville Road (the Granville Building and the Kwun Fai Building respectively);

(3)    2 Government grants of the neighbouring properties; and

(4)    the relevant land searches of the neighbouring properties.

9.  The 3/F Owner objected to the admission of the new evidence.  And therefore at the beginning of the trial, I ordered that the new evidence be considered de bene esse.

10.  In support of the admission of the new evidence, Sino Channel has submitted that the new evidence only goes to show that:-

(1)   the “exterior side walls” was described in the tender notice in Chinese as “外牆”;

(2)   the dates the neighbouring properties were issued with occupation permits;

(3)   the absence of height restriction in the 2 Government grants; and 

(4)   the land searches confirming the above information.

11.  Sino Channel said that they are relevant materials on the construction issue and were disclosed weeks before the trial.  It was submitted that there was more than ample time to consider them and the new evidence is not capable of being disputed.  The position is exactly the same had they been disclosed 3 or 6 months ago.  There cannot be any conceivable prejudice.

12.  The 3/F Owner submitted that, generally, the court will rarely exercise its discretion to admit late documents or late evidence, in the absence of exceptional circumstances or unless good reasons exist to allow the late production to ensure the just resolution of the dispute.

13.  I agree with the submissions of Sino Channel.  The primary objective of any court of law including this Tribunal is to secure the just resolution of disputes in accordance with the substantive rights of the parties. In my view, the new evidence will help resolving the issue on construction of the DMC and, more importantly, no prejudice was shown to me by the 3/F Owner for admission of the new evidence.  The new evidence should therefore be admitted.

The Legal Principles for Interpretation of the DMC

14.  The principles of interpretation of contracts including deeds of mutual covenants generally are well established and not really in dispute.  I therefore take the liberty to repeat the submissions of counsel below.

15.  Mr Chain, counsel for Sino Channel, submitted, and I agree, that it is nota game of words, rather the Tribunal is to consider the document as a whole, having regard to its objectives, and to conclude what the words or phrases mean.

16.  Mr Lee, counsel for the 3/F Owner, drew my attention to the authority Grande Properties Management Ltd v Sun Wah Ornament Manufactory Ltd (2006) 9 HKCFAR 462 where Chan PJ held at paragraph 2 regarding disputes concerning the construction of a DMC that:-

“The rights and obligations of the owners and the manager of a multi-storey building are usually defined and governed by a deed of mutual covenant in respect of the building. This deed is a contract which runs so as to bind all owners and their assignees and the manager. Some of these rights and obligations are modified by the Building Management Ordinance (Cap.344) (the Ordinance). The provisions of the deed and the Ordinance are usually aimed at facilitating the management of the building by reducing conflicts among co-owners on the one hand and preventing abuse by the manager and the majority owner on the other. It is fair to say that most disputes are resolved by a purposive construction and common sense application of the relevant provisions of the deed and the Ordinance.”

17.  I am also told that, in Kung Ming Tak Tong Co Ltd v Park Solid Enterprises Ltd (2008) 11 HKCFAR 403, Li CJ confirmed (at paragraph 34) that the apparent grant by the DMC to the occupier of a unit of the exclusive use occupation and enjoyment of his unit is properly regarded as a separate contractual undertaking by every other co-owner not to exercise the rights of occupation and enjoyment which he would otherwise be able to do as co-owner over units other than his own.  When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties: Smart Essence Development Ltd v Hong Kong Housing Authority, HCA 450 of 2016 (unreported) 28 April 2016 at paragraph 46.

18.  I also accept that it is not permissible to take into account subsequent conduct of the parties as an aid in construing the contract or in determining whether an inference can be drawn as to their intention when they entered into the contract unless such conduct may give rise to an estoppel: Banco Del Austro SA v Regal Prosper Trading Ltd & Others, HCA 477 of 2015 (unreported) 1 April 2016at paragraph 22.

19.  Mr Tsang and Ms Tam, counsel for the IO, take me to the authority: Jumbo King Ltd v Faithful Properties Ltd & Others (1999) 2 HKCFAR 279, at 296D, for the court’s approach generally to construction of a document:-

“The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve. Quite often this exercise will lead to the conclusion that although there is no reasonable doubt about what the parties meant, they have not expressed themselves very well. Their language may sometimes be careless and they may have said things which, if taken literally, mean something different from what they obviously intended. In ordinary life people often express themselves infelicitously without leaving any doubt about what they meant. Of course in serious utterances such as legal documents, in which people may be supposed to have chosen their words with care, one does not readily accept that they have used the wrong words. If the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other. The court is not privy to the negotiation of the agreement – evidence of such negotiations is inadmissible – and has no way of knowing whether a clause which appears to have an onerous effect was a quid pro quo for some other concession. Or one of the parties may simply have made a bad bargain. The only escape from the language is an action for rectification, in which the previous negotiations can be examined. But the overriding objective in construction is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean. ”

20.  Counsel for the IO also submitted that words are to be given their ordinary and natural meaning, being the meaning in which the words are generally understood.  The Tribunal should assume that the parties have used the language in the way that reasonable persons ordinarily do, unless there are particular reasons such as known usage of trade or some matter in the context to indicate otherwise.  The principle that words must be construed in their ordinary sense, however, is liable to be departed from where that meaning would involve an absurdity or would create some inconsistency with the rest of the instrument.

21.  And I also agree with their submissions that if a word or phrase may be open to more than one potential meaning or interpretation, this Tribunal will have regard to all the relevant surrounding circumstances and ascertain “the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract”: Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] WLR 896.

The 3/F Owner’s Argument

22.  Mr Lee informed this Tribunal that the term “exterior side walls” appears in the DMC twice, namely in the First Schedule, in the context of reserving that the “Exterior Side Walls” and the “Area” and “Space” (together with 1 undivided share) to the original developer, namely Prosperity Land Development Company Limited (“the Developer”) and in Clause (s) of the Third Schedule, in the context of providing that the Developer and its successors and assignees “shall have the exclusive right to display or affix signs (whether illuminated or otherwise) on the exterior side walls of the said building”.

23.  He further said that, at the same time, other terms similar to “exterior side walls” also appear in the DMC, each with its own distinct meaning:-

(1)    The term “exterior” is used in Clause (f)(i) and Clause (t) of the Third Schedule to refer to any part of the Building facing outside;

(2)    The term “western exterior wall” is used in the First Schedule and in Clause (h) and Clause (r) of the Third Schedule to refer to one specific wall of the Building facing outside (the one facing west); and

(3)    The term “exterior walls” is used in Clause (p)A. of the Third Schedule to refer generally to the walls of the Building facing outside.

24.  Mr Lee therefore argued that the draughtsman of the DMC must have chosen their words with care and given due consideration to the meaning of each term used.  In the circumstances, there is simply no reason to suppose that the phrase “exterior side walls” should bear the same meaning as “exterior walls”.  Further, there is no reason to suppose that the word “side” is intended to bear no meaning whatsoever.  Instead, it appears that “side” is used in contra-distinction to “facade” and “front”, which are used in Clause (f) of the Third Schedule to refer specifically to the part of the Building facing Granville Road.

25.  In developing his argument, Mr Lee also asked me to consider the facts and circumstances at around the time when the DMC was executed.

26.  It is agreed that the building situated to the west of the Building was about 5-storey high.  In other words, it was much lower in height.  This building was later replaced by a new building, Kwun Fai Building, which was completed in 1978.  The building situated to the east of the Building, Granville Building, was about 7 storeys lower than the Building.

27.  I was told that the state of the 3 buildings back in 1973 was broadly as indicated in the sale brochure.  Mr Lee submitted that upon a glance of the cover of the sale brochure, it is immediately apparent that the front of the Building facing Granville Road was rather different from the two side walls facing east and west.  The state of the three buildings in 1973 as described above may well explain why the front of the Building is never referred to in the DMC as a wall; the terms “facade” and “front” are used instead.  He therefore argued that the “exterior side walls” must have meant only the 2 walls facing east and west but not the Facades.

28.  Mr Lee also argued that the state of the three buildings in 1973 is also consistent with the argument that the exclusive right to display or affix signs under Clause (s) of Third Schedule is limited to the two side walls facing east and west, again not including the Facades.

29.  He further submitted that the fact that as at the time of the execution of the DMC, the building to the west was soon to be demolished and replaced with a new building is consistent with the clauses immediately preceding Clause (s) of the Third Schedule, namely: -

(1)   Clause (p) expressly mentioned the possibility that the Developer may purchase the adjoining lot to the west of the Building.  Rights and privileges were reserved “in respect of the adjoining lot”, including the right to erect the adjoining new building against the exterior walls of the Building adjoining the adjoining lot;

(2)   Clause (q) reserved the Developer’s right to grant the rights and privileges in Clause (p) to the owner of the adjoining lot; and

(3)   Clause (r) confirmed Developer’s right to exclusive use occupation and enjoyment of the “Area” and “Space”, both of which lie between the Building and the adjoining lot.

30.  Mr Lee therefore said that there is every reason for the draughtsman to intend to assign to the Developer by way of Clause (s) further rights in relation to the two side walls of the Building facing east and west.

31.  Mr Lee accepted that the building presently situated to the west of the Building, Kwun Fai Building, is taller than the Building.  The building presently situated to the east of the Building is the same Granville Building.  It can be seen from the photos that the existence of Kwun Fai Building has made it very difficult to display or affix any sign on the western exterior wall.  Given that there is no height restriction in respect of lot where Granville Building is, there is a possibility that the same may also happen to the Building’s eastern exterior wall. But he submitted that one may be tempted to rely on the above and argue that the draughtsman of the DMC must not have allocated 1 undivided share to something which might turn out to be of such low commercial utility and value.  However, the important point is that the two side walls of the Building facing east and west were of commercial value at the time of the execution of the DMC.  The fact that they are now of low commercial utility and value is simply irrelevant as a matter of law (Smart Essence Development Ltd v Hong Kong Housing Authority, HCA 450 of 2016 (unreported) 28 April 2016)

32.  The 3/F Owner, alternatively, argued that if this Tribunal finds that on a true construction of the DMC, the term “external side walls” is meant to include the Facades, the exterior walls are limited to the external surface of the architectural fins.

33.  Mr Lee argued for the 3/F Owner that the front of the Building (the facade) has always been made up of narrow architectural fins in between rows and columns of windows.  The natural and ordinary meaning of the word “wall” does not include the part where there is a window. Indeed, the natural and ordinary meaning of a “window” is an opening in the wall. In other words, a window is defined by the absence of a wall.  There is nothing in the DMC which justifies a departure from this ordinary meaning. It follows that the right to affix signs on the “exterior side walls” under Clause (s) of the Third Schedule does not include a right to affix signs on the windows.  Instead, the right should be limited to displaying or affixing signs on the external surface area of the architectural fins in between the windows.

34.  Lastly, for the 3/F Owner, Mr Lee submitted that this Tribunal can imply a quasi-easement under the common lawwhere it is clear that a continuous and apparent quasi-easement exists which, after severance of the land and creation of the two tenements, say after the execution of the DMC, would be necessary to the reasonable enjoyment of the property granted. He invited this Tribunal to infer from the fact that the front windows facing Granville Road are necessary for the reasonable enjoyment of the 3/F of the Building.

The IO’s Argument

35.  The IO took a very similar stance with the 3/F Owner. The IO submitted that the natural and ordinary meaning of “exterior side walls” refer only to the 2 side walls facing (to the west) Kwun Fai Building and (to the east) Granville Building and do not include the Facades.  Although the argument was very similar, for fairness to the IO, I will also summarise its argument briefly below.

36.  Mr Tsang and Ms Tam for the IO submitted that clearly the fact of inclusion of the word “side” in the phrase “exterior side walls”, rather than simply stating “exterior walls”, means to expressly include “side walls” and thereby exclude the Facades. (expressio unius est exclusio alterius): Chitty on Contracts, Vol 1, 32^nd ed, (13-094).

37.  They argued that the DMC and the Walls Assignment concerning ownership of the “exterior side walls” are legal documents and the parties must “have chosen their words with care”. These documents were not drafted by laymen.  It must be assumed that the inclusion of the word “side” was deliberate and carries significance.  Indeed, the word “side” does not appear in another phrase “western exterior wall” which appears together with the phrase “exterior side walls” in the First Schedule of the DMC.

38.  In support of the argument, they also relied on the sales brochure of the Building that the phrase “exterior side walls” in Chinese was referred to the exterior walls on the two sides of the Building only, namely “五、外牆：前後外牆及部分側面外牆，… ”.

39.  In analysing the DMC, they have the following submissions.  The provisions of the DMC specifically draw a distinction between “exterior side walls” and “exterior walls” or “exterior” at Clause (s), Clause (p)A. and Clause (t) of the Third Schedule of the DMC.   Clause (s) provides that the Developer and “its successors and assigns and all persons authorised by it or them” shall have the exclusive right to display or affix signs “on the exterior side walls of the said building ...”.  On the other hand, Clause (p)A. refers to “exterior walls of the said building” and Clause (t) provides that unless specifically mentioned in the DMC, “no owner shall affix any sign structure installation or thing to the exterior of the said building”.  This underlines the deliberate and distinctive addition of the word “side” when describing the “exterior side walls”.

40.  The IO also submitted that Clause (t) of the DMC will be completely superfluous if “exterior side walls” encompassed all “exterior walls”.  Clause 1 of the DMC together with its First Schedule already conferred upon the owner the “full right and privilege to the exclusive use occupation and enjoyment” of the “exterior side walls”.  Further, Clause (s) gave the owner “exclusive right to display or affix signs … on the exterior side walls”.  Clause (t) is needed only where there are other “exterior walls” not belonging to “exterior side walls” and they submitted that the answer must be the Facades.

41.  Furthermore, the IO submitted that the DMC specifically provides for certain rights and privileges to facilitate the erection of an adjoining new building “against those exterior walls of the said building specified in the Second Schedule hereto which adjoin or face the adjoining lot” (at Clause (p) of the Third Schedule of the DMC).  It made sense for ownership of the side wall adjoining Kwun Fai Building (which has since been erected at the adjoining lot) to be retained by the Developer due to the possibility of it erecting a new building at the adjoining lot.  It also made sense for the Developer to retain ownership of the other side wall adjoining Granville Building for similar reason.  No similar consideration applied to the Facades which did not and does not have any adjoining building.

42.  According to the submissions of the IO, the front elevation of the Building should be described as a “facade” rather than “exterior wall” since it is comprised of architectural fins and small infill panels in between.  This is supported by Clause (f) of the Third Schedule, namely　“(f)     The owner of the Ground Floor Unit shall have the exclusive right: (i) to erect or affix one or more signs signboards and or advertisement, whether illuminated or not, on the facade and the exterior of the Ground Floor Unit. (ii) To decorate or repaint the facade and front and the appearance of the exterior of the Ground Floor Unit or any part thereof.”.  If the “exterior side walls” also included the “facade” of the Building, Clause (f) will then confer exclusive right to the “Ground Floor Unit” owner to affix signs on the “facade”.  The IO argued that this is contradictory to Clause 1 of the DMC together with its First Schedule which conferred upon the “exterior side walls” owner the “full right and privilege to the exclusive use occupation and enjoyment” of the “exterior side walls”.

43.  If this Tribunal accepts the argument above, counsel for the IO then submitted that the Facades are common parts of the building as they have not been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner (Schedule 1 of the Building Management Ordinance, Cap 344 (“BMO”)).

44.  There was also a further argument in relation to a small part of the exterior walls (which was coloured orange in a plan by the IO) on the east and west sides of the Building.  The IO argued that these small parts of the walls should be treated as part of the rear walls, rather than “exterior side walls”.  They said that these small parts of the walls are in closer proximity to those rear walls facing the service lane.  They do not have any commercial values and hence the Developer had no commercial reason to retain ownership of them.  In other words, in addition to the Facades, the IO also argued that these small parts of the walls are also part of the Facades.

The Sino Channel’s Argument

45.  Against the submissions of the 3/F Owner and the IO, Mr Chain, on behalf of Sino Channel, submitted that the word “side” by itself is neutral. Every quadrilateral object has 4 sides.  The word can also be used in contra-distinction to “the ends” or “the front and back”.  If one then compares “exterior side walls” with “western exterior wall”, it is also possible that “side” is used in contra-distinction to “western (side)”, or it embraces all 4 sides.

46.  He argued that, as a matter of reality, the Developer was in a position to, and did dictate, the terms of the DMC.  As a matter of law, a DMC is “mutual” (Jumbo King Ltd v Faithful Properties Ltd & Others (1999) 2 HKCFAR 279, at 296C) and should be read and construed with common sense (Grande Properties Management Ltd v Sun Wah Ornament Manufactory Ltd (2006) 9 HKCFAR 462). He pointed out that the DMC was poorly drafted.  There are, at least arguably, internal inconsistencies, for example the First Schedule and Clause (r) in the Third Schedule. The Third Schedule is not taken from any “template”.  It contains some rather unique provisions. In drafting the Third Schedule, it appears that some provisions were included without cross reference to the rest of the DMC.  He therefore submitted that it explains the use of various different terminologies in the Third Schedule.  The construction of the DMC should therefore be more “contextual” than “textual”, namely a greater emphasis on the factual matrix (Wood v Capita Insurance Services Ltd [2017] 2 WLR 1095).

47.  Insofar as Clauses (s) and (t) in the Third Schedule are concerned, Mr Chain argued that their objectives are clear.  The Developer (and its successors-in-title) of those parts was to be granted some rights over the exterior side walls and exterior of the Building to the exclusion of the other co-owners. Clauses (s) and (t) in the Third Schedule of the DMC are as follows:-

“(s) Prosperity Company and its successors and assigns and all persons authorised by it or them shall have the exclusive right to display or affix signs (whether illuminated or otherwise) on the exterior side walls of the said building provided that the signs shall not protrude to or below the second floor level.

(t)   Except as herein specifical1y mentioned no owner shall affix any sign structure installation or thing to the exterior of the said building.”

48.  In support of his submissions that different words were used but for the same meaning in the DMC, Mr Chain gave the following examples, namely for the “outside” of the building, the DMC contains the following different expressions:-

(1)    “exterior side walls” - First Schedule and Clause (s) of Third Schedule

(2)    “western exterior wall” - First Schedule and Clauses (h)(iii) and (r)(ii) of Third Schedule

(3)    “facade” - Clause (f) of Third Schedule

(4)    “exterior” (of Ground Floor) - Clause (f) of Third Schedule

(5)    “front” - Clause (f) of Third Schedule

(6)    “exterior walls” - Clause (p) of Third Schedule

(7)    “exterior” - Clause (t) of Third Schedule.

49.  Apart from (1) and (2) above, all the rest only appeared in the Third Schedule.  Clauses (f) and (p) of the Third Schedule of the DMC are provisions dealing with specific subject (the Ground Floor Unit and rights relating to the potential acquisition of the neighbouring lot).  Mr Chain submitted that in view of the inconsistent choice of words, these words including “facade”, “exterior”, “front” and “exterior walls” as they only appeared in Clauses (f) and (p) of the Third Schedule cast little light on the meaning of the First Schedule.

50.  He also explained that for the words “western exterior wall” in Clauses (h) and (r) of the Third Schedule, they were clearly taken or copied from the First Schedule.  The expression “(between) the western exterior wall” has more to do with describing or defining the area and space lying in between, rather than the exterior walls.

51.  Mr Chain further argued that the terms “exterior side walls” in Clause (s) and the word “exterior” in Clause (t), both of the Third Schedule, are consecutive and they are plainly directed at the same subject matter.  He therefore submitted that when read together the latter gives a good pointer to the meaning of the former.  They are, and are intended to be, 2 sides of the same coin.  The term “exterior side walls” in Clause (s) should be given a similar meaning to word “exterior” in Clause (t).

52.  This is his submissions that the “exterior side walls” and “the area and the space” were presumably regarded as something valuable and therefore to be held under separate ownership.  It matters little whether the draughtsman intended “exterior” to bear a broader meaning.  The reference to “walls” is more a reference to the surface or facade.  That being the case and again as a matter of commercial reality, and bearing the objectives of Clauses (s) and (t) of the Third Schedule in mind, there was no apparent reason to distinguish among the 4 walls, or more accurately, there was no reason to exclude the Facades.  It is particularly difficult to see why the Developer would want to exclude the facade facing Granville Road.  The value and utility of the facade is very clear and it is consistent with Clause (t) of the Third Schedule.

53.  Mr Chain also suggested that, on true construction of the DMC, the Developer was granted the exclusive right to display or affix signs on the “exterior side walls” provided the signs shall not protrude to or below the 2^nd Floor level (see Clause (s) in the Third Schedule). Having regard to the physical state of the Building and the factual matrix, this provision and in particular the proviso makes no, or little sense if the “exterior side walls” are confined to those abutting the 2 neighbouring buildings.  The fundamental point is the principle that the same expression in Clause (s) of the Third Schedule and in the First Schedule should be construed consistently and be given the same meaning.  He submitted that to read “exterior side walls” to include all 4 sides of the Building is not an unreasonable construction.

54.  Further, Mr Chain argued that the BMO is irrelevant to the construction of the DMC as it was only enacted in 1993.

55.  In reply to the 3/F Owner’s alternative argument regarding the exclusion of windows in the definition of walls, Mr Chain described it as a non-sequitur.  He said that Clauses (s) and (t) of the Third Schedule are clear and the 3/F Owner is clearly in breach of Clause (t).  Windows generally in the context of a building are part of the walls (Boswell v Crucible Steel Company [1925] 1 KB 119, at 123, per Atkin LJ).  The easement point also is irrelevant having regard to Clauses (s) and (t) in the Third Schedule.

Discussion

56.  I find Mr Chain’s submissions most convincing and persuasive and therefore accept them in full.  The approaches suggested by the 3/F Owner and the OI respectively are unrealistic and sometimes against common sense. For example, it is against common sense to say that the facade of the Building had no value or no special value to the Developer in 1973.  They focused too much on the technical analysis of the drafting of the DMC but failed to take sufficient account of the poor quality of drafting and the factual matrix at the time when the DMC was executed.

57.  In my judgment, it appears from the style of drafting of the DMC that the document was not drafted by one person, perhaps by a number of persons over a period of time.  The language, and in particular certain words used as mentioned by counsel in their submissions, in the document are so inconsistent. Although I agree with Mr Lee that a court, like this Tribunal, is not supposed to “cure” the defects of the document, it is the task of this Tribunal to find the true meaning of the document, namely the DMC, as reflected by the words they chose.  In other words, I have to ascertain the objective meaning of the language which the parties to the DMC have chosen to express in the document.  There is no dispute that this is not a literalist exercise focused solely on the parsing of several words.  This Tribunal must consider the DMC as a whole and, depending on the nature, formality and quality of drafting, give appropriate weight to elements of the wider context of the words in reaching its view as to that objective meaning.  In striking a balance between the different meanings given by the language, this Tribunal must consider the quality of drafting. Both the 3/F Owner and the IO obviously failed to take the quality of drafting into consideration sufficiently. They unreasonably assumed that if the documents were drafted by professionals, namely lawyers, the drafting must be good. This is wrong. They also followed the rules of construction mechanically disregarding the objective factual matrix at the time when the DMC was drafted.

58.  No doubt the DMC is a very badly drafted document.  This is however not the intention of this Tribunal to resolve all the “inconsistencies” and “defects” of the DMC.  I am specifically asked to determine the meaning of the “exterior side walls” in the context of the DMC and therefore I will just focus on that.

59.  I also accept that we should look at the commercial purpose of the DMC, not retrospectively, but at the time when it was drafted and executed so as to see what was intended to achieve when the Developer reserved the ownership and rights of the “exterior side walls”.

60.  I agree with Mr Chain that it is really self-defeating to try to ignore the fact that the terms of the DMC were actually dictated by the Developer.  There was simply no negotiation as such. In reserving the ownership and rights of any exterior walls of the Building, the facade facing Granville Road was obviously the most valuable to the Developer.  I am unable to see any evidence which could offer a sensible explanation, why in reserving the ownership and rights of the walls of the Building, the Developer, at that point of time back in 1973, would have any reason to exclude the facade from the meaning of “exterior side walls”.  For similar reasons, although not as valuable as the facade, the back wall facing Cameron Road direction (to the south), would also not have been excluded by the Developer too.

61.  Since I accept Mr Chain’s submissions, I therefore reject the 3/F Owner’s alternative argument regarding the windows too. And given my findings above, it is also unnecessary for me to deal with the IO’s further argument in relation to the “small part” of the exterior walls.

62.  In conclusion, I find in favour of Sino Channel that the term “exterior side walls” in the DMC and the Walls Assignment means the 4 sides of the exterior walls of the Building including the Facades.

Disposition and Costs

63.  By reasons of the above, I grant the 2 declarations sought by Sino Channel in BM211 and BM117 (by counterclaim) in terms of its notice of application and notice of opposition respectively.  Consequently, I dismiss the IO’s application in BM117 and additionally, I also grant the injunctive relief in terms of the notice of application in BM211 against the 3/F Owner.

64.  Costs should normally follow the event and I therefore further grant an order nisi that the 3/F Owner do pay costs of BM211 (including all costs reserved) to Sino Channel and the IO do pay costs of BM117 (including all costs reserved) to Sino Channel, both with certificate for counsel, on the District Court Scale, to be taxed if not agreed.  This order nisi shall become absolute unless an application is made to vary the same within 14 days.

65.  Finally, I thank counsel for their helpful assistance.