CENTURY STAR LTD v. KENFORD ENTERPRISES LTD

DCCJ 4631/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4631 OF 2009

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BETWEEN

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JUDGMENT

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Background

1.  Plaintiff (“P”), the registered owner of all outer and external walls of Empress Plaza (“the External Walls”), Nos 17-19 Chatham Road South, Tsim Sha Tsui, Hong Kong (“the Building”), has the sole and exclusive right and privilege to hold use and enjoy the External Walls.

2.  Defendant (“D”), on the other hand, is the registered owner of, inter alia, shops 1, 7-9, 10, 11, 12, 15, 16 and 17 on the ground floor of the Building (collectively called “the Shops”).

3.  P now alleges that the D had, without their consent or permission, erected or caused to be erected, signboards onto part of the External Walls immediately above the shop front of the Shops (“the Unauthorized Signboards”) thereby infringing P’s rights over the External Walls. 

4.  P had, in the Statement of Claim annexed photos of the Unauthorized Signboards (edged blue).

5.  P pleaded in the Statement of Claim that despite their request on 7 July 2009 via letters from their solicitors, D had failed and/or refused to remove/demolish the Unauthorized Signboards.

6.  P now claims against the D, inter alia, for:-

(1) An Order that the D do forthwith remove/demolish the Unauthorized Signboards at its own costs and expenses and make good all damage caused to the External Walls as a result of the removal/demolition work;

(2) An injunction to restrain the D by itself, its servants or agents or otherwise from erecting any signboard or structure onto the External Walls;

(3) Damages;

(4) Interest as aforesaid;

(5) Costs; and

(6) Further or other relief.

7.  In the Amended Defence and Counterclaim, D denied the title of P to the External Walls whilst admitting that the Unauthorized Signboards were erected without the consent or permission of the P or its predecessors.

8.  Further D pleaded that the External Walls do not extend to the area where the Unauthorized Signboards were erected.

9.  It is further the D’s case that even if the Unauthorized Signboards were in fact erected onto part of the External Walls (which is not admitted), they were within the shop front of the Shops. D says the right to use such area which forms part of the shop front, does not vest in the P.

10.  As an alternative argument, D says the management of that part of External Walls is exclusively vested in the building Manager of the Building (“the Manager”) and therefore the P has no locus to sue.  D says therefore no consent or permission from the P is required for the erection of the Unauthorized Signboards.

11.  D also pleaded that any title of the P to the part of the External Walls which occupied part of the exterior and/or the front end of the Shops below the floor slab of the first floor of the Building (“Occupied Area”) or alternatively any title of the P to the part of the External Walls occupied by the Unauthorized Signboards (“Subject Areas”) had been extinguished by virtue of Section 17 of the Limitation Ordinance Cap 347.

12.  It is not in dispute that by an assignment dated 23 October 1996 and registered in the Land Office bearing memorial no UB689249, the developer of the Building, Charmwell Development Ltd (“Charmwell”) assigned, inter alia, shops nos 01, 02, 03, 05, 06, 07, 08, 09, 10, 11, 12, 15, 16 and 17 on ground floor of the Building (“D’s Shops”) to D’s predecessor in title Well City Enterprise Ltd (“Well City”) and that by an assignment dated 28 February 2005 and registered in the Land Office by memorial no 05031900740071 and re-registered by memorial no 65080201230089, Well City assigned all D’s Shops to D.

13.  By an assignment dated 19 December 2000, Charmwell assigned in favour of Easy Surplus Company Ltd (“Easy Surplus”) the External Walls.

14.  By an assignment dated 19 April 2007 (“the said Assignment”), Charmwell and Easy Surplus assigned collectively as Vendor to the P here, inter alia, the sole and exclusive right and privilege to hold use occupy and enjoy the External Walls of the Building subject to certain exceptions and reservations and subject to and with the benefit of all easements rights and rights of way (if any) and all other appurtenant rights contained and described and subject to and with the benefit of the Deed of Mutual Covenant (“DMC”) of the Building and subject to and with the benefit of existing lettings and tenancies and licences, if any and the whole of the Vendor’s estate right title and interest therein and thereto.

15.  D says since the acquisition of the D’s Shops on 23 October 1996, Well City and the D had been in exclusive possession of the Occupied Areas or alternatively, the Subject Areas, through the erection of the Unauthorized Signboards without payment of any rent or other sum for such possession or otherwise acknowledging any title of Charmwell, Easy Surplus or the P.

16.  The D pleaded further that they had never considered possession of the Occupied Areas or the Subject Areas as attributable to any consent by Charmwell, Easy Surplus or the P nor was such consent or permission ever given to the D or Well City.

17.  D says therefore that the P’s title to the Occupied Areas or the Subject Areas was barred even before the issue of the P’s claim.

18.  D says that it was plain to everyone inspecting the ground floor of the Building that the Occupied Areas and the Subject Areas form part of the D’s Shops.  They say therefore that these areas were never assigned by Easy Surplus to the P.

19.  D also avers that by virtue of the location and the usage of the Occupied Areas and Subject Areas, being located on the exterior and/or the front end of D’s Shops below the floor slab of the first floor of the Building, the Occupied Areas and Subject Areas form an inherent part of the D’s Shops.  D relies on the presumption that, unless otherwise provided, the assignment of a part of a building divided horizontally or vertically includes the external area enclosing the part so assigned.

20.  D argues further that the P was estopped and precluded from denying D’s rights and entitlement to use and occupy the Occupied Areas and the Subject Areas by reasons of the past acts, inaction or acquiescence of the P’s predecessors Charmwell, Easy Surplus and the P, representing by implication and/or by conduct that the External Walls does not extend below the first floor of the Building.

21.  D claimed further that they had so conducted themselves between year 1996 and year 2009 which led the D to believe that they had recognized D’s rights over the Occupied Areas or the Subject Areas and thus ceased to exert any right over these areas.  In reliance of the said representation and of the conduct of P and its predecessors, D and its predecessors had rented out D’s Shops to tenants on basis that the tenants could use and enjoy the Occupied Areas including the Subject Areas where the Unauthorized Signboards situate and further they had incurred costs and expenses in maintenance, repair and renovation of the Occupied areas, including the Subject Areas.

22.  D says therefore it would be wholly unjust to permit the P to deny the D’s rights and entitlement to occupy and use the Occupied Areas and the Subject Areas.

23.  D pleaded further that in the event that the External Walls were said to include the Occupied Areas and the Subject Areas, the P was estopped by convention and precluded from denying the D’s rights to the Occupied Areas and the Subject Areas.

24.  Moreover, D says P’s action is unmaintainable owing to laches, acquiescences and delay on the part of the P and its predecessors.  He says the acts now complained of by the P started in year 1996.  The fact that the Occupied Areas and the Subject Areas occupied by the D and its predecessors was apparent to anyone inspecting the ground floor of the Building and the P and its predecessors were fully aware of the existence of such possession since 1996 and they have waited until 7 July 2009 when the first complaint was made.  D says therefore P and its predecessors had acquiesced to the alleged trespass by the D in and over the Occupied Areas or the Subject Areas.

25.  D admitted not having demolished or removed the Unauthorized Signboards as demanded by the P but denied that the P had suffered loss and damages as a result.

26.  D counterclaimed inter alia, for:-

(1) A declaration that the right (if any) to bring the action for recovery of the Occupied Areas (or alternatively the Subject Areas) did not first accrue to the P (and its predecessors) within 12 years before the date of writ herein;

(2) A declaration that the D (and its predecessor) have been in possession of the Occupied Areas (or alternatively the Subject Areas) for a period of over 12 years and that any action for possession of the same that the P may have has been barred by virtue of section 7(2) of the Limitation Ordinance, Cap. 347;

(3) A declaration that any title right or interest the P may have to and in the Occupied Areas (or alternatively the Subject Areas) has been extinguished by virtue of section 17 of the Limitation Ordinance, Cap. 347;

(4) Further or in the alternative, a declaration that all the estate, right, title, interest, term and terms of years, claims and demands and all rights of way (if any), privileges, easements and appurtenances in and to the Occupied Areas (or alternatively the Subject Areas) is vested in the D absolutely;

(5) Further or alternatively, a declaration that the P is estopped from denying the right and entitlement of the D in and over the Occupied Areas (or alternatively the  Subject Areas);

(6) An order that the D be registered as owner of the Occupied Areas (or alternatively the Subject Areas) in the Land Registry;

(7) Further or alternatively, a declaration that the D is entitled to exercise all rights of occupation and possession of the Occupied Areas (or alternatively the Subject Areas) which the P might otherwise be entitled to exercise as the registered owner of the same.

Evidence of Factual Witnesses

Yeung Siu Tung, Tony

27.  Tony Yeung is director of the P. 

28.  He said after seeking legal advice in year 2009, they had, via their solicitors demanded the removal of the Unauthorized Signboards on 7 July 2009 as he verily believes the erection of the signages was unauthorized and that the D had infringed P’s rights as owner of the External Walls.  He said P had suffered loss and damages.  He did not produce any evidence to prove the alleged loss and damages.

29.  He said before the purchase, he had been shown the photos of the Building taken in year 2005.  He also agreed that anyone passing by the Building can see the Unauthorized Signboards.  He said he did not bother about them as he did not know the Occupied Area was in fact part of External Walls and belonged to them.

Tse Chi Yung

30.  He joined the P in September 2004 and was responsible for tenancy matters of the Building for the P who owns inter alia, the External Walls and the basement Shops in the Building.

31.  He said he noticed the Unauthorized Signboards but did not know if they were part of the External Walls of the Building.

Chan Yiu Cho, Joe (“Y C Chan)

32.  He is one of the first batch of tenants of the Ground Floor Shop of the Building since year 1994, operating an optical shop.  He said initially that he was unclear in year 1994 if there were the Unauthorized Signboards as he seldom went to the shop then.  Later, when cross examined, he said he was sure that in year 1994, there was no such signboard but they were there later by April 1997 as he then often went to the shop.

33.  He did not notice the 7-11 shop at the corner undergoing any alteration work which meant probably that the shop front was already modified from its original design the same since year1997.

34.  He said no one ever complained about his Unauthorized Signboard at the entrance of the shop.

35.  He said when he saw the signboard in year 1997, the same was brand new and he had to remove the film over it before use.

36.  He said other shops like 7-11 sometimes put posters on the shop exterior.  He also sometimes put poster on the exterior of the shop without asking but will remove the same if he is so requested by the Manager of the Building.

Chan Hak Keung (“H K Chan”)

37.  H K Chan was the General Manager of Golden Dragon Group to which both Well City and the D belong.  He said he was seconded to work for the D and before that in June 2002, he was seconded to work for Well City.  He was responsible for the tenancy matters, including those relating to the Shops.

38.  He said in February 2005, the Shops were sold to the D, a sister company of Well City and he continued to be responsible for the tenancy matters.  He said all along, the possession and control of the Occupied Areas, management and mode of operation of the Shops had nothing to do with Charmwell or Easy Surplus.  There was no consent or permissions required from them nor were they given.

39.  He said to his knowledge, since year 1996 when the Ground Floor Shops was sold to Well City, Well City and the D had been using the Occupied Areas as part of the areas belonging to them.  He said there was uninterrupted use of the area below the First floor slab all these years, even after Charmwell assigned the External Walls to Easy Surplus.  The Shops had been let to tenants and they could use and enjoy the Occupied Areas, including in particular using the Unauthorized Signboards on the Subject Areas.  Costs were also incurred in maintenance, repairs and renovations of the Occupied Areas, including that of the Unauthorized Signboards and the Subject Areas.

40.  He said from time to time, Well City, D and their tenants seeked approval from the Manager in relation to design layout and nature of the signs, signboards or name plates to be hanged at the shop front which included the Occupied Areas.  He said Charmwell, Easy Surplus and the P were never consulted.

41.  He said the use of the Occupied Areas and the Subject Areas by Well City and the D were all along known to the P and his predecessors in title.

42.  He produced a Drawing entitled “Block P, Ground Floor Plan” approved by the Building Authority dated 17 December 2009 where the signboard on the Occupied Areas was described as within the shop front.

43.  He told of the complaint letters from Messrs. Gallant YT Ho & Co solicitors regarding the “Cyber X signage”, “Take 5 Signage” between year 1997 to year 2002.  To his understanding, on reading the correspondence, the Charmwell and Easy Surplus was concerned really only of the trespass to the External Wall on the 1^st Floor.

44.  He said when tenants moved out they had to incur repair costs for the signboard, electric wiring and make good the affected areas.  He has always understood External Walls to cover only from 1^st Floor and upwards. 

Chan Yeung Yum (“Y Y Chan”)

45.  Y Y Chan was the director of both Well City and the D.

46.  In October 1996, Well City as purchaser signed sale and purchase agreement to purchase from Charmwell, inter alia, the Ground Floor Shops of the Building. 

47.  He said before the purchase, they had done site inspection and was impressed by the prominent shop fronts of the Ground Floor Shops which could be combined in various pattern or design and have great potential value.

48.  After completion of the purchase of the Shops, the External Walls of the Building was still owned by Charmwell.  He said both  Charmwell and Well City had treated the Occupied Areas as belonging to Well City and the latter and their tenants were using the Occupied Areas uninterrupted, even after Charmwell assigned the External Walls to Easy Surplus later in year 2000.

49.  The Shops were rented out by Well City to various tenants on the basis that they could use the Occupied Areas and the Unauthorized Signboards on the Subject Areas.

50.  Y Y Chan said they had also incurred costs in repair and renovation of the Occupied Areas, including the Unauthorized Signboards on the Subject Areas.

51.  He said throughout, Well City and its tenants had been using the Occupied Areas as part of the shop front, subject to the Manager’s approval in the design layout and nature of the signs to be affixed.

52.  He said Charmwell and Easy Surplus were never consulted in the use of the Occupied Areas and they were fully aware of the use of these areas by Well City.

53.  He said after purchasing the Shops from Well City D had been using the Occupied Areas in the same manner.  He exhibited list of tenants for the Shops between 23 October 1996 to 27 February 2005.

Expert Evidence

54.  In this case, parties have adduced joint reports dated 9 August 2010 (“First Joint Report”) and 8 September 2010 (“Second Joint Report”) (collectively called “Joint Reports”) prepared by building surveyors Mr. Benson Wong for the P and Mr. Samson Wong for the D with a view to assist the Court to understand the meaning of shop front, shop front façade, External Walls in the Building industry.

55.  According to the experts, they had carried out a survey on the Unauthorized Signboards, taking photos and measurements of the same as well as the roller shutter to the front exterior of Shops with a view to determine if the Unauthorized Signboards are fixed on the External Walls, the shop front, the shop front facade and/or exterior of the Shops.

56.  In preparation of the Joint Reports, they had been given the DMC of the Building, the record General Building Plan, the record Structural Plan and the record Granite plan of the Building maintained by the Buildings Department.

57.  In the First Joint Report, it was stated that the Unauthorized Signboards were located at the shop fronts of the Shops and that they were constructed of light weight metal framework with plastic or metal covers at the front.

58.  In court, P’s expert Benson Wong clarified and said that the location of Unauthorized Signboards should be situated at the front exterior, not the shop front of the Shops.  He said the description in the First Joint Report was not accurate, due to oversight.

59.  Both agree that the exteriors of the Shops as constructed are very similar to the works approved by the Buildings Department except that for Shops nos 11 and 12, some alteration works including removal of two fake posts in the front and formation of shop windows in the walls facing the corner entrance had been carried out.  There was no record of approval of these alteration works but the experts viewed the same was done long time ago.

60.  They also observed that immediately below the 1^st floor structural floor slab, the external upper parts of the shop are structural beams of reinforced concrete constructed with granite panels on the external surface.

61.  It was said that the definition of “External Wall” under the Building Ordinance are:-

“5.2.1 Building (Planning) Regulation 2(1):-

an outer wall of a building not being a party wall, even though adjoining a wall of another building. (Appendix 5a)

5.2.2 Building (Construction) Regulation 2:-

an outer wall of a building even though adjoining a wall of another building. (Appendix 5b)

5.2.3 Building (Construction) Regulation 38:-

every external wall of a building shall be constructed of –

(a) masonry not less than 225 mm thick;

(b) plain concrete or reinforced concrete not less than 100 mm thick;

(c) any of the materials mentioned in paragraph (a) or (b) in combination with a framework of steel or reinforced concrete; or

(d) other suitable materials of permanent, non-combustible and impervious construction. (Appendix 5c)

62.  Experts say the Occupation Permit of the Building was issued on 1 March 1994, i.e. shortly before the execution of the DMC of the Building.

Issue (i)

Which part of a building constitutes “external wall” in context of building construction/survey industry?

63.  Both experts say there was no plan showing the exact extent and locations of the outer or the External Walls.

64.  Mr. Benson Wong said based on the definition and constructions as stated under the relevant Building Regulations, external wall for the Shops include the walls and beams of reinforced concrete construction as shown on the approved plan.  He opined that the beams on the outer face of a building are external wall because beams are thickened and strengthened the structural frame members and the external walls of a building and further that beams meant the definitions of external wall under the relevant Building Regulations and fulfill the Building (Construction) Regulations 38(b) (i.e. plain concrete or reinforced concrete not less than 100 mm thick).

65.  He continued and said that outer wall is external enclosure of a building including but not limited to those external walls and beams meeting the four kinds of construction as stated in the Building (Construction) Regulation 38. He concluded in the First Joint report that with regard to the Shops, the outer walls include the external wall as defined by the relevant Building Regulations and all other external enclosures including those constructed of metal framework construction and granite cladding on the external surface for the roller shutters at the head of the shop fronts.

66.  Mr. Samson Wong on the other hand disagreed and said that the edge beams were constructed as a ring directly above and across the shop openings of the Shops.  Below that is the granite casing of roller shutter provided for each shop and a column like in fill panel is erected between the external parts of two shops (The Pilaster). Both are decorative features which can be removed, changed or refitted without any prior approval of the Building Authority.

67.  Mr. Samson Wong claims further that the edge beams at the upper part of the shop facing the street are a kind of structural element designed to carry the 1^st Floor structural floor slab without the need to rely on the structural support of the External Walls.  The same aims at maximizing the width of the front openings as they are essential for a shop’s business operation.  It also allows flexibility for future changes.

68.  He says therefore that the edge beams, granite casing of roller shutters and the column like pilasters are not part of the External Walls.

69.  He opines that according to Building (Planning) Regulation 2 and Building (Construction) Regulation 38 and the visual inspection of the Building, the External Walls of the Building consists of vertical enclosure walls constructed upwards from the top of the first floor slab, but exclusive of all window openings, columns and beams.

70.  He concluded that the Unauthorized Signboards are erected within the extent of the front part of the Shops and not on the External Walls of the Building.

 Issue (ii)

Which part of a building constitutes “shop front” in the context of building/construction/survey industry?

71.  Mr. Benson Wong said that “shop front” refers to the opening of the shop on the shop’s street frontage.  It is the space set within the outer and/or the External Walls as approved and shown in the approved plan.  He said, subject to the terms of the DMC and/or ownership, the existing shop front of the shops may be enlarged vertically by removing the roller shutter casing and also horizontally, by removing the concrete walls adjacent to each of the shop windows as these are non-structural works that were exempted from obtaining approval of Building Authority.

72.  Mr. Samson Wong does not agree shop front only refers to the opening of the shop on the shop’s street frontage, he says the same consists of the front of the shop that faces the street and therefore consists of more than the mere openings.

73.  He says in the present case, being the owner of all the shops on the Ground Floor of the Building, the D can enlarge the shop front vertically and horizontally by removing the roller shutters and the pilasters subject to the approval of the Building Manager, which approval, according to the DMC should not be unreasonably withheld.

74.  He added reasons being these are non-structural works that are exempted from the approval requirement of the Building Authority.

75.  He explained further that in the real estate industry, the reservation of the External Walls rights applies to just the upper part of a building only.  All shop front areas at street level are inherently property of the shop owner, especially for shopping arcade under one ownership.

76.  Mr. Benson Wong disputed that there is such industry practice.

77.  Mr. Samson Wong supplemented that according to the DMC, the individual shop owner has the right to decide their own shop front façade on the exterior of the shop subject to the approval of the Building Manager.

Issue (iii)

Which part of building constitutes “shop front façade” in the context of building construction/survey industry?

78.  Mr. Benson Wong said “shop front façade” refers to the external surface of a shop front.  The width and the depth of the shop front façade of each shop was indicated by red lines in his Drawings D1 to D7 in Appendix 7a, of the First Joint Report.

79.  Mr. Samson Wong disagreed and said the shop front façade would include not just the external surface but also the architectural features (i.e. para 6.2.2 (c) of the First Joint Report).

Issue (iv)

Which part of a building constitutes “exterior of the Shop” in the context of building/construction/survey industry?

80.  Mr. Benson Wong says the same refers to the external surfaces of the outer wall, external walls and the shop front facades of the shop.  The width and height of the exterior of the shop for each of the shops are indicated by green lines on Drawings D1 to D9 in Appendix 7a of the First Joint Report.

81.  Mr. Samson Wong says he agrees to the area as said by Mr. Benson Wong but disputes to the constituents of the area as said by him.

Issue (v)

In the present case, whether the signage i.e. Unauthorized Signboards are in the expert’s opinion, erected on:-

(1)  external walls of the subject building; and/or

(2)  the shop front of each shop; and/or

(3)  the shop front façade of each shop; and/or

(4) the exterior of each shop

82.  Both experts made reference to the record General Building Plan, record Structural Plan said the record Granite Plan as well as making measurements and verifications but they gave different answers to questions (1) to (3), except (4), due to their difference in opinion regarding the definition or location of external wall, outer wall, shop front, shop front façade in the present case as aforesaid.

83.  For question (4), both agree the Unauthorized Signboards situate 100% in the exterior of the Shops.

84.  Mr. Benson Wong concluded that all the Unauthorized Signboards situate on partly the outer wall and partly the exterior wall and they were not located within the shop front or the shop front facade.

85.  Mr. Samson Wong on the other hand opined that the Unauthorized Signboards were not situated within the outer wall or the external wall but rather they all situate within the shop front façade and the shop front.

P’s title to the External Walls of the Building

86.  In the said Assignment, Charmwell and Easy Surplus collectively as Vendor assign in favour of the P, inter alia, External Walls of the Building and “the whole of the vendor’s estate right title and interest therein and thereto subject to the benefit of the DMC and subject to and with the benefit of the lettings and tenancies and licences, if any”.

87.  The said Assignment  reads:-

“In consideration of the sum of HK$26,500,000.00 paid by the Purchaser to the Vendor (receipt whereof is acknowledged) the 1^st Vendor as beneficial owner ASSIGNS to the Purchaser the land described in Part I of the Schedule hereto (“the 1^st Property”) and the 2^nd Vendor as beneficial owner ASSIGNS to the Purchaser the land described in Part II of the Schedule hereto (“the 2^nd Property”) (the 1^st Property and the 2^nd Property are hereinafter where not inapplicable individually and collectively called “the Property”) and the whole of the Vendor’s estate right title and interest therein and thereto TO HOLD the same unto the Purchaser for the residue of the term of years created by the Government Lease referred to in the Schedule hereto (“the Government Lease”)”.

88.  The Vendor, including Charmwell, therefore had assigned the whole of their estate right title and interest relating to the External Walls to the P here.

Construction or interpretation of “the outer and external walls of the Building”, “shop front”, “shop front façade” and “exterior of the shop” in the DMC

89.  It is submitted by Mr. Jenkin Suen, Counsel for the D that the issues in this case really turn on the construction or interpretation of the words “the outer and external walls of the Building”, “shop front”, “shop front facade” and “exterior of the shop” in the DMC.  I agree.

90.  Parties agree that for multi-storey development, the DMC of a building binds all owners including their successors-in-title and that the rights of individual owners are determined according to the terms of the DMC.

91.  The DMC of the Building here is silent on the definition of these terms and therefore the usual rules of construction of contract applies.

92.  Mr. Anthony Chow, counsel for the P submitted that the DMC is a contract document between individual owners of a multi-storey building and being mostly lay persons and the terms in question not being special terms and or particularly technical that really no assistance need be sought from the experts for their interpretation. 

93.  He added that in the case of Doe D Nash v Birch 1M & W 42, that the meaning of the term “shop front” should be construed within the four corners of the documents in which it was used, not by reference to outside documents, hence he said the reference by D’s expert Mr. Samson Wong to the “shop front” guidance by North West Leicestershire District Council (Appendix 8 to the First Joint Report) for the interpretation of “shop front” would be irrelevant and should be inadmissible.

94.  Mr. Jenkin Suen, counsel for the Defence submitted on the other hand that we should follow the governing principles on construction as laid down by Lord Hoffmann in ICS v West Bromwich Building Society [1998] 1 WLR 896 at 912H-913F.  He said  the principle was adopted in Hong Kong in the construction of DMC in Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279.

95.  He said in construing a document, the court should look at the agreement as a whole, its factual and legal background and the practical objects which it was intended to achieve.  Further, although the court will have regard to the natural and ordinary meaning of the words, the overriding objective is to give effect to the objective intention of the parties.  As explained by Lord Hoffmann in Jumbo King at 296D-I:-

“In my respectful opinion, the judge’s approach was far too narrow and literal. 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. Therefore, if in spite of linguistic problems the meaning is clear, it is that meaning which must prevail.”

96.  Mr. Suen added that Lord Diplock in Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at 201 expressed in his view that:-

“This passage in the award anticipates the approach to questions of construction of commercial documents that was voiced by this House in the very recent case, Miramar Maritime Corporation v. Holborn Oil Trading Ltd. [1984] A. C. 676, which dealt with a bill of lading issued under a charterparty in Exxonvoy 1969 form. There, after referring to various situations which might arise if the construction for which the shipowners in that case contended were correct, I added, at p.682, in a speech concurred in by my fellow Law Lords:

                                           “ There must be ascribed to the words a meaning that would make good commercial sense if the Exxonvoy bill of lading were issued in any of these situations, and not some meaning that imposed upon a transferee to whom the bill of lading for goods afloat was negotiated, a financial liability of unknown extent that no business man in his senses would be willing to incur.”

While deprecating the extension of the use of the expression “purposive construction” from the interpretation of statutes to the interpretation of private contracts, I agree with the passage I have cited from the arbitrators’ award and I take this opportunity of re-stating that if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.”

97.  This court accepts that in the construction of the DMC of the Building, the Jumbo King approach should be adopted and that the construction of the same should accord with business common sense.  Therefore, no or not much weight should be attached to the expert evidence.

Construction of DMC of the Building

98.  The DMC of the Building was dated 16 March 1994 and Charmwell, the developer of the Building, was a party.

99.  Section II of the DMC is entitled “Additional Rights of the Company”. The Company is Charmwell.

100.  Mr. Chow, counsel for the P submitted that under Clause 1(a)(iii) of Section II of the DMC, Charmwell shall have the sole and absolute right in its absolute and unfettered discretion at any time or times and from time to time as it shall deem fit to do all or any of the following acts or deeds and to exercise all or any of the following right, such as the right to the exclusive use occupation and enjoyment of the Reserved Area.

101.  “Reserved Area” in the DMC is defined as “shall mean all the outer or external walls…”

102.  Mr. Chow asked this court to further consider clause 1(j) and clause 1(l) of Section II of the DMC.

103.  Section II of the DMC is entitled “Additional Rights of the Company”.

104.  Clause 1(j) of section II of the DMC reads:-

“The right to affix, install, erect, maintain, alter, renew and remove any one or more chimneys, flues, pipes, conduits, plant, machinery and other apparatus, signs, advertisements (illuminated or otherwise), masts, aerials, lightning conductors and lighting and other fixtures, installation and facilities of whatsoever kind on any part or parts of the Common Areas and/or the Reserved Area and/or the areas of the Building the exclusive right to hold, use, occupy and enjoy which has not been assigned and the right to enter into and upon any part of the Building with or without workmen and equipment at all reasonable times on giving prior written notice (save in the case of emergency) for any or all of the purposes aforesaid and to license or otherwise permit or grant the right so to do to any other person on such terms as the Company may deem fit PROVIDED ALWAYS THAT any such chimneys, flues, pipes, conduits, plant, machinery and other apparatus, signs, advertisements, masts, aerials, lightning conductors or lighting or other fixtures shall not unreasonably interfere with the use and enjoyment by other Owners of the Units owned by them.”

105.  Clause 1(l) of section II of the DMC reads:-

“The Company shall have the sole and absolute right in its absolute and unfettered discretion at any time or times and from time to time as it shall deem fit to do all or any of the following acts or deeds and to exercise all or any of the following rights:-….(l) The right to make any alteration or change in the colour of the shop front façade and to display install erect or affix such signboards and other advertising signs or structures whatever thereon together with the right to remove repair maintain service or replace the same.”

106.  Section V of the DMC is entitled “Covenants, provision and restrictions to be observed and performed by the Owners.”

107.  Clause 17(a) of section V of the DMC also reads:-

“Subject to Clause 1(j) of Section II hereof, no external signs, signboards, notices, advertisements, … or other projections or structure whatsoever extending outside the exterior of any unit shall be erected, installed or otherwise affixed or projected from the building or any part thereof except with the written consent of the Manager.”

108.  Clause 38 of section V of the DMC states:-

“The design of all shop front facades or exteriors of the shops of the building and all changes or additions thereto shall first be approved in writing by the Manager and such approval shall not be unreasonably withheld.”

109.  Clause 42(a) & (b) of section V of the DMC states:-

“No Owner of any shop of the Building shall exhibit any signs, signboards or name plates (whether illuminated or not) except at the shop front of his shop and then only subject to the following conditions:-

(a) The design layout and nature of such signs, signboards, or name plates shall be subject to prior written approval of the Manager who shall have absolute discretion in granting or refusing such approval;

(b) All such approved signs, signboards, or name plates shall be erected affixed and constructed in strict accordance with the approved design and layout to the complete satisfaction of the Manager.”

110.  Mr. Suen submitted that the right of Charmwell under Clause 1(l) of Section II was never assigned to Easy Surplus and therefore  the said right remains with Charmwell.  He says this right is distinct from the right given to Charmwell under Section II §1(j) of the DMC, in which Charmwell has the right to affix signs on any part of the Common Areas and/or the Reserved Areas(which include the External Walls).

111.  He submitted that the shop front façade do not form part of the Common Area or the Reserved Areas, otherwise there need not be two separate provisions dealing with Charmwell’s rights to affix signs.

112.  At the time of DMC, Charmwell was registered owner of the External Walls, the Shops and Reserved Areas. Was the right under clause 1(l) of section II of DMC rights attached to the External Walls? or the Shops? Or neither?

113.  If the shop front façade does form part of the External Walls, the right of Charmwell in relation to 1(l) would be assigned to the P as the registered owner of the External Walls or otherwise, it would be assigned to Well City and presently the D here, as registered owner of the Shops.  If not, the right may still be vested in Charmwell.

Does the shop front façade form part of the outer or external walls of the Building or does it form part of the Ground Floor Shops as argued by the D?

Should the Sturge v Hackett case presumption apply?

114.  D here relies on the presumption enunciated in Sturge v Hackett [1962] 1 WLR 1257, where Diplock LJ (as he then was) at 1265-1266 says:-

“It is, as McNair J accepted, well-settled law that in the absence of provisions to the contrary in a lease a demise of a part of a building divided horizontally or vertically includes the external walls enclosing the part so demised.”

115.  Mr. Suen argued that the principle in Sturge v Hackett was applied by Wylie J in Chung Yuk Wah & Ors v Golden Gate Food Factory Ltd [1963] HKCU 56 where the registered owners of flats on 2^nd - 4^th Floor of a building sued a tenant of a shop on the ground floor for affixing 3 iron rods to the outside walls of their flats for the support of a large signboard without their consent.  It was argued on behalf of the D that the outside walls were the common property of all owners.  Wylie J disagreed and held that, in the absence of provisions to the contrary, there was nothing to exclude the demise of the outer wall of the flat assigned to each flat-owner, who was therefore entitled to sue for trespass.

116.  Further, he said this principle was also followed the case of Wong Lai Kai v IO o Lok Fu Building, Yuen Long [2000] CPR 194 where the P was injured by collapse of awning attached to the external wall of a ground floor shop.  The Court of Appeal held that, although the external wall of the shop may have been a common part by virtue of section 2 and the 1^st Schedule to the Building Management Ordinance, Cap. 344, the occupant of the shop was still responsible for its maintenance by reason of section 34H of the said Ordinance.  Woo JA in that concluded that, given the evidence in the lower court, the part of the Building to which the awning was attached should be treated as part of the shop.  It was said by Mr. Suen that although Woo JA did not refer to the principle in Sturge v Hackett, he was no doubt following this principle.

117.  Mr. Suen also referred this court to a different approach by Deputy Judge Alfred Chan in IO of KK Mansion v Jade Water Group Ltd [2010] 3 HKLRD 195 where it was decided that the effect of section 2 of and the 1^st Schedule to the Building Management Ordinance and the express reservation of the “external walls” to the developer was already sufficient to displace the presumption in Sturge v Hackett.

118.  Defence said in the present case, unlike the IO of KK Mansion case, there are provisions in the DMC which empowers the shop owners to erect and exhibit signs at the shop front and that agreeing with the expert opinion of Mr. Samson Wong, shop front included not just the shop opening but also the exterior of the shop.

119.  Clause 42(a) and (b) of section V of the DMC reads:-

“No Owner of any shop of the Building shall exhibit any signs, signboards or name plates (whether illuminated or not) except at the shop front of his shop and then only subject to the following conditions:-

(a) The design layout and nature of such signs, signboards, or name plates shall be subject to prior written approval of the Manager who shall have absolute discretion in granting or refusing such approval;

(b) All such approved signs, signboards, or name plates shall be erected affixed and constructed in strict accordance with the approved design and layout to the complete satisfaction of the Manager.”

120.  Mr. Chow for the P says that the presumption in Sturge v Hackett has no application for multi-storey building in Hong Kong where the rights and obligations between individual owners are governed by the DMC.  It was said that in the Sturge case, there was no DMC and the court there was merely dealing with the tenant’s liability under occupier’s liability.

121.  He referred this court to the remarks by Riberio PJ in Nation Group Development Ltd v New Pacific Properties Ltd (2003) 3 HKCFA 427 at 436D where he agrees that reference to the exclusive use of the “entire first floor” must be taken to have intended the purchaser to be given the right to the exclusive use of the floor and the ceiling surfaces of the First Floor and of the air space between them, in other words, of the entire volume of the first floor space, but not the use of the underside of the concrete slab.  Following that he said, on the other hand, canopy, unlike “flats” or “shops” does not form part of its internal volume.  It follows therefore the presumption of Sturge v Hackett does not apply to multi-storey buildings situations.

122.  Mr. Chow pointed out further that in the Wong Lai Kai case, Woo JA did not query the finding of fact in the court below, that the 5^th defendant, being the registered owner, acquired the right to the exclusive use of the external wall where the awning was erected.  He said therefore there was no basis for the Defence here to suggest Woo JA was buttressed by the principle in Sturge.

123.  He agrees with the approach taken in IO of KK Mansion case where the court said:-

“In a multi-storey building, the developer, by the first assignment and the deed of mutual covenant, is about to divest of rights and impose obligations relating to land, which will affect not only the developer and that purchaser, but also subsequent owners of other units, each of whom may potentially have a right to use the external walls, exclusively or in common with others. The assumption underlying cases such as Sturge v Hackett is at the least more easily displaced. Ultimately it is a question of ascertaining the parties’ intention by construing relevant instruments.”

124.  Mr. Chow said that in the present case, the developer made an express reservation of rights over the ‘outer or external walls’ to itself which was subsequently assigned to the P.  It follows therefore that any presumption in Sturge v Hackett would have been rebutted by the express reservation of rights over the ‘outer or external walls’ set out in the DMC.

125.  Assuming ‘shop front’ are to be interpreted in the way the D proposes, does it mean that the presumption in Sturge v Hackett will apply?

126.  If the presumption should apply to the Building in general, there would hardly be any External Walls that could be reserved by Charmwell.  One might argue that the presumption only applies to the Ground Floor Shops, that the Ground Floor be treated different because of the right to affix signs on the shop front under clause 42(a) and (b) of section V of the DMC.  Is this the intention of the parties to the DMC having regard to the construction of the DMC following the Jumbo King approach?  Does the External Walls of the Building extend to the exterior of the Shops on the ground floor?

127.  I am not persuaded by this argument by Mr. Suen.  Following the remarks of Ribeiro PJ in Nation Group Development Ltd case, I accept Mr. Chow’s argument on this point and find that the Sturge v Hackett principle has no application in the present case.

Construction of ‘outer, external walls’, ‘shop front’, ‘shop front façade’ and ‘exteriors of shop’ in the DMC

128.  Mr. Chow for the P submitted that the ordinary meaning of the term ‘outer or external walls’ shall be the outside surface of the Building or the enclosure of the Building (except the openings thereon) which is visible from outside. 

129.  He said that in the case here, it would mean the whole of the granite cladding wall surface as existed in 1994 when the Building was completed, as one can see from the outside of the Building.  He said one need not concern with whether the granite cladding was supported by concrete wall, beam or steel frame behind or whether the wall surface abuts on the boundary line of the Building lot or is set back from the Building line.

130.  He criticized Mr. Samson Wong for saying in para 6.2.2 (B) of the First Joint Report that the meaning of “shop front” in the Oxford Dictionary is ‘the façade of a shop and a façade is the principal front of a building that faces on to a street/open space.’  It is said that the relevant part of the Oxford Dictionary has not been produced by Mr. Wong and Mr. Chow says that they are unable to find the alleged meaning in the Oxford English Dictionary, 2^nd edition.

131.  In any event, he submitted that the meaning of ‘shop front’ as used in the DMC has to be construed in the light of all the relevant provisions in the document as a whole.  I agree.

132.  Mr. Chow submitted that adopting the general principle of construction of contract, the term ‘shop front’ as used in Clause 42(a) of Section V of the DMC actually refers to the opening under the roller shutter and between columns of each shop; and the term ‘outer or external walls’ would be given their ordinary meaning in English language, i.e. the parts other than the said opening.

133.  He submitted further that ‘shop front façade’ shall mean the part of the outer or external wall on the ground floor other than the shop openings.  If follows therefore he says that ‘shop front façade’ is part of the ‘outer or external walls’, the exclusive right which now vest in the P.

134.  Mr. Chow says that this interpretation is consistent with the natural and ordinary meaning of the term ‘outer or external walls’ of a building  and is in line with the common understanding of ordinary persons.

135.  Under Clause 1(l) of Section II of DMC, Charmwell as the developer had retain exclusive right to alter or change the colour of the ‘shop front façade’ and to display … erect … signboards …, while, under Clause 42(a) of Section V of DMC no shop owner exhibit any sign, signboards, … except at the shop front of his shop. 

136.  To give effect to both provisions, he submits that shop front façade and shop front must be mutually exclusive.

137.  Similarly, he said contrasting Clause 1(j) with Clause 42(a) of Section V, ‘outer or external walls’ and ‘shop front’ must also be mutually exclusive. He says that at the time of the execution of the DMC, the Unathourized Signboards above the shop openings were not there. 

138.  He further reiterates that in this case, Charmwell has clearly reserved to himself the exclusive use of the Reserved Area which include all the outer and external wall, the use of which is not to be shared.  Mr. Chow argues therefore that the “shop front” would not have meant part of the outer or external wall or the shop front façade. 

139.  He said the exclusive right of the developer to change the colour of the shop front façade conferred under clause 1(1) of section II would, as a matter of common sense, refer to areas of the walls covered by granite panels rather than the openings of the shop.  This interpretation adopted by Mr. Chow is at variance with that as advanced by P’s own expert Mr. Benson Wong.

140.  Under clause 42(a) & (b) of section V of the DMC, headed covenants, provisions and restrictions to be observed and performed by the owners, owners are allowed only to exhibit signs at the shop front of his shop and the design, layout and nature of such signs are subject to the approval of the Manager. 

141.  Mr. Chow says the ‘shop front’ referred to in the provision could not have been part of the external wall exclusively owned by Charmwell or presently the P, of which he says the shop front façade form part.

142.  He said regarding the definition of “external wall”, reference to the framework of reinforced concrete” in Regulation 38(c) of the Building (Construction) Regulations refers to the concrete beams and columns. He said Mr. Samson Wong also agreed to this interpretation under cross examination.  It is said therefore that the concrete edge beams under the concrete slab of 1^st Floor falls within the definition of external wall in the Regulations. 

143.  Mr. Chow says in fact in the tenancy agreement dated 27 August 2003 between Well City Enterprise Ltd (“Well City”), the predecessor of the D and Hi-tech International Holdings Ltd regarding one of the Ground Floor Shops, Well City had also maintained that “shop front” means the shop opening.  In clause 7(10)(b) of the tenancy agreement, the Unauthorized Signboards are referred to as “standard signboard above the shopfront(s) to the said premises”. 

144.  He also referred to another tenancy agreement dated 24 October 2004 between Well City and Super Growth Investment Company Ltd concerning one of the Ground Floor Shops, the same phrase was used to describe the location of the Unauthorized Signboards.

145.  Mr. HK Chan, the defence witness had admitted in cross examination that the standard signboard referred to the corresponding Unauthorized Signboards. 

146.  Mr. Chow said regarding clause 38 of section V where it reads:- 

“The design of all shopfront facades or exteriors of the shops of the Building and all changes or additions thereto still first be approved in writing by the Manager and such approval would not be unreasonably withheld.”

147.  This clause, according to Mr. Chow,     caters for situation when the developer intends to alter the designs of the shop front facades, being the ground floor external walls or outer walls. 

148.  Mr. Chow says the dealings of the D (and/or its tenant) with the Manager of the Building is not within the knowledge of the P and this conduct of the D is irrelevant to the construction of the DMC. 

149.  He added that if the court does consider the expert evidence of the experts, then the evidence of Mr. Benson Wong should be preferred. 

150.  Mr. Chow criticized Mr. Samson Wong for concluding that the whole of the Building façade under the 1^st floor slab of the Building is not external wall on the basis that part of the wall surface can be removed without the approval of the Buildings Authority and further that part of the external structure under the 1^st floor slab is an edge beam, and not a ‘wall’.  He said an external wall of a building does not have to be structural in the sense that it is required to support the loads of the Building.  He said the external wall can be and is in fact often, a non-structural wall and that the Building (Construction) Regulation 38 confirms this. 

151.  He said Mr. Samson Wong under cross examination, agreed there is no requirement in the Building Regulation that an external wall has to be structural.  It is submitted that Mr. Samson Wong’s opinion does not stand. 

152.  Mr. Chow further argues that the primary function of an external wall is to provide cover for the interior part of the Building against weather conditions etc.  Therefore, even if a certain piece of external wall is not necessary for the support of the Building, it cannot be removed without some replacement to provide a weather proof enclosure for the shops. 

153.  He continued and said that if the reasoning of Mr. Samson Wong was correct, as there are similar edge beams on 2^nd and 3^rd floor of the Building, the external facades on 2^nd and 3^rd floors can also be removed as they are not structural, and there would not be any external walls on 2^nd and 3^rd floor.  He said argument of Mr. Samson Wong must therefore fail. 

154.  As to Mr. Samson Wong’s saying that there is a common practice in the real estate industry that ‘reservation of external rights applies to the upper part of a building only’, Mr. Chow says, agreeing with Mr. Benson Wong, that the alleged common practice does not exist. He said further that when Mr. Samson Wong was cross examined on the details of the alleged practice, he was unable to give specific details as to the support evidencing existence of such common practice.

155.  As to the meaning of ‘shop front’, Mr. Chow criticized reference to “Shopfront Guidance – advice on traditional shop fronts & signage from North West Leicestershire District Council” produced by Mr. Samson Wong for the purpose of construction of the term as most inappropriate and is, as a matter of law, not admissible. 

156.  He said the kind of shop front design and features as shown in the photo in the shop front are rarely adopted in Hong Kong, if at all.  He referred to the response by Mr. Benson Wong that “these references have no relevance in determining the extents of the shop fronts in question as they are not stated in the DMC or found in the Buildings Ordinance and Regulations of Hong Kong.  In fact, these references are rarely known or adopted by the local building professionals in the planning and design of commercial building…”. 

157.  Although in the Joint Reports, both experts appear to agree that the Unauthorized Signboards are located at the shop-fronts of the Ground Floor Shops, Mr. Benson Wong clarified in chief that what he meant was in fact the ‘front exterior of the shops’ and he confirms that shop front is restricted to the shop opening.  Mr. Chow says if one read his conclusion in the same report, one would know this is merely an accidental slip on the part of Mr. Benson Wong. 

158.  P’s position is that the coverage of the ‘shop front’ in the DMC is determined by reference to the layout of the Building upon its completion in 1994, i.e. at the time of the execution of the DMC and therefore it would not vary over time. 

159.  Mr. Chow again reminds the court that to ascertain the objects of the terms used in the DMC, the views of the experts are not relevant and therefore one should not make reference to Building Regulations and Practice Notes.  He said common sense should be adopted in the interpretation of these terms.

160.  He said to an ordinary person, the words “outer and external walls” actually refer to the parts covered by the granite cladding irrespective of the form or the structure behind it. 

161.  He said in a multi-storey building situation, the fact that one is assigned to the exclusive right to use occupy and enjoy a part of a building does not necessarily carry with it the liability to maintain.  It all depends on the terms of the DMC. 

162.  He says further that at time of execution of DMC, the Unauthorized Signboards above the shop opening were not in existence and therefore the DMC could not have contemplated the same. 

163.  It is common ground  between the parties that as at 7 July 2009, there were the Unauthorized Signboards erected on top of the existing shop openings at the Shops as shown in the photos attached to the Statement of Claim without the permission and/or consent of the P.  Their locations are shown in Drawings D0 to D9 of the First Joint Report. 

164.  The said drawings in the First Joint Report show that save for the ‘Guddi’s’ sign at Shop 11 and the ‘7-eleven’ sign at Shop 12 facing the corner entrance of the Building, (Drawing D5 and D6 refers) others were erected entirely on concrete wall with granite cladding, the other Unauthorized Signboards are erected on the granite cladding supported partly by the structural frame which houses the roller shutter and partly by the concrete wall behind. 

165.  Mr. Chow says according to the evidence of Mr. J Chan, his company was amongst the first lot of tenants of the Ground Floor Shops of the Building.  He confirmed in cross examination that when his company moved in year 1994, the roller shutters and granite cladding were there already but the sign-boxes were not there.  They were erected subsequently. 

166.  D disputed and said Mr. J Chan just said he was not sure if there were the signboards in year 1994.  That was what he said initially but later he did clarify and said these signboards were not there in year 1994.

167.  It is submitted by the P that the Unauthorized Signboards (including the face plates put up by the D’s tenants) were erected on the outer or external wall of the Building of which the P acquired and retained the right to the exclusive use occupation and enjoyment. 

168.  The issue for this court is whether the Unauthorized Signboards are erected on part of the External Walls, i.e. ‘outer or external walls’ of the Building and/or whether they were erected within part of the ‘shop front’ within the meaning of clause 42(a) of the DMC.

169.  It is agreed by the experts that they were erected within the “exterior of the shop”. 

170.  Clause 38 of section V of the DMC merely provides that the design of all shop front façade or exteriors of the shops shall first be approved by the Manager.  It does not expressly confer right of design of and/or alteration to the exteriors of the shops to any party.

171.  Clause 38 falls under section V covenants, provision and restrictions to be observed and performed by the owners.

172.  It is the D’s case is that if properly construed, the External Walls do not include the exteriors of the Shops at ground level.  Alternatively, the D says that the Unauthorized Signboards are erected within the shop front and that as the External Walls and the shop front overlap, the P’s right is subject to the D’s right to use the shop front under the DMC. 

173.  Defence submitted that the ‘shopfront facades and exteriors of shops’ as referred to in clause 38 of section V of the DMC are actually synonymous.  These two phrases were used interchangeably in the DMC and refer to the same area.

174.  Mr. Suen, counsel for the D submitted that the provision in section II (entitled “additional rights of the company”) §1(1) of the DMC empowers the erection by Charmwell of signboards, advertising signs or structures on the shop front façade and the right to change colour of such shop front façade. 

175.  He says a natural and ordinary reading of such provision suggests that the developer is given the right to make any alteration in the colour of the wall/cladding above and in between the opening of the shops and to erect signs thereon.  It would be against business commonsense for the shop front façade to mean only the surface the shop opening,as suggested by Mr. Benson Wong. 

176.  Mr. Suen submitted that it is in the interest of Charmwell that the outlook of the Shops is compatible with one another and the rest of the Building as a whole.  They must therefore retain a right to control not only over the shop openings, but also their exteriors.  Such purpose cannot be achieved if the words “shop front facades” are to be construed narrowly as referring only to the external surface of the shop opening. 

177.  Further, it was submitted by the Defence that as Charmwell was already the owner of the Reserved Areas (which include all the outer walls and external walls), the additional provisions under section II, §1(1) of the DMC in relation to the erection, affixing of signs on shop front façade or exteriors of the Shops would have been unnecessary if the external walls already encompass the walls and structures within the exteriors of the Shops. 

178.  The Defence therefore concluded the exteriors of the Shops are distinct and different from the External Walls under the DMC.  It is submitted that they are inherently pat of the Shops and are owned now by the D as shop owners whose rights are however subject to the control of the Manager over the design and change of the “shop front facades” or “exteriors of the shops”. 

179.  Mr. Suen said in reading section V clauses 38 and 42 together, clearly the rights of the shop owner in exhibiting any signs at the shop front echoed with their right to change the shop front façade or exterior of the shops and that they all actually refer to the same area and that further these area do belong to the shop owner as well. 

180.  At the time of entering into the DMC, Charmwell was the developer of the Building, and its associate company was appointed as the Manager.  The developer has retained to itself as absolute right to alter or change the colour of the shop front facades and to display thereon signboards (clause 1(l)) as well as affix signs into the external walls provided that they will unreasonably interfere with use and enjoyment of by other owners of their units (clause 1(j)).

181.  In order that the developer can have control as to the overall outlook or image of the Ground Floor Shops, section II clause 1(l) and section V clause 38 are inserted in the DMC.

182.  It should be noted that whoever has the right under section V clause 38 to apply to the Manager to change the colour of shop front façade does not have the right to affix sign; unlike what Charmwell can do under section II clause 1(l). 

183.  Mr. Suen says on reading the DMC as a whole, there is a clear distinction between the reserved area (which include the external walls) on the one hand and “shop front façade” “exterior of the shops” on the other and that the latter area do belong to the owners of the shop though the enjoyment of which is subject to the right of the developer and the Manager in the DMC. 

184.  It is said if the external wall do actually extend below the 1^st floor slab, then the P’s right as owner of the external walls are subject to the D’s rights as shop owners in exhibiting the signs at the “shop front”, i.e. under section V clause 42 of the DMC. 

185.  Mr. Suen said, according to their witness H K Chan, all along the practice was that the tenants of the Ground Floor Shops would submit the design or structure of signboards to be erected at the shop front, for approval of the Manager.  This was not challenged by the P.

186.  He says, in particular, because the owner of the Shop is entitled to erect sign at the shop front, one has to consider boundary of the shop front to see if the present Unauthorized Signboards are situated within the ‘shop front’.

187.  He insisted that “shop front’ is never confined to the shop opening or shop window.

188.  He says if the shop front is the facade of a shop, then one cannot say it includes just the shop opening but excludes the columns and structures enclosing such shop opening.  These structures together form an array of shop facade of the Building and it would be arbitrary and artificial to exclude the walls and structures enclosing the shop windows from the shop facades.

189.  He said P’s expert Mr. Benson Wong did also in the First Joint Report describe the location of the Unauthorized Signboards as “located at the shop front of the Shops”, although he later said it was an accidental slip.

190.  Defence asked the court to look at the natural and ordinary meaning in daily usage and not look for any technical meaning of the words.

191.  He said Mr. Benson Wong in cross examination admitted that there was no consensus in the industry as to the meaning of “shop front”.  In fact, he was shown a building plan by an authorized person in year 2009 where the reference to the location of a proposed signboard on top of the shop opening of the Ground Floor Shop of the Building was described as the shop front.  Benson Wong agreed that in approving the plan, building authority did also approve the description of the “signboard at the shop front”.

192.  He said “shop front facades” and “exterior of the shops” are commonly used and employed to refer to the external or outer surface of the street frontages of the shops.

193.  It is also D’s case that had the shop front meant the shop openings, since the openings could be enlarged vertically and horizontally, by removing the pilasters/columns by the sides and the roller shutters at the head of the shop openings, the size of the shop front can vary.

194.  Conversely if the shop openings are filled up with a wall, the shop front size will diminish.  In fact, Mr. Benson Wong agrees to the change in size of shop front in such situation.

195.  D asked if it is likely to be the intention of the parties to the DMC that the ownership of the external walls should extend to such a dynamic part of the Building at ground floor level which can be enlarged or reduced without obtaining prior approval from the Building Authority?

196.  It was submitted that the more reasonable construction of the DMC is that such structures (which as agreed between the experts, can be removed without prior approval from the Building Authority) fall within part of the shop front owned by (and hence can be modified by) the shop owners.  In such way, the dividing line between the rights of the external walls’ owners and the shops’ owner would have remained constant (ie at the 1^st Floor slab) throughout the years.

197.  On the other hand, P’s case would mean that the rights of the owner of the external walls vis-à-vis those of the shop owners could vary over time depending on whether the walls were converted into shop opening or whether shop opening was converted into walls.

198.  D says according to the experts, the metal casing of the roller shutter cannot form the external wall of the Building.  Reference was made to the Building Construction Regulations. 

199.  Mr. Suen says that if outer wall includes external walls and others, then it does not make sense to refer to ‘outer and external walls’ because it is sufficient to mention ‘outer walls’ alone.  He says the reasonable construction’ would be that the words “external” and “outer” are used interchangeably and, on a natural reading, refer to the same area of the walls.

200.  He refers to regulation 2 of the Building (Planning) Regulations where “external wall” is defined as “an outer wall of a building not being a party wall, even though adjoining a wall of another building” and regulation 2 of the Building (Construction) Regulations where “external wall” is defined as “an outer wall of a building even though adjoining a wall of another building”.

201.  He says the Chinese version of the rules defines “外牆” (external wall) as “建築物外部的牆壁”.  “External wall” is never defined as those “outer wall” satisfying the requirement under regulation 38 of the Building (Construction) Regulations.  He submits therefore the two phrases are simply synonymous.

202.  In regulation 38 of the Building (Construction) Regulations, it is said that every external wall of a building shall be constructed of the specified materials.  Since external wall is defined by reference to an outer wall, one can substitute the words “external wall” in r 38 with “an outer wall of a building even though adjoining a wall of another building”.  As such, Mr. Suen argues that an outer wall of a building shall also be constructed of the same specified materials in r 38.

203.  He says therefore the words “external wall (外牆)” and “outer wall (建築物外部的牆壁)”, whose natural and ordinary meaning mean the same thing.  It follows that neither the metal casing of the roller shutter nor the granite cladding can be regarded as the “outer or external wall of the Building”.

204.  He explained there are separate provisions in the Building (Construction) Regulations governing the position and definition of cladding and that “cladding” is defined under Part VIII of the Building (Construction) Regulations as “a facing or architectural decoration additional to the external walls of any building” and cannot form part of the external (or outer) walls.

205.  Therefore, D submits that the metal casing of the roller shutter covered by the same cladding material cannot turn into an external or outer wall.

206.  As regards the edge beams, both experts accept that such structures are only found at the shop level but not the office of the Building erected above the podium.  Mr. Benson Wong opined that they qualified as an external wall since they complied with the requirements of r 38 of the Building (Construction) Regulations.

207.  In fact, the rule only provides that the external wall could be constructed in combination with columns and beams and it does not necessarily turn columns and beams into external walls simply because they may be constructed from the same materials.

208.  Both experts accepted the word “beams” has a settled meaning within the industry and that beams are not normally described as a “wall”.

209.  It is submitted by the Mr. Suen that if the draftsman of the DMC intended to include beams and columns as part of the external walls, they would have stipulated so expressly (which was not done here).  As a matter of fact, external walls, columns and beams are referred to and described as separate structures in Schedule 1 to the Building Management Ordinance.

210.  It was said by Mr. Suen that the edge beams (and similarly the column-like pilasters) were not intended to be part of the external walls.

211.  He submitted therefore that the more reasonable and coherent construction is that the area within the exteriors of the shops (ie the shop front facades) is part of the shop front rather than the external walls.  It is also against such context that the D’s expert emphasized that a shop front is a very dynamic concept and its design and construction can change from time to time to suit the needs of different businesses and customers.

212.  This interpretation, said Mr. Suen, is consistent with the common practice in the real estate industry where reservation of external rights applies to the upper part of the Building only and all shop front areas at street level are inherent properties of the shop owner.

213.  He said the fact that the roller shutter and the column-like pilasters can be removed without prior approval from the Building Authority and any alteration in the cladding works (which may be required in the replacement of the roller shutter or column-like pilasters) below the height of 6 metres (ie usually at ground level) is subject to less stringent requirements.

Analysis

214.  As said above, P became the registered owner of all the outer and external walls of the Building by reason of the said Assignment together with the benefit of all rights and privileges of Charmwell in relation to the outer and external walls of the Building.

215.  It is not disputed that all owners of the Building, including the P and the D here hold their properties subject to the DMC of the Building.

216.  I agree with Mr. Chow that in interpretation and construction of the terms, “outer and external walls”, “shop front”, “shop front façade”, “exteriors of the shop” in the context of DMC, one does not and should not seek assistance from the experts.  Whilst the parties to the action have tried to assist the court by adducing experts evidence, I do not find them particularly useful.  In my view, the meaning of these terms should be constructed within the four corners of the DMC and as said by Mr. Suen, in the construction of the DMC, one should adopt the approach as in the Jumb King case.

217.  As I see it, it is more important that we refer, not merely to the individual words they have used, but to the document as a whole, the factual and legal background against which it was included and the practical objects it was intended to achieve.  The construction should give good business sense to the DMC.

218.  Accordingly, I will not place much weight on the expert evidence before me and nor shall I place weight on definition of these terms in the Building Ordinance or the subsidiary legislation context.

219.  As far as the presumption in Sturge v Hackett is concerned, I agree with Mr. Chow that the presumption has no application in the present case where the owners of the Building, a multi-storey building are bound by the terms of the DMC in which all the outer and external walls are expressly reserved by the developer.

220.  I do not find the mere fact that the owners of the Shops have the right to affix signs at the shop front would make the position of the owners of the Shops any different from the other owners.

221.  If one reads the DMC, one would actually find there are also other shops which do not have street frontage on the Ground Floor and on the 1^st Floor of the Building.  They also have the same rights to display signs at the shop front.  Does it mean also that the presumption will apply in their case?  The answer must be no.  

222.  It is argued by the D that the outer or external wall does not extend to the area below the 1^st Floor slab.

223.  I must admit that if one does not read the DMC, one would definitely have no objection in describing the exteriors of the Ground Floor Shops as the “external wall”, as advanced by Mr. Chow.

224.  Coming to the definition of “the outer or external wall” in the context of this DMC, I agree with Mr. Chow that we should not look to the nature of the structure behind the granite cladding in order to determine whether the structure is/is not an external wall or outer wall.  There should be no reference made to the Buildings Ordinance or any Building Regulations.

225.  I think the law is clear that when we construe the DMC, the conduct of the parties to the DMC subsequent to the document is not admissible.

226.  At the time of the DMC, Charmwell was the registered owner of inter alia, outer and external walls and the Shops.

227.  This Court notes that although under clause 1(j) of section II of DMC, Charmwell and now the P, had the right to affix sign at all the outer and external walls of the Building, it is stipulated there that the same must not unreasonably interfere the enjoyment by the owners of other units, including therefore owners of the Shops.

228.  Under clause 1(l) of section II of the DMC, Charmwell does have the sole and absolute right in its absolute and unfettered discretion to make alteration or change the colour of the shop front façade and to affix Signboards thereon.

229.  Now, if the shop front façade is part of the outer or external wall, P will be assigned this absolute right to affix signs and no one will have control over them as there is no controlling provision.  Should the P follow clause 1(l) or clause 1(j), the shop front façade being also part of the External Walls.

230.  Is that what the parties to the DMC intended?

231.  Section V clause 17(a) of the DMC reads:-

“Subject to Clause 1(j) of Section II hereof, no external signs, signboards, notices, advertisements, … or other projections or structure whatsoever extending outside the exterior of any unit shall be erected, installed or otherwise affixed or projected from the building or any part thereof except with the written consent of the Manager.”

232.  This section is only designed to accommodate right of Charmwell and his assignee to affix sign without Manager’s approval under clause 1(j), not clause 1(l). Why?

233.  In my view, if the shop front façade is part of the External Walls, then clause 17(a) should be made subject also to 1(l).

234.  However, if it does not form part of the External Walls, on assignment to other owners, the rights regarding the shop front façade, if assigned, does not come along with it the right to affix sign (see section V clause 38).  This appears to explain well why there is no mention of clause 1(l) in clause 17(a).

235.  I agree with the interpretation of “shop front façade” as suggested by Mr. Suen, which actually coincides with the view of D’s expert.

236.  It could not have been just the shop openings as suggested by the P’s expert.  How could one change the colour of the shop front façade if it just referred to the shop openings?

237.  I accept the meaning of shop front façade of the Shops as shown in Diagram C1 and C2 in the Joint Reports.  This is actually the aggregate Occupied Areas and the shop opening.

238.  As for the definition of the “shop front”, it is accepted by all there is no precise definition.

239.  The original description in the First Joint Report of the location of the Unauthorized Signboards in my view is another example of what one might understand to be adopting the ordinary usage of ‘shop front’.

240.  In my view, an ordinary meaning of the same will allow it to include more than the shop openings.

241.  I consider the Unauthorized Signboards in this case as falling within the “shop front” of the Shops.

242.  It is said that if so interpreted, the right to affix sign at shop front by shop owners clashes with the right to affix sign in shop front façade under clause1(l). 

243.  In fact, it will not clash.  Even if the Shops were owned by Well City and the rights under clause 1(l) owned by Charmwell, as before, no problem would arise so long as owner of the right to the shop front façade recognized the right of the Shops owners to affix sign at shop front.

244.  However, if the right to the shop front façade is assigned also to the owners of the Shops, there will definitely be no management problems.  Further, if the shop front façade right arose from clause 38, then as clause 38 does not carry with it the right to affix sign, there will not be clashes.

245.  To give good business sense to the construction of this DMC, bearing in mind the purpose to be served by the DMC and the relevant terms as discussed before, I find the shop front façade do not form part of the External Walls.

246.  Under clause 42(a) and (b) of section V of the DMC, no owner of any shop has right to exhibit any sign except at the shop front and the design etc shall be subject to prior written approval of the Manager.

247.  I accept that all the Unauthorized Signboards here are placed within the shop front of the Shops.

248.  By reasons aforesaid, I find in construction of this DMC, that the shop front façade does not form part of outer and external walls of the Building. They must be mutually exclusive.

249.  On the other hand, I do not agree that because the owners of the Shops had the right to affix sign at shop front (clause 42 of section V) that would by itself indicate that shop front and the outer and external wall are mutually exclusive.

250.  As said earlier, the right to affix sign by Charmwell or presently the P under clause 1(j), should not unreasonably interfere with the affixing of sign by the owners of the Shop at the shop front (clause 42), even if the External Walls would extend below the 1^st Floor slab.

251.  If we ask “who would be the ones most interested in making alteration or changing the colour of the shop front façade of the Shops?”  The obvious answer would be the owners of the Shops as they would really be the ones affected most.

252.  I agree with Mr. Suen that as the size of the shop front can vary over time, if the shop front façade does belong to other than the Shop owner, then their rights will be affected when the shop owners seek to alter their shop front as they would only be required to obtain approval from the Manager.

253.  It should be noted however that Section V clause 18 of the DMC reads:-

“18. No owner shall do or permit to be done any act or thing which may or will alter the external appearance of the Building without the prior consent in writing of the Manager.”

254.  The DMC is designed for the management of the Building and over time, the size of shop front of the shops vary.  It could not be construed, as suggested by Mr. Chow, to be restricted to mean the same shop openings as at the time of execution of the DMC.

255.  In fact, the shop front of shops ‘Guddi’ and ‘711’ have varied since the completion of the Building.  It would flout business sense if the Manager had to resort to the same shop openings for the Shops as at the time of DMC when performing its management functions.

256.  It is the evidence even of the witnesses for the P that before they scheduled legal advice, they thought the shop front façade does not form part of the External Walls.

257.  It is also the evidence of all witnesses for the D that all along, their beliefs and the arrangement of affairs were that the shop front façade had nothing to do with the External Walls.

258.  Considering the DMC as a whole, bearing in mind that clauses to the DMC should sit well with each other and considering the practicality of the management of the Building,  I find the rights under clause 38 of the DMC to be excisable only by the owner of the Shops, not the registered owner of the External Walls.

259.  Has the right under clause 1(l) been assigned by Charmwell?

260.  On studying the said Assignment and the assignment dated 28 February 2005 between Well City and the D here, it is apparent that Charmwell has retained rights in the Building.  Although it is very likely that the right under clause 1(l) has been assigned together with the Shops to the D here, in the absence of representation of Charmwell and not had the benefit of reading the assignment in favour of the Well City here concerning the Shops, I do not find it appropriate to give any ruling on the point.  In any event, for the purpose of the present proceedings, the same is not necessary.

261.  In fact, the conduct of the parties to the DMC appeared to be in line with this interpretation.

262.  Firstly, Well City did purchase the Shops subject to the only existing tenancies/licence with Daily Ladies Sauna, which advertisement was affixed to the side of the entrance on the ground floor of the Building, not on any part of the shop front façade, as shown in photo EP4 in the Joint Reports.

263.  It is P’s pleaded case that “without the P’s consent or permission, the D had erected, or cause to be erected, signboards onto part of the External Walls immediately above the shop-front of the shops (“the Unauthorized Signboards”) thereby infringing the P’s rights over the External Walls”.  The Unauthorized Signboards are more particularly shown and edged blue on the photographs annexed to the Statement of Claim (para 3 of the Statement of Claim).

264.  In the P’s closing submission dated 13 June 2011, Mr Chow, counsel for the P tried to advance P’s case in a way that was in direct contradiction of his pleaded case of ‘signboards erected without consent or permission of the P’, the very basis of his claim.

265.  He argued that way back in year 1996, P’s predecessor Charmwell had probably erected the Unauthorized Signboards and by “implied licence” allowed the tenants of the Shops to use the Unauthorized Signboards, even after the Shops were sold to Well City.

266.  It is trite law that a party should not be allowed to change its case at trial as the other party has not been properly informed of his new case and therefore is not in a position to deal with it as fully as it should be.

267.  The Hong Kong Civil Procedure 2012 vol. l Commentary 18/8/3 reads:-

“Need for compliance─These requirements should be strictly observed (per May L.J. in Lipkin Gorman v. Karpnale Ltd [1989] 1 W.L. R 1340 at 1352). Pleadings play an essential part in civil actions, and their primary purpose is to define the issues and thereby to inform the parties in advance of the case which they have to meet, enabling them to take steps to deal with it; and such primary purpose remains and can still prove of vital importance, and therefore it is bad law and bad practice to shrug off a critism as a “mere pleading point”. (See per Lord Edmund Davies in Farrell v. Secretary of State for Defence [1980] 1 W.L.R 172 at 180.) See further the decision of the Court of Final Appeal in Poon Hau Kei v. Hsin Chong Construction Co. Ltd, Taylor Woodrow International Joint Venture Ltd [2004] 2 H.K.L.R.D. 442, per Bokhary P.J. at 156G-157H, 158D-161J. Where the version of events as pleaded or advanced by a party was found not to be accurate or true and another version was held to be true, a court must be careful when asked to make a finding of liability based on that other version, and before doing so, it must be satisfied that the other party was fully aware of the case it had to meet (usually by the matter being made clear in the pleadings) and had been given a full opportunity to deal with it. However, provided that it did so in a fair manner, the court was entitled to decide in favour of a plaintiff on the basis of a scenario which, although different from the one pleaded and advanced by the plaintiff, was one pleaded and advanced by the defendant. In disputes about the terms agreed in a contract, the parties generally advance their cases with the surrounding relevant facts leading up to the agreement. Taking all this into account, the court decides what terms the parties agreed and these may not be the same as those advanced by either party. Unless the court moves outside the evidence and makes unwarranted findings, this is normally not unfair on either party but an attempt to do justice between them according to law. In the absence of exceptional circumstances, no person who has concluded a contract can be said to have been taken by surprise by the terms he has agreed. This is so regardless of whether the other party has precisely pleaded those terms (Mak Kang Hoi v. Ho Yuk Wah David (2007) 10 H.K.C.F.A.R. 552, para. 96-107).

In Wing Hang Bank Ltd v. Crystal Jet International Ltd & Others [2005] 2 H.K.L.R.D. 7995, Ma CJHC emphasized the importance of proper pleadings, at 643G to 644H. The object of pleadings is to fairly inform the other side and the court of a party’s case, identifying the issues and the true extent of the dispute. Where issues are sought to be introduced that had not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties has been obtained. It would simply not do for unpleaded issues to be “slipped in” when evidence was being given in the hope that the other side was not sufficiently alter to object. This was not to be constructed as an encouragement to take pedantic, small or quite insignificant points of pleadings. Ultimately, a court is to be guided by what is fair and just in the circumstances.

In On Hang Chu v. Chang Ngun [2003] 2 H.K.L.R.D. H2, the Court of Appeal held that an application was not entitled to rely upon a statutory provision exempting the applicant from the definition of an employee, where that provision had not been pleaded.”

268.  It is clear in the circumstances, as objected by Mr Suen, that should the P be allowed to advance his case on the ‘implied licence’ point, the same would defeat the object of the pleading to fairly inform the other side and the court of a party’s case, identifying issues and the extent of the dispute and it would be totally unjust and unfair in the circumstances.

269.  I will therefore consider P’s case as pleaded and in light of evidence before the court.

270.  In my judgment, P should not be allowed to advance his case on a totally different ground, directly contradictory to what is pleaded.

Conclusion- P’s Claim

271.  On evidence before this Court, I have no hesitation to conclude that the Unauthorized Signboards had been erected by the Charmwell latest by April 1997 for the benefit of the Ground Floor Shops.  The evidence of Y C Chan confirmed this. 

272.  The evidence does not support the P’s case of ‘without consent or permission’ as pleaded by the P in his Statement of Claim.  The basis of P’s claim does not exist.

273.  That said, the whole P’s case has to collapse.  I therefore dismiss his claim.

274.  Further, as I have found that in the present case, the Unauthorized Signboards situate within the shop front of the Shops, therefore even if the Subject Areas do form part of the External Walls, which I do not find, there is no breach of DMC on the part of the D.  As it is, as I find the External Walls do not cover the shop front façade, of which the Subject Areas form part, the P had no locus to sue on these Areas.

275.  However, had I been wrong and the shop front façade did form part of the External Walls of which the P was the registered owner and the Unauthorized Signboards were not within the shop front and further that P is allowed to proceed with a case different from the pleaded case, then we need to consider the major defences raised by the D, i.e. adverse possession and proprietary estoppels.

Defences

Adverse possession

Possession

276.  D in para 4A of the Re-amended Defence and Counterclaim claimed that should the court find the Unauthorized Signboards were erected on the External Walls, they say that P’s title to the Occupied Areas or P’s title to the Subject Areas has been extinguished by virtue of section 17 of the Limitation Ordinance.

277.  Mr. Suen that since Charmwell assigned the P’s shops to Well City on 23 October 1996, Well City and the D have been in exclusive possession of the Occupied Areas (or alternatively the Subject Areas) though, inter alia, the erection of the Unauthorized Signboards without paying any rent or other sum for such possession or otherwise acknowledging the title of Charmwell, Easy Surplus or the P.  He said D never considered its possession of the Occupied Areas or the Subject Areas as requiring any consent or permission by Charmwell, Easy Plus or the P nor was such consent given to the D or its predecessor Well City.  D says therefore P’s title (if any) to the Occupied Areas or the Subject Areas was banned before the issue of the proceedings.

278.  In support of such contention, Mr. Suen asserts that though P is the registered owner of the External Walls of the Building, even at time of commencement of the present proceedings it has only rented out a small portion of the External Walls for income, namely, the advertising light box on the wall at side of the Ground Floor entrance for “Daily Women Sauna”.  The same was rented out previously by P’s predecessor Easy Surplus and do not form part of the shop front façade.  Subsequently the same was renewed by the P, as confirmed by witness for the P, Yeung Siu Tung Tony during cross-examination.

279.  Mr. Suen said it was only 1 year after the issue of the present action that there was also the signage of “Royal Place Hot Pot” pursuant to a licence agreement executed by the P.  It is submitted, which I agree, that this conduct of the P after the issue of the present proceedings was irrelevant for the purpose of these proceedings.

280.  It is not challenged and as submitted by the Defence that each of the D’s tenants of the Shops have been using the Unauthorized Signboards at the exteriors of their respective shop since at least April 1997, ie more than 12 years prior to the commencement of these proceedings on 27.10.2009. 

281.  It is therefore the D’s case that they always thought they owned the exteriors of the shops below the 1^st Floor slab, i.e. the Occupied Areas and it had allowed its tenants to use the Unauthorized Signboards within such area.

282.  The D says as the Occupied Areas form part of the D’s Ground Floor Shops, therefore it had rented them out as an inherent part of the Ground Floor Shops to its tenants.

283.  D says, given the D’s understanding that the Occupied Areas are part and parcel of the D’s shops, it would have been sufficient to refer to the D’s shops in the tenancy agreements to have included the Occupied Areas. I agree.

284.  Mr. Suen argues that the evidence as to the factual possession of the Occupied Areas by the D and its tenants is overwhelming and the P failed to rebut the D’s case.

285.  He said the evidence of the D’s first factual witness YC Chan, being a director of Super Growth Investment Company (“Super Growth”) one of the first tenants of the Shops from year 1996 up to the present is reliable and should be accepted as Super Growth is not a party to these proceedings and it has no vested interest in the proceedings. 

286.  It is said that YC Chan is an honest witness and he was frank to tell that he was not certain about the signboards of the Shops along Mody Road, as he seldom went to his shop from Chatham Road and he was also not certain of whether there were the Unauthorized Signboards at his own shop prior to April 1997, as he was not always in the shop during that period.

287.  Under cross-examination, YC Chan firmly stated that a signboard already existed in the same location as the one erected on shop 1 as may be seen from the relevant photo prior to April 1997.  He further elaborated by saying that in the beginning, the signboard was not used by Super Growth but, at least from April 1997 onwards, it was already used by Super Growth.

288.  He further confirmed that by April 1997, all other shops along Mody Road were already using similar signboards erected above the shop opening similar to those seen from the photos annexed to the Statement of Claim.

289.  As for the shop window of shop 12 (facing the corner), he said the same existed ever since the convenience store was there.  He did not recall any alteration work having been carried out to convert the wall into a shop window. 

290.  Mr. Suen says according to YY Chan, shop 12 on the ground floor was rented out as a convenience store since 14.10.1994.

291.  It could safely be inferred that the alteration together with removal of the 2 fake posts were done by Charmwell.

292.  Further, YC Chan also testified that, other than the existing signboards, the shops along Mody Road (including Super Growth itself) had also affixed posters on the walls/columns in between shops from time to time, and there was never any objection or intervention by any other person.  Examples of such use were seen from some of the photos produced.

293.  It is therefore YC Chan’s evidence that, since at least April 1997, the tenants of Well City and that of the D in respect of the shops along Mody Road (i.e. shops 1, 11, 15, 16) had possession of the exteriors of the shops below the 1^st Floor slab by using the Unauthorized Signboards and affixing posters, etc from time to time up till the commencement of the present proceedings.

294.  According to another defence witness YY Chan, the position of the signboards along Chatham Road was the same.

295.  He fairly accepted that he might not be able to tell clearly the individual status of the signboards erected along Mody Road, since he was mainly attracted by the signboards along Chatham Road during the site inspections made by him prior to the purchase by Well City (D’s sister company) inter alia, of the Ground Floor Shops in October 1996.

296.  YY Chan said he was instructed by his boss to assist in the setting up of the property investment business.

297.  Before entering into an agreement for sale and purchase in respect of the Shops in the Building, YY Chan said both his boss and him paid site visits to the Building.

298.  He was attracted by the signboards along Chatham Road and by the large and prominent shop fronts as well as the high ceiling of the Shops.

299.  He would never think that the signboards and the exteriors of the Shops were not owned by the D.  As he was very concerned about the rental return of the Shops, if the signboards were not part of the Shops that would have serious impact on the rental return.

300.  Apart from such site inspections, he also visited the Building a number of times in year 1997 to negotiate tenancy or accompanied Managers of banks in paying visit to the Building.

301.  YY Chan confirmed that, at the time of the purchase of the Ground Floor Shops in year 1996, the shop window of shop 12 (facing the wind) already existed.

302.  As the tenant Robert Lam vacated Shop 11 on 20.3.1998, the shop was left vacant until 5.6.2000.  If the alteration work in shop 11 occurred in year 2000, consent from the D as landlord was necessary, but YY Chan had no recollection of such consent.

303.  It is therefore very likely that such alteration works were carried out by Charmwell before the shops were first leased out.

304.  It is submitted by Mr. Suen that the shop window of shop 12 (facing the corner) and the signboard above it should have existed since year 1994 (or at least from year 1996).

305.  The D’s third factual witness, HK Chan, has given evidence as to the status of the signboards since he joined the Golden Dragon group to which the D belongs, as a property Manager in June 2002.  Since he is the property Manager of the group, he is the person dealing with the Manager of the Building over the use of the External Walls.

306.  He said shortly after he joined the Golden Dragon group, he received a letter dated 16.8.2002 from Messrs. Gallant Y T Ho & Co, Solicitors then acting for Easy Surplus concerning the Cyber AA and Take 5 signages trespassing on the External Walls of the Building.  Later he also received copies of previous correspondences on the same subject. 

307.  He later followed up on the matter with the Manager of the Building and understood Easy Surplus (and previously Charmwell) had objected to the affixation of signboards above the 1^st Floor slab of the Building.

308.  He said, to his understanding, all along the understanding amongst the D, Charmwell and the Manager was that the dividing line between the rights of the D and the developer as owner of the External Walls was the 1^st Floor slab of the Building.

309.  He said before he joined Golden Dragon, there was the “Cyber X” signage complaint, the signage was already demolished by time he joined the Golden Dragon group.  All along he thought that only the part of the signage above the 1^st Floor slab was demolished, in fact the whole signage was removed.

310.  He said, regarding the “Take 5” signage complaint, the letter from Messrs. Gallant Y T Ho & Co, solicitors only complained about trespass on the external wall of the 1^st Floor and this was borne out by “part of this “Take 5 signage” in the area of 240 mm [in height] times 9,510 mm [in width] on its upper part trespassed onto the External Wall”.

311.  He said later he rented Shop 7 to 9 to ‘Yes Bar’, the signboard of which were erected within the exteriors of Shop 7 to 9 and 17 below the 1^st Floor slab.  Such replacement works were evidenced by the photos kept by the Manager of the Building bearing the dates of 29.8.2003 30.8.2003, 5.9.2003 and 10.9.2003.  He said in fact, similar signboards existed at the exteriors of shops 10 and 11.

312.  It is said by the D that Well City and the D had never received any complaint about any trespass of the “External Walls” below the 1^st Floor slab until 7 July 2009.  The only complaints that existed before were in respect of the “Cyber X” and “Take 5” signages that covered the to 1^st Floor of the External Walls of the Building.

313.  Further, it is not in dispute that both Well City and the D were never approached by the developer or the P to pay rent in respect of the various signboards located in the Occupied Areas.

314.  Mr. Suen said all along Well City and the D or their tenants were using the existing signboards on the understanding that they were entitled to use the entire exteriors of the Shops below the 1^st Floor slab.  The correspondences from Messrs. Gallant Y T Ho & Co, solicitors also confirmed this.

315.  He submitted that the possession of part of the area below the 1^st Floor slab is evidence of possession of the entire Occupied Area.

316.  Mr. Suen submitted when the “Take 5” signage was removed and replaced by the “Yes Bar” signage, it was Well City and/or the D (but not Easy Surplus) who supervised their tenants in such works.  Moreover, as HK Chan explained in court, some of their tenants wished to erect a bigger signboard and they also sought consent from Well City/the D (and not the owner of the External Walls). It is submitted therefore the D did have exclusive control of the Occupied Area.

317.  It was also argued by the D says that apart from the signage above the opening of shops 7-9 and 17, the other existing signboards have remained intact throughout the years.  Insofar as the former is concerned, the signages of “Cyber X” and “Take 5” are plainly larger in size.  It is said therefore that although there was a change in the signages at that location, it was only a reduction in size.  The fact remains that Well City and the D have been in possession of the area occupied by the existing signboard of shops 7-9 and 17 for over 12 years.

318.  Even during the intervals between different tenancies, it was said that D continued to remain in possession of the Occupied Area.  Both YY Chan and HK Chan were ad idem when they testified that Well City /the D had incurred costs in maintaining the signboards during the intervals between tenancies.  In any event, it is said, as mentioned above, it is well-settled law that possession may continue to subsist notwithstanding that there are intervals, and sometimes long intervals between the acts of user.

319.  It is D’s case that at time of the Sale and Purchase Agreement dated 19.10.1996 shops 1-2, 9 12, 15 and 16 and Portion of Shop 11 were rented out, whilst Shops 8 and 10 were vacant.

320.  Later Shop 8 (together with shops 7, 9 and 17 were rented out from 9.6.1997 and shop 10 was rented out from 1.11.1996. 

321.  By June 1997, all the Ground Floor Shops with street frontages were rented out (the only uncertainty concern Shop 11) with signboards above their shop openings, e.g. “Cyber X” signage was erected in 1997, as was referred to in a letter dated 23.12.1997 from Messrs. Gallant Y T Ho & Co, solicitors.

322.  It was aid that although some of the Ground Floor Shops may have been vacant, the intervals were relatively short.  At the same time, evidence by both YY Chan and HK Chan showed D had been incurring costs on the Unauthorized Signboards during the said intervals.  The possession therefore of the Occupied Areas (or alternatively the Subject Areas) by Well City/the D was a continuous one.

323.  The Unauthorized Signboards, as one could see from the photographs, have been all along been erected the exteriors of the Ground Floor Shops of the Building along Chatham Road and Mody Road, such as:

(1)             The photo dated 10.9.2003 kept by the Manager, showing signboards at the exteriors of the Shops along Chatham Road;

(2)             The situation remained the same as revealed in a    photo taken by the P on 27.9.2005.  During cross-examination, P’s expert accepted that one cannot see the original granite cladding and it would appear that, although the signage of the previous tenant may have been removed, the signboard remained in place;

(3)             The signboard used by the D’s tenant Korea Ginseng (HK) Limited whose tenancy expired on2 .6.2010.  One can see that though the signage of Korea Ginseng (HK) Limited was later removed, the signboard remained in place so that one cannot see the original granite cladding;

(4)             P’s property Manager Tse Chi Yung on 27.9.2005, produced a photo which shows clearly the presence of signboards for Shops 12, 15 and 16 along Mody Road.

Intention to Possess

324.  As for the ‘Intention to Possess’ element in this claim for adverse possession, the issue for the court is whether Well City and the D had the intention to possess the Occupied Areas (or alternatively the Subject Areas), as opposed to an intention to own the same.

325.  Here, Well City and the D never admitted the title of Charmwell, Easy Surplus and the P to the exterior of the Shops below the 1^st slab.

326.  Mr. Suen says it is clear from the evidence of YY Chan and HK Chan that Well City and the D always thought that the Occupied Areas was part and parcel of the Shops, and the D was the owner of the Occupied Areas.  There was plainly the intention on the part of Well City and the D to own the Occupied Areas, as originally pleaded, although such intention is not required and it is sufficient that they intended to possess the Occupied Areas.

327.  As YY Chan explained in court, such intention to own and possess the Occupied Areas was reinforced by the various correspondences from Messrs. Gallant Y T Ho & Co, solicitors.  YY Chan’s understanding at the time was that Charmwell and Easy Surplus were only complaining about trespass of the external wall of the 1^st Floor of the Building but not the area below the 1^st Floor slab falling within the exteriors of the Ground Floor Shops.

328.  In court, both YY Chan and HK Chan confirmed that Well City/the D would have objected had it been known to them that Charmwell, Easy Surplus or the P would like to exert control or ownership over the Occupied Areas.  There is no question of Well City/the D ever admitting their title, let alone agreeing to pay rent to them, if asked.

329.  At trial, YY Chan and HK Chan had also confirmed that they never sought any consent from Charmwell, Easy Surplus or the P regarding the use of the Occupied Areas or the existing signboards erected on the Subject Areas. 

330.  Similarly YC Chan gave evidence that he never obtained any consent from any other person in using the signboard in respect of the shop rented by Super Growth.

331.  It was always the understanding of HK Chan that the complaint about the “Take 5” signage related only to trespass of the External Walls of the Building.  As such, Easy Surplus never intended to assert over the Occupied Areas (as opposed to the External Walls of the 1^st Floor), Well City did not find it necessary to deal with the issue below the 1^st Floor slab.

332.  Having regard to the conduct and acts of possession of Well City, the D and their tenants, it is respectfully submitted by Mr. Suen that there was clear intention to possess the Occupied Areas on the part of Well City and the D.

333.  Mr. Chow on the other hand criticized D for relying on signboards put up prior to the Unauthorized Signboards, as pleaded in para 4A(5) of the Amended Defence and Counterclaim, in their claim for adverse possession.  P said the same was not pleaded.

334.  P said the D should not be allowed to change its case at trial by referring and relying on other signs that had once been put up on the external walls in question prior to the Unauthorized Signboards.  The P had not been properly informed of this new case and therefore not in the position to deal with it as fully as it should be.  Mr. Chow quoted:-

“In Wing Hang Bank Ltd v Crystal Jet International Ltd & Others [2005] 2 HKLRD 795, Ma CJHC emphasized the importance of proper pleadings, at 643G to 644H. The object of pleadings is to fairly inform the other side and the court of a party’s case identifying the issues and the true extent of the dispute. Where issues are sought to be introduced that had not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties had been obtained. It would simply not do for unpleaded issues to be “slipped in” when evidence was being given in the hope that the other side was not sufficiently alert to object. This was not to be construed as an encouragement to take pedantic, small or quite insignificant points of pleadings. Ultimately, a court is to be guided by what is fair and just in the circumstances.” Hong Kong Civil Procedure 2011 Vol 1 commentary 18/8/3.”

335.  P submits that the D in the 12 years period before the issue of the proceedings did not exercise effective, single and exclusive control of the Subject Areas, or the Occupied Areas.

336.  On reading clause 4A(5), it is apparent that D had in fact pleaded the Unauthorized Signboards over the period of time and the present case of the D would not surprise the P.

337.  Further, Mr. Chow said that the Unauthorized Signboards only came into existence at their respective locations after Oct 1997 (ie 12 years before commencement of the present proceedings).  In the premises, he say the present Counterclaim for adverse possession must fail.

338.  They further submitted that the evidence of YY Chan and HK Chan were not reliable as their evidence are coached or at the very least inaccurate.  Mr. Chow criticized both Mr. Chan say that the D and/or its predecessor-in-title has been in exclusive use and control of the entire Occupied Areas (ie the entire part of the external wall under 1^st floor slab), when these were far from the true. 

339.  Upon cross-examination, both Mr. Chan changed their stances and explained that what they intended to say was that the D had the right to exclusive use and possession of the Occupied Areas, not that they were in actual occupation of the Occupied Areas.  It was also said that save and except the “Cyber X” and “Take 5” signs to which complaints were raised by Charmwell and Easy Surplus, it was said that no sign have been hung up in areas outside the Subject Areas. 

340.  This is true.  There was said to be posters post up occasionally but Mr. Chan said that when the Manager interene, they would remove these posters.

341.  Under clause 42 of the DMC, the display of sign must be approved by the Manager.

342.  P submitted based on the evidence of the defence witnesses, it is more probable than not that the sign boxes were erected by Charmwell for the benefit of its tenants.  He said therefore the space occupied by the sign boxes i.e. Subject Areas were occupied by Charmwell themselves and under its control.

343.  P submitted that the use of those sign boxes were deemed to be under implied licence of Charmwell and was not revoked until 7 July 2009 when P requested the D to remove the Unauthorized Signboards. 

344.  This ‘implied licence’ point however was never pleaded by the P.  In fact in para 3 of the Statement of Claim, he had pleaded that the Unauthorized Signboards were erected by the D without P’s consent or permission.  This was also not mentioned in any of the witness statements of the P.

345.  In my judgment, clearly it is not open for the P to proceed on “implied licence” or that they were erected by the D or their predecessor, as submitted by the D.

346.  P said subsequent to the change of ownership of the Ground Floor Shops from Charmwell to Well City, the tenants of the Shop under the subsisting tenancies and the new tenants of the other Shop would continue place their signage plate on the Unauthorized Signboards. 

347.  Mr. Chow says such conduct would not amount to conduct which would have communicated to Charmwell that Well City or the D was asserting the right of control over the signboard in question or the Subject Areas to the exclusion of Charmwell.

348.  Mr. Chow also argued that from evidence of Mr. J Chan, the signboard was not erected by them and therefore probably by Charmwell, who was, prior to Oct 1996 owner of the Externals Walls and the Ground Floor Shops.  He submitted the area where the signboard was affixed was part of the External Wall and these signboards are erected by Charmwell for the benefit of the Ground Floor Shop owners.  He says therefore the occupation of the area which corresponds with the Subject Areas was under control of Charmwell.  He said the tenants at the time used the signboards under the implied licence of Charmwell and such licence was not revoked until 7 July 2009 when P request D to remove the Unauthorized Signboards.

349.  This argument sounds attractive but was however contradictory to the pleaded case of the P nor was it so mentioned in any witness statement of the P’s witness.

350.  P says such conduct of continuous placing the signboard there would not have amounted to conduct which would have communicated to Charmwell that Well City or the D was asserting on the right of control of the signboards in question or the Subject Areas to the exclusion of Charmwell.

351.  Mr. Chow argued that even up to September 2002, when being accused by Charmwell and Well City of trespasses on the relevant part of external wall, the D did not assert their right.

352.  He says at most, the act of the D merely involved the hanging up of the face plate on the front side of the signboard, which in its very nature and extent would not amount to physical control of the wall in question.

Will the act of erecting the signboards or the shop exterior amount to an act of adverse possession?

353.  Mr. Chow also doubted if the D had the animus possidendi.  He said the self-serving statements by the defence witness should not carry weight.  He asks this court to consider the conduct of the D and the following circumstances of the case:-

(1)             that prior to the D becoming the owner of the Ground Floor Shops, the sign-boxes had already been erected;

(2)             that the tenants of Charmwell had been using (ie hanging their own name plate or sign) on those sign-boxes before October 1996;

(3)             that after the purchase of the shops by the D, while Charmwell remained as the owner of the outer or external walls, the tenants continued to use those sign-boxes without question from any party; Well City took no active step to assert possession of the part of the external walls in question or the sign-boxes, YY Chan confirmed that he had not addressed his mind to the issue of sign-boxes at the time;

(4)             that in December 1997, soon after one of the original sign-boxes (outside Shop 10) was replaced with a much bigger sign, ‘Cyber X’, Charmwell re-asserted its right as owner of all the external and outer wall of the Building and requested Well City to remove the whole sign including an area both below and above the 1^st floor slab and Well City did not seek to assert exclusive possession of the part of the external wall concerned;

(5)             that in December 2011, Charmwell once again asserted its right as owner of all the external and outer wall and requested Well City to remove the ‘Cyber X’ sign within 14 days, again no response was made by Well City seeking to assert exclusive possession of the part of the external wall concerned;

(6)             that in January 2002, Charmwell threatened to remove the ‘Cyber X’ sign itself and charge Well City for the cost of removal, enclosing a copy of the quotation from Waytech Engineering (Trading) Company Limited.  Again, Well City did not respond;

(7)             that after the change of ownership of the external and outer wall from Charmwell to Easy Surplus, in February 2002, Easy Surplus wrote to Well City reiterating the earlier request made in January 2002 for the removal of the “Cyber X” sign.  Again, no response was made by Well City;

(8)             that in August 2002, the “Cyber X” sign was removed peacefully by Easy Surplus and no complaint was made by Well City alleging infringement of its possessory right over the Occupied Areas;

(9)             that in the same letter, Easy Surplus complained about another sign “Take 5” that was being erected on the external wall and requested Well City to remove it and reinstate the external wall to its original condition within 14 days.  On 5 September 2002, Well City instructed its lawyer, Messrs Joseph S C Chan & Co to respond; instead of complaining against the unauthorized removal of the “Cyber X” sign by Easy Surplus and asserting its right of possession of the Occupied Areas, Well City denied any connection with the “Take 5” sign;

(10)        that further on 10 September 2002, all the previous correspondence were once again sent to Well City’s legal representative, they were received and read by HK Chan; no response thereto was made by Well City, no action was taken by Well City asserting right to the exclusive possession of the area concerned or complaining about the unauthorized removal of the “Cyber X” sign;

(11)        that in 2009, while HK Chan was aware of the legal defence of adverse possession, in response to the P claim for infringement of its right over the external wall by reason of the Unauthorized Signboards, the D did not at once raised the defence of adverse possession.

354.  Mr. Chow said it is plain therefore from the D’s conduct and the circumstances set out above that at the material times Well City and the D had no subjective intention to possess the signboards, let alone the Occupied Areas. None of the above conduct was consistent with the D having an intention to possess the Occupied Areas at the time.

355.  He said for someone who believed it had the right of possession or intended to possess the Occupied Areas, it would no doubt have responded to the various complaint letters issued by Charmwell and/or Easy Surplus, and asserted that it has the right of exclusive possession of the “Cyber X” sign and the “Take 5” sign and the part of the external wall occupied by those signs.  Well City failed to do so over a period of 5 years from year 1997 to year 2002.

356.  Having considered what the P had submitted, one should not forget that the “Take 5” or the “Cyber X” sign did extend to the External Wall over the 1^st Floor slab and that even if the D did have the right as alleged, over the Occupied Areas or the Subject Areas, these signboards would have to be demolished.  It would be affront to any business sense if one were to assert their right over the part of the signboard underneath the 1^st Floor slab.  The remaining part of the signboard would not serve any useful purpose.

357.  This court however notes that for the letter dated 23 December 1997, Messrs. Gallant Y T Ho & Co, Solicitors for Charmwell did complain of the trespass of “Cyber X” signboard on the external wall and ask for removal of the whole signboard.

358.  On the other hand, on the same issue by letter dated 19 December 2001, again from Messrs. Gallant Y T Ho & Co, Solicitors, the caption of the letter was changed to “Trespass to external wall of the 1^st Floor”.

359.  Further in paragraph 1 of the letter, it reads “we understand that you are the owner of Shops 7-10 on the Ground Floor of Empress Plaza (“the Shops”) which are directly underneath the External Wall”.

360.  It follows from reading the letter, the complaint relate to the portion of the signboard attaching to the area of external wall over the first floor slab.

361.  The same caption was adopted in the subsequent letters dated 30 January 2002 and 21 February 2002 when Messrs. Gallant Y T Ho & Co, Solicitors representing the new registered owner of the External Walls, Easy Surplus.

362.  Moreover, in the letter dated 16 August 2002 from Messrs Messrs. Gallant Y T Ho & Co, Solicitors apart from using the same caption for the “Cyber X” complaint, Easy Surplus raised a new complaint about “Take 5” signage. 

363.  It read “Part of this “Take 5’ Signage” in the area of 240 mm times 9510 mm on its upper part trespassed onto the External Wall with another part in the area of 40 mm times 1470 (being 1710 mm – 240 mm) trespass upon the shop front of Shop 11 of the Ground Floor. We are instructed to give you notice that unless you and/or your tenant remove the said portion of the “Take 5 Signage” and reinstate the External Wall to its original condition.”

364.  Further, the demand by Easy Surplus via its solicitor was merely to remove the part of the signage above the 1^st Floor slab.

365.  Moreover, the other part of the “Take 5” was described to be affixed/erected to the shop front of Shop 11 which was in fact the shop exterior of Shop 11, i.e. part of the Occupied Areas (or alternatively the Subject Areas).

366.  Interestingly, Easy Surplus did not seek to remove the whole “Take 5 Signage”.  They did not seek to remove the part of the signboard in the Occupied Areas or the Subject Area.

367.  In fact, in a subsequent letter dated 10 September 2002, Messrs. Gallant Y T Ho & Co, Solicitors said “our client had instructed a surveyor firm to ascertain the exact area of the portion of your client’s signage which stretches outside the shop front of the Shops 8 to 10.  Our client had incurred HK$6,600.00 being the Surveyor’s Fee therefore.”

368.  In this letter, again the caption only referred to the “Trespass on the external wall of the 1^st Floor.”

369.  Although there was no photo of the “Take 5” signage, it is safe to conclude the same extends to the Occupied Areas or the Subject Area as it referred to the shop front of Shop 11 and that they require the surveyor to measure the upper portion trespassing to the External Walls.

370.  It must be noted that Messrs. Gallant Y T Ho & Co, Solicitors are in fact the same firm of solicitors responsible for preparation of the DMC in the present case.  They are the one best to know the subjective intention of the parties to the DMC.

371.  Further, this court does not think the reply letter dated 5 September 2002 from Joseph Chan’s Solicitors, for Well City would incriminate Well City and/or the D when they say “officials of own client are always prepared to meet with representative of your client direct to iron out whatever management matters related or unrelated to the signage(s) mentioned in your letter.”

372.  It only showed that they are willing to settle any differences between the parties.

373.  D was criticized that had they all along been considering themselves to be in adverse possession of the Occupied Areas and/or the Subject Areas, they could have raised adverse possession at first available opportunity, when they first filed the Defence but instead they only pleaded the same 9 months later in the Amended Defence and Counterclaim.

374.  In the closing submission of the P, he admitted that whilst they complained about the large signages such as “Take 5” and “Cyber X”, they have not raised any complaint with the continuous use of the Unauthorized Signboards or granted permission to the D for the use of these Signboards.

375.  P says as it is Mr. J Chan’s evidence that if the Manager of the Building complained, he would remove the posters posted between shops.  He says therefore that the D does not have the intention to possess the Occupied Areas.

376.  I am not persuaded by this argument because even if the place where the posters were affixed belong to the D or the Ground Floor Shops, the display or erection of signs still need to be approved by the Manager of the Building.

377.  It is also clear  on evidence before this court that at least for the 12 years before the issue of the present proceedings, the Unauthorized Signboards were there being used by the tenants of the Ground Floor Shops although the signage on the top of the Unauthorized Signboard might change.  It is clear that for use of such Unauthorized Signboards, no consent/approval need be sought save from the Manager.

378.  It is the pleaded case of the parties that the P never gave consent to the erection of the Unauthorized Signboards and the D and/or the predecessors and their tenants never seek consent from the P or their predecessor either.

379.  Considering the evidence before me, I am ready to find that the D did have the intention to possess the Subject Areas.  But are their acts sufficiently overt to assert their rights?

380.  I do not agree with Mr. Chow that the D had failed to plead the use of those signboards bearing different trade names other than those trade names on the Unauthorized Signboards as shown in the Statement of Claim as said earlier.

381.  Para 4A(5) of the Re-amended Defence and Counterclaim did not limit the use of those Unauthorized Signboards using  different trade names.

382.  Moreover in para 4B(2) of the Re-amended Defence and Counterclaim, it stated:-

“(2) Since about 1996, the D and its predecessor have been using the Occupied Areas or allegedly the Subject Area for a considerable period of time …..”

383.  Further, in the witness statements of Defence witnesses, they had told explicitly their use of these Unauthorized Signboards at different shops on the Ground Floor at different times.  Surely the P was not and would not be caught by surprise by the D’s case.

384.  As for P’s submission that Easy Surplus had made an effective assertion of its rights over the External Walls in August 2002 and that therefore the requisite time period for the purpose of limitation has to run afresh.  As said, the letter from their solicitor in fact tended to suggest that Easy Surplus was only concerned about the External Wall above the 1^st Floor slab.

385.  Having said the above, however, it is most important that we consider the case of Sunbroad Holdings Ltd v All Occupiers & Others HCMP 1852/2008 24 June 2011.

386.  The subject matter of the case concerns an external wall which separated the building at No 15 Pak Sha Road, Causeway Bay, Hong Kong from a scavenging lane at the junction with Yun Ping Road.  It concerns that part of the external wall which has been coloured blue on the plan which is annexed to the judgment (“the Blue Wall”).

387.  The P there was the registered owner of the ground floor of the Building of which the external wall forms part.

388.  The 3^rd Defendant (“3^rd D”) was a cobbler who operates a stall which is located opposite to the external wall.  He has constructed certain structures at the Blue Wall.

389.  According to the 3^rd D in around 1972, he constructed a small metal box (the “Small Metal Box”) on the external wall for storage of shoes pending customers’ collection and as a show case for leather belts and other goods.

390.  In around 1984, he constructed a large metal box (the “Large Metal Box”) on the external wall above the Small Metal Box for the same purpose.

391.  Again, in around 1986, he constructed a canopy (the “Canopy”) above the aforesaid 2 metal boxes to protect them from sunlight and rain.

392.  The Small Metal Box, the Large Metal Box and the Canopy make up the Structures complained of by the P in this action.

393.  It is not in dispute that the 3^rd D erected the Structures, which are physically attached or affixed to the external wall, without the consent, licence or permission of the P, or its predecessors in title.

394.  It is the 3^rd D’s contention that since around year 1972, he has been in exclusive possession of and has been using the external wall without the consent or licence or permission in whatever form of the owner of the external wall, such that he has acquired a good title to the external wall by adverse possession.

395.  The P claims against the 3^rd D for, inter alia, an injunction to restrain the 3^rd D from trespassing upon, or interfering with, the P’s possession of the external wall, and a mandatory order to require the 3^rd D to demolish and remove the Structures and to make good the damage caused to the external wall by such demolition and removal.

396.  The P took out a summons under Order 18 Rule 19 of the Rules of High Court and the Court’s inherent jurisdiction.

397.  It is the P’s contention that these facts, even if they can be established at the trial, cannot as a matter of law amount to adverse possession of the external wall.

398.  It is not in dispute that, subject to the claim of adverse possession by the 3^rd D, the P is the owner of the external wall.  The court ruled that the acts of attaching or affixing the Structures to the external wall were acts of trespass.  Such trespass was continuing up to the moment of trial.

399.  Recorder A. Chow ruled that it would be fair to infer that the external wall stands upon the boundary of the land and that the Structures in fact situate outside the land and occupy part of the scavenging lane.  It follows that the P’s complaint cannot be that the 3^rd D has wrongfully occupied any part of the property, but is simply that the 3^rd D has wrongfully attached or affixed the Structures to the external wall.

400.  Further, he says as the court does not know the ownership of the scavenging lane, the mere fact that the 3^rd D has occupied a part of the scavenging lane is not something that the P has locus to complain about.

401.  The question which thus arises is whether, as a matter of law, the concept of “adverse possession” can apply to a vertical plane or surface such as the surface of the external wall in the present case.

402.  The court accepts that, as a matter of law, “it is necessary that relying on the judgment of Byrne J in Midland Railway Co v Wright [1901] 1 Ch 738 at 744, whatever is acquired by means of exclusive possession must be measurable by precise metes and bounds and in some way cubically.”

403.  Recorder A. Chow said he was unable to see how, from the mere fact that the 3^rd D has attached or affixed certain structures to the external wall and used those structures for a long time, it can be inferred that the 3^rd D has taken adverse possession of half of the external wall to the exclusion of the P, or its predecessors in title, or that the 3^rd D intended to exclude the P or its predecessors in title from having the use or possession of the External Wall or half of it (as opposed to merely a surface of the external wall).

404.  Recorder A. Chow therefore ruled that the 3^rd D has not raised any arguable or triable defence to the P’s claim against him for trespass of the external wall.

405.  On appeal, Hon Tang VP said the learned recorder had identified the main issue between the parties as:-

“20. ….. whether, as a matter of law, the concept of ‘adverse possession’ can apply to a vertical plane or surface such as the surface of the External Wall in the present case.”

406.  He held that that it was not possible.  He accepted that as a matter of principle.  He referred to the judgment of Byrne J as said earlier in the case of Midland Railway Company.

407.  Hon Tang VP accepted the principle in Leung Kwok Kau v Tam So Wa [1968] HKLR 673.  There the question was whether a lease of the surface of the outer wall of a building could be created.  The Full Court held that it could not.  Their lordships explained why:-

“….. A corporeal hereditament ….. has always included an area of the surface of the earth or of some horizontal plane either below, or in a building erected above, the surface of the earth. The area need not be large, but it must have some substance …..” Per Huggins J held at 680.

“….. It is possible to grant a lease of a wall but that is because a wall is situated on the ground and in effect a lease of a wall is a lease of the ground on which the wall is standing together with the wall itself. However, this is not to say that there can be a tenancy of the surface of a wall by itself as was argued in this appeal. I do not think that that is possible. The surface of a wall of its very nature has no depth, it is not standing on any part of the ground: and therefore it cannot in my view be the subject matter of a lease.” Per Briggs J held at 675.

“….. In the absence of a defined portion of the soil, to which a letting can be distinctly related, no lease or tenancy can arise. Where the subject matter of an alleged lease or tenancy is but the bare surface of such a wall, it has no width or breadth of soil to support it, as a lease or tenancy. No estate or interest in land is created; I use the word ‘land’ in its widest sense …..” Per Mills-Owens J at 679.

408.  He said the learned recorder had also dealt with another argument relied on by the 3^rd D, that the 3^rd D had adversely possessed the Blue Wall to half of its thickness, which the learned recorder also rejected. 

409.  Hon Tang VP agreed with the learned recorder that one could not infer from the fact that the 3^rd D had attached or fixed certain structures to the Blue Wall and used those structures for a long time, that the 3^rd D had taken adverse possession of half of the Blue Wall to the exclusion of the P; or that the 3^rd D had intended to exclude the P from having the use or possession of half of the thickness of the Blue Wall.

410.  Mr. Suen for the D maintains that the Sunbroad case can be distinguished from our present case because in that case, it was said that at all material times, the P or its predecessors in title have had the use of the External Wall, as a means of enclosure of the backyard of the Property, and that the 3^rd D in that case merely used the surface of the wall in affixing the Structures.  In contrast, Mr. Suen says that in the present action, whatever structure (including walls, external walls, granite cladding, or any other structure howsoever named) below the 1^st Floor slab, both in terms of its structure (as a means of enclosure of the D’s shops) and its surfaces (facing on to the street externally and the D’s shops internally), ie the whole thickness, had all been used by the D and/or its shops owner tenants. It is submitted that therefore the Sunbroad case is distinguishable.

411.  Mr. Chow for the P submits that the Sunbroad case is most relevant here.  He says the D’s alternative defence on adverse possession, refers to “the part of the External Walls (if any) which occupies the exterior and/or the front end of the D’s shops (as defined below) below the first floor slab of the First Floor of the Building (“the Occupied Areas”) or, alternatively, the P’s title to the part of the External Walls (if any) which is occupied by the Unauthorized Signboards (as identified by Drawings Nos D1 to D9 in Appendix 7a and the photographs in table 1 in Appendix 7b of the Joint Experts Report…) (“the Subject Areas”) has been extinguished by virtue of section 17 of the Limitation Ordinance, Cap. 347” (emphasis added).

412.  He says D relies only on the putting-up of face sign-plates by their tenants on the Unauthorized Signboards, and that the Unauthorized Signboards had been erected on the surface of the External Walls by someone else prior to the D’s acquisition of the Ground Floor Shops.  As held in Sunbroad (both at first instance and on appeal), the use of the External Wall of that nature could not give rise to physical possession of any thickness (i.e. the body) of the External Wall concerned, let alone to the exclusion of the paper owner.

413.  Mr. Chow submitted that it is plain from the D’s pleaded case that nature of the alleged use or occupation, as well as the way in which the D advanced its case at trial, the D was merely claiming possessory title (by way of adverse possession) to the surface of the External Walls concerned.

414.  He asks this court to follow the principles enumerated in the Court of Appeal Sunbroad case.

415.  Mr. Chow argues that as the Court of Appeal did not mention in its judgment the fact that the P in the case had had the use of the External Wall concerned as means of enclosure of background of the Property, the distinction drawn by the D is immaterial.

416.  P says that as it was not the pleaded case of the D that they have acquired possessory role of the body of the External Wall (as opposed to the surface), the claim of adverse possession should fail.

417.  I agree with Mr. Chow that the present case cannot be distinguished from the Sunbroad case.  The fixing of the Unauthorized Signboards to the surface of the External Wall is similiarly the only act relied on by the D and the principle accepted by Tang VP that as there could not be a lease of the surface of a wall, there could not be adverse possession of such surface.

418.  Even if the D did really claim for the title of the whole body of External Wall, they would still just be relying on the same act.  Their use of the External Wall for bordering the inside of their shops from the pavement obviously cannot operate to advance their case in adverse possession as they themselves are the lawful owner of the Shops.

419.  The defence of adverse possession would fail.

Proprietary Estoppel

420.  Mr. Chow submitted that for the D to succeed in a plea of proprietary estoppel, five elements need be established, namely:-

(i)  The claimant must have made a mistake as to his legal rights.

(ii) The claimant must have expended some money or must have done some act (not necessarily upon the owner’s land) on the face of his mistaken belief.

(iii) The owner, the possessor of the legal right which the claimant claims it would be inequitable for the owner to enforce, must have known of the existence of his own right which is inconsistent with the right claimed by the claimant.

(iv) The owner must have known of the claimant’s mistaken belief of the claimant’s right.

(v) The owner must have encouraged the claimant in his expenditure of money or any other acts which he has done, either directly or by abstaining from asserting his legal right.

421.  Mr. Suen however relied on the Court of Appeal case of Kung Wong Sau Hin v Sze To Chun Keung [1996] 2 HKC 616 where Nazaeth VP said as obiter that “It was to be said that the judge treated the five requisites stated by Fry LJ in Willmot v Barker [1880] 15 Ch D 96 as inflexible rules.” But the modern and true view (as one sees from Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB133, [1981] 2WLR576 and the cases referred therein) is that Fry LJ’s five requisites constitute no more than a valuable guide when addressing the question of unconscionability, a concept which calls for a broad approach.

422.  Mr. Chow said in this case, the D (and/or Well city) could not reasonably have mistaken the position of Charmwell and/or Easy Surplus, as alleged because between year 1997 and year 2002,   Charmwell and subsequently Easy Surplus have repeatedly asserted their rights over all the outer or external walls when they have insisted on the removal of the entire “Cyber X” sign (including the part under the 1^st floor slab) and also complained about the part of the “Take 5” sign which trespassed upon the external wall and further that the D (and/or Well City) had actually obtained benefit by relying on the alleged mistaken belief.

423.  He said even if the D or Well City did make good the wall after the removal of the “Take 5” sign as alleged, the making good of the external wall damaged by the erection of sign can hardly be treated as an investment in or improvement to the external wall for the purpose of proprietary estoppel.

424.  He concluded that in the circumstances, it would not be inequitable for the P to enforce its right under the DMC.

425.  Mr. Chow submitted that the saying that Well City and the D continued to rent out the Ground Floor Shops together with the existing signboards to their tenants since 1996 was not supported by the tenancy agreements disclosed.  He said there were disclosed only 2 tenancy agreements in which there existed a provision regarding the use of these Unauthorized Signboards i.e. the one involving Hi-tech International Holdings Limited and Super Growth Investment Co Ltd as tenants. 

426.  He questioned whether the use of the Unauthorized Signboards were part of the terms agreed for the other tenancy agreements as he said these other tenants were not called to testify in court.

427.  He said under the tenancy agreements, the costs of maintenance for these signboards were really borne by the tenants.

428.  He said also that there was not the slightest evidence that the D and/or Well City has been induced to acquire the Ground Floor Shops from Charmwell, let alone by the P based on the mistake as to legal rights; nor is it the D’s case that Charmwell (or the P) has ever made any representation to Well City as to the possible yield or return it would derive from the purchase of the Ground Floor Shops.

429.  He submitted therefore that the enforcement of the P’s right over the external wall is not inequitable.

430.  According to Mr. Suen, if D is to establish proprietary estoppel, (1) there must be some assurance (which can be by conduct) by the P or its predecessors which led Well City and the D to reasonably believe that the they had the right to use the Occupied Areas; (2) Well City and the D must have acted upon such assurance to its detriment; and (3) It must be unconscionable for the P to act contrary to the assurance: Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133 and Kung Wong Sau Hin v Sze To Chun Keung [1996] 3 HKC 292 at 628-631.

431.  He submitted further that silence can amount to such representation and “passive encouragement”: Incorporated Owners of Summit Court v Full Surplus Investment Ltd (No 2) [2005] 1 HKC 662 at 678-681; Kung Wong Sau Hin v Sze To Chun Keung [1996] 3 HKC 292 at 630B-C.

432.  He said that estoppel binds both the parties and their privies, i.e. successors in title: ER Ives Investment Ltd v High [1967] 2 QB 379 at 405 and that further, if proprietary estoppel is made out, the effect of it is to extinguish the rights of the P.

433.  He quoted Snell’s Equity 32^nd edition para 12-06 at 367 and says that “proprietary estoppel provides an independent source of rights and obligations and will support a separate cause of action whereas promissory estoppels can only be deployed as a defence to a claim or to meet a cause of action”.

434.  Mr. Suen first dealt with representation by P’s predecessor Charmwell and Easy Surplus.  He says that at time Charmwell sold the Ground Floor Shops of the Building to Well City in 1996, the sale was subject to the existing various tenancies at set out in Schedule V. The tenants there were using the Unauthorized Signboards and therefore the tenancy of the Shops had included the use of Subject Areas, if not the Occupied Areas.

435.  It is suggested by Mr. Suen that by reasons aforesaid Charmwell has clearly represented to Well City that Well City will, after completion of the purchase of the Ground Floor Shops, own the Occupied Areas or the Subject Areas.

436.  It is said that undisputedly between 1996 and 2007, Charmwell and Easy Surplus had never asserted any right over the Occupied Areas and when, signboards were erected at the exterior of the Shops along Chatham Road and Mody road.  It is said that they only raised complaints about the “Cyber X” and “Take 5” signage trespassing over the external wall of the 1^st Floor, but had not raised any complaint torwards the Unauthorized Signboards at the front top exterior of the Shop openings.

437.  In particular, Mr. Suen referred to the letters issued by solicitors for Charmwell and Easy Surplus, Messrs. Gallant Y T Ho & Co, Solicitors where they clearly represented they were only asserting rights over the external walls of the 1^st Floor, not the area below the 1^st Floor slab. 

438.  In my view, this argument raised by Mr. Suen was indeed supported by the correspondence from Messrs. Gallant Y T Ho & Co, Solicitors since year 2001.  As for the first letter from them dating back to year 1997 when they demanded removal of the whole Cyber X Signage, although they seeked to remove the whole signage which covered both areas above and below the 1^st Floor slab, in the following letter on the same subject, the caption was changed to “external wall of the 1^st Floor”.

439.  During that period of time, according to YC Chan there were signboards used by shops along Mody Road and according to YY Chan along Chatham Road and no complaints were raised by Charmwell or Easy Surplus or even the P.

440.  Further, Mr. Suen argued that during the period from year 1996 to year 2001, Charmwell and Easy Surplus had merely asserted rights over part of the wall on the Ground Floor which does not fall within the exterior of the Ground Floor Shops (i.e. Occupied Areas) and they only rent to Daily Women Sauna, an area on the Ground Floor that do not fall within the shop front façade.

441.  They also did not charge rent for the use of the Unauthorized Signboards erected on the exterior of the shop.

442.  Further it was said after Take 5 signage was removed and it was replaced by another signage erected by tenant of Well City in the exterior of the shop, Easy Surplus did not object.

443.  It was further said by Mr. Suen that Tony Yeung of the P admitted that they were only advised in year 2009 i.e. 2 years after their acquisition of the External Walls that the space where the Unauthorized Signboards were erected was really part of the External Walls of which P was the registered owner.  Mr. Suen says the reason being to any ordinary person, the Occupied Areas is an inherent part of the Shop.

444.  It was also revealed that the P had actually on 28 March 2002 already acquired the basement shops of the Building i.e. 5 years before their acquisition of the External Walls, nevertheless they had not considered the Occupied Areas as being part of the “External Walls” of the Building.

445.  It is also argued by the D that when Well City acquired the Ground Floor Shops from Charmwell, they have relied on the conduct and representation of Charmwell that the shops owners were entitled to erect signboards and that Subject Areas and the Occupied Areas were part of the Shops.  In fact, Well City and the D had all along rented out the Ground Floor Shops on the basis that the tenants could display signs at the Subject Areas. 

446.  As HK Chan said in court, this right to affix sign on the Unauthorized Signboards was either explicitly mentioned in the Tenancy agreements or orally agreed.

447.  It was said by HK Chan that the “Yes Bar” signage was erected after Well City was consulted.

448.  Defence further submitted that D and their predecessor had over the last 13 years incurred expenses in maintaining the Unauthorized Signboards and had also entered into tenancy agreements with tenants on basis they could use the Unauthorized Signboards and if that was now refused, they would suffer serious legal consequence.

449.  YY Chan on behalf of the D testified that their group acquired the Ground Floor Shops for investment by renting the same out in exchange for rental income.  They said all along they were under the belief that the Occupied Areas and the Subject Areas were part of the Shops and they could erect signboards without having to pay rent.

450.  The D said having regard to the foregoing that it would be inequitable for the P now to enforce their rights to the detriment of the D.

451.  I agree with the submission by Mr. Suen on this issue that in the circumstances of this case they should succeed in raising the defence of proprietary estoppels. 

452.  In my view, although in the first letter from Messrs. Gallant Y T Ho & Co, Solicitors, Charmwell requested for removal of whole “Cyber X” sign, we did not know how the sign was affixed or designed and whether it was possible to remove only the part above 1^st Floor slab.  In any event, the caption of the next letter from them had been changed to “trespass to External Wall on 1^st Floor”.

453.  It was clear that in the subsequent letters, they were only concerned with the signboard above the 1^st Floor slab, in particular from the second letter where the caption was changed to cover “external wall on 1^st Floor of the Building”.  These letters clearly would lead the D into believing that the P was not concerned with the Occupied Areas under the 1^st Floor slab.  In particular, the P raised no complaints to all the Unauthorized Signboards clearly visible and noticeable to all going past the Building.

454.  Further, in my judgment, I accept that in case where expenses were paid by the tenants, they should be treated as agents of the D and that there is no doubt that when the Shops were left vacant, cost of such maintenance or reinstatement would fall on the D.

455.  In addition, as one could see from the photos produced, the Shops had been displaying signs on the Unauthorized Signboards and it must be a term of the tenancy agreement that they were entitled to use the signboards whether the tenancy agreement did expressly have such a clause.

456.  Had the Subject Areas been found to be part of the External Wall and the same did not fall within shop front, then I am prepared in the circumstances of this case, to find proprietary estoppel for the D.

457.  I now deal briefly with the other defences raised. 

Estoppel by Convention

458.  It is submitted by Mr. Suen that the essential features of an estoppels by convention are that where parties are in a certain legal relationship have acted on a “convention”, i.e. an agreed assumption as to a state of facts or of law (which includes the construction of documents), and that it would be unfair for one party to resile from it: Chitty on Contract, 30^th edition, vol. 1, para 3-107 to 3-114; Snell’s Equity, 32^nd edition, para 12-007.

459.  He argued that both Charmwell (the P’s predecessor) and Well City (the D’s predecessor) had mistakenly assumed that it was Well City, as opposed to Charmwell, who had the exclusive right to use the Occupied Areas and that following such common mistaken assumption, Charmwell and Well City had so conducted themselves that it would be unjust for the P now to deny the common mistaken assumption.

460.  Whilst I agree there could be such mistaken apprehension on the part of the P, there could not have been such mistake on part of Charmwell or Easy Surplus in particular Charmwell being a party to the DMC and as a developer, Messrs. Gallant Y T Ho & Co, Solicitors who prepared the DMC would probably be taking instructions from them on the drafting of the DMC.

461.  This defence will not stand.

Acquiescence and laches

462.  D here also pleads acquiescence.  Mr. Suen submitted that where there is an assent or lying by on the part of the P and in view of that and consequent acts it is unjust to grant the specific relief: Spry, The Principles of Equitable Remedies, 7^th edition, pp440-444.

463.  It is said that in this case, there has been an assent or lying by on the part of Charmwell, Easy Surplus and the P in asserting rights over the Occupied Areas and/or the Subject Areas occupied by the existing signboards (by reason of the facts supporting the proprietary estoppels argument) and it would be unjust for the P now to be granted the specific relief to demolish the existing signboards, which were in use for about 13 years prior to the commencement of these proceedings.

464.  Mr. Chow argues that even if there was delay, no more hardship or inconvenience was really caused to the D as they had actually profited from renting the Shops on basis that the tenants could enjoy the Occupied Areas and the Subject Areas.  I agree, and that being the case, this defence will also fail.

Conclusion-Counterclaim

465.  Now coming to the Counterclaim of the D, in view of the ruling of this court on the adverse possession issue, there is no basis for declaration sought by the D in subparagraph (1) to (3).  This part of the Counterclaim is dismissed.

466.  In this case, Charmwell was not a party to the proceedings, as said earlier, although this court considers it very probable that the right to the shop front façade is assigned to the Ground Floor Shops owners, in the absence of good evidence that the right under clause 1(l) or right under clause 38 of the DMC had been vested in the D, this court does not feel comfortable to grant declaratory judgment as seeked for in subparagraph (4) and (6), i.e. in connection with the rights of the D in and over the Occupied Areas which form part of the shop front façade.  Declaration sought under subparagraph (4) and (6) are also dismissed.

467.  As this court has found that the shop front façade do not form part of the External Walls of the Building, therefore P is not the registered owner of the Occupied Areas nor does he has any locus to be concerned with the Occupied Areas or Subject Areas.  It is therefore not necessary or appropriate to grant declarations under subparagraph (5) and (7).

468.  I also dismiss the remaining part of the Counterclaim.

469.  The whole Counterclaim of the D is dismissed.

Costs

470.  Coming to the question of costs, the claim of the P is dismissed.  Although the D also failed in their Counterclaim, the costs incidental thereto is minimal. I make an order nisi that the P shall pay costs of the whole proceedings to the D, the same to be taxed if not agreed, with certificate for counsel.

471.  Lastly I thank counsels for their assistance.