WING MING GARMENT FACTORY LTD v. SANWA TRADING (H.K.) LTD

CACV 571/2021, [2023] HKCA 691

On Appeal From [2021] HKCFI 3357

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 571 OF 2021

(ON APPEAL FROM HCA NO 1805 OF 2016)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  The principal issue which arises for determination in this appeal against the Judgment of Coleman J dated 16 November 2021 (“Judgment”) is whether the subject matter of the agreement for sale and purchase between Wing Ming (vendor) and Sanwa (purchaser) contained in or evidenced by an offer letter dated 28 August 1991 was the “Original CPS 2” (as contended by Sanwa), instead of the “Re-designated CPS 2” (as contended by Wing Ming).

2.  The Original CPS 2 is a reference to the car parking space marked “2” on the Ground Floor Plan (“DMC Ground Floor Plan”) attached to the Deed of Mutual Covenant dated 2 March 1991 in respect of Wing Ming Industrial Centre (“the Building”). The following diagram shows the Original CPS 2 to 4 and the “VOID” areas in front of them as depicted on the DMC Ground Floor Plan[1]:

3.  The Re-designated CPS 2 is a reference to the “VOID” area in front of the Original CPS 2 on the DMC Ground Floor Plan, and came about as a result of certain modification works carried out in 1992/1993 by Wing Ming, in particular the construction of a partition wall (“Partition Wall”) enclosing the Original CPS 2 to 4. The following diagram shows the Re-designated CPS 2 to 4 after the construction of the Partition Wall[2]:

The re-designation of CPS 2 was reversed consequent upon the judgment of Reyes J dated 20 December 2007 in HCA 8805/1993 (“the Reyes Judgment”) holding that the “VOID” areas in front of the Original CPS 2 to 4 were common areas of the Building and requiring Wing Ming to remove the Partition Wall, which Wing Ming did in around June 2010.

BASIC FACTS

(i)  The Building and the Car Park Layout Plan

4.  Wing Ming was the developer of the Building, situated at No 15 Cheung Yue Street, Kowloon and erected upon New Kowloon Inland Lot No 5491 (“the Lot”), which was granted by the Government to Wing Ming pursuant to Conditions of Sale dated 13 September 1974.

5.  Special Conditions (9) and (10) of the Conditions of Sale provide, inter alia, as follows:

(1)  Spaces shall be provided within the Lot to the satisfaction of the Director of Public Works for the parking, loading and unloading of vehicles (including containers on trailers with their prime movers) at a certain specified rate (SC (9)(a)).

(2)  The spaces so provided shall not be used for any purpose other than for the parking, loading and unloading of vehicles (SC (9)(b)).

(3)  A lay-out plan indicating the parking, loading and unloading spaces to be provided within the Lot in accordance with SC (9) and approved by the Building Authority, or a copy of such plan certified by an authorized architect, shall be registered by Wing Ming in the Land Office. The parking, loading and unloading spaces indicated on the said approved plan shall not be used for any purpose other than the purposes set out in SC (9). Wing Ming shall maintain the parking, loading and unloading spaces in accordance with the said approved plan and shall not alter the layout except with the prior written consent of the Director of Public Works (SC (10)).

6.  On 31 July 1978, the Building Authority approved building plans for the Building, including a Ground Floor Plan (“the Approved Ground Plan”) designating thereon 11 car parking spaces (“Original Car Parking Spaces”) and a container parking space (“Container Space”). Pausing here, it may be noted that the Approved Ground Floor Plan does not show or delineate any “VOID” areas in front of the Original CPS 2 to 10 as shown on the DMC Ground Floor Plan (see §10 below).

7.  On 14 November 1978, the Building Authority issued the Occupation Permit in respect of the Building, comprising 11 storeys from the G/F to 10/F together with a Basement and a Roof and an Upper Roof.

8.  On 6 March 1979, a copy of the Approved Ground Floor Plan, certified by an authorized architect as having been approved by the Director of Public Works, was registered in the Land Registry pursuant to SC (10) (“the Car Park Layout Plan”).

(ii)  The DMC

9.  In the early 1990s, Wing Ming started to sell off individual floors together with car parking spaces of the Building to purchasers.

10.  On 2 March 1991, Wing Ming as the First Owner, Super Kind Investment Ltd (“Super Kind”) as the Second Owner[3] and a company called Essman Construction Company Limited as the Management Company entered into a deed of mutual covenant (“DMC”) in respect of the Building. Attached to the DMC are various floor plans of the Building, including the DMC Ground Floor Plan. The DMC Ground Floor Plan depicts 11 car parking spaces marked “1” to “11” (“Original CPS 1 to 11”) corresponding to the Original Car Parking Spaces shown on the Car Park Layout Plan, as well as the Container Space. In front of each of the car parking spaces marked “2” to “10” on the DMC Ground Floor Plan is an area marked “VOID”.

11.  By the DMC, the Lot and the Building are sub-divided into 1,323 undivided shares, with:

(1)  5 shares being allocated to each of “Car Parking Spaces Nos.2-10 on Ground Floor”;

(2)  2 shares being allocated to each of “Car Parking Spaces Nos.1 and 11 on Ground Floor”; and

(3)  1 share being allocated to the Container Space.

12.  In the DMC:

(1)  the expression “Vehicle Parking Space(s)/Car Parking Space(s)” is defined to mean “all of the spaces in the Building for parking of vehicles (coloured green on the Ground Floor Plan)”, and

(2)  the expression “Common Areas and/or Common Facilities” is defined to mean “(i) the entrances, staircases, lift halls, lift shafts, lift pits, stairways, landings, passages and other spaces of the Building which are intended for common use …, (ii) the loading and unloading spaces, roadways and driveways (if any)”, and other specified areas.

13.  On the DMC Ground Floor Plan, the following areas are all coloured “green”: (i) the Original CPS 2 to 10 and the “VOID” areas in front of them, (ii) the Original CPS 1 and 11, and (iii) the Container Space.

(iii)  The sale of 5/F and Car Parking Space “2” to Sanwa

14.  In the latter half of 1990, Mr Ng, a director of Sanwa, was looking for new premises for Sanwa, and saw an advertising board on the external wall of the Building and thought it might suit Sanwa’s requirements. A security guard from the Building’s management office took him to tour one upstairs unit. He did not at that time commit to purchase any unit in the Building.

15.  In July or August 1991, Mr Ng learned, upon further inquiry with Jones Lang Wootton (“JLW”), the agent handling the sale of units in the Building, that only the 4/F, 5/F and 10/F of the Building still had vacant/unsold units. A staff member of JLW took Mr Ng to see two of those units and the car parking spaces on the Ground Floor of the Building, and he was shown the Original CPS 2, 3 and 4. Mr Ng’s preference was to buy the Original CPS 2.

16.  At the time of looking around the Ground Floor of the Building, neither Mr Ng nor the agent had any floor plan. Whilst the space shown looked big enough to park two private cars, the agent apparently said something to the effect that any parking space that Mr Ng might buy would likely only have space for one private car. Mr Ng was also given to understand that the car parking space could be “moved forward” from the Original CPS 2 and a new partition wall would be built, though that would need application and approval[4].

17.  Starting from August 1991, there were exchanges of correspondence between JLW and Sanwa concerning the latter’s intended purchase of the 5/F and a car parking space of the Building. It is not necessary to set out the details of the correspondence in this judgment, save to mention that the sale and purchase of the 5/F and a car parking space of the Building was eventually split into two sets of document.

18.  In relation to the 5/F of the Building, Wing Ming and Sanwa signed a letter prepared by JLW dated 28 August 1991 confirming the agreement for the sale and purchase of the 5/F at the price of HK$12,708,800. A formal sale and purchase agreement was entered into on 10 September 1991, and completion took place by an assignment dated 26 September 1991.

19.  In relation to the car parking space, there are 3 versions of a letter prepared and signed by JLW dated 28 August 1991 confirming Sanwa’s offer to purchase from Wing Ming of the “Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre”. The first and second versions were not signed by either Sanwa or Wing Ming, but a circular chop of Sanwa appeared on pages 1 and 2 of the second version. For the present purpose, it is only necessary to focus on the third version, referred to at the trial as the “PSPA”, which was signed by both JWL and Wing Ming on page 3. A circular chop of Sanwa also appeared on pages 1, 2 and 3 of the PSPA. An additional Clause 6(ii)a was inserted on page 2 of the PSPA, next to the initials of Mr Ho of JWL and Mr Yuen of Wing Ming.

20.  The PSPA states, as far as material, as follows:

“Re: Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre

We write to confirm that Sanwa Trading HK Limited (‘Sanwa’) has offered to purchase from Wing Ming Garment Factory Limited (‘Wing Ming’) the captioned property (‘the Property’) on the following terms and conditions:-

1. Purchase Price: HK$400,000.00

…

6. Others:

(i) The Property will be sold to Sanwa or its nominee free from incumbrances and with a good title;

…

(ii) a. Subject to the existing Deed of Mutual Covenant and Management Agreement, a copy of which is attached. It is [declared] that the Purchaser has read through the DMC before signing this Offer Letter.

…

8. Agency Fee: 1% of the sale price, to be paid by Wing Ming to Jones Lang Wootton upon completion of sale and purchase.

9. The Vendor hereby reserves the right to alter common areas whenever the Vendor considers necessary provided that the Vendor shall notify the Purchaser of such alteration if the same affects in any way the said premises hereby agreed to be sold. If as a result of such alteration the area of the said premises shall differ [from] the original area thereof then the purchase price shall be increased or reduced in proportion to the increase or reduction in the area provided that if the increase or reduction in the area shall be greater than 5% of the saleable area of the said premises then the Purchaser shall have the option to determine this Agreement in which event all monies paid by him hereunder shall be returned to him forthwith.

10. In the Assignment, the Purchaser shall give the following special covenant:-

It is a treaty for this Assignment and pursuant and to give effect thereto the Purchaser, for itself and for its successors and assigns, to the intent and so as to bind the property and into whomsoever hands the same may come HEREBY COVENANTS with the Vendor its successors and assigns and the owners for the time being of Car Parking Spaces Nos. 2, 3 and 4 that notwithstanding anything in the said Deed of Mutual Covenant and Management Agreement contained, the Purchaser and its successors and assigns shall not object in any manner but allow and consent the Vendor its successors and assigns and the owners for the time being of Car Parking Spaces Nos. 2, 3 and 4 to convert the said Car Parking Spaces Nos. 2, 3 and 4 or any part or parts thereof to other lawful purposes provided [that] such conversion is Subject to the approval of the Building Authority or other appropriate authority (as the case may be) AND further that the Purchaser, its successors and assigns shall provide and see to be provided this Covenant in all subsequent assignments. To all intents and purposes that this [covenant] shall run with the Property.

We have been informed by Wing Ming that it has applied to the Building Authority for approval to use the Property for parking of private car. There are also some legal matters that Wing Ming has to deal with before Sanwa’s above offer can be accepted. If the Building Authority does not give the approval sought or the legal matters cannot be dealt with, Sanwa’s above offer cannot be accepted by Wing Ming.

If the Building Authority gives its approval and the legal matters can be dealt with, Wing Ming agrees to first consider accepting Sanwa’s above offer. In consideration of this, Sanwa agrees to make its above offer irrevocable.

Please sign the attached copy of this letter and return it to us to confirm that you have made the above offer irrevocably. We will then submit the same to Wing Ming for confirmation.”

21.  Importantly for the present purpose, the Judge found as a fact that a ground floor plan, with the Re-designated CPS 2 coloured green next to the initials of Mr Ho[5] and Mr Yuen and two circular chops (one faint and on clear) of Sanwa (“the Colour Copy Plan”)[6], alleged by Mr Yuen to have been attached to the PSPA[7], was not attached to the PSPA[8]. We shall come back to the significance of this finding later in this judgment.

22.  It is not in dispute that, at the time of the making of the PSPA, it was Wing Ming’s intention to convert the Original CPS 2 to 4 to some use other than for the parking of vehicles, and relocate the Original CPS 2 to 4 to the “VOID” areas in front of them to become the Re-designated CPS 2 to 4. Such intention could be gleaned from Clause 10 of the PSPA, and similar provisions in some earlier sale and purchase agreements/assignments entered into by Wing Ming and other purchasers in respect of some other floors/car parking spaces of the Building.

23.  On 29 October 1991, the Architect/Authorised Person acting for Wing Ming submitted building plans (“the A&A Plans”) for some intended alterations and additions works at the Building to the Building Authority for approval. Those works involved, inter alia, the construction of a mezzanine floor to form a loft area, the demolition of an internal wall, and the building of a new wall (ie the Partition Wall) enclosing the area comprising the Original CPS 2 to 4[9]. On 5 December 1991, the Building Authority approved the A&A Plans. Consent for commencement of the relevant works was given on 13 July 1993, and the works were certified to have been completed by 26 October 1995.

24.  In the meantime, by an assignment dated 8 February 1992 (“the Assignment”), Wing Ming assigned, or purported to assign, to Sanwa the property described in the Second Schedule thereto, namely -

“ALL THOSE five equal undivided 1,323^rd parts or shares … TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT CAR PARKING SPACE NO.2 on the Ground Floor of the Building as shown coloured Green on the Plan hereto annexed”.

25.  Annexed to the Assignment is a “Car Park Ground Floor Plan” (“the Assignment Plan”) of the Building with the “VOID” area in front of the Original CPS 2 marked “G” and coloured Green. This is the area referred to by Wing Ming as the Re-designated CPS 2. The Original CPS 2 to 4 are not shown on the Assignment Plan.

26.  As found by the Judge:

(1)  For a while after purchasing the CPS 2 (be it the Original CPS 2 or the Re-designated CPS 2), Sanwa parked its vehicle in the Original CPS 2[10].

(2)  The Partition Wall had not been installed by the end of January 1992 as alleged by Wing Ming[11], having regard to the fact that consent for commencement of the works referred to in the A&A Plans was only given in July 1993[12].

(3)  Sanwa parked its vehicle in the Re-designated CPS 2 from February 1992 or some later period in or after mid-1993, Sanwa could only have parked its vehicle in that location after the Partition Wall had been erected. Sanwa then continued to do so until sometime after June 2010, when the Partition Wall was removed and the Original CPS 2, 3 and 4 were reinstated by Wing Ming[13] (see §35 below).

(4)  Since at least June 2011, Sanwa has been using the Original CPS 2 as its parking spot[14].

(iv)  The 1993 Action against the IO

27.  In 1993, Wing Ming brought an action in the High Court, HCA 8805/1993 (“1993 Action”), against the Incorporated Owners (“IO”) of the Building for breach of the DMC, alleging that a fire services pipe (“the Pipe”) running through the length of the air-space over the Original CPS 2, 3 and 4 as indicated on the DMC Ground Floor Plan installed by New Gas & Company upon the IO’s instruction encroached on Wing Ming’s right to construct a loft in the said air-space as reserved by Clause 5 of Subsection C of Section I of the DMC. The IO denied that there was any encroachment of any air-space over the Original CPS 2, 3 and 4 shown on the DMC Ground Floor Plan. They argued that Wing Ming had unilaterally re-designated common areas (marked “VOID” on the DMC plan) as the Re-designated CPS 2 to 4, constructed a loft over the Original CPS 2 to 4, and erected the Partition Wall below the loft enclosing the Original CPS 2 to 4. This caused those parking areas to be separated from the Re-designated CPS 2 to 4. The IO further argued that, in any event, the Pipe only ran through the length of the air-space above the “VOID” areas, and never entered the air-space over the Original CPS 2 to 4. Since the “VOID” areas were in fact common area, there was no breach of any air-space right of Wing Ming under the DMC, which only reserved to it a right to construct a loft over the Original CPS 2 to 4.

28.  The 1993 Action was tried by Reyes J in December 2007. By the Reyes Judgment, Reyes J held in favour of the IO, finding (inter alia) the following:

(1)  The impugned section of the Pipe did not run anywhere near the air-space over the Original CPS 2 to 4 shown on the DMC Ground Floor Plan. It only ran along the length of the air-space over the areas marked “VOID” in front of the Original CPS 2 to 4.

(2)  The “VOID” areas were “Common Areas” as defined in the DMC. This was because the “VOID” areas had to be kept clear in order to enable vehicles to drive in or out of the Original CPS 2 to 4, and were thus “roadways and driveways” within the definition of “Common Areas” in the DMC.

(3)  Such conclusion was self-evident if one considered the Original CPS 2 in the DMC plan. If a container and its prime mover occupied the Container Space, it would be impossible to drive in or out of the Original CPS 2 unless the “VOID” areas in front of the Original CPS 2 to 4 were kept clear.

(4)  It followed that, contrary to Wing Ming’s allegation, in erecting the Pipe, New Gas did not trespass onto any air space belonging to Wing Ming.

(5)  Wing Ming was not entitled to shift the Original CPS 2 to 4 into the “VOID” areas in front of them.

(6)  Wing Ming did not obtain the approval of the other owners to vary the terms and definitions of the DMC so as to enable the “VOID” areas to be designated as the Re-designated CPS 2 to 4.

(7)  In any event, even if all the other owners had agreed to designate the “VOID” areas as the Re-designated CPS 2 to 4, the written consent of the Government was required for such re-designation. By SC (9) and (10) of the Conditions of Sale: (i) the parking, loading and unloading spaces indicated on the Car Park Layout Plan (which corresponded to the car parking spaces shown on the DMC Ground Floor Plan and excluded the “VOID” areas) could not be used for any purpose other than for the parking of vehicles, (ii) Wing Ming was bound to maintain such parking, loading and unloading spaces in accordance with the Car Park Layout Plan, and (iii) Wing Ming could only alter the layout shown on the Car Park Layout Plan after obtaining the written consent of the Director of Public Works. No such consent was ever obtained from the Building Authority or the District Lands Officer who had, by the 1990s, assumed the functions of the Director of Public Works[15]. In particular, the Building Authority’s approval of the A&A Plans or consent to the commencement of the relevant works could not be treated as a waiver of the requirements imposed by the Conditions of Sale. Nor could the absence of comment from the District Lands Officer in relation to the A&A Plans be treated as a permission to change the car parking spaces shown on the Car Park Layout Plan in the absence of any explicit application made to the relevant Government body for permission to alter the layout of the car parking spaces shown on the Car Park Layout Plan. If Wing Ming wished to change the parking layout, it should have made a specific application the relevant Government body for permission to do so.

(8)  Although the expression “Car Parking Space(s)” was defined in the DMC to mean “all of the spaces in the Building for parking vehicles (coloured green on the Ground Floor Plan)”, and the “VOID” areas in front of the Original CPS 2 to 4 were coloured green on the DMC Ground Floor Plan, the said definition must be read in context and would make sense only if it was construed as referring solely to those spaces within the area coloured green on the DMC Ground Floor Plan which were specifically identified and delineated on it as “Car Parking Spaces”.

(9)  Properly understood, the “VOID” areas coloured green on the DMC Ground Floor Plan were not “Car Parking Spaces”, but formed part of the Building’s common areas.

29.  Reyes J granted, inter alia, a mandatory injunction requiring Wing Ming to (i) demolish the Partition Wall, and (ii) restore the car parking spaces to what was shown on the Car Park Layout Plan. Pausing here, it may be noted that there were other issues raised between the parties in the 1993 Action (including the IO’s counterclaim against Wing Ming for outstanding management fees) which were determined by Reyes J. However, those issues are not relevant to the present action, and do not require consideration here.

30.  Wing Ming’s appeal against the Reyes Judgment was dismissed by the Court of Appeal (constituted by Le Pichon JA, and Suffiad and Sakhrani JJ) in CACV 27/2008. By a judgment dated 27 June 2008 (“the CA Judgment”), the Court of Appeal held, inter alia, that:

(1)  Given the location of the Original CPS 2 in relation to the Container Space on the Car Park Layout Plan, it was self-evident that the “VOID” areas were areas that have to be kept clear so that the Original CPS 2 could be accessed and used.

(2)  Reyes J was clearly right in holding that the areas marked “VOID” adjacent to the Original CPS 2 to 4 were common areas.

(3)  It was apparent form the last sentence of SC (10) that changes to the layout in the Car Park Layout Plan required the “prior written consent of the Director of Public Works”. However, Wing Ming never made any specific application for consent to alter the layout in the Car Park Layout Plan. Such consent could not be inferred from the Building Authority’s approval of the A&A Plans. Nor would it be reasonable or appropriate to treat the absence of comment from the District Lands Officer as the requisite permission to satisfy SC (10). Where consent had to be obtained under the provisions of a land grant for alterations to an approved layout plan, in the absence of any specific application where the intended changes were clearly spelt out, it would be well-nigh impossible to infer the relevant consent. The architect’s letter submitting the A&A Plans “for approval” plainly was not such an application.

31.  Wing Ming sought leave to appeal against the CA Judgment in respect of “the pipe issue”, arguing that the following question was a question of great general or public importance which ought to be determined by the Court of Final Appeal under s 22(1)(b) of the Court of Final Appeal Ordinance, Cap 484:

“whether an approval given by the Building Authority/Director of Buildings and Lands in respect of an application for alterations and additions to a building shall amount to a written consent of the Director of Public Works for such works when the office of the Director of Public Works has ceased and his duties assumed by the Director of Buildings and Lands”.[16]

32.  On 17 June 2009, the Court of Appeal rejected Wing Ming’s application for leave to appeal in respect of the pipe issue[17], holding that it was “a concurrent finding of fact that [Wing Ming] had not in fact made any application for the alteration of the approved layout plan for the car parks” and thus the said question was purely hypothetical and did not arise for determination; in any event the question could not be determined divorced from its context, was fact sensitive, and as such could not be said to be a question of great general or public importance[18].

33.  Wing Ming also sought leave to appeal on the “or otherwise” basis, arguing that the Court of Appeal’s finding that the “VOID” areas were common areas was not a pure finding of fact but also involved a question of construction and the Court of Appeal, in reaching that conclusion, was obviously wrong. The Court of Appeal held that while, as a matter of construction, a different view could not be ruled out altogether, it would not follow that in reaching their conclusion, the Court of Appeal was obviously wrong[19].

34.  On 16 September 2009, the Appeal Committee of the Court of Final Appeal (constituted by Li CJ and Bokhary and Ribeiro PJJ) rejected Wing Ming’s renewed application for leave to appeal in respect of the pipe issue, holding that the decisions of Reyes J and the Court of Appeal were case specific and did not turn on the said question, and as to discretionary leave on the “or otherwise” basis, Wing Ming was, apart from anything else, confronted with concurrent factual findings adverse to it which it had no reasonable prospects of having overturned[20].

35.  Wing Ming eventually demolished the Partition Wall and reinstated the Original CPS 2 to 4 in about June 2010. The reinstated car parking spaces were demarcated by different colour floor paint (in light grey inside rectangular white outlines) from the common areas (in darker grey).

(v)  The 2016 Action against Sanwa

36.  On 11 July 2016, Wing Ming commenced the present action, HCA 1805/2016 (“the 2016 Action”), against Sanwa, alleging that Sanwa had been trespassing on the Original CPS 2, and sought, inter alia, an order for possession of the Original CPS 2 and mesne profits from June 2011 until delivery up of vacant possession of the Original CPS 2. The underlying basis of this claim was that what Wing Ming sold to Sanwa under the Assignment was the Re-designated CPS 2, instead of the Original CPS 2 (of which Wing Ming contended it had all along retained the right to the exclusive use and possession).

37.  Sanwa defended Wing Ming’s claim on the basis that it had throughout been the legal and beneficial owner of the Original CPS 2 shown on the DMC Ground Floor Plan, and sought an order that the Assignment Plan be rectified to depict the correct location of the car parking space that it had purchased from Wing Ming as the Original CPS 2.

(vi)  The 2018 Action against the IO

38.  On 17 April 2018, Wing Ming commenced an action in the Lands Tribunal in LDBM 89/2018 (“the 2018 Action”) against the IO, seeking the dissolution of the existing Management Committee of the IO and the appointment of an accountancy firm as the administrator of the Building. To justify the claimed relief, Wing Ming complained, inter alia, that the IO had failed to prevent and/or stop the conversion of commons parts in the car park of the Building. The following facts were pleaded by Wing Ming in support of this complaint:

“[29] In HCA 8805/1993, the Court had finally and conclusively determined that the areas of G/F marked ‘VOID’ (i.e. those areas in front of car park spaces nos. 2-10) in the DMC plan (the ‘Void Area’) are common parts of the Building (the ‘HCA 8805/1993 Judgment’).

[30] As such, any vehicle parked in the Void Area would be a conversion of the common parts, in contravention of Clauses 13 and 27 of section IV of the DMC and Section 341 of the BMO [Building Management Ordinance].

[31] There are and were at all material times vehicles parked in the Void Area (see photos at Annexure 2), in breach of Clauses 13 and 27 of Section IV of the DMC and section 341 of the BMO. As such, the IO is entitled to claim mesne profits against these owners, tenants and/or occupiers in breach.

[32] The IO had chosen to take in force and action(s) against [Wing Ming] and/or its tenant(s). [Wing Ming] had duly paid mesne profits of HK$811,855.00 with interest to the IO.

[33] Nevertheless, and notwithstanding [Wing Ming’s] repeated requests and demands, the IO, controlled by the Management Committee, has failed and/or refused to take any enforcement actions against other owners, tenants and/or occupiers in breach. The reason is apparently that these other owners, tenants and/or occupiers are and were at all material times connected to the Management Committee.

[34] The IO’s selective and/or delayed enforcement is in contravention of the HCA 8805/1993 Judgment, the Enforcement Duties Covenants of the DMC and section 18(1)(c) of the BMO, as well as a breach of the common law and/or equitable duties owed by members of the IO as pleaded at paragraph 20 above.”

39.  Wing Ming’s aforesaid pleading was verified by a statement of truth by a director of Wing Ming. It is thus apparent that Wing Ming accepted that the Reyes Judgment finally and conclusively determined that the “VOID” areas were common areas of the Building, and relied on the Reyes Judgment to mount its claim against the IO in the 2018 Action.

THE JUDGMENT

40.  The trial of the 2016 Action took place before the Judge in November 2021. At the trial, the Judge heard oral evidence from Mr Yuen (managing director of Wing Ming) and Mr Ng (director of Sanwa). As pointed out by the Judge, it was common ground that the case turned on interpretation of documents rather than the credibility of the witnesses.

41.  On 16 November 2021, the Judge gave the Judgment in favour of Sanwa.

42.  In the Judgment, the Judge made, inter alia, the following material findings:

(1)  The Colour Copy Plan was not attached to the PSPA, which only mentioned the DMC as an attachment[21].

(2)  The subject matter of the PSPA was the Original CPS 2. Further, it was unlikely that the subject matter of the PSPA was different from the subject matter of the subsequent Assignment[22].

(3)  The common intention of the parties was to transact only what was properly able to be transacted. The common intention was and remained to conclude a transaction on the sale of 5 equal undivided shares, with the right to use “CPS 2” in the Building[23].

(4)  The allocation of 5 equal undivided shares to Car Parking Space No 2 in the DMC was to the Original CPS 2, not to any area marked “VOID” on the DMC Ground Floor Plan[24].

(5)  Wing Ming and Sanwa must have intended to sell and purchase the 5 equal undivided shares together with the rights attached to those shares by the DMC, being the right to use, hold and occupy the Original CPS 2[25].

(6)  There was no approval by the Building Authority and/or the Director of Lands of the re-designation of the Original CPS 2 to 4 by Wing Ming, nor was there actual agreement between the co-owners of the Building to any relevant variation of the commons areas under the DMC[26].

(7)  Wing Ming was in any event bound by the findings in the Reyes Judgment and the CA Judgment on the ground of issue estoppel[27], and/or abuse of process[28].

(8)  On the basis that there was a clear common intention that the subject matter of the Assignment up to the time of its execution was not properly reflected by the Assignment Plan, the Assignment should be rectified so as to correctly reflect the true intention and the correct location of the car parking space as the Original CPS 2[29].

43.  Accordingly, the Judge:

(1)  granted a declaration that Sanwa has since 8 February 1992 up to the present been the legal and beneficial owner of the car parking space no 2 as shown and marked “2” on the DMC Ground Floor Plan; and

(2)  ordered that the Assignment Plan be rectified to depict the correct location of the car parking space no 2 conveyed by Wing Ming to Sanwa as the car parking space no 2 as shown and marked “2” on the DMC Ground Floor Plan.

THE PRESENT APPEAL

44.  Wing Ming appealed against the Judgment by a Notice of Appeal dated 13 December 2021. In the Notice of Appeal, Wing Ming raises the following grounds of appeal:

(1)  Ground 1 - the Judge erred in law and in fact in holding that the common intention of the parties was that the subject matter of the Assignment up to the time of its execution was the Original CPS 2.

(2)  Ground 2 - the Judge erred in law and in fact in failing to give proper weight to various items of evidence in reaching the above conclusion regarding the subject matter of the Assignment.

(3)  Ground 3 - the Judge erred in law and in fact in granting an order for rectification of the Assignment.

(4)  Ground 4 - the Judge (i) wrongly rejected Wing Ming’s evidence that it obtained the requisite approval from the Building Authority, and there was no objection from the Director of Lands, as regards the re-designation of the Original CPS 2 to 4, and (ii) erred in holding that there was no actual agreement between the co-owners of the Building to any relevant variation of the common areas under the DMC.

(5)  Ground 5 - the Judge erred in law and in fact in concluding that Wing Ming was in any event bound by the findings in the Reyes Judgment and the CA Judgment, and that Reyes J was “clearly right” in holding that the areas marked “VOID” adjacent to the Original CPS 2 to 4 were common areas.

(6)  Ground 6 - the Judge erred in law and in fact in holding that the principle of estoppel by convention did not factually apply in this case.

(7)  Ground 7 - the Judge erred in law and in fact in holding that Sanwa did not trespass upon the Original CPS 2 and no damages be awarded to Wing Ming.

DISCUSSION

(i)  Grounds 1 and 2 - the subject matter of the sale and purchase

45.  The ascertainment of the subject matter of the sale and purchase between Wing Ming and Sanwa depends on the true construction of the PSPA. According to Wing Ming, the PSPA constituted the preliminary sale and purchase agreement of the Re-designated CPS 2[30]. On the other hand, Sanwa denies that the subject matter of the sale and purchase under the PSPA was the Re-designated CPS 2, which was not in existence as at the date of the PSPA nor referred to in that document or the DMC; instead the common intention of the parties was that Wing Ming agreed to sell and Sanwa agreed to buy “CPS 2 which Wing Ming had title and the right to convey”, ie the Original CPS 2[31].

46.  The applicable principles for the construction of a written agreement are well settled. The Court shall have regard to, amongst other matters, its context and purpose, the factual matrix surrounding the agreement, as well as the language used by the parties. The exercise is an objective one.

47.  In the present case, the subject matter of the sale and purchase under the PSPA is stated to be “the captioned property (‘the Property’)”, that being a reference to the “Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre” mentioned at the beginning of that document. There is no suggestion that, as at the date of the PSPA, any area on the Ground Floor of the Building was actually marked “2”. In our view, the “Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre” was plainly a reference to an area marked “2” on a floor plan of the Ground Floor of the Building. The Judge found, as a fact, that the Colour Copy Plan was not attached to the PSPA; instead the PSPA only referred to the DMC as an attachment. In Clause 6(ii)a of the PSPA, it was expressly agreed by the parties that the intended transaction was “subject” to the existing DMC. It was also declared that “the Purchaser has read through the DMC before signing this Offer Letter”. The DMC Ground Floor Plan was one of the plans attached to the DMC.

48.  In our view, the “Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre” in the PSPA is a reference to the area marked “2” on the DMC Ground Floor Plan. The only area marked “2” on the DMC Ground Floor Plan is the Original CPS 2. The area corresponding to the Re-designated CPS 2 is marked “VOID”, not “2”. The fact that both the Original CPS 2 and the “VOID” area in front of it are coloured green in the DMC Ground Floor Plan does not assist Wing Ming, because the subject matter of the sale and purchase under the PSPA is not the “Space Marked ‘green’ on the Ground Floor of Wing Ming Industrial Centre”. The “VOID” area in front of the Original CPS 2 or, what amounts to the same thing, the Re-designated CPS 2, is not the subject matter of the sale and purchase under the PSPA.

49.  The Judge’s conclusion that the subject matter of the agreement for sale and purchase between Wing Ming and Sanwa under the PSPA was the Original CPS 2 is further supported by the following considerations:

(1)  The “VOID” area in front of the Original CPS 2 was, as held by Reyes J and the Court of Appeal, a common area of the Building. This finding was based on an objective reading of the DMC and consideration of the relevant surrounding circumstances. Ordinarily, one would not expect Wing Ming, being the grantee of the Lot and the developer of the Building with full knowledge of the provisions of the Conditions of Grant (including SC (9) and (10)) and the layout of the car parking spaces on the Car Park Layout Plan, to seek to sell to Sanwa a common area of the Building. On the contrary, one would have thought that Wing Ming would seek to sell something to which it had title or which it had the right to sell (or, in the Judge’s words, “to transact only what was properly able to be transacted”[32]). In this regard, it is trite that, as a matter of construction, the court should, where reasonably possible, seek to avoid a conclusion which is contrary to business common sense or objectively unreasonable.

(2)  While it may be accepted that (i) Wing Ming had, at all material times, an intention to convert the Original CPS 2 to 4 to some use(s) other than for the parking of vehicles and “move” the car parking spaces forward to the “VOID” areas in front of them, and (ii) Mr Ng was aware that the car parking space that he was going to purchase might, subject to application and approval, be “moved forward”[33], Wing Ming plainly accepted that the intended exercise could only be done with the approval of the appropriate Government authorities[34]. As held by Reyes J and the Court of Appeal, up to the date of the Assignment, Wing Ming had not, as a matter of fact, obtained any such approval.

(3)  As found by the Judge, during a tour of the premises in July or August 1991, Mr Ng was taken by a staff of JLW (which the Judge considered to be acting as Wing Ming’s agent[35]) to look at the car parking spaces on the Ground Floor of the Building, and he was shown the Original CPS 2 to 4[36]. This finding is not contradicted by the fact that at the time of looking around the Ground Floor of the Building, although Mr Ng saw that the space shown looked big enough to park two private cars, he was given to understand that any parking space that he might buy would likely only have space for one private car[37].

50.  Under Ground 1, Wing Ming argues that all contemporaneous documents show that the subject matter of the sale and purchase was the Re-designated CPS 2 (§1.1 of the Notice of Appeal). We set out below the main documents relied upon by Wing Ming and our comments on them:

(1)  The “1^st Offer Letter” dated 28 August 1991 and its attached plan showing the location of the Re-designated CPS 2 marked “2” - the “1^st Offer Letter” is the first version of the offer letter referred to in §19 above. This document does not assist Wing Ming because: (i) there is no finding by the Judge that any plan was attached to it, and we are not prepared to making any such finding of primary fact, (ii) it was signed by JLW only, but not by Sanwa or Wing Ming, and (iii) it differed from the PSPA in at least one material aspect, namely, the inclusion of Clause 6(ii)a, whereby the parties expressly agreed that the intended transaction was subject to the DMC.

(2)  The “2^nd Offer Letter” dated 28 August 1991 and its attached plan showing the location of the Re-designated CPS 2 marked “2” - the “2^nd Offer Letter” is the second version of the offer letter referred to in 19 above. The same comments in (1) above apply, save that a circular chop of Sanwa appears on pages 1 and 2 of that document.

(3)  The PSPA and the Colour Copy Plan showing a space marked “2” and coloured green as the location of the Re-designated CPS 2 - as found by the Judge, this document was not attached to the PSPA.

(4)  The Assignment and the Assignment Plan - as found by the Judge, the Assignment/Assignment Plan did not reflect the true common intention of the parties as regards the subject matter of the assignment and ought to be rectified.

(5)  The chops of Sanwa as appeared on the Colour Copy Plan (regardless of whether it was attached to the PSPA) - the Judge was not bound to accept the evidence of Mr Yuen as regards the circumstances in which the Colour Copy Plan came into being, and made no finding on the date on which, or the circumstances in which, the chops of Sanwa were applied to that document. The fact that Sanwa applied its chop on the Colour Copy Plan would tend to suggest that there was some discussion in relation to the area marked “2” and coloured green on that plan, but it would be speculative to infer from this fact that Wing Ming and Sanwa had reached any concluded or firm agreement that the subject matter of the sale or purchase was the green area shown on the Colour Copy Plan.

51.  On behalf of Wing Ming, Ms Audrey Eu, SC argues the fact that Mr Ng admitted (at §10 of his first Witness Statement) that the “Property” to be sold required application to the Building Authority first[38] shows that the “Property” could not be the Original CPS 2, because no approval from the Building Authority was required for the sale of the Original CPS 2 by Wing Ming to Sanwa[39].

52.  At §10 of his first Witness Statement, Mr Ng referred to a provision in an earlier draft, unsigned offer letter dated 22 August 1991 for the purchase of the “Space Marked ‘2’ on the Ground Floor of Wing Ming Industrial Centre”. That provision (“Requisite Approval Clause”) was reproduced in the PSPA:

“We have been informed by Wing Ming that it has applied to the Building Authority for approval to use the Property for parking of private car. There are also some legal matters that Wing Ming has to deal with before Sanwa’s above offer can be accepted. If the Building Authority does not give the approval sought or the legal matters cannot be dealt with, Sanwa’s above offer cannot be accepted by Wing Ming.

If the Building Authority gives its approval and the legal matters can be dealt with, Wing Ming agrees to first consider accepting Sanwa’s above offer. In consideration of this, Sanwa agrees to make its above offer irrevocable.”

53.  In our view, the part of the evidence of Mr Ng that Ms Eu relies upon should be read in light of the fact, as found by the Judge, that there was discussion between Mr Ng and JLW concerning the possibility of “moving forward” the car parking space intended to be purchased by Sanwa from the Original CPS 2 subject to proper approval being obtained and certain “legal matters” being satisfactorily dealt with[40]. Mr Ng’s position was that -

“Sanwa agreed to this approach because we would not purchase (and Wing Ming also confirmed that it would not sell) an unlawful car parking space. The intention of both parties was that Wing Ming agreed to sell to Sanwa, and Sanwa agreed to purchase from Wing Ming a parking space that Wing Ming has ownership, which is confirmed by paragraph 6 of the draft offer letter:

‘(i) The Property will be sold to Sanwa or its nominee free from incumbrances and with a good title.’”[41]

54.  Mr Jonathan Chang, SC (for Sanwa) argues that on a proper reading of the PSPA, it only suggested that in the absence of Building Authority approval, Wing Ming could not sell the right to use the Re-designated CPS 2 to Sanwa. However, this did not alter the parties’ intention to conclude a transaction on the sale of 5 equal undivided shares together with the right to use “Car Parking Space No.2” in the Building (ie the Original CPS 2). One problem with this submission is that generally speaking, a word or expression in a written agreement ought to bear the same, consistent meaning throughout the document. If, as earlier mentioned, upon the true construction of the PSPA, the word “Property” should be read as a reference to the Original CPS 2, it would be difficult to reconcile such construction with the statement in the Requisite Approval Clause that Wing Ming “[had] applied to the Building Authority for approval to use the Property for parking of private car” (underlining added).

55.  While we would accept that the language used in the Requisite Approval Clause is not perfect and cannot be fully reconciled with what we consider to be the true construction of the PSPA, we believe that the intention of the parties was clear: Wing Ming’s wish was to move the Original CPS 2 forward to the “VOID” area in front of it to become the Re-designated CPS 2 and sell it to Sanwa. On the other hand, Sanwa’s wish was to purchase a lawful car parking space which Wing Ming had ownership of and was lawfully able to sell. Objectively, the car parking space that Sanwa wished to purchase would be the Original CPS 2. Nevertheless, Sanwa was willing to take the car parking space as moved forward if Wing Ming was able to obtain the requisite Government approval to enable Wing Ming to sell it to Sanwa. If Wing Ming was unable to obtain the requisite Government approval, Wing Ming would be under no obligation to proceed with the intended sale and purchase of a car parking space in the Building.

56.  As it was, Wing Ming failed to apply for, or obtain, the requisite Government approval to change the layout of the Car Park Layout Plan, or move the Original CPS 2 forward to the “VOID” area in front it, and yet proceeded to complete the sale and purchase under the PSPA. Objectively, there was nothing to suggest that the parties had changed their intention to enter into a lawful transaction involving a sale and purchase of a car parking space which Wing Ming had ownership of and was lawfully able to assign to Sanwa. By proceeding to complete the PSPA in such circumstances, the clear intention of the parties to the Assignment must continue to be to transact what was properly able to be transacted, ie an assignment of the Original CPS 2.

57.  Wing Ming also relies on some other bits and pieces of Mr Ng and Mr Yuen’s evidence in support of its case that the subject matter of the sale and purchase was the Re-designated CPS 2 and not the Original CPS 2[42] (§1.2 of the Notice of Appeal). It is not necessary to deal with them in any great detail. As mentioned by the Judge, it was common ground that the present case turns on interpretation of documents[43]. In Ms Eu’s opening, she also says that “[t]he crux is the interpretation of contemporaneous documents signed by the parties as seen in the context of the surrounding circumstances”[44].

(1)  The evidence of Mr Ng that Ms Eu relies upon concerns the possibility that the car parking space that he intended to purchase from Wing Ming would be “moved forward”. We have already dealt with this matter above and shall not repeat our views here.

(2)  In so far as the evidence of Mr Yuen is concerned, Ms Eu relies on his evidence that “he had no intention of selling the Original CPS 2 because, even before partition of the Building for the first sale, he has already decided to extend the existing G/F warehouse to incorporate the Original CPS 2, 3 and 4 and extend the loft above the CPS 2, 3 and 4”. Save what was disclosed in the DMC or the documents exchanged between JLW and Sanwa, or specifically brought to Sanwa’s attention, Mr Yuen’s subjective intention is not relevant or admissible for the purpose of construction of the PSPA. In any event, we do not consider that the said intention of Mr Yuen affects our conclusion that, upon the true construction of the PSPA, the subject matter of the sale and purchase between Wing Ming and Sanwa was the Original CPS 2.

58.  Wing Ming contends that the Judge’s finding that the common intention of the parties up to the time of execution of the Assignment was that the subject matter of the Assignment was the Original CPS 2 is contrary to the factual matrix (§1.3 of the Notice of Appeal). We set out below the matters relied upon by Wing Ming and our comments on them:

(1)  The JWL letters (including those referred to in §§17-19 above) which it is said contain special covenants consistent with Wing Ming’s evidence that it had no intention of selling the Original CPS 2 and the intention was to sell the Re-designated CPS 2 after the Building Authority’s approval - in our view, while those documents indicated that Wing Ming had the intention to convert the Original CPS 2 to 4 to other use(s), Wing Ming was fully aware that it could not do so without the approval of the appropriate Government authorities, which Wing Ming never obtained. Also, they do not show that Wing Ming had no intention of selling the Original CPS 2 to Sanwa.

(2)  The fact that the sale and purchase of CPS 2 was specifically postponed and was not done at the same time as the sale and purchase of the 5/F of the Building - as a matter of fact, the provisional agreement for the sale and purchase of the 5/F of the Building was made on the same date as the PSPA. Although the assignment of the car parking space took place later (on 8 February 1992) than the assignment of the 5/F of the Building (on 10 September 1991), this fact does not mean or indicate that the subject matter of the sale and purchase under the PSPA was the Re-designated CPS 2. Ms Eu relies on Mr Ng’s “admission” that he was told that the reason for the postponement was that Wing Ming would not sell the Original CPS 2 to Sanwa and the sale and purchase of the space “moved forward” would have to wait until Wing Ming obtained the necessary approval from the Building Authority. However, Wing Ming never obtained the necessary approval to change the Car Park Layout Plan or the layout or use of the Original CPS 2, and yet proceeded to enter into the Assignment with Sanwa. This would indicate, objectively, that what Wing Ming intended to assign to Sanwa under the Assignment was what it could lawfully and properly assign, ie the Original CPS 2.

(3)  The special covenants in the DMC and other documents concerning the sale and purchase of some other floors and/or car parking spaces of the Building to purchasers prior to the Assignment - those covenants show that Wing Ming intended, amongst other things, to convert the uses of the Original CPS 2 to 4 and alter some common areas of the Building to make up for the car parking spaces lost as a result of the conversion. However, such changes were subject to the approval of the relevant Government authorities, which Wing Ming never obtained. The covenants do not “confirm” Wing Ming’s intention not to sell the Original CPS 2 as argued by Ms Eu.

(4)  Wing Ming hired professional help to carry out the proposed conversion and alteration, including architects and contractors for the application to the Building Authority and Deacons to advise on the preparation and execution of the DMC, plans and other conveyancing documents - we do not see that these matters are relevant to the true construction of the PSPA (or the DMC).

59.  Wing Ming next argues that the Judge erred in law and in fact in holding that the common intention was to transact only what was properly able to be transacted, and he conflated (i) the question of the common intention of Wing Ming and Sanwa in respect of the subject matter of the sale and purchase under the Assignment with (ii) the question of whether something was properly able to be transacted, which Ms Eu says was a question of title (§1.4 of the Notice of Appeal). We do not accept this argument. As a matter of ordinary business commonsense, one would have thought that the parties to an assignment would seek to transact what was properly able to be transacted. It is, of course, conceivable that in some special circumstances, the parties to an assignment may knowingly enter into a transaction where the assignor’s title to the property to be assigned may be in doubt or may be known to be defective. However, there was nothing on the facts of this case to suggest that this was what Wing Ming and Sanwa intended to do by entering into the Assignment. In our view, what could properly or lawfully be transacted was a matter which the Judge was entitled to take into account when determining the true, objective intention of the parties to the Assignment.

60.  Wing Ming argues that the Judge erred in law and in fact insofar as the finding in §40 of the Judgment (ie the subject matter of the PSPA was the Original CPS 2) was based on his finding that that there was no dispute that, as at the date of the PSPA, the Re-designated CPS 2 was neither in existence nor referred to in the DMC. Wing Ming also complains that the Judge was wrong to say that there was no dispute that the Re-designated CPS 2 was neither in existence nor referred to in the DMC (§1.5 of the Notice of Appeal). In our view:

(1)  Regardless of whether there was any dispute on this matter, it is plain that, as a matter of fact, the Re-designated CPS 2 was not in existence nor referred to in the DMC as at the date of the PSPA.

(2)  The fact that, as at the date of the PSPA, the Re-designated CPS 2 was not in existence nor referred to in the DMC is relevant as part of the factual matrix for the proper construction of the PSPA, in particular, the question of what was the true subject matter of the sale and purchase under that document.

61.  Wing Ming next argues that insofar as the Judge reached his finding in §80 of the Judgment (namely, what the parties must have intended to be the subject-matter of the Assignment was the Original CPS 2) was based on the assignment of 5 equal undivided shares allocated to the Original CPS 2 in the DMC, he conflated the issue of a legal estate in land with the issue of exclusive possession of the subject matter of the sale and purchase under the Assignment (§1.6 of the Notice of Appeal). As can be seen from the above discussion, we have arrived at the conclusion that the subject matter of the sale and purchase under the PSPA is the Original CPS 2 without relying on the fact that under the DMC, 5 equal undivided shares are allocated to the Original CPS 2. On the other hand, the fact that 5 equal undivided shares have been allocated to the Original CPS 2 in the DMC is relevant to the question of the parties’ common intention as regards the subject matter of the Assignment. For the purpose of this part of the discussion, the following principles are relevant:

(1)  “Prima facie, the co-owners of land have the right of possession in common to every part of the land. In relation to a multi-storied building there cannot be a proprietary right to the exclusive possession of part of the building except as an incident of common ownership in the land and building” [emphasis original] (Jumbo King Ltd v Faith Properties Ltd (1992) 2 HKCFAR 279, at 290A-B per Litton PJ).

(2)  By a deed of mutual covenant, the rights of exclusive possession to individual parts of a building are marked out as between the co-owners. In this sense, “an undivided share may ‘carry’ a right to exclusive possession of a defined space” in the building (Jumbo King, at 290F-G per Litton PJ).

(3)  Since the right to exclusive possession of a defined part of a building is not a proprietary right in itself and can only exist as an incident of ownership of the land and building, such right cannot be assigned separately on its own without the assignment of some undivided share(s) at the same time (King Prosper Trading Limited v Urban Renewal Authority, HCAL 56/2009 (unreported, 17 December 2010), at §78 per Poon J (as he then was)).

(4)  However, the right to exclusive possession of a part of a building does not necessarily have to be “attached” to any particular undivided share(s). Thus, “if an owner in common of some undivided share in a building has the right, under a covenant with him as such owner, to occupy a specific part of the building, there is no conceptual objection to his assigning the right to occupy together with any undivided share” [underlining added] (Jumbo King, at 298G-H per Lord Hoffmann; see also King Prosper, at footnote 13).

62.  In the present, case, 5 undivided shares have been allocated to the Original CPS 2 under the DMC. By the Assignment, those 5 undivided shares were assigned by Wing Ming to Sanwa. There is no, or no sufficient, evidence that Wing Ming and Sanwa intended to “de-couple” or “dissociate” the 5 undivided shares from the Original CPS 2. In such circumstances, the prima facie inference is that Wing Ming and Sanwa intended that the right to exclusive possession of Original CPS 2 would be passed from Wing Ming to Sanwa together with the 5 undivided shares under the Assignment.

63.  Lastly, Wing Ming argues that insofar as the Judge based the finding that the common intention between the parties was that the subject matter of the Assignment up to the date of its execution was the Original CPS 2 on the physical demarcations on the Ground Floor of the Building, such finding is unsafe and unreliable as this was never an issue and no evidence was given as to what physical demarcations there were and when or why or by whom physical demarcations were made (§1.7 of the Notice of Appeal). In this regard, Wing Ming refers to and relies upon §§7, 63 and 102 of the Judgment. We have considered those paragraphs of the Judgment, but do not see that the said finding of the Judge was based on the actual physical demarcations on the Ground Floor of the Building. In particular:

(1)  At §7 of the Judgment, the Judge referred to what happened in 2010 when Wing Ming demolished the Partition Wall and re-instated the Original CPS 2 to 4, and gave a general description of the appearance of the re-instated car parking spaces (different floor paint surrounded by a white line). This part of the Judgment is merely a narration by the Judge of the background facts, and did not form any part of the Judge’s reasoning process leading to his view that the common intention between the parties was that the subject matter of the Assignment up to the date of its execution was the Original CPS 2.

(2)  At §63 of the Judgment, the Judge referred to the observation by Reyes J at §40 of the Reyes Judgment that if a 40-foot container were parked in the Container Space shown in the DMC Plan, Sanwa would not be able to park a vehicle in the Re-designated CPS 2, so that the lines marking off the Container Space had consequently been painted so as to extend no further than the edge abutting that space. In response to Ms Eu’s criticism that Reyes J apparently did not know that the purchaser of the Container Space had covenanted to give access across the end of it to CPS 2, the Judge remarked that the criticism was somewhat weakened by the fact of re-painting. The covenant relied upon by Ms Eu is a non-point, because the true construction of the DMC cannot depend on subsequent events which were not in existence as at the date of the DMC.

(3)  At §102 of the Judgment, the Judge was dealing with the issue of “Trespass and Remedy”, which had nothing to do with his finding concerning the common intention of the parties as regards the subject matter of the Assignment.

64.  Ground 2 of the Notice of Appeal contends that the Judge erred in law and in fact in failing to give proper weight to the Assignment and the Assignment Plan. As mentioned in §50(4) above, the Judge found that the Assignment/Assignment Plan did not reflect the true common intention of the parties as regards the subject matter of the assignment and should be rectified. We agree with the Judge’s view on this matter.

65.  In all, Grounds 1 to 2 are rejected.

(ii)  Ground 3 - rectification

66.  Wing Ming argues that the Judge erred in law and in fact in granting an order for rectification of the Assignment in that:

(1)  the Judge’s own equivocal finding at §40 of the Judgment that “it seems to me that the subject matter of the PSPA was the Original CPS 2” was not sufficiently clear evidence for rectification; and

(2)  there was no pleading for mistake and there is no “mistake” in the documentation.

67.  Point (1) is just semantics. At §106 of the Judgment, the Judge made a specific finding that it was “a clear common intention that the subject-matter of the Assignment up to the time of its execution was not properly reflected by the Assignment Plan”.

68.  In respect of point (2), the issue of “mistake” is a red-herring. In Hua Tyan Development v Zurich Insurance Co Ltd (2014) 17 HKCFAR 493, at §51, Ma CJ (with whom the other members of the Court of Final Appeal agreed) set out the correct approach to rectification of a contract where it does not accurately reflect the parties’ true agreement, as follows:

“… the correct approach to rectification of a contract where it does not accurately reflect the parties’ true agreement, is that set out in Agip SpA v Navigazione Alta Italia SpA (The Nai Genova and Nai Superba):-

‘As the law stands, the conditions which must be satisfied if rectification is to be granted on the grounds of common mistake may, in my opinion, be summarized as follows:

First, there must be a common intention in regard to the particular provisions of the agreement in question, together with some outward expression of accord. Secondly, this common intention must continue up to the time of execution of the instrument. Thirdly, there must be clear evidence that the instrument as executed does not accurately represent the true agreement of the parties at the time of its execution. Fourthly, it must be shown that the instrument, if rectified as claimed, would accurately represent the true agreement of the parties at that time: (see generally Snell’s Equity, 28^th ed. (1982) at pp. 612-614).’”

69.  The above principles were set out by the Judge at §105 of the Judgment, and he found the 4 conditions for rectification of the Assignment to be satisfied.

70.  As for Wing Ming’s reliance on the fact that the Assignment was prepared by Sanwa’s solicitors, that fact, while relevant to the question of whether the Assignment Plan accurately reflected the parties’ common intention regarding the subject matter of the Assignment, was not conclusive. In view of the Judge’s finding of a clear common intention that the subject matter of the Assignment up to the time of its execution was not properly reflected by the Assignment Plan, the Judge was plainly correct to make an order for rectification of the Assignment. All the more so having regard to the declaratory relief granted by the Judge (see §43(1) above).

(iii)  Grounds 4 - title

71.  Under this ground, it is argued that the Judge (i) wrongly rejected Wing Ming’s evidence that it had obtained the approval from the Building Authority, and there was no objection from the Director of Lands, as regards the re-designation of the Original CPS 2 to 4, and (ii) erred in holding that there was no actual agreement between the co-owners of the Building to any relevant variation of the common areas under the DMC.

72.  This ground can be disposed of briefly. Reyes J and the Court of Appeal both found that Wing Ming had failed to obtain the requisite Government approval required by SC (10) to change the layout of the Car Park Layout Plan, or convert the “VOID” areas in front of the Original CPS 2 to 4 for use as car parking spaces. We agree with this finding, and do not propose to repeat the reasoning of Reyes J and the Court of Appeal leading to it.

73.  In any event, this finding of Reyes J and the Court of Appeal has stood for many years, and constituted an essential step to their conclusion that Wing Ming was not entitled to shift the Original CPS 2 to 4 to the “VOID” areas in front of them. The Court of Final Appeal was not prepared to re-examine the correctness of this finding on the basis that it amounted to a concurrent finding of fact. The general principle against disturbing a concurrent finding of fact made by the first instance court and the intermediate appeal court only applies to the Court of Final Appeal when considering an appeal against the judgment of the intermediate appeal court in which the relevant finding was made, and has no application to our present situation. Nevertheless, we should be slow to re-open such a finding where no new relevant evidence has been adduced unless we consider it to be plainly wrong. We are far from being satisfied that this is the situation in the present case.

74.  In short, we do not accept the argument that the Judge wrongly rejected Wing Ming’s evidence that its purported re-designation of the Original CPS 2 to 4 had been relevantly approved by the appropriate Government authorities[45]. This conclusion makes it unnecessary to consider the further question of whether there was actual agreement between the co-owners of the Building to any relevant variation of the common areas under the DMC. We would merely observe that on Wing Ming’s case, the “VOID” areas were not common areas but formed part of the “car parking spaces” as defined in the DMC, and thus there was no need for Wing Ming to vary the common areas under the DMC in order to re-designate the “VOID” areas in front of the Original CPS 2 to 4 to become the Re-designated CPS 2 to 4 (although any such re-designation would still require the Government’s approval of the necessary changes to the Car Park Layout Plan)[46]. On the other hand, if (as rightly held by the Judge), the “VOID” areas were (and are) common areas under the DMC, the other co-owners’ agreement to such re-designation would be required. However:

(1)  There is nothing in the DMC which empowers Wing Ming to convert the “VOID” areas, being part of the common areas, into car parking spaces.

(2)  Although in some of the sale and purchase agreements between Wing Ming and purchasers of various premises of the Building, there was a provision which gave Wing Ming a power to alter the common areas provided that the purchaser might determine the agreement if the increase or decrease in the area sold to the purchaser should exceed 5% of the saleable area of the premises agreed to be sold[47], such provision was not repeated in the subsequent assignments[48]. It is questionable whether the said provision in the sale and purchase agreements was intended to continue to have effect after completion, or was effective only up to completion[49].

(iv)  Ground 5 - the Reyes Judgment and CA Judgment

75.  Under this ground, Wing Ming argues that the Judge erred in law and in fact in concluding that it was bound by the findings in the Reyes Judgment and the CA Judgment, and that Reyes J was “clearly right” in holding that the areas marked “VOID” adjacent to the Original CPS 2 to 4 were common areas.

76.  This ground can also be disposed of briefly. Regardless of whether Wing Ming is strictly bound by, or is barred from seeking to re-open, the findings in the Reyes Judgment and/or the CA Judgment, we agree with them, in particular the findings that: (i) the “VOID” areas are common areas of the Building under the DMC, (ii) the “Vehicle Parking Space(s)/Car Parking Space(s)” as defined in the DMC relate only to the spaces marked “1” to “11” and coloured green, but not the “VOID” areas even though they are also coloured green, on the DMC Ground Floor Plan, and (iii) Wing Ming failed to obtain the requisite approval from the appropriate Government authorities required by SC(10) to change the layout of the Car Park Layout Plan, or convert the “VOID” areas in front of the Original CPS 2 to 4 for use as car parking spaces.

77.  The above findings have stood for many years, and have been acted upon by both Wing Ming (in demolishing the Partition Wall and re-instating the Original CPS 2 to 4) and Sanwa (in moving its vehicle back to the Original CPS 2). That being so, we would not be minded to re-open them unless there are compelling reason(s) to do so. We can see none.

78.  We also agree with the Judge that Wing Ming is bound by, and/or is barred from seeking to re-open, the above findings in the Reyes Judgment and/or CA Judgment on the ground of issue estoppel/abuse of process. Wing Ming’s present challenge to the said findings plainly constitutes an impermissible attempt to mount a collateral attack on the Reyes Judgment and CA Judgment which have become final and conclusive following the Court of Final Appeal’s refusal to grant leave to appeal in respect of the “pipe issue”. Wing Ming’s challenge to the finding that the “VOID” areas in front of the Original CPS 2 to 4 are common areas is particularly egregious having regard to the fact that (i) Wing Ming and Sanwa had acted upon that finding for many years prior to the commencement of the 2016 Action, and (ii) Wing Ming has plainly accepted that the Court finally and conclusively determined that the “VOID” areas were common areas of the Building and relied on that finding to mount the 2018 Action against the IO.

(v)  Ground 6 - Estoppel by convention

79.  The estoppel raised by Wing Ming concerns the question of whether Sanwa can dispute Wing Ming’s title or use of the Re-designated CPS 2[50].

80.  The alleged estoppel is based on the premise that both Sanwa and Wing Ming had acted on the common assumption that Sanwa would buy and Wing Ming would sell the Re-designated CPS 2 after Wing Ming had obtained the requisite approval to change the layout of Car Park Layout Plan and use the “VOID” area in front of the Original CPS 2 as a car parking space, and that the Assignment was completed on the common assumption that Wing Ming had obtained the requisite approval[51]. However, Wing Ming never obtained the requisite approval, and there is no finding by the Judge that the parties proceeded to complete the sale and purchase based on any common assumption that Wing Ming had obtained the requisite approval. Thus, Wing Ming has failed to prove the underlying factual basis for the alleged estoppel to arise.

81.  In any event, even if the parties had acted on any (mistaken) assumption that Wing Ming had obtained the requisite approval (which we do not accept to be the case), it would be unjust to uphold the alleged estoppel against Sanwa because (i) the mistaken assumption was the result of Wing Ming’s own failure to obtain the requisite approval from the appropriate Government authorities, and (ii) Sanwa will not be entitled to use the Re-designated CPS 2 as its car parking space because that is a common area of the Building. As correctly held by the Judge, the Court should not give effect to an arrangement which would trample on the rights of third parties (ie the other co-owners of the Building and/or the IO).

(vi)  Ground 7 - trespass

82.  In view of the conclusions reached above, the issues of whether Sanwa trespassed on the Original CPS 2 and whether any damages should be awarded to Wing Ming do not arise for consideration.

83.  For the same reason, it is not necessary to consider the Respondent’s Notice, which is relevant only in the event of Wing Ming’s appeal being allowed.

DISPOSITION

84.  Wing Ming’s appeal against the Judgment is dismissed with costs to Sanwa, to be taxed if not agreed, with certificate for 2 counsel.