WONG KWOK CHIANG AND OTHERS v. LONGO CONSTRUCTION LTD AND OTHERS

IN THE COURT OF APPEAL

No.45 of 1987
(Civil)

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JUDGMENT

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Silke,V.-P.:

1. I will ask Hunter, J.A. to give the judgment of the Court.

Hunter, J.A.:

2. This is an appeal from that part of the order of Liu, J. made on 11th April of this year, whereby he ordered the vacation of the registration at the Land Office of a Deed of Grant dated 16th May 1952.

3. This is part of a longstanding dispute, which has already been before the court several times, between the owners of two adjacent properties 73D and 73C Waterloo Road. The plaintiffs are the owners of D, and I shall call them 73D, a practice which has been adopted by every tribunal so far. The second defendant is the owner of 73C. The whole problem stems from a mutual drainage agreement made in 1952, when these twin 3-storey buildings were apparently first erected. C put in a septic tank, and it then seemed convenient to drain both properties into that tank. There resulted the Deed of Grant of 16th May, which granted the owners of D the right to drain into that septic tank, and to use the pipe which they themselves constructed upon a named line from D into the septic tank beneath C. There were provisions for maintenance and repair and the sharing of costs.

4. The trouble really is that a mutual drainage agreement in 1952 for houses of that dimension becomes totally unreal in the circumstances of 1987, when you have got at the moment the original structure still on D, but: we have been told, something like a 24-storey structure en C.

5. What happened was that when C started to be redeveloped, the septic tank was simply destroyed and the drainage system for D was switched, away from the septic tank into some other connection to the main drainage or otherwise. The matter was done sufficiently ski1lfully as well as secretly by the builder on the site of C, because it escaped the notice of the owners of D for sometime. But proceedings eventually started. The writ was issued on 28th July 1984. There were interlocutory proceedings but no claim for an injunction for reinstatement. The statement of claim was eventually delivered on 16th February 1985 out of time by leave, with no claim for reinstatement.

6. On 1st April of the same year the defence was filed, which alleged an implied term in the Deed of Grant allowing the owner of C to vary the form of drainage. There were some commital proceedings which came before the court on 4th April of the same year, which resulted in an order for a speedy trial. This order, I regret to say, seems to have been totally ignored by everybody. It was said that there were no proper directions attached to the order. That may well be true. But it is a matter of great simplicity to fill that void by applying for directions subsequently.

7. The case took a rather more serious turn in 1986 with an amendment in the 18th June of the statement of claim asking then for an order for reinstatement. This was coupled with an attack on the defence, an attempt to strike out the paragraph pleading an implied term, and then to seek an interlocutory judgment on admissions following the successful striking out, the interlocutory judgment sought being a declaration of entitlement and a mandatory injunction. Those tactics were totally successful before Jones, J., who made orders to that effect on 23rd July.

8. On 31st October of the same year this court took a radically different view. The court set aside the declaration. It set aside the mandatory injunction. It held that up to that time there had been very little damage suffered because there had been no sign of inconvenience for the loss of the septic tank; and as far as the future was concerned the matter could be wholly dealt with the terms of money. This was not a case where the court could properly grant specific relief. Clough, J.A. in particular, pointed out that the simple way of assessing the damages here would be by the cost of a direct connection to the public sewer. Following that further thought seems to have been given to that proposition, coupled with comment from the architect acting for the owners of C that he thought that in future the Government might well insist upon any sewerage connection from D going directly into the main sewer and not through C. One can well understand that this was more than a possibility. This resulted in a letter being written in November 1986 by the defendant to the plaintiffs offering to pay the costs of that connection.

9. Nothing positive has so far come from that. No order was obtained front the court for the assessment of damages until March 1987. That assessment has been started but stands adjourned. It. is instructive to notice that the first head of damage claimed, so we were told, is the cost of the direct connection to the public sewer as suggested by Clough, J.A. This seems to me a totally sensible approach. This is plainly the proper way of draining the site of D in the future, without further conflict between the owners of C and D. Speaking for myself it seems to me that if the costs of that connection were paid then the plaintiffs would be properly and completely compensated for the loss of their Deed of Grant and the septic tank.

10. That is the position now. When the matter came before Liu, J. he concluded that by reason of the judgment of the Court of Appeal in this case, there was no question now but that the plaintiff’s rights under it, sounded only in damages. He said this:

"These rights and obligationbs under the Deed of Grant have since the institution of this action, been abrogated by a decision of the Court of Appeal. It cannot now be argued that the 1952 Deed of Grant could give rise to anything more than a claim in damages by the plaintiffs."

11. In those circumstances he came to the conclusion that this Deed of Grant did not "affect" land.

12. The criticism Mrs. Spruce directs at his decision really goes like this. She says first that when granted this Deed of Grant did affect land and was plainly registrable and properly registrable under Section 2(1) of the Land Registration Ordinance because it created an easement over land. She follows it up by, saying again quite properly, that that interest was a legal interest.

13. She then seeks to say that interest subsists until it is in fact expressly released by D, and in effect the subject matter of this easement cannot be released by anything less than a deed. But the problem here is this. The subject matter of this easement was in fact the septic tank. That septic tank has been destroyed. With it this easement was physically destroyed unless this court was prepared to direct its replacement; by making some order for specific relief in favour of the plaintiffs. If this court was not prepared to grant specific relief it necessarily followed that the plaintiff1s rights sounded only in damages.

14. This result was spelt out by the Privy Council in the circumstances which I have particular reason to remember, in Anstalt Nybro v. Hong Kong Resort(1). That was a case where the original registration had been proper because it was in fact an option to purchase validly affecting land. It was also a case in which the court came to the conclusion that there was no question of specific relief ever being granted. The particular head of relief being sought was specific performance. It therefore followed that although the document had been validly registered the party could not maintain the registration because the rights under it sounded only in damages und not by way of specific relief. I think the trial judge here was quite correct in directing himself by the principles of that case.

15. At the present moment on the assessment of damages, it is more than likely that the plaintiff will recover the cost of the direct connection to the main sewer. That puts an end to all the problems created by the mutual drainage scheme, effective in 1952; ineffective and compeltely out of date in 1987. Thos costs will, it seems to me, fully compensate the plaintiffs for the effective loss of the Deed by the denial of specific relief. The Deed as it stands no longer affects land and the trial judge was quite correct in the exercise of his inherent jurisdiction to order the vacation of the entry.