Case Detail

CACV000199A/1991

1991, No. 199
(Civil)

IN THE COURT OF APPEAL

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BETWEEN
	INCORPORATED OWNERS OF CHUNGKING MANSIONS	Plaintiff (Respondent)

	AND

	SHAMDASANI, MURLIPESSUMAL	Defendant (Appellant)

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Coram: Hon Penlington, Bokhary, JJ.A. and Godfrey, J.

Date of hearing: 13 October 1993

Date of delivery of judgment: 13 October 1993

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J U D G M E N T

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Godfrey, J.:

1. This is an application for leave to appeal to the Privy Council from an order of this Court made on 26th February 1993 dismissing the appellant's appeal. The period for an appeal to the Privy Council, a period of 14 days from the date of that order, expired on 12th March 1993. The present application was made on 17th June 1993, almost 4 months after the date of the judgment of this Court. In those circumstances, the proposed appeal cannot proceed unless this Court grants leave. This Court must consider before doing so: (1) the length of the delay; (2) the reasons for the delay; (3) the chances of the appeal succeeding if an extension of time is granted; and (4) the degree of prejudice to the respondent if the application is granted: see the judgment of Lord Donaldson of Lymington M.R. in Norwich & Peterborough Building Soc. v. Steed [1991] 1 WLR 449 and see also Mallory v. Butler [1991] 1 WLR 458.

2. I turn first to the length of and reasons for the delay. The delay was occasioned, the appellant says, because the solicitors acting for him in his appeal to this Court failed to advise him of his right to appeal to the Privy Council. The appellant puts the matter in this way in paragraph 3 of his affirmation made on 30th September 1993:-

"3. My previous legal advisers did not advise me in relation to my right of appeal to the Privy Council, and I was, therefore, unaware of such right and the prescribed time limits."

Speaking for myself, I am extremely surprised by this. I should have thought that the appellant's previous solicitors would have been under a duty to advise their client of his right of appeal to the Privy Council; in this jurisdiction, a right to appeal as of right when the sum involved in the appeal is (as here) of sufficient size, and would have been unlikely to fail to discharge that duty. I am also extremely surprised that the appellant was not aware, quite independently of any advice given or not given to him by his former solicitors, of that right. But that is what he has said in his affirmation and, as Mr Coleman for the appellant observes, it is only right for us to act on the footing that what the appellant says is true. I propose therefore, despite my misgivings, to accept that the appellant did not become aware of his right of appeal to the Privy Council in time to launch his appeal within the prescribed period. It appears that he did not approach his present solicitors for advice until mid-April 1993, when he was for the first time advised of the possibility that he might be able to appeal from the decision of this Court to the Privy Council. Thereafter, it took some little time for the appellant's solicitors and counsel to get their tackle in order before launching this present application.

3. Mr Coleman submitted that it was the duty of solicitors and counsel properly to prepare an application of this sort and that accordingly this further delay was not unjustified. However, having regard to the fact that the appellant was already out of time, I should have thought it incumbent on his solicitors and counsel to treat the matter as one of urgency. And as Lord Donaldson of Lymington M.R. pointed out in Norwich & Peterborough Building Soc. v. Steed (see above) at p.454:-

"Once the time for appealing has elapsed, the respondent who was successful in the court below is entitled to regard the judgment in his favour as being final. If he is to be deprived of this entitlement, it can only be on the basis of a discretionary balancing exercise, however blameless may be the delay on the part of the would-be appellant."

4. The delay here has been considerable, and in my judgment was not justified.

5. I come now to the third factor to be considered; the chances of the appeal succeeding if an extension of time is granted.

6. Two points are taken by Mr Coleman. The first is a limitation point. I need not describe this. It was taken unsuccessfully before the judge. It was not pursued at all before this Court. Mr Coleman says he ought to have leave to resurrect it before the Privy Council. In my view, it would be quite wrong for this Court to assist the appellant to do this. The point was abandoned, and in these circumstances it seems to me absurd to suggest that this Court should consider the point to be of sufficient substance to warrant leave to appeal being granted from the decision of this Court to the Privy Council.

7. The second point is a point on estoppel. This Court pointed out in its judgment that there was no dispute in this case as to the law or to the facts, but only as to the conclusions which ought to be drawn from them. Mr Coleman complained that in the judgment of this Court, when considering the estoppel point this Court must have confused the concepts of "representation" and "reliance". But this was mere playing with words. And he says that, over a long period of time, the conduct of the respondents, the incorporated owners of Chungking Mansions, must have led many people to think that they would not object to a continuance of the conduct of which they now complain. In a very broad sense, the appellant's feeling that he has been treated inequitably is quite understandable. But this Court is not concerned with equity in so broad a sense. The question before this Court was simply: whether or not the proprietary estoppel for which the appellant was contending could possibly be established on the facts of the case. This Court came to the clear and unequivocal conclusion that it could not.

8. Mr Coleman in effect now seeks to resurrect, not the proprietary estoppel argument which failed before this Court, but a different argument based on estoppel which was also abandoned before this Court. Once again, it seems to me to be absurd to suggest that in those circumstances the appellant should be given leave to put his case before the Privy Council in a completely different way from the way which it was presented to this Court.

9. In the result, I am, for my part, quite satisfied that there are no merits in the application.

10. As to the fourth factor, the respondents have not suggested at any stage that they would suffer any prejudice if the application was granted. Indeed, it appears to be the case that the respondents wish to embark upon the same course of conduct from which they say the appellant is precluded. There would, therefore, be nothing in this point if it were taken by the respondents (which it is not). But for the reasons I have attempted to state, I am quite satisfied that this application for leave to appeal ought to be dismissed.

Bokhary, J.A.:

11. Litigation is, for those engaged in it, unsettling in a variety of ways while it lasts. And the life or potential life of litigation is extended by a system of appeals. Nevertheless, that system is efficacious and indeed necessary if justice is to be administered properly as a system. Also, its potential for the unsettling of the affairs of litigants is limited by an arrangement under which the time limited for lodging appeals is strictly regulated, subject only to an overriding judicial discretion which by its nature is to be exercised cautiously.

12. It is no small matter to say to a winning party that the other side is to have leave to appeal out of time and, therefore, after a time when the winning party become entitled to think that the matter was at an end in his favour.

13. The approach to the discretion to extend time for appealing has been dealt with fully by my brother Godfrey. For the reasons which he gives, I am of the opinion that, on a proper approach to the relevant factors, this is clearly a case in which there should be no extension and no leave to appeal to Her Majesty in Council. I, too, would dismiss this application.

Penlington, J.A.:

14. I have considered the first aspect of this matter, the question of delay, on the basis that of course we have an affidavit before us and provided it does not patently appear to be false we should accept it. But, nevertheless, there must be some degree of skepticism that the appellant; a businessman, should not be aware of cases going to the Privy Council from this Court particularly where they involve substantial sums of money. However, as I say, accepting that the affidavit correctly sets out the reason for the delay, we then turn to the merits of the application. Having considered the judgment of this Court of which I was not a member and having looked particularly to the course of conduct of this litigation, I have no doubt whatever that there is no reasonable prospect of success should we grant the leave asked for. The application for leave to appeal to the Privy Council out of time is refused. The respondent will have its costs of the application.

(R.G. Penlington)	(K. Bokhary)	(G.M. Godfrey)
Justice of Appeal	Justice of Appeal	Judge of the High Court

Representation:

Mr Russell Coleman (Messrs Robert W.H. Wang & Co.) for the Appellant

Mr Warren Chan (Messrs Ng & Partners) for the Respondent

CACV000199/1991

1991, No.199
(Civil)

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H E A D N O T E

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Where, by words or conduct, one party leads another to believe that whatever the first party's strict legal rights he will not insist on them, and the second party, to his detriment, acts in reliance on this, the first party will be held estopped from insisting, unconscionably, on his strict legal rights; but if it would have been ultra vires the first party to contract out of his strict legal rights, the second party cannot claim the benefit of such an estoppel against the first party.

1991, No.199
(Civil)

IN THE COURT OF APPEAL

________________

BETWEEN
	THE INCORPORATED OWNERS OF CHUNGKING MANSIONS	Respondent

	AND

	SHAMDASANI, MURLI PESSUMAL	Appellant

________________

Coram: Hon Fuad, V.-P., Nazareth, J.A. and Godfrey, J.

Date of hearing: 16 February 1993

Date of judgment: 26 February 1993

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J U D G M E N T

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Godfrey, J.:

1. At the conclusion of the argument in this case we said that the court's judgment would be reduced into writing. This is that judgment, which I now hand down.

2. This is an appeal from an order of Mr Jerome Chan (sitting as a Deputy Judge of the High Court) made on 31st May 1991, the substantive effect of which was to dismiss the appellant's claim to be entitled to continue in possession or occupation of a number of units ("the A units") in Chungking Mansions, Nathan Road, Kowloon.

3. Before the judge, the appellant claimed to have acquired a possessory title to these A units; the judge rejected this and before us the appellant did not attempt to make good this claim. Instead, the appellant contended that the respondent had induced him to assume, to his detriment, that he would be allowed to occupy and let out these A units as they had been occupied and let out by his predecessor Maidstone Investments Limited ("Maidstone") which had assigned, or purported to assign, the A units to him; and that, in those circumstances, it would be unconscionable for the respondent to be permitted now to deny the appellant the right to occupy or let out the A units. On this basis, said the appellant, the court should make an order in his favour the effect of which would be to allow him to continue to occupy and let out the A units, if not for ever, then at least for some considerable period of time.

4. There is no difficulty about the law. If, by its words or conduct, the respondent did indeed lead the appellant to believe that, whatever the strict legal position, the appellant would be allowed to continue to occupy and let out the A units as Maidstone had, and the appellant, to his detriment, did act in reliance on this, equity will step in to prevent the respondent from now attempting, unconscionably, to insist on its strict legal rights. But is that what happened here?

5. In order to answer that question, we have to look at all the circumstances to see (1) whether the respondent did, by words or conduct, lead the appellant to believe that it would not insist on its strict legal rights; (2) if so, whether the appellant arranged his affairs in reliance on that belief; and (3) if so, whether he did so to his detriment.

6. The facts are not in dispute; what is in dispute is whether the conclusions indicated are those which ought to be drawn from them.

7. The facts are as follows.

8. Chungking Mansions is a building of 18 storeys and a basement developed on a piece of land in Kowloon by one Jaime Chua Tiampo, to whom an occupation permit was issued on 11th November 1961. On 1st May 1962, Mr Tiampo executed a deed of mutual covenant ("the DMC") affecting the building, from which it appears that there were assigned to him 916 of the 920 equal undivided shares in which the land was held. Under the regime constituted by the DMC, Mr Tiampo became entitled to the exclusive use, occupation and enjoyment of all but 4 units (3 shops and 1 flat) in the building.

9. The building of course contained common parts for the use and enjoyment of all those entitled to units in the building. Over the years, however, a number of additional units including the A units have, illegitimately, been created within the common parts. These units do not have allotted to them any undivided shares in the land on which the building stands; and they do not appear on the original building plan. They were carved out of recesses or encroachments in the corridors and lift lobbies. Their occupiers have always been assessed for rates and for management charges, despite the illegitimacy of their creation.

10. On 28th January 1972, the respondent was incorporated under s.8(1) of the Multi-storey Buildings (Owners Incorporation) Ordinance, Chapter 344. It has a statutory duty to maintain the common parts of the building in a state of good and serviceable repair and clean condition: see s.18(1)(a). It has also a statutory duty to do all things reasonably necessary for the enforcement of the obligations contained in the DMC : see s.18(1)(c). The rights, powers, privilege and duties of the owners in relation to the common parts of the building are to be exercised and performed by the corporation to the exclusion of the owners : see s.16.

11. In January 1976, the appellant took a tenancy of Shop 65 from Mr Tiampo.

12. In March 1980, the A units (save one which was assigned separately) were assigned by Mr Tiampo to Maidstone. This was a Liberian registered company controlled by the Tiampo family. Maidstone continued to let out the A units as had Mr Tiampo. The misuse of the common parts in this way was at all times open and conspicuous and (so long as the A units were owned by Mr Tiampo or Maidstone) tolerated by the respondent, in disregard of its statutory duties to which I have referred.

13. Some years later, the appellant was minded to purchase Shop 65. But Maidstone was willing to sell Shop 65 only as part of a lot including the A units. The appellant was willing to go along with this. However, it had been the policy of the respondent to object to sales of units which had been carved out of the common parts of the building. When it heard of the sale to the appellant, it objected accordingly (although it does not seem to have been successful in communicating its objection to the appellant and, indeed, does not seem to have made much of a fist of trying).

14. The price which Maidstone negotiated with the appellant for what it was selling to, or foisting on, him was HK$13,500,000. The appellant needed, in connection with this transaction, the assistance of his bank; and of his solicitors. His bank referred his request for financial assistance to its own solicitors Messrs Johnson, Stokes and Master. This firm advised the bank as follows :

"Our land search record and the Deed of Mutual Covenant relating to the above building reveal that the above premises do not hold any share in the land as they originally were part of the common areas. In the absence of further evidence, we do not think that the developer of the said building has the right to assign the exclusive right to use the said premises to the present owner. However, the developer or its solicitors may have in their possession document (s) (not having been registered in the Land Office) to show that the developer has in fact such a right to dispose the said premises."

15. On 29th December 1985, the bank indicated that in the circumstances it was not in a position to finance the appellant's purchase but that it would be prepared to reconsider the appellant's request if he could provide the bank with further details or the documents mentioned by the bank's solicitors.

16. In the end, the bank agreed to advance only HK$7,500,000 in connection with the appellant's purchase. Although the appellant would obtain no title as to the A units he would obtain a title to the remainder of the property the subject matter of the purchase; and the bank was presumably satisfied that the latter afforded it sufficient security for an advance of HK$7,500,000.

17. The appellant's own solicitors, Messrs Lo & Lo, expressed the same concern as the bank's solicitors. The appellant was anxious to put through his agreement with Maidstone; but his solicitors were prepared to assist him to do so only if he was prepared to address and sign a letter to them in the following terms :

" I refer to my instructions to you to put through an Agreement under which I will agree to purchase the above property for $13,500,000.00 from Maidstone Investment Ltd., the present owner. I acknowledge that you have explained to me and advised me as follows:-
1. The present owner and the present owner's predecessor in title have for many years been in undisturbed possession of certain units included in the sale and purchase namely Shop No.9A on the Ground Floor and Shops 8A, 25A, 41A, 43A, 46A, 80A and 95A on the First Floor and Units A10 on the 3rd, 8th, 11th, 12th, 13th, 14th, 15th and 17th Floors of the Building but the right to the exclusive use of the said units has not been reserved by or granted to the present owner or the present owner's predecessor in title under the Deed of Covenant of the building or any other deed or document and the present owner's title to the said units is defective and in the Agreement for Sale and Purchase I will be required to agree to accept such title as the present owner has.

2. The walls of the said units and the sanitary installations in Unit A10 on 17th Floor have not been approved by the Building Authority.
3. Shop No.99 on the Ground Floor is now used as the transformer room of the building and I will be required to covenant at all times hereafter to permit such use and to permit access thereto.

Having heard and understood your advice and explanation I confirm my instructions to you to proceed with the Agreement for Sale and Purchase."

18. On 14th March 1986 the appellant addressed and signed a letter to his solicitors in these terms; and on the same day he entered into an agreement for the purchase at the price of $13,500,000. That agreement contained, as clause 11, the following provision :

"11. The Vendor and the Vendor's predecessor in title have been in undisturbed possession of the following units specified in the said Schedule namely Shop No.9A on the Ground Floor, Shops Nos.8A, 25A, 41A, 43A, 46A and 95A on the First Floor and Units A10 on the Third, Eighth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth and Seventeenth Floors ('the said Units') for many years but the right to the exclusive use of the said Units has not been reserved by or granted to the Vendor or the Vendor's predecessor in title under the Deed of Covenant specified in the said Schedule or any other deed or document and the Vendor shall not be required to show any title to the said Units except an Assignment Memorial No.1868564 and the Purchaser shall accept such title as the Vendor has."

19. By an assignment of 1st July 1986, Maidstone assigned, or purported to assign, "the properties" to the appellant.

20. Those are the facts. They fall far short of what would be needed to justify a conclusion that the respondent had, in fact, induced the appellant to assume that he would be allowed to continue and occupy the units in question as Maidstone had done. We go further. We can discern nothing whatever in the evidence which would support such a conclusion. No doubt, the respondent had quite openly allowed Maidstone, and before Maidstone Mr Tiampo, to occupy and let out these units. No doubt, too, when the appellant decided to purchase the properties he acted in "the confident and not unreasonable hope" (we borrow this expression from Lord Templeman : A.G. of Hong Kong v. Humphreys Estate (Queen's Gardens) Ltd [1987] AC 114, at p.125) that this state of affairs would, indeed, be allowed to continue, for he gave evidence that Mr Tiampo's son had expressly told him that his occupation and use of the property would not be disturbed; but that is of no assistance to the appellant since Mr Tiampo's son had no authority of any kind to make such a statement to the appellant on behalf of the respondent.

21. So the appellant's case fails at the first hurdle. The respondent did not, in any way at all, induce the appellant to believe that, if he purchased the A units, he would be allowed to continue to make the same use of them as Maidstone, and before Maidstone, Mr Tiampo had been allowed to do. The respondent was not responsible for the way in which the appellant acted. The appellant had had no dealings of any sort with the respondent before he chose to enter into the Agreement of 14th March 1986, which, as we have seen, he did with his eyes open but his mind closed to the difficulties which had been drawn to his attention. Whatever representation the respondent might have been held to have made to Mr Tiampo, or to Maidstone, there is no warrant for holding that any such representation was made to them, not only for their own benefit, but also for the benefit of their successors in interest. In any case, just as it would have been unlawful for the respondent to contract to allow anybody the exclusive use of units carved out of the common parts of the building (because so to do would be a breach of its statutory duty) so also it would have been impossible for the respondent to bring about the same result by making representations which might otherwise have given rise to an estoppel: Western Fish Products Ltd v. Penwith District Council [1981] 2 All ER 204.

22. In the circumstances, the questions of reliance and detriment do not arise and it is unnecessary to consider them. It is also unnecessary to consider the point, properly taken on behalf of the respondent, that the appellant's case as advanced before us by Mr Neville Sarony, Q.C., in the course of his elegant and attractive argument on behalf of the appellant, was not his pleaded case as advanced in his defence and counterclaim. (We note in this connection that the judge, at p.8 of his judgment, recorded: "No reliance has been placed by the defendant on the doctrine of proprietary estoppel...").

23. This appeal therefore fails; and pursuant to O.42, r 5B(6) of the Rules of the Supreme Court we order that the costs of the respondent of the appeal are to be taxed (if not agreed) and paid by the appellant to the respondent.

(K.T. Fuad)	(G.P. Nazareth)	(G.M. Godfrey)
Vice-President	Justice of Appeal	High Court Judge

Representation:

Mr Neville Sarony, Q.C. and Mr Andrew Chung (M/s Munro & Claypole) for Appellant

Mr Warren Chan (M/s Ng & Partners) for Respondent

SHAMDASANI, MURLI PESSUMAL v. THE INCORPORATED OWNERS OF CHUNGKING MANSIONS

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