HCA816/2004
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 816 OF 2004
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| BETWEEN | | |
| | COGI ENTERPRISES LIMITED | 1st Plaintiff |
| | SPEEDY GAINER LIMITED | 2nd Plaintiff |
| | CHOW SHING KEE INVESTMENT COMPANY LIMITED | 3rd Plaintiff |
| | and | |
| | THE INCORPORATED OWNERS OF MALAHON APARTMENTS | Defendant |
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Before : Hon Sakhrani J in Court
Date of Hearing : 21-22, 25-28 January 2010 and 3-4 February 2010
Date of Judgment :5 May 2010
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J UD GM EN T
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1. The 1st, 2nd and 3rd plaintiffs are companies incorporated in Hong Kong.
2. Thedefendants (“the IO”) were and still are the incorporated owners of the building known as Malahon Apartments (“the building”) incorporated in or about 1977 under the Multi-Storey Buildings (Owners Incorporation) Ordinance (Cap. 344) which was renamed as the Building Management Ordinance (Cap. 344) (“the BMO”) in or about 1993.
3. The building is at Jaffe Road in Causeway Bay, Hong Kong. It is a multi-storey building consisting of commercial and residential units. The commercial part of the building comprises the basement to the 2nd floor. The residential part comprises the 3rd to 18th floors.
4. The building was constructed in the 1960s. The occupation permit for the building was issued on 21 October 1966.
5. Malahon Investment Company Ltd (“Malahon”) was the developer and the first owner of the building.
6. A Deed of Mutual Covenant for the building was executed on 12 September 1967 between Malahon as the first owner and Tam Bok Man as the second owner (“the DMC”).
7. By an assignment dated 6 June 1972 (“the 1972 assignment”) Malahon assigned shop numbers 2, 2A, 3, 4, 7 and 8 on the ground floor and other parts of the building to Chin Kam Development Ltd (“Chin Kam”).
8. By an assignment dated 11 February 1988 (“the 1988 assignment”) Chin Kam assigned shop numbers 2, 2A, 3 and portion of shop 4 on the ground floor and other parts of the building to the 1st plaintiff (“Cogi”).
9. By an assignment dated 31 May 2004 Cogi assigned to the 2nd plaintiff the portion of shop 4 on the ground floor of the building.
10. By an assignment dated 31 May 2004 Cogi assigned to the 3rd plaintiff shops 2, 2A and 3 on the ground floor of the building.
11. The matters in dispute in the claim and in the counterclaim in these proceedings relate to 4 separate matters :
(1) the pipeworks as coloured in yellow and shown in the revised plan marked Revised B (“the revised B plan”) in the re-re-amended statement of claim (“the RRASC”) which pass through shop 2A on the ground floor of the building (“the pipeworks”);
(2) The pipeducts or lightwells which are on the ground floor of the building and marked in orange in the revised B plan (“the pipeducts”). The pipeducts are also marked A, B, C, and D in exhibit P1;
(3) The passage to the switch room as coloured in blue and shown in the revised B plan (“the passage”); and
(4) The door opening facing the lobby on the ground floor of the lobby leading to the toilet coloured in green and shown in the revised B plan (“the door opening”).
12. The agreed issues between the parties are :
The pipeducts
(1) Do the pipeducts form part of the plaintiffs’ private property or are the pipeducts part of the common area of the building?
The pipeworks
(2) When were the pipeworks constructed, and who installed them?
(3) Did the installation of the pipeworks involve building works within the meaning of section 2 of the Buildings Ordinance (Cap. 23) (“the BO”)?
(4) Were the pipeworks installed without the prior approval of the Building Authority?
(5) Are the pipeworks unauthorized building works?
(6) Has the IO, in failing to demolish the pipeworks and/or in failing reinstate the sewer mains at the building, acted in breach of its obligations under clause 3 and/or 4 of the DMC?
(7) Has the IO acted in breach of its duties under section 18(1) of the BMO by failing to enforce the obligations under the DMC and cause the removal of the pipeworks?
(8) Have the plaintiffs by conduct acquiesced to the installation of the pipeworks and/or the passage of the pipeworks through shop 2A or are the plaintiffs estopped from saying that the passage of the pipeworks was without their consent?
(9) Are the plaintiffs entitled to an injunction requiring the IO to remove the pipeworks?
The passage
(10) Did the plaintiffs’ predecessor in title, Chin Kam grant a licence to the IO to use the passage?
(11) Was the licence revocable and, if so, was it validly revoked by the letter dated 14th August 2003?
(12) If the licence was validly revoked, does any use of the passage by the IO constitute infringement of the plaintiffs’ rights as owner, or is the IO still entitled to access the switch room via the passage either under the DMC or by other reasons including necessity?
(13) Are the plaintiffs entitled to an injunction to restrain the defendant from using the passage?
The door opening
(14) Was the door opening created before the execution of the DMC?
(15) Did the creation of the door opening involve a structural alteration or building works within the meaning of section 2 of the BO?
(16) If the answer to Issue 15 is in the affirmative, whether such works are exempted under section 41(3) of the BO?
(17) Was there any breach of clause 3 of the Second Schedule to the DMC?
The witnesses
13. I heard evidence from Chang Ping Kay (“Chang”) a director of Cogi and the representative of all the plaintiffs. Tan Pek Lee, also known as Chen Shun Lee (“Tan”), who was a director of Malahon, also gave evidence on behalf of the plaintiff.
14. I also heard evidence from Ng Lai Ngar (“Ng”), Au Chi Chun, Johnny Lau Fook Chung (“Lau”) and Tang Ping (“Tang”).
15. I also heard expert evidence from Patrick Lau (“Lau”) who gave evidence on behalf of the plaintiffs and from Norman Yiu (“Yiu”) who gave evidence on behalf of the IO.
16. I find that Chang and Tan were honest witnesses. Save for a part of Chang’s evidence which I did not accept as mentioned in paragraph 113 below, I accept the rest of his evidence. I have no hesitation in accepting the rest of the evidence of Chang. I also accept the evidence of Tan. Both Chang and Tan gave truthful and reliable evidence in my view.
17. I also accept that Ng, Au Chi Chun and Lau were honest witnesses. However, their evidence was, in my view, of limited value and do not assist in the determination of the issues.
18. As for Tang, I find that he was a dishonest, untruthful, evasive and unreliable witness. Where his evidence is at variance with the evidence of Chang I have no hesitation in preferring the evidence of Chang to the evidence of Tang whose evidence I did not accept.
The pipeducts
19. The plaintiffs’ case is that it was the common intention of the parties to the 1972 assignment that Chin Kam would become the owner of the pipeducts. However, at the time of the 1972 assignment the pipeducts were mistakenly not coloured in the plan to show that they had been assigned. The same mistake was repeated in the 1988 assignment. It is the plaintiffs’ case that the common mistake was rectified by the respective parties by the two deeds of rectification both dated 3 May 2004. The defendant denies that the pipeducts have been assigned to the plaintiffs.
20. Tan said, and I accept, that Malahon as the developer was meant to assign the pipeducts as well in the 1972 assignment. The pipeducts in the same location on the 1st floor and the basement were clearly assigned by Malahon to the purchasers of the 1st floor and the basement. Malahon did not reserve for itself the pipeducts.
21. In my judgment on the evidence of Tan, which I have no hesitation in accepting, it was clearly the common intention of the parties to the 1972 assignment that the pipeducts on the ground floor were meant to be assigned to Chin K am.
22. There was a failure to colour the pipeducts in the plan annexed to the 1972 assignment. This was repeated in the 1988 assignment. It seems to me, and I so find, that a conveyancing mistake was made when the pipeducts were not coloured in the plan to the 1972 assignment as being part of the properties sold to Chin Kam. The mistake was rectified by a deed of rectification made on 3 May 2004 between Malahon and Chin Kam. As the pipeducts were also mistakenly not coloured in the plan to the 1988 assignment the mistake in that assignment was also rectified by another deed of rectification also made on 3 May 2004 between Chin Kam and Cogi. I so find.
23. The deeds of rectification have been registered in the Land Registry.
24. The common parts of a building means the whole of a building “except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner” (section 2 of the BMO).
25. It is clear that the pipeducts were for the exclusive use, occupation or enjoyment of Chin Kam and then Cogi. By the assignment dated 31 May 2004 Cogi assigned one of the pipeducts together with the portion of shop 4 on the ground floor to the 2nd plaintiff. The other three pipeducts were assigned with the shops 2, 2A and 3 by Cogi to the 3rd plaintiff by the other assignment also dated 31 May 2004.
26. There is no merit in the IO’s case that the pipeducts are common parts of the building. Issue (1) is resolved against the IO. In my judgment the pipeducts form part of the private property of Cogi which were assigned to the 2nd and 3rd plaintiffs. They do not form part of the common parts of the building.
The pipeworks
27. The main dispute at trial was in respect of the pipeworks.
28. It is common ground that the pipeworks are the soil and waste pipes which discharge the sewage from the floors above the ground floor. As shown in exhibit P1 the pipeworks running through shop 2A are from the pipes of the upper floors. The pipeworks pass through the ceiling of shop 2A and the sewage is discharged into the government sewers at the rear lane of the building. Shop 2A was assigned to Chin Kam by the 1972 assignment, to Cogi by the 1988 assignment and to the 3rd plaintiff by the assignment dated 31 May 2004.
29. There can be no doubt that when the occupation permit for the building was issued on 21 October 1966 the building had drainage pipes installed in accordance with approved drainage plans. Unfortunately the approved drainage plans are missing and are not available. The Building Authority no longer has them. Copies of the same are also not available.
30. The plaintiffs’ case is that the pipeworks which were and are still being used to discharge sewage from the upper floors of the building form part of the common facilities of the building which shall be controlled, managed and administered by the IO (section18(1) BMO).
31. It is the plaintiffs’ case that the pipeworks which pass through shop 2A are unauthorized building works. The IO has a duty to remove the pipeworks from shop 2A which presently belongs to the 3rd plaintiff. The IO has failed to act in accordance with its duty and the plaintiffs seek injunctive relief against the IO. Although damages were also claimed this was not pursued at trial.
32. The IO’s primary case is that the pipeworks had been installed when the occupation permit for the building was issued on 21 October 1966. IO’s pleaded case is that the pipeworks “should have been installed by Malahon, Chin Kam or [Cogi]” (paragraph 6(a)(i) of the re-re-amended defence and counterclaim (“RRADC”) ). It is averred in the alternative that Cogi has by its conduct acquiesced the installation of the pipeworks and/or the passage of the same through shop 2A as particularized in paragraph 6(a)(ii) of the RRADC.
33. The IO further avers in the alternative that under the DMC the pipeworks can pass through shop 2A without the prior consent of Cogi and that Cogi is estopped from saying that the pipeworks were installed without its consent.
34. I reject the IO’s primary case that the pipeworks were installed by Malahon, Chin Kam or Cogi.
35. The pipeworks are not shown in exhibit P2, the plan for the ground floor alterations approved on 22 November 1974. The pipeworks are made of UPVC material and not cast iron. In the 1960s when the building was constructed UPVC was not used for drainage pipes. The use of UPVC pipes only became common in the 1980s as confirmed by Yiu in evidence. The fact that the pipeworks are made of UPVC leads to the inference that they could not have been installed when the building was constructed in the 1960s. The pipeworks are not even shown in exhibit P2. What is shown in the area of the pipeducts marked A and B in exhibit P2 are cast iron pipes rather than UPVC pipes running vertically through the ground floor.
36. It is highly unlikely that Malahon installed the pipeworks.
37. The pipeworks do not serve any of the shops on the ground floor. It is highly unlikely in my view that Malahon as the developer of the building would have accepted a design of the building which permitted the pipeworks to pass through valuable commercial space through shops including shop 2A on the ground floor of the building. The basement plan approved on 29 August 1964 (bundle E page 301) shows the pipeducts running all the way down to the basement. It seems to me that this indicates that the pipeworks were installed at some stage after the occupation permit had been issued and that they had not been installed prior to the issue of the occupation permit.
38. By a letter dated 2 August 2004 addressed to the IO the Building Department (“the BD”) regarded the installation of the pipeworks as building works which contravened the provisions of the BO. The IO was asked to remove the unauthorized building works immediately. Clearly the BD’s position is that the pipeworks passing through the shop units on the ground floor are in contravention of the BO as they stated in their letter to the plaintiffs’ solicitors dated 22 May 2009.
39. If the pipeworks had been installed at the time of the occupation permit the BD would not have regarded them as unauthorized building works as the pipeworks would have been installed in accordance with approved drainage plans. Quite obviously the pipeworks were not installed in accordance with any approved plans.
40. There is, in my view, compelling evidence to show that the pipeworks were installed sometime after 1974 and not at the time of the DMC.
41. In my view it is also highly unlikely that Chin Kam or Cogi installed the pipeworks. The pipeworks do not serve shop 2A and neither Chin Kam nor Cogi derive any benefit from the pipeworks. The pipeworks discharge the sewage from the upper floors. The presence of the pipeworks running through shop 2A as shown in the photographs annexed to Lau’s report would clearly have the effect of diminishing the value of shop 2A. I reject any suggestion that Chin Kam or Cogi installed the pipeworks which have the effect of diminishing the value of their valuable commercial property.
42. Chang gave evidence that he did not know when and how the pipeworks were installed. He said that he first became aware of the pipeworks when Cogi put shop 2A together with other premises for sale and he saw the pipeworks during a visit with potential purchasers in 2003. I believe him and accept his evidence. It seems, and I so find, that Chang only became aware of the pipeworks in 2003.
43. According to the land searches in evidence shops 2, 2A and 3 on the ground floor of the building were leased to Wellcome Company Ltd (“Wellcome”) by a tenancy agreement dated 8 November 1990. On the evidence before me Wellcome has operated a supermarket at those shops which includes shop 2A. Wellcome still operates a supermarket there. It is also highly unlikely that the pipeworks were installed after Wellcome leased the premises including shop 2A. Wellcome would not have given permission for the pipeworks which discharge sewage to run through the ceiling of their supermarket where food is sold.
44. It is common ground that before Wellcome operated a supermarket at shops 2, 2A and 3 the premises were used as a restaurant. The land searches show that Mr Beef Restaurant Ltd had a lease for 6 years from 1 March 1985 but as there was the later tenancy agreement with Wellcome dated 8 November 1990 it appears that the restaurant did not operate there for the full 6 years.
45. In the 1964 approved plan for the basement (bundle E page 301) the pipeducts A, B, C and D ran all the way into the basement. And exhibit P2 also shows cast iron pipes running vertically through the pipeducts. Lau also said that when he went to the building he saw manhole covers in the basement. It was his view that the drainage went all the way down to the basement before the installation of the pipeworks. I accept his evidence.
46. Yiu also accepted that in the original design of the drainage the developer would have wished the sewage and the drainage pipes to run to the basement and then be pumped up to the government mains.
47. I find that it is likely that the sewage and drainage pipes serving the premises in the 1st floor and above ran vertically through pipeducts A, B, C and D into the basement before the installation of the pipeworks.
48. Tang is an assistant to a district councillor. He is and has been the Secretary of the IO since about 2002.
49. Tang said, and I accept, that from his investigations he found out that in the basement of the building there were two sump pumps which previously pumped waste water and sewage to the government mains at ground level.
50. The Chairman of the IO is Au Yee Ming (“Au”). Au was a director of Framway Ltd (“Framway”) which is the company which owned flat 11D in the building. Although Tang said earlier in his evidence that his company owned flat 11D, later on in his evidence he contradicted his earlier evidence. He admitted that Framway was Au’s company and not his. He said that he had asked Au to make him a representative of Framway so that he could represent Framway as an owner of premises in the building.
51. There was evidence that Cleverwin Investment Ltd (“Cleverwin”) became the owner of the 2nd floor of the building in May 1988. A club was operated there. Cleverwin is a company which was associated with Au. According to the floor plan in bundle E page 300, which shows the floor plan on the 2nd floor, it is clear that the toilets on the left side of the 2nd floor were moved to the centre. In my view, it is likely that because of the relocation of the toilets, the drainage pipes of the relocated toilets on the 2nd floor had to pass through the pipeduct B. It is likely that because of the relocation of the toilets on the 2nd floor there was extra sewage going through pipeduct B and that the two sump pumps in the basement were unable to cope with the extra sewage.
52. Tang said that he did not know who installed the pipeworks. However, according to him he conducted detailed investigations yet he never asked Au whether he knew how the pipeworks came to be installed. Tang knew that Au’s company Cleverwin had purchased the 2nd floor in 1988 and that there had at some stage been a relocation of the toilets on the 2nd floor. Au was the Chairman of the IO. Yet Tang said that he never asked Au about how the pipeworks came to be installed. In my view his evidence is incredible. I do not believe him.
53. Tang also gave evidence that in 1984 he saw the pipeworks in the kitchen of the Fat Cow Restaurant which was operating in the premises now occupied by Wellcome which includes shop 2A. He said later on that he might have made a mistake about the name of the restaurant he had visited but was adamant that he saw the pipeworks when he went to a restaurant there in 1984. There was absolutely no reason for him to pay any attention to any pipeworks in 1984. He was not the Secretary of the IO then and was not involved with the management of the building. I do not believe his evidence and find that he has lied about seeing the pipeworks in the kitchen of the restaurant in the building in 1984.
54. The IO has failed to give a satisfactory explanation for not calling Au as a witness. In my view an adverse inference can and should be drawn against the IO that if Au had been called to give evidence his evidence would not have supported the IO’s case (see the observations of Le Pichon JA in Li Sau Keung v Maxcredit Engineering Ltd and another [2004] 1 HKC 434 at 443-444).
55. I accept that, as Tang said, there is no record of any discussion in any of the minutes or records of the IO permitting the installation of the pipeworks.
56. Be that as it may, it is clear and I so find that the pipeworks were installed sometime after the 1974 approved building plan (exhibit P2) but before Wellcome leased the premises including shop 2A in 1990.
57. It seems to me that it is likely that the pipeworks were installed sometime in the 1980s as UPVC became popular at that time as a material for pipes.
58. There was evidence that the IO did not pay for the installation of the pipeworks and that the owners who gave evidence were not asked to pay for the installation of them. I accept this evidence. It simply means that the IO and the owners who gave evidence did not pay for the installation of the same. It provides no assistance as to when the pipeworks were installed.
59. As to issue (2), the plaintiffs have not pleaded a positive case as to when the pipeworks were installed and in my view it is not necessary to make a finding as to when the pipeworks were installed and by whom.
60. As to issue (3), I find that the pipeworks do involve building works within the meaning of section 2 of the BO where “building works” is defined to include drainage works.
61. As regards issue (4), it is also clear, and I so find, that the pipeworks were installed without the prior approval of the Building Authority. I have already found that the pipeworks were probably installed in the 1980s.
62. In my judgment, on the evidence, it is clear that the pipeworks were installed without the prior approval of the Building Authority. If they had been installed with the approval of the Building Authority it would not have asked the IO to remove the same.
63. As to issue (5), it is the IO’s case that the pipeworks are not unauthorized building works. Yiu gave evidence that the pipeworks are exempted works under section 41(3A) of the BO. This provides that
“ Drainage works may be carried out in or for any existing building without application to or approval from the Building Authority if those works do not involve-
(a) the structure of any building;
(b) ……………………………….
(c) ……………………………….
(d) ……………………………….
(e) ……………………………….
(f) …………………………….
Provided that nothing in this subsection shall permit any drainage works to be carried out in contravention of any regulation.”
64. Yiu said that the pipeworks did not involve structural walls and hence the pipeworks were exempted works.
65. Yiu, however, accepted that the works were in contravention of the BO by reason of a failure to provide fire resisting collars or material, although he regarded it as a minor contravention.
66. It seems to me that the pipeworks are clearly unauthorized building works as the BD has said and not exempted works. If they were exempted works they would not have been in contravention of the BO and the BD would not have required the IO to remove the same. There is no merit in the IO’s case that the works are not unauthorized building works.
67. I find in favour of the plaintiffs on this issue and find that the pipeworks are unauthorized building works. The BD has to decide what priority to give to enforcement actions against unauthorized building works. It has indicated to the plaintiffs’ solicitors by the letter dated 26 February 2008 that immediate enforcement actions against the unauthorized pipeworks was not warranted in view of the priorities in their enforcement policy. However, this does not mean that the pipeworks are authorized building works. They clearly are unauthorised building works and there is a real risk of enforcement. As Chung J said in Spark Rich (China) Ltd v Valrose Ltd HCMP 3739 of 1997 23 September 1998 at page 16 :
“ It would be astounding to think that a government department vested with the powers (and duty) to enforcement the law would choose not to do so.”
68. Mr Wright, for the plaintiffs, submitted, correctly in my view, that the pipeworks are unauthorized building works. The consequence of that is that the real risk of enforcement by the BD is a blot on the title of shop 2A.
69. As to issue (6), there is no dispute that the IO has failed to demolish the pipeworks. I find that the IO has failed to demolish the pipeworks.
70. Section 18(1)(b) of the BMO provides that the IO shall carry out such works “as may be ordered or required in respect of the common parts by any public officer or public body in exercise of the powers conferred by any Ordinance”. The IO has been required by the letters from the BD to remove the pipeworks which are common parts of the building.
71. Section 18(1)(c) also provides that the IO shall “do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building”.
72. Clause 3 of the DMC provides:
“ Each undivided 314th part or share in the said land and building and the full and exclusive right and privilege to hold use occupy and enjoy each shop office or flat in the said building shall be held by the person or persons from time to time entitled thereto subject to and with the benefit of the easements rights privileges and obligations set out in the First Schedule hereto.”
73. Clause 4 of the DMC provides :
“ The owner or owners for the time being of each undivided 314th part or share in the said land and building and each shop, office or flat in the said building shall during the said respective term of 99 years and 999 years and, where applicable, the renewal thereof be bound by and shall observe and perform the covenants provisions and restrictions set out in the Second Schedule hereto.”
74. Clause 3 of the Second Schedule contains an obligation
“ Not to make any structural alteration to any shop, office or flat of which he is the owner which may damage or affect or interfere with the use and enjoyment of any other part of the said building whether in separate or common occupation or use nor cut injure damage alter or interfere with any part or parts of the said land or building in common use or any of the sewers drains water-courses conduits pipes cable wiring fixtures equipment apparatus or services of the said land and building.”
75. The IO has a duty of enforcement of the obligations in the DMC under section 18(1)(c).
76. The IO could not have granted an owner in the building the right to act in contravention of the DMC (per Godfrey JA (as he then was) in The Incorporated Owners of Hoi Luen Industrial Centre and another v Ohashi Chemical Industries (Hong Kong) Ltd [1995] 2 HKC 11 at page 13).
77. In Fan Tony v Incorporated Owners of Kung Lok Building [2006] 3 HKC 240 Deputy Judge Muttrie said at paragraph 22 of his judgment :
“ In TheIncorporated Owners of Hoi Luen Industrial Centre v Ohashi Chemical Industries (HK) Ltd [1995] 2 HKC 11 it was held that, because of this duty of enforcement, an owners’ corporation could not acquiesce to the breach of a condition of a deed of mutual covenant. It follows that, a fortiori, the incorporation must be under a duty not to breach any of the conditions itself.”
78. It is common ground that the pipeworks are common facilities of the building. The IO relies on clause 3 of the DMC where the full and exclusive right and privilege to hold use and occupy each shop was “subject to and with the benefit of the easements rights privileges and obligation set out in the First Schedule hereto”. These are set out in Part A of the First Schedule. Clause 4 of Part A gives
“ The free and uninterrupted passage and running of water sewage gas and electricity from and to the shop office or flat through the sewers drains water-courses cables pipes and wires which now are or may at any time hereafter be in under or passing through the said land and building or any part or parts thereof.”
79. Clause 1 of Part B imposes obligations on the owners to allow
“ Full right and liberty for the Manager appointed hereunder with or without agents surveyors workmen and others at all reasonable times on giving reasonable notice (except in case of emergency) to enter into and upon each shop, office or flat for the purposes of rebuilding repairing renewing maintaining cleaning painting or decorating the said building or any part or parts thereof or any sewers drains water-courses cables pipes wires or services therein or any other apparatus and equipment used or installed for the benefit of the said land and building as a whole.”
80. It was submitted by Mr Law, with Mr Cheung, for the IO that there was an easement of free passage given to the manager by the DMC. By relying on the words “which now are or may at any time hereafter be in under or passing through the said land and building or any part or parts thereof” it was submitted that it mattered not if the pipeworks were diverted through shop 2A after the execution of the DMC. It was submitted that so long as the pipeworks were common drainage pipes for the benefit of the building there are easement rights given to pass the pipeworks through the exclusive area of shop 2A even though the pipeworks were not in existence at the time of the DMC.
81. It was submitted by Mr Wright that under clause 3 of the Second Schedule of the DMC the owners of the building must not make any structural alteration which may affect or interfere with the use and enjoyment of shop 2A. He submitted that the presence of the pipeworks in shop 2A to which the plaintiffs have the right to exclusive occupancy is a breach of their rights under clause 3 of the DMC.
82. Whether or not there is a right to run the pipeworks through shop 2A must depend on a proper construction of the DMC. The DMC must be construed as at the time it was executed in 1967. The DMC was executed between the developer and Malahon and the first purchaser Tam Bok Man.
83. As Lord Hoffman NPJ said in Jumbo King Ltd v Faithful Properties Ltd & others (1999) 2 HKCFAR 279 at page 296 :
“The construction of a document is not a game of words. It is an attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve……………………. But the overriding objective in construction is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean.”
84. As a matter of the proper construction of the DMC I am unable to accept that in 1967 when the developer was wishing to sell units in the building the first purchaser was agreeing to permit the developer or the manager of the building to run sewage pipes which were not there at the time through her property but could do so at any time thereafter.
85. By clause 1(b) of the DMC Malahon as the first owner expressly reserved for itself the right to erect or install, inter alia, pipes, fittings, apparatus and equipment in or upon any part of the building “other than the shops offices and flats therein the exclusive right to hold use occupy and enjoy the same shall have been assigned” by the first owner. Although there is a right reserved to the developer to install pipes it clearly does not give a right to do so in the shops offices and flats which have been assigned to the first owner and to subsequent purchasers. I accept Mr Wright’s submission that under the DMC there is a right to run drainage and sewage pipes through the building or any part thereof which were in existence at the time of the DMC but it does not give an unrestricted right to subsequently install new sewer and drainage pipes in different locations in shops offices and flats which have been assigned to purchasers.
86. The words “or may at any time hereafter” is explained by reference to clause 1(b) of the DMC. It contemplates that the developer might subsequent to the execution of the DMC install e.g. pipes in the building for the benefit of the owners of the building. However, on a proper construction of the DMC as a whole it seems to me that there was no right in the developer to install new pipes not in existence at the time of the DMC in premises the exclusive use and occupation of which have been assigned. It does not give the developer any right to change the routing of the pipes if it involves going through premises the exclusive use and occupation of which have been assigned. Clause 4 of Part A of the First Schedule is subject to the rights of the first owner as set out in clause 1(b) of the DMC and clause 4 of Part A has to be construed by reference to clause 1(b) of the DMC.
87. It would be absurd in my judgment to construe clause 4 of Part A of the First Schedule as giving a right to the IO an unreserved right to reroute the passage of sewage pipes in the building to go through premises which have been assigned with an exclusive right to occupy the same. Mr Wright submitted that the nature of the obligation imposed does not include an obligation to allow additional pipes (which were not present at the time of the DMC) to be installed which would run through premises which have been assigned with an exclusive right to occupy. I accept Mr Wright’s submissions.
88. Cogi was given the exclusive right and privilege to hold, use and occupy shop 2A. Cogi did not consent to the installation of the pipeworks. As the pipeworks ran through shop 2A this was a breach of the exclusive right and privilege to hold use occupy and enjoy shop 2A.
89. It is plain, and I so find, that the pipeworks constitute a breach of the obligations in the DMC. By section 18(1)(c) of the BMO the IO was under a duty to enforce the obligations contained in the DMC.
90. It seems to me that if an owner of other parts of the building had installed the pipeworks the IO would have been under a duty to enforce the obligations contained in the DMC and to remove the pipeworks. The IO has failed to do so.
91. As to issue (7), I find that the IO has acted in breach of its duties under section 18(1) of the BMO by failing to enforce the obligations under the DMC and cause the removal of the pipeworks.
92. As to issue (8), the IO avers that Cogi has by its conduct acquiesced the installation of the pipeworks as pleaded and particularized at paragraph 6(a)(ii) of the RRADC. It is pleaded that Cogi was under the control of Chang and that Cogi was aware at all material times of (or alternatively responsible for) the installation of the pipeworks and acquiesced the installation of the same passing through shop 2A.
93. On the IO’s pleaded case the only person who is said to have acquiesced in the installation of the pipeworks passing through shop 2A is Chang. I have already found that Chang only became aware of the pipeworks in 2003. There is no evidence that Chang, and through him, Cogi knew of the installation of the pipeworks. For there to be acquiescence there must be an assent or lying by in relation to the acts of another person. There can be no assent or lying by without knowledge (Fan Tony v The Incorporation Owners of Kung Lok Building [2006] 3 HKC 240 at page 246).
94. The IO also relies on estoppel (paragraph 6(b)(iii) of the RRADC). No particulars are given that would support the alleged plea of estoppel save that it was submitted that the pipeworks had been installed for many years and the plaintiffs are estopped from asserting that the pipeworks were installed without any consent. I have already found that Chang did not know of the pipeworks until 2003. There is no merit in the plea of estoppel.
95. As to issue (8), in my judgment the plaintiffs have not by conduct acquiesced to the installation of the pipeworks passing through shop 2A and the plaintiffs are not estopped from saying that the passage of the pipeworks was without their consent.
96. As regards issue (9), the 3rd plaintiff is in my judgment entitled to relief in relation to the pipeworks.
97. Lau gave evidence that in his opinion it was technically feasible to reroute the pipeworks to avoid passing through shop 2A as detailed in his supplementary report at paragraph 5.2. He also gave an estimate of the cost for the same and the time it would take. Lau accepted that his proposed rerouting of the pipes at the ceiling of the basement would not meet the minimum 2 m height clearance for fire safety requirements. He did, however, say that there were other feasible ways of rerouting the pipeworks to avoid passing through shop 2A. I accept his evidence.
98. Yiu was of the view that it was not feasible to reroute the pipeworks at the ceiling of the basement.
99. Yiu was cross-examined as to whether the pipeworks could be rerouted to run vertically down to the basement and whether the sump pumps at the basement would be able to pump the same up to the government mains. He agreed that under the original design of the building the sewage and drainage pipes from the upper residential floors flowed right down to the ground of the basement and then passed through drains to the sump pumps. He said that sump pumps with sufficient capacity could be ordered but these would be expensive.
100. Although it may be expensive to replace the two existing sump pumps which, on the evidence, are very old, the IO has not demonstrated that the rerouting of the pipeworks to the basement and the replacement of the existing sump pumps to sump pumps with a larger capacity is not feasible. I accept that the works may well cost a lot more than the cost estimate given by Lau whose estimate did not include expenses for consulting experts.
101. It seems to me that the 3rd plaintiff is clearly entitled to relief. In my judgment it would be unjust to deny the 3rd plaintiff an injunction to compel the IO to remedy their breach of duty by ordering them to remove the pipeworks. I am satisfied that the 3rd plaintiff is entitled to a mandatory injunction to compel the IO to remove the pipeworks and to reinstate the walls in shop 2A where the pipeworks pass through. The IO has already been required by the BD to remove the pipeworks but they have not done so.
102. I would grant a mandatory injunction to order the IO to remove the pipeworks and to reinstate the wall in shop 2A where the pipeworks pass through. It was submitted by Mr Wright that the IO be given 6 months to comply with the mandatory injunction to remove the pipeworks and that if there were difficulties in complying with the order there should be liberty to apply. I agree.
103. As to issue (9), the 3rd plaintiff is entitled to an injunction requiring the IO to remove the pipeworks and to reinstate the walls in shop 2A where the pipeworks pass through.
The passage
104. There is no doubt that the passage is inside shops 2 and 2A which presently belong to the 3rd plaintiff.
105. It seems to me that the IO has the full right and liberty to pass through the passage to get to the switch room under the provision of clause 1 of Part B of the First Schedule to the DMC which has been set out above in paragraph 79.
106. There is no dispute that various controls and main switches for fire services, lifts, water pumps, electricity supply, lighting for the benefit of the building as a whole are in the switch room. It is important for the proper maintenance and management of the building that the IO does have access to the switch room. The IO has the right to enter the switch room on giving reasonable notice except in case of emergency. The only means of access to the switch room is the passage.
107. The plaintiffs’ pleaded case is that in or about 1977 Ms Wong Sheung Ka of Chin Kam verbally agreed with the then Chairman of the IO to grant a licence to the IO for the use of the passage which was to be revoked upon reasonable notice and that by a letter dated 14 August 2003 the licence was revoked by Cogi (paragraphs 16 and 17 of the RRASC).
108. There was no evidence on behalf of the plaintiffs at trial that a licence was ever granted by Ms Wong Sheung Ka of Chin Kam to the IO as pleaded.
109. In my judgment the IO clearly has the right to enter the switch room under the provisions of clause 1 of Part B of the First Schedule to the DMC and the only means of access to the switch room is through the passage. The plaintiffs have failed to establish its pleaded case on the alleged licence. In my judgment the plaintiffs are not entitled to any relief in respect of the passage.
110. As to issues (10) to (13) the plaintiffs have failed to establish its pleaded case of the alleged licence granted by Chin Kam to the IO. The plaintiffs are not entitled to an injunction to restrain the IO from using the passage.
The door opening
111. There is no doubt that the door opening has been there for a long time. The door opening leads to the toilet as coloured in green in the revised B plan.
112. The plaintiffs’ pleaded case is that in or about 1967 prior to the execution of the DMC Malahon caused the door opening to be made. Although there was evidence that the door opening has been there for a long time there is no reliable evidence showing that it had been made by Malahon or in or about 1967 prior to the execution of the DMC.
113. Chang said that the door opening was made within one month of the issue of the occupation permit. In my view his recollection was inaccurate. I do not accept this part of his evidence. In my view he has not given reliable evidence on this matter. Exhibit P2 being the 1974 approved plan does not show the door opening which is presently there as shown in the revised plan B. In my view the door opening was probably made after the 1974 approved plan. I accept that the door opening has been there for a long time since at least 1982 based on the evidence of Au Chi Chun.
114. I accept Mr Law’s submission that the wall through which the door opening was made constitutes common parts of the building as defined in Schedule 1 to the BMO which includes
“2. Walls, enclosing passageways, corridors and staircases.”
115. There can be no doubt that the wall where the door opening was made is one of the walls enclosing the corridors or passageways on the ground floor of the building.
116. Section 34I of the BMO provides :
“(1) No person may-
(a) convert any part of the common parts of a building to his own use unless such conversion is approved by a resolution of the owners’ committee (if any);
(b) use or permit to be used the common parts of a building in such a manner as-
(i) unreasonably to interfere with the use and enjoyment of those parts by any owner or occupier of the building; or
(ii) to cause a nuisance or hazard to any person lawfully in the building.”
117. It seems to me that it is probable that the door opening was made by Chin Kam sometime before 1982 but after Chin Kam became the owner of shops 2, 2A, 3, 4, 7 and 8 by the 1972 assignment.
118. In my judgment Chin Kam has converted the part of the common parts of the building to its own use by making the door opening at the wall in the corridor of the ground floor lobby. The conversion has not been approved by any resolution.
119. The outer surface of the wall facing the lift lobby must clearly, in my view, be a common part. I accept Mr Law’s submission that the individual shop owners cannot make openings like the door opening for their own use. As Mr Law submitted, correctly in my view, it cannot be right that different owners of shops can simply make their own door openings through the common walls in the corridor for their own use.
120. By section 34I(2) of the BMO any person contravening subsection (1) shall be deemed to be in breach of an obligation on him by the deed of mutual covenant in respect of the building. It seems to me that the DMC is deemed to be breached by Chin Kam the predecessor in title and the IO is entitled to relief in respect of the door opening.
121. As to issue (14), in my judgment the door opening was not created before the execution of the DMC.
122. As to issues (15) to (17), the restriction in clause 3 of the Second Schedule to the DMC is not to make “any structural alteration to any shop….”. The creation of the door opening is, in my view, not a structural alteration. It seems to me that the creation of the door opening was an exempted work under section 41(3) of the BO as it did not involve the structure of the building. The case of Incorporated Owners of Elite Garden v. Profit More Co. Ltd [2002] 2 HKLRD 518 relied on by the IO is in my view distinguishable on its facts. In that case it was held that there was a structural alteration made by the owner of a unit in the building where holes had been made in the exterior walls and windows had been installed in that unit.
123. There was evidence that a fire shutter has been installed behind the door in the door opening for fire safety. In the event of a fire the fire shutter would automatically come down. It could be lifted up manually but it was heavy and difficult to lift up.
124. Yiu’s evidence was that the only matter of complaint about the door opening was that it posed a fire hazard. In evidence he was of the view that the creation of the door opening was not an unauthorized building work but the provision of the fire shutter in his view prevents the means of escape contrary to regulation 41(1) of the Building Planning Regulations. I accept his evidence on this.
Conclusion
The pipeducts
125. I give judgment to Cogi, the 2nd and 3rd plaintiffs on their claim for a declaration that the pipeducts were at all material times and still are private areas and not common areas of the building. I dismiss the IO’s counterclaim for a declaration, injunction and orders in respect of the pipeducts.
The pipeworks
126. I also give judgment to the 3rd plaintiff on its claim for a mandatory injunction to compel the IO to remove the pipeworks and to reinstate the walls in shop 2A where the pipeworks pass through by 5 November 2010 with liberty to the parties to apply in case there is difficulty in complying with this order. The IO’s counterclaim for a declaration and injunction in respect of the pipeworks is dismissed.
The passage
127. I dismiss the plaintiffs’ claim for injunctive relief in respect of the passage.
128. I give judgment to the IO against Cogi on its counterclaim in respect of the passage as claimed for
(1) a declaration that the IO does have the right to enter and pass the passage through shop 2A for the purpose of entering the switch room of the building to repair, renew or maintain the building or any part thereof or any cable wires for the benefit of the building; and
(2) an injunction to restrain Cogi whether by itself, its servants or agents or howsoever from obstructing or preventing the IO from gaining access to the passage through shop 2A.
The door opening
129. I dismiss the plaintiffs’ claim for a declaration that the door opening is lawful.
130. I give judgment to the IO against the 2nd plaintiff on its counterclaim in respect of the door opening for an order that the 2nd plaintiff does by 5 July 2010 demolish and remove the door opening and reinstate the wall where the door opening has been made with liberty to the parties to apply in case there is difficulty in complying with this order. The 2nd plaintiff is in effect given 2 months to comply.
131. As Cogi abandoned its claim for injunctive relief and damages for libel against the IO, this claim is dismissed.
132. I also make an order nisi for costs as follows
(1) Cogi does pay the IO its costs of the claim for injunctive relief and damages for libel such costs to be taxed.
(2) Save for the costs order made in (1), the costs of the action be costs to the plaintiffs to be paid by the IO such costs to be taxed.
(3) The costs of the counterclaim be costs to the IO to be paid by the plaintiffs such costs to be taxed.
133. For the assistance of the taxing master, I would observe that roughly about 70% of the total time at trial was taken up with the matter of the pipeworks in respect of which the 3rd plaintiff has succeeded. Each of the other matters (the pipeducts, the passage and the door opening) took roughly about 10% of the total time at trial.
| | (Arjan H. Sakhrani) |
| | Judge of the Court of First Instance, |
| | High Court |
Mr Colin Wright, instructed by Messrs Huen Wong & Co, for the Plaintiffs
Mr Dennis Law and Mr Lawrence Cheung, instructed by Messrs Tung, Ng, Tse & Heung, for the Defendant
Appeal by the defendant to Court of Appeal dismissed. Please refer to CACV108/2010 dated 29 June 2011