WING MING GARMENT FACTORY LTD v. SANWA TRADING (H.K.) LTD
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HCA 1805/2016
[2021] HKCFI 3357
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 1805 OF 2016
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BETWEEN
| WING MING GARMENT FACTORY LTD | Plaintiff | |
| and | ||
| SANWA TRADING (H.K.) LTD | Defendant |
________________________
Before: Hon Coleman J in Court
Dates of Hearing: 9-10 and 15 November 2021
Date of Judgment: 16 November 2021
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J U D G M E N T
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A. Introduction
1. In 1991, the plaintiff (“Wing Ming”) sold to the defendant (“Sanwa”) a single car parking space, numbered 2, on the ground floor of the Wing Ming Industrial Centre (“Building”) in Kowloon. Now, 30 years later, I am asked to determine a dispute as to what space was actually sold and purchased.
2. The dispute turns on a decision as to what was the common intention of the parties and, where the parties agree that a sale was actually concluded by a preliminary sale and purchase agreement dated 28 August 1991 (“PSPA”) and an assignment dated 8 February 1992 (“Assignment”), there are two candidates for what car parking space was sold. They are readily described by reference to two diagrams:
(1) The first is an extract from a ground floor plan (“DMC Plan”) in the Building’s Deed of Mutual Covenant (“DMC”) and shows what has been termed the “Original CPS 2”:
(2) The second is a diagram showing modifications made in 1992 or 1993 and shows what has been termed the “Re-Designated CPS 2”:
3. As can be seen from the diagrams, the Re-Designated CPS 2 was positioned on what was the area marked “VOID” on the DMC Plan, and following the erection of a new partition wall (“Partition Wall”) which enclosed the Original CPS 2, CPS 3 and CPS 4 preventing access to those spaces.
4. Wing Ming says it sold Re-Designated CPS 2, and that it has never sold but has retained ownership of the Original CPS 2. Sanwa says it purchased the Original CPS 2.
5. These proceedings are not the first occasion on which a decision impacting this car parking space has been necessary from the Court. On 20 December 2007, Reyes J gave judgment (“Reyes Judgment”) in HCA 8805/1993 (“1993 Action”), in which he held that the areas marked “VOID” in front of CPS 2, 3 and 4 can only be “Common Areas and/or Common Facilities” as defined in the DMC. Amongst other relief, Reyes J granted a mandatory injunction requiring Wing Ming to demolish the Partition Wall and to restore CPS 2, 3 and 4 to their original position.
6. Wing Ming’s appeal to the Court of Appeal was dismissed by its Judgment dated 27 June 2008 (“CA Judgment”), which stated that Reyes J was clearly right in holding that the areas marked “VOID” adjacent to CPS 2, 3 and 4 are common areas.
7. As a result, in around 2010, the Partition Wall was demolished, and CPS 2 was relocated back to the Original CPS 2 (as were CPS 3 and 4 also relocated back to their original positions). Photographs show that, as is common in Hong Kong car parks, the location of the car parking space is shown by floor paint. The paint colour of the car parking space is surrounded by a white line, and is different from the other parts of the floor (including the area marked “VOID” on the DMC Plan).
8. Unsurprisingly, though Sanwa had for many years used the Re-Designated CPS 2 as its parking spot, Sanwa has since at least June 2011 used Original CPS 2 as its parking spot. Perhaps more surprisingly, Wing Ming commenced these proceedings in 2016 claiming that Sanwa has been trespassing on the Original CPS 2, and seeks the relief of an order for possession of the Original CPS 2 and mean profits from June 2011 until possession is delivered up.
9. Sanwa defends the claim, and counterclaims seeking a declaration that it has throughout been the legal and beneficial owner of the Original CPS 2 on the DMC Plan, and an order that the plan attached to the Assignment (“Assignment Plan”) be rectified to depict the correct location of the car parking space as the Original CPS 2.
10. At trial, Wing Ming has been represented by Ms Audrey Eu SC, leading Ms Chantel Lin, and Sanwa has been represented by Mr Jonathan Chang SC, leading Ms Esther Mak.
11. In addition to the various documentation available, evidence was given at trial by (1) Mr Yuen Man Pui, managing director of Wing Ming, and (2) Mr Ng Kwok Wing, a director of Sanwa. But I think it is common ground that the case turns on interpretation of documents rather than the credibility of witnesses.
12. This is my Judgment after trial.
B. Relevant Chronology
13. Wing Ming was the original developer and registered owner of the Building. The land on which the Building was subsequently developed had been granted to Wing Ming by Conditions of Sale dated 13 September 1974 (subsequently modified in 1975 and 1985).
14. Relevantly for present purposes, the Special Conditions (9) and (10) of the Conditions of Sale provide:
(9) (a) Space 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 the rate of not less than one vehicle for each 10,000 square feet or part thereof of gross floor area, excluding any floor area to be used for this purpose, of any building erected on the lot or at the rate of not less than one vehicle for each 5,000 square feet or part thereof of the site area, whichever rate provides the greater amount of such space.
(b) The space so provided shall not be used for any purpose other than for parking, loading and unloading of vehicles.
(c) The space provided for loading and unloading shall abut a goods handling platform or area which must be provided and so laid out that goods loaded/unloaded from/to such platform or area may be transported within the lot to all parts of the building both vertically and horizontally. The platform or area for goods handling must give access to the building in accordance with the Code of Practice on provision of means of escape in case of fire and allied requirements, laid down under the provisions of the Buildings Ordinance.
(d) Of the space provided for parking, loading and unloading, one half shall be used for the packing of private cars and light vans assuming each vehicle to have a turning circle of 24 feet outer radius and to occupy an area of 16 feet x 8 feet with a minimum headroom of 7 feet 6 inches and one half for the parking, loading and unloading of lorries assuming each lorry to have a turning circle of 30 feet outer radius and to occupy an area of 25 feet x 8 feet with a minimum headroom of 15 feet 6 inches (provided that the space stipulated herein for the parking, loading and unloading of lorries shall be designed so that a portion thereof will accommodate at least one container on a trailer with its prime mover).
(e) Of the space provided for lorries and containers on trailers, two-thirds shall be used for parking and one-third for simultaneous loading and unloading.
(f) The space provided for parking, loading and unloading shall be laid out in such manner that on entering and leaving the lot, no reversing movement of vehicles including containers on trailers with their prime movers from or onto the roads abutting the lot will be necessary.
(10) A lay-out plan indicating the parking, loading and unloading spaces to be provided within the lot in accordance with the Special Condition No. (9) and approved by the Building Authority, or a copy of such plan certified by an authorized architect, shall be registered by the purchaser by memorial in the Land Office. No transaction affecting the lot or any part thereof or any building or part of any building erected or to be erected thereon shall be entered into prior to such registration. 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 Special Condition No. (9). The purchaser 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.
15. The Building was built in accordance with building plans which were approved by the Building Authority in 1978, and the plans included the approved plan for the ground floor (“Approved Plan”). The occupation permit of the Building was issued on 14 November 1978.
16. The Building has 12 storeys respectively from G/F to the 11/F (Roof Floor) and in addition it has a Basement and an Upper Roof. There are 11 car parking spaces (“Original CPSs”), and a container parking space (“Container PS”), all of which are situated on the ground floor and are indicated on the Approved Plan.
17. A Car Parking Layout Plan, which is the same as the Approved Plan, was separately registered with the Land Registry as required under the Special Conditions of the Conditions of Sale of the land to Wing Ming.
18. Prior to 2 March 1991, Wing Ming was the sole owner of the Land and the Building was for self-use. Hence, there was no need for any DMC and no question of any common areas. However, in around March 1991, Wing Ming notionally divided the Building into 1,323 equal undivided shares, and the shares were allocated among various units and the Original CPSs within the Building.
19. The allocation was identified in the DMC, made on 2 March 1991, between Wing Ming (being the First Owner) and a purchaser of two floors and two Original CPSs (being the Second Owner), and the then manager of the Building (“Essman”). The Recitals to the DMC include the following:
WHEREAS: -
(1) Immediately prior to the Assignment to the Second Owner hereinafter referred to, the First Owner was the registered owner of the Land which is held from the Crown by virtue of the Grant subject to the payment of the rent and to the observance and performance of the terms covenants and conditions therein reserved and contained.
(2) The First Owner has constructed on the land the Building.
(3) For the purpose of sale and individual ownership the Land and the Building have been notionally divided into 1323 equal undivided parts or shares which have been allocated to the units in the following manner:-
1. The Front Portion of the Ground Floor (colour blue on the Ground Floor Plan hereto annexed) and the Foyer and the Lofts therein, the Basement and the void space above Car Parking Spaces Nos. 2, 3 and 4 (leaving for these car parking space a minimum clear headroom of 7’6”) 125 shares 2. The Storeroom at the rest of the Ground Floor (above Car Parking Spaces 1 and 11) and Room A (coloured blue and diagonally hatched black on the said Ground Floor Plan) 1 share 3. Each of 1st, 2nd and 3rd Floors (120 shares each floor) 120 x 3 360 shares 4. 4th Floor (including the Flat Roof) 106 shares 5. Each of 5th, 6th, 7th, 8th, 9th and 10th Floors (100 shares each floor) 100 x 6 600 shares 6. Roof Floor 77 shares 7. The Upper Roof (and the Penthouse if and when the same is erected thereon and the Top Roof of the Penthouse) 4 shares 8. Car Parking Spaces Nos. 2-10 on Ground Floor (5 shares each space) 5 x 9 45 shares 9. Car Parking Spaces Nos. 1 and 11 on Ground Floor (2 shares each space) 2 x 2 4 shares 10. The Container Space on Ground Floor (shown coloured green hatched black on the Ground Floor Plan) 1 share 1,323 shares
20. As the Recitals indicate, attached to the DMC were various floor plans, including in particular the DMC Plan. On the DMC Plan, all of the Original CPSs and the “VOID” areas in front of each of them are coloured green. But see also further, below.
21. The DMC has a definition section by which “Common Areas” and/or “Common Facilities” shall mean, amongst other things:
(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 (other than the Floor Reserved Areas) and not for the exclusive use occupation and enjoyment by the First Owner or Second Owner as hereinafter specified,
(ii) the loading and unloading spaces, roadways and driveways (if any),
22. The DMC was made (in part) for the purposes of and at the same time as an assignment dated 2 March 1991, by which Wing Ming sold 210 equal undivided shares and the exclusive right to the 6th and 7th floors and CPS 6 and 7 to the first of various purchasers of units in the Building. It seems that, prior to the division and allocation of the undivided shares, Wing Ming had formed the desire to extend the existing ground floor premises and relevant cockloft. Therefore, clause 5 of Sub-section C (“SPECIAL RESERVATIONS”) of Section I of the DMC provides a special reservation for Wing Ming to construct the loft over the Original CPS 2, 3 and 4 (and, it might be noted, at least not expressly over the space marked void).
23. Following the first sale of units, and by a series of further agreements for sale and purchase and assignments (which both pre-dated and post-dated the dealings with Sanwa), Wing Ming sold various units and CPSs in the Building. In each sale, the documents included a clause by which Wing Ming purported expressly to reserve a right to alter the common areas. Further, the plans attached to the documents showed the CPSs coloured to include those areas marked “VOID”.
24. The sale of the Container PS (which was sold together with the 1st and 2nd floors and CPS 10) included a covenant that the purchaser would give way to facilitate the owners of “location C” and/or CPS 2 to move in and out. From the attached plan, the location of “location C” and CPS 2 was a reference to the Re-Designated CPS 2. But, it might be thought that the owner of the Container PS would probably need to have covenanted to facilitate access to the Original CPS 2, or at least it would have been preferable had such a covenant been made, as the Container PS extended as far as right in front of Original CPS 2 and the area marked “VOID” to its front.
25. In two sales post-dating the Assignment to Sanwa, there was a special covenant, by which the purchaser agreed with Wing Ming, its successors and assigns and the owners for the time being of CPS 2, 3 and 4 that notwithstanding anything in the DMC, the purchaser, its successors and assigns would not object in any manner but would allow and consent to Wing Ming and the owners for the time being of CPS 2, 3 and 4 or any part or parts thereof converting them to other lawful purposes, subject to the approval of the Building authority or other appropriate authority.
26. However, and in any event, there is no suggestion that Sanwa had sight of these various documents or knew of their contents prior to entering the PSPA and the Assignment. On that basis, it does not seem to me that they are of any real assistance in the interpretation of the contract. Further, none of the contractual covenants between Wing Ming and other purchasers of units and CPSs in the Building actually gave Wing Ming consent to vary the DMC so as either (a) to attach the exclusive right to hold, use and occupy the “VOID” area to the 5 shares allocated to the Original CPS 2, or (b) to limit the exclusive right to hold, use and occupy the space attached to the 5 shares to only the “VOID” area, rather than to all of the green coloured area comprising Original CPS 2 and the area marked “VOID” to its front.
27. I accept Mr Ng’s evidence that in the latter half of 1990 he was looking for new premises for Sanwa. When walking around Cheung Sha Wan Road, he saw an advertising board on the external wall of the Building and thought it might suit Sanwa’s requirements. Someone in the Building’s management office, a security guard, took him to tour one upstairs unit. From the advertising board and the security guard, Mr Ng knew that the agent was Jones Lang Wootton (“JLW”), of whom Mr Ng enquired the price. The facts (a) that there was an advertising board affixed to the Building, and (b) that the security guard appeared to know of JLW as agent, are consistent with JLW being the agent of Wing Ming.
28. Thinking there was no rush, Mr Ng made no further enquiry until July or August 1991. At that time, upon further enquiry, he learned from JLW that only the 4th, 5th and 10th floors of the Building still had vacant/unsold units. A staff member of JLW took Mr Ng to see perhaps two of those units and to see the car parking spaces. Obviously, there can be no dispute that what he was shown at that time was the Original CPS 2, 3 and 4. His preference was to buy Original CPS 2.
29. I accept Mr Ng’s evidence that at the time of looking around the ground floor of the Building, neither he nor the agent had any floor plan. Whilst the space shown looked big enough to park two private cars, the agent apparently said something – whether or not he referred then to any intended building of a partition wall – to make it clear to Mr Ng that any parking space he might buy would likely only have space for one private car. The particular details of any alteration were not given, and of course any alteration would be contingent on other matters.
30. I also take account of the evidence given by Mr Ng in cross-examination that, although he did not know the details of the alteration work, he later knew enough to understand that the car parking space could be “moved forward” from the Original CPS 2 because of a new partition wall, though that would need application and approval.
31. There is various correspondence from August 1991 involving JLW. The first letter is one dated 19 August 1991 from JLW to Sanwa relating to the potential purchase of “5/F, & Parking Space No. 4 on G/F”. The letter asked for a copy of it to be signed and returned as confirmation of acceptance of the terms, which JLW would then submit to Wing Ming for consideration and acceptance (if any). Confirmation was given by Sanwa by the signature of Mr Ng against Sanwa’s authorised signatory chop. It does not seem to me to be of any great moment that Mr Ng apparently confirmed an interest in purchasing CPS 4, when he now says he had no such interest and was always interested only in CPS 2. Either a mistake was made, or the target for some reason changed, but that does not assist in the interpretation of the agreement ultimately made in this case.
32. Certainly, by the date of 22 August 1991 and at all times thereafter, reference was to CPS 2. There is a draft letter of that date (on paper with no pre-printed header, but which was obviously to be issued by JLW) relating to “Space Marked “2” on the Ground Floor”. By this point of time, therefore, there has been a separation of the potential purchase of the 5/F unit and a car parking space.
33. In common with all subsequent similar letters, the draft letter provides that the agency fee of 1% of the sale price is to be paid by Wing Ming to JLW upon completion of sale and purchase. There is no reference to any other agency fee payable by Sanwa. That is at least consistent with JLW acting as Wing Ming’s agent. The draft letter also includes the following:
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.
34. That statement indicates the desired change, and seems likely to be by reference to the desired relocation of CPS 2 to a position in front of or forward to the Original CPS 2. But the statement also indicates that approval for any such relocation had yet to be obtained.
35. There are various JLW letters dated 28 August 1991. One of them (“5/F PSPA”) forms the preliminary sale and purchase agreement for the 5/F unit. Clause 9 provides that the 1% of sale price agency fee payable to JLW will be borne by Wing Ming. Clauses 10 and 11 providers follows:
10. 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 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 retuned [sic] to him forthwith.
11. 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 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.
36. There are three versions of a further letter dated 28 August 1991, headed “Space Marked “2” on the Ground Floor”, relating to the purchase by Sanwa from Wing Ming of the car parking space for HK$400,000. The difference between the various versions includes the absence or presence of some signatures, initials and what appears to be some use of a circular chop of Sanwa. There is no dispute that one of the versions constitutes the PSPA.
37. In full, the PSPA provides 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
2. Sanwa will be given 28 days notice for completion of sale and purchase and the purchase price will be paid within 14 days from such date of notice.
3. Upon completion, Wing Ming will deliver vacant possession of the Property to Sanwa or its nominee in an as is condition.
4. Legal Costs: Each party will bear its own legal costs.
5. Stamp Duty: To be borne by Sanwa only.
6. Others:
(i) The Property will be sold to Sanwa or its nominee free from incumbrances and with a good title;
(ii) Upon completion, and prior to delivery of vacant possession, the Purchaser shall pay the Management fee, Management Security Deposit, Management Fundation Fund, Plan Fee for the Management Agreement & Assignment and DMC and water and electricity deposits to the Vendor’s solicitor.
(iii) a. Subject to the existing Deed of Mutual Covenant and Management Agreement, a copy of which is attached. It is declarded that the Purchaser has read through the DMC before signing this Offer Letter. [this clause (ii)a was added to the earlier drafts]
(iv) The title deeds belong to the Vendor who shall allow the Purchaser to make certified copies thereof at its own costs and to return the same to the Vendor within 3 days after delivery.
(v) Requisition period 7 days after delivery of title deeds.
7. Naming Right: Sanwa or its nominee will agree to Wing Ming reserving the right to re-name Wing Ming Industrial Centre or to assign such right to another party.
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 form 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 a 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 convenant 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.
38. Attached to the copy PSPA in the trial bundle is a ground floor plan of the Building, apparently showing the Re-Designated CPS 2, coloured green, and with the handwritten dimensions “7.5’ H MIN” and “7.5’ x 15’ MIN”. There are also one faint and one clear version of what seems to be the Sanwa circular chop, as well as the initials of Mr Yuen and the signature of Mr Ho of JLW, near the green area. I note that whilst the PSPA itself is a black and white copy, the plan is a colour copy.
39. There is a dispute as to whether that plan was actually attached to the PSPA, which does not mention it expressly. Rather there is mention only of the DMC as an attachment, and the fact that the agreement would be subject to the existing DMC, and the additional declaration that Sanwa has read through the DMC before signing the offer letter. On balance, I find that the colour copy plan was not attached to the PSPA. But in any event there can be 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 Plan.
40. On that basis, it seems to me that the subject-matter of the PSPA was the Original CPS 2. Further, it is unlikely that the subject-matter of the PSPA was different from the subject-matter of the subsequent Assignment.
41. The assignment for the 5/F is dated 26 September 1991. However, it appears to be common ground that the assignment of CPS 2 was delayed because it could only take place if appropriate approvals were obtained as had previously been indicated were being sought. I accept Mr Ng’s evidence that he agreed to the delay at least in part because he trusted Wing Ming, and they seemed to have the shared intention that what would ultimately be sold was a lawful car parking space, and something which Wing Ming could actually sell.
42. On 29 October 1991, the Architect/Authorised Person acting for Wing Ming applied for approval of proposals in respect of ‘Building (A & A) Amendment’. By letter from the Buildings Ordnance Office, Buildings and Lands Department dated 5 December 1991, the proposals were approved on a standard form with six pre-printed paragraphs and two additional typed paragraphs which stated:
7. Corresponding structural plans are required to be submitted for my approval.
8. Comments from District Lands Officer/Kowloon West, District Planning Officer Kowloon & Assistant Commissioner for Transport/Urban will be conveyed to you in due course.
43. Also dated 5 December 1991 is the Form 12 issued by the Building Authority under section 14 of the Buildings Ordinance. The BOO reference number is ‘BLD (B) 2-3/4053/72(2)’. The Form 12 states (emphasis in original):
The Building Amendment (Alterations & Additions) plans attached hereto, on which I have signified my approval, are hereby approved.
…
2. Your attention is drawn to section 14(2) of the Buildings Ordinance, which provides that the giving by the Building Authority of his approval to any plans shall not exempt any person from the necessity of obtaining the consent of the Building Authority to the commencement and carrying out of the building works shown on such plans. This approval does NOT authorize the commencement or carrying out of any building works.
44. On the basis of the two documents dated 5 December 1991, it appears that – whilst approval had been given to the proposals in the alterations and additions plans – (1) corresponding structural plans were yet required for approval, (2) comments from various government departments including the District Lands Officer were outstanding, to be conveyed in due course, and (3) approval of the plans did not authorise the commencement or carrying out of any building works.
45. There is also a Form 14 issued under section 14 of the Buildings Ordinance. That is the form which gives consent to the commencement and carrying out of the works described as “Building Works (Alterations & Additions)”, namely the relevant works proposed to be performed by Wing Ming. The Form 14 specifies that those building works are to be carried out in accordance with the following plans, as are listed in a table, as follows:
B.O.O.
ReferencePlans Date of Notice of Approval Consent Date Signature BLD(B) 2-3/4053/75(2) Building (A&A) 4.12.90 BLD(B) 2-3/4053/75(2) Building Amendment (A&A) 5.12.91 BLD(B) 2-3/4053/75(2)L/1 Structural (A&A) 9.6.93 13.7.93 C Y WU
46. The only ‘Consent Date’ shown is 13 July 1993, and the Form 14 bears to hand written “}” signs which seem to indicate that all three entries for ‘Date of Notice of Approval’ were given just one ‘Consent Date’ as shown, and against one handwritten signature of CY Wu against the chop of that name in the ‘Signature’ column.
47. This is also consistent with the ‘Certificate on completion of building works not resulting in a new building or of street works’ filed by Essman on 25 October 1995, which specifically refers to the consent of the works under relevant reference number as having been given on 13 July 1993, the works having been completed on 26 October 1995.
48. On that basis, I do not think it likely that the Partition Wall had been installed by the end of January 1992. As all of the proposed works, including the Partition Wall, were put forward in one set of drawings under the same reference number, albeit with a further submission of structural drawings as was required by the original approval of plans, consent to doing any of those works was only given in July 1993. Further, the Partition Wall was placed where it seems likely to have had some potential structural impact on the cockloft built on or across the top of it.
49. I acknowledge that the clear suggestion that the Partition Wall was not actually completed by January 1992 was first made only in Mr Ng’s cross-examination – when it might be thought that the date of the erection of the Partition Wall was something to which prior focus would have been given. But, there is perhaps some support for Mr Ng’s evidence by the very nature of the complaint made by Wing Ming in the 1993 Action (see below). In any event, irrespective of that point and on balance on the evidence overall, I accept Mr Ng’s evidence that for a while after purchasing CPS 2, Sanwa parked its vehicle in the Original CPS 2.
50. Nevertheless, it must be clear that both Wing Ming and Sanwa probably thought that any necessary approvals and legal matters were being dealt with so that the completion of the purchase of CPS 2 might go ahead, and at some point it was envisaged that CPS 2 might be relocated.
51. On 8 February 1992, Wing Ming and Sanwa entered into the Assignment for the “Property” described as follow:
“All Those five equal undivided 1,323rd parts or shares of and in All That piece or parcel of ground registered in the Land Office as NEW KOWLOON INLAND LOT NO. 5491 And of and in the messuages erections and building thereon now known as ‘WING MING INDUSTRIAL CENTRE (永明工業中心)’ No. 15 CHEUNG YUE STREET (‘the Building’) 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. ”
52. There was a plan attached to the Assignment (ie. the Assignment Plan) with the original Void Area next to the Original CPS 2 marked “G”. This is the area referred to by Wing Ming as the Re-Designated CPS 2. It is right that the Assignment was prepared by Sanwa’s then solicitors, whose duty it was to check and accept title.
53. Whether Sanwa parked its vehicle in the Re-Designated CPS 2 from February 1992, or from some later period in or after mid-1993, Sanwa could only have parked its vehicle in that location once the Partition Wall had been erected. Sanwa then continued to park its vehicle in the Re-Designated CPS 2, apparently without complaint, until sometime after June 2010, when the Partition Wall was removed and the Original CPS 2, 3 and 4 were reinstated.
54. That was the result required by the outcome of the 1993 Action. I shall deal separately below with the content of the relevant judgments, but a brief introduction to the claim may be useful at this point. In the 1993 Action, Wing Ming claimed against the Incorporated Owners (“IO”) of the Building for breach of the DMC, in encroaching or permitting New Gas & Company (“New Gas”) to encroach on Wing Ming’s reserved right to construct a loft in the airspace over CPS 2, 3 and 4 as indicated in the DMC Plan. The encroachment was in permitting New Gas in August 1993 to install a fire services pipe which entered into and ran through the length of such air space, which resulted in Wing Ming’s plans to construct a loft in the air space and rent it out once constructed being delayed. Wing Ming contended that, to construct the pipe, New Gas must have entered into the airspace which Wing Ming had not authorized. The IO and New Gas defended the claim on the basis that there was no encroachment on any airspace over CPS 2, 3 and 4. They argued that Wing Ming unilaterally re-designated common area (marked “VOID” in the DMC Plan) as CPS 2, 3 and 4, then constructed a loft over the true car parking spaces and the adjacent re-designated spaces. There was also the erection of the Partition Wall below the loft, enclosing the true car parking spaces, and separating those parking areas from the re-designated spaces. It was contended that was all unlawful, as contrary to the DMC and Conditions of Sale relating to the Building.
55. As can be seen from that summary, and as is clear from the plan annexed to the Reyes Judgment, it was a central issue in the 1993 Action as to whether the Re-Designated CPS 2 at the location marked “VOID” on the DMC Plan was actually on common area in accordance with the DMC.
56. Following the Reyes Judgment, and Wing Ming’s unsuccessful appeal from it, the required works were performed. As already indicated above, photographs of the ground floor taken after those works show CPS 2, 3 and 4 being in the Original CPSs location, and specifically marked accordingly on the ground itself. The different colour floor paint shows the demarcation between the white-outlined light grey parking spaces and the darker grey common areas. Notably, the photographs show that there is no other parking space delineated on the ground in front of Original CPS 2.
57. On 17 April 2018, Wing Ming commenced proceedings in the Lands Tribunal in LDBM 89/2018 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 relied on certain facts which it asserted.
58. Relevantly for present purposes, Wing Ming’s pleaded case (§5) made reference to the fact that as developer it had sold several units with car parks to purchasers including Sanwa. In section C2 of the pleading headed ‘Failure to Prevent and/or Stop the Conversion of Common Parts in the Car Park of the Building’, Wing Ming pleaded in §§29-34:
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.
59. The pleading was verified by a statement of truth by a director of Wing Ming. The facts asserted as true are obviously at odds with the facts now relied upon by Wing Ming in this action.
60. In passing, it might be noted that in §36, Wing Ming pleaded a further breach by the IO in causing, procuring and/or permitting the parking of private cars in designated parking spaces for lorries and/or containers on trailers (i.e. CPS 5, 6, 7, 8, 9 and 10). This seems to me to be a recognition of what is shown on the DMC Plan, namely that the parking space areas in those parking spaces are longer than that shown for CPS 2, 3 and 4 – with the consequent difference in size of the areas in front of those spaces marked “VOID”. This is also consistent with the original Special Conditions (9) and (10) of the Conditions of Sale of the land in 1974 (see above) which specified that half of the space provided for parking, loading and unloading should be used for the parking private cars and light vans, and the other half for lorries, and referred to the attached layout plan approved by the Building Authority.
C. Reyes Judgment and CA Judgment
61. At the start of his judgment (§§1-2), Reyes J described the context. Since 1993, the owners of the Building had been locked in bitter dispute about almost all aspects of the building’s management. As Reyes J put it, on one side of the dispute is Wing Ming, and on the other side are all other owners, represented by the IO. He then set out (§§3-12) the particular contest to be decided in relation to the main claims summarised (as I have also summarised them above). In the context of his brief chronological review, Reyes J specifically noted (§35(1)) that the area identified as having been sold to Sanwa is marked “VOID” on the DMC Plan, and that CPS 2 to 10 and the “VOID” areas in front of each are also coloured green on the DMC Plan.
62. As Reyes J noted (§§37-39): (a) at the time when the fire pipe was installed by New Gas, there was no loft over CPS 2, 3 and 4 as shown in the DMC: but (b) by the time of the trial there was a loft over CPS 2, 3 and 4 as marked in the DMC, but the loft was not confined to the space over CPS 2, 3 and 4 as it also extended into the space above the “VOID” areas marked on the DMC Plan in front of CPS 2, 3 and 4; and (c) the Partition Wall had been erected below the loft so as to separate CPS 2, 3 and 4 from the areas marked “VOID” as shown on the DMC Plan.
63. Reyes J also noted (§40) that if a 40-foot container were parked in the Container PS 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 PS have consequently been painted so as to extend no further than the edge abutting that space. This point is criticised by Ms Eu, on the basis that Reyes J apparently did not know that the purchaser of the Container PS had covenanted to give access across the end of it to CPS 2. But, the criticism is somewhat weakened by the fact of the re-painting.
64. In any event, the key holdings were that:
(1) The impugned section of pipe does not run anywhere near the space over Original CPS 2, 3 and 4, but merely runs along the length of the areas marked “VOID” in front of those spaces (§41).
(2) The areas marked “VOID” can only be “Common Areas and/or Common Facilities” as defined in the DMC. This is because the “VOID” areas have to be kept clear in order to enable vehicles to drive in or out of Original CPS 2, 3 and 4 (§42).
(3) That conclusion is also self-evident from the locations of the Original CPS 2 and the Container PS on the DMC Plan (§43).
(4) It follows that New Gas did not trespass into any air space belonging to Wing Ming. Nor could the IO have authorised or caused New Gas to commit any trespass. There was no breach of the DMC by the IO (§§44-45).
(5) Wing Ming was not entitled to shift the Original CPS 2, 3 and 4 into the “VOID” areas in front of those spaces shown on the DMC Plan (§46). That is because it would have required the approval of all other owners to vary the terms and definitions of the DMC so as to enable the “VOID” areas to be re-designated as parking spaces (which implicitly Reyes J held had not occurred) (§47), and written permission would have been required from the relevant Government body (the Building Authority or the District Lands Office) which was never specifically sought nor obtained (§§48-52).
(6) Wing Ming’s claim that the necessary permission was implicit in the Building Authority’s approval of its plans to build a loft over the “VOID” areas failed. In particular, the plan submitted did not signal any deviation from the DMC Plan all the Approve Plan, and approval for proposed construction works could not confer title to land or waiver of requirements under the Conditions of Sale (§§53-58).
(7) Upon the proper construction of the DMC, the “VOID” areas marked on the DMC Plan are not car parking spaces and could not have formed part of the Original CPSs (§§63-65).
65. In the CA Judgment, it was identified that unless the areas marked “VOID” adjacent to the Original CPS 2, 3 and 4 belonged to Wing Ming, no liability for damages could arise on the claim. In answering that question, focus had to be on the circumstances peculiar to the areas marked “VOID” adjacent to the Original CPS 2, 3 and 4. Amongst the particular circumstances, the CA looked at the definitions in the DMC, and the special conditions of the land grant which contained specific requirements relating to the provision of space “for the parking, loading and unloading of vehicles”.
66. The conclusion was that Reyes J was “clearly right” in holding that the areas marked “VOID” adjacent to the Original CPS 2, 3 and 4 are common areas.
D. Agreed Issues
67. The parties have agreed the following issues to be determined at trial:
(1) What was the intention of the parties as to the subject matter of the Assignment, namely (a) the Re-designated CPS 2 (as Wing Ming contended); or (b) the Original CPS 2 (as Sanwa contended) (“Subject Matter Issue”)?
(2) If the subject matter under the Assignment was the Re-designated CPS 2,
(a) Whether Wing Ming was entitled to assign the Re-designated CPS 2 to Sanwa by the PSPA and the Sanwa Assignment? Specifically, whether Wing Ming could give, and had given, good title of the Re-designated CPS 2 to Sanwa under the PSPA and the Assignment (“Title Issue”)?
(b) Whether Wing Ming is estopped and/or barred by the doctrine of abuse of process from arguing the Title Issue in the light of the Reyes Judgment and/or the CA Judgment (“Res Judicata Issue”)?
(c) Whether Sanwa has waived its right and/or Sanwa was estopped from disputing its title (“Estoppel Issue”)?
(d) If Wing Ming is found to have breached the PSPA and the Assignment by failing to give a good title, whether Sanwa’s claim against Wing Ming for breach of the PSPA and the Assignment is time-barred (“Limitation Issue”)?
(e) If Sanwa’s claim is not time-barred, what damages should be awarded in favour of Sanwa against Wing Ming (“Damages Issue”)?
(f) If Sanwa’s claim is time-barred, or if there is no breach of the PSPA and the Assignment by Wing Ming, whether Sanwa has trespassed on the Original CPS 2 since June 2011? If yes, what remedy should be awarded to Wing Ming (“Trespass and Remedy Issue”)?
(3) If the subject matter under the Assignment was the Original CPS 2, whether Sanwa is entitled to the relief sought (including the rectification of the Assignment) or if the claim is also time-barred (“Rectification and Limitation Issue”)?
68. Whilst I may traverse most of those issues, I am not sure they need necessarily be compartmentalised quite in the above way.
E. Subject-Matter of the Assignment
69. This is obviously the key question, and it requires the application of general and well-settled principles on the construction of contracts. No reference to authority is necessary. The exercise is to discover what a reasonable person would have understood the parties to mean. This involves having regard to the individual words used by the parties, but also 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.
70. In the context of a conveyance, where there is a dispute with regard to what is actually conveyed, that is a matter of construction of the whole conveyance, including the parcel clause and the plan, in light of other relevant surrounding circumstances. Again, the object is to ascertain what the parties intended to be passed and what was passed under the document.
71. In this case, the relevant documents to consider include the PSPA and the Assignment, with what strikes me as the reasonable presumption that they related to the same subject-matter.
72. The starting point is to note that, though the PSPA was headed by reference to the parking space marked “2” on the ground floor, the actual subject matter of the Assignment was and could only have been the 5 equal undivided shares in the Building, together with the right to use, occupy and enjoy a designated car parking space. This is because an assignment concerning a unit in a multi-story building is the proprietary grant of the undivided share(s) allocated to the unit. The right to exclusive possession of the unit is based on mutual covenants running with the land, such as are found in the DMC in this case. Hence, the purported grant of exclusive possession in assignment should be read as a reference to the product, as a matter of contract, of the mutual covenants simultaneously being entered into, rather than any proprietary grant under the assignment itself.
73. There seems little doubt that the parties envisioned the possibility of the Original CPS 2 being “moved forward” – a possible relocation to Re-Designated CPS 2 – at a later date, albeit only if proper approval was obtained and certain “legal matters” were satisfactorily dealt with. But, I agree with Mr Chang that does not change the fact that the property intended to be sold was the Original CPS 2. As an aside, it seems the “legal matters” were separate from and in addition to the buildings approval. Anyway, that evidences the common intention 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.
74. The Assignment identified the rights ‘carried’ or ‘bundled’ with the 5 equal undivided shares as “the sole and exclusive right and privilege to use occupy and enjoy Car Parking Space No. 2 on the Ground Floor of the Building as shown coloured green on the plan annexed” (which showed the Re-Designated CPS 2). But that does not of itself answer what rights were ‘carried’ or ‘bundled’. It is necessary first to look at the DMC and the DMC Plan.
75. The Recitals to the DMC, when read together and in context identify, that the 5 undivided shares allocated to each car parking space numbered 2-10 are allocated only to the actual car parking spaces shown, and not to any area marked “VOID” on the DMC Plan. As a matter of ordinary meaning, “void” means empty and might be contrasted with, for example, a marked car parking space. Therefore, whilst Ms Eu is right to say that “void” does not necessarily mean common area or passage way, nor does it likely mean car parking space, or there would have been no need to differentiate one thing from the other. I conclude that the allocation of the 5 equal undivided units was to the Original CPS 2.
76. On this point, there is some confusion in the submission on behalf of Wing Ming as to what the green marking on the DMC Plan signifies. As stated, the area coloured green includes both the CPSs as marked and the areas marked “VOID”. Therefore, the following options arise as to what the green coloured area comprises:
(1) the whole of the green coloured area is car parking space; or
(2) half of the green coloured area is car parking space, and the other half is common area; or
(3) half of the green coloured area is car parking space, and the other half belongs to Wing Ming (in the sense that it retains exclusive possession over it).
77. Ms Eu cannot have it both ways: if the whole of the green coloured area on the DMC Plan (that is, both the area of the car parking space marked 2 and the area marked “VOID” in front of it) is car parking space, then it would be the use of that whole space which would run with the 5 equal undivided shares allocated to CPS 2; yet Ms Eu’s submission depends upon the rights ‘carried’ or ‘bundled’ with those 5 equal undivided shares being attached to only half of the area marked green on the DMC Plan. If that were not so, then Wing Ming would have been trespassing when it purported to sell Re-Designated CPS 2 and yet blocked off access to Original CPS 2.
78. Nor can there be any argument proceeding from the suggestion made that no share was allocated to the Original CPS 2, which Ms Eu submits would not stop Wing Ming from asserting its right to exclusive possession to the space because by agreement this is private area which has never been sold. That suggestion turns the facts and the documents on their head. Ms Eu’s further submission that there may have been some form of sub-division also does not seem to me to fit the facts. Whatever comprised CPS 2 was allocated 5 equal undivided shares under the DMC, and whatever was sold and purchased in 1991/1992 was all of those 5 equal and undivided shares. There was no sub-division. As Mr Chang submitted, it makes little sense for Wing Ming to claim that it retained the right to exclusive possession of Original CPS 2 despite having sold all of the 5 equal undivided shares in the Building which under the DMC attached to the very space which Wing Ming claims to have retained.
79. Once it is accepted that the rights carried or bundled with the 5 equal undivided shares can only run with part/half of the area coloured green on the DMC Plan, that must be a reference to the Original CPS 2. Of course, Ms Eu focuses on the assignment Plans, but I do not think one simply ignores the DMC when construing the agreement. Indeed, that is further supported by the following matters:
(1) The PSPA specifically included that the agreement was subject to the existing DMC, a copy of which was attached. It was further declared that Sanwa had read through the DMC before signing the offer letter/PSPA.
(2) The Assignment provides at clause 1 that the property is assigned together with the benefits and burdens of the covenants in the DMC.
(3) Co-owners have no right to sell those parts of the building to which no undivided shares have been allocated.
80. That seems to me to be the straightforward answer to what the parties must have intended to be the subject-matter of the Assignment. 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.
81. I do not think that answer is somehow ‘trumped’ by discussions of a possible “move forward” or by the plan attached to the Assignment, where it is the Re-Designated CPS 2 which is coloured green. I accept Mr Chang’s submission that where the verbal description sufficiently identifies without reference to the plan the property being conveyed, then the plan is not determinative of the parties’ objective intention on the subject-matter of the assignment.
82. I also note a degree of inconsistency in Wing Ming’s case as to which plan was supposedly attached to the PSPA. Its pleaded case is that the plan attached was the one marked “W-3” appended to the Amended Statement of Claim. But the evidence of Mr Yuen is that the plan attached was the one showing the Re-Designated CPS 2 coloured and with the dimensions handwritten on it. Of course, as I have already noted, the PSPA itself only refers to there being one attachment, namely the DMC. But even the plan showing dimensions gives those dimensions by references to ‘minimums’, not in fact precise dimensions.
83. I also reject Ms Eu’s submission that it is clear from the special covenants included in the DMC and the various documents of title, most of which were not seen by or known to Sanwa at the material time, that the various owners of the Building agreed to the Re-Designated CPS 2 as a car park and not as common area. Nor do I think the green colour of the Re-Designated CPS 2 evidences that agreement in any way. Here too, there is some inconsistency. On Wing Ming’s own case, there would be no need to seek consent from all co-owners when Wing Ming contended that the “VOID” space was not common area but formed part of the Original CPS 2. But, anyway, the contractual covenants in the other documents simply do not grant Wing Ming consent to vary the DMC so as to attach the exclusive right to hold, use and occupy the “VOID” area to the five shares that were allocated to the Original CPS 2.
84. Ms Eu submits that, although the Original CPS 2, 3 and 4 are now reinstated by the subsequent demolition of the Partition Wall, this does not retrospectively change the subject-matter of the Assignment. That may be right, but it really only begs the question as to what was the subject-matter of the Assignment. Indeed, it can also be put the other way round, in that the erection of the Partition Wall would not retrospectively change the subject-matter of the Assignment. Therefore, the precise date of construction of the Partition Wall unlikely affects the analysis.
85. As to Sanwa’s acceptance without complaint of the long-term use of Re-Designated CPS 2, that of itself could not create any lawful right to use it (when it was part of the common area of the Building). Also, Sanwa understood it was purchasing a car parking spot which would accommodate only one private car, and precisely where that spot might have been may not have been of prime importance – at least, not until the Reyes Judgment.
F. Other Matters
86. Having reached the conclusion that the subject-matter of the Assignment was the block of 5 equal undivided shares in the Building, together with use and possession of the Original CPS 2, the matters arising under the various sub- paragraphs of Agreed Issue 2 (see above) do not arise. However, I would make the following comments on them.
87. Title: I tend to think that the question of title is something of a red herring. Wing Ming had title to convey the 5 equal undivided shares in the Building. Insofar as what rights to exclusive use and position are ‘carried’ with those shares were an aspect of title, I do not accept on the evidence (see above) that the re-designation of car parking spaces was relevantly approved by the Buildings Authority and/or the Director of Lands Office, nor was there actual agreement between the co-owners of the Building to any relevant variation the common areas under the DMC.
88. Res Judicata / Issue Estoppel: I have reached my conclusion on my own reasoning. In so doing, I have not considered the previous judgments as evidence. However, I also think that Wing Ming is in any event bound by the findings in the Reyes Judgment and the CA Judgment.
89. It is trite that an issue estoppel arises where: (1) the decision was judicial in the relevant sense; (2) it was in fact pronounced; (3) the tribunal had jurisdiction over the parties and the subject matter; (4) the decision was final and on the merits; (5) it determined a question raised in the later litigation; and (6) the parties are the same or their privies, or the earlier decision was in rem. There is no dispute between Ms Eu and Mr Chang that the first four requirements are satisfied.
90. As to requirement (5), this seems to me to be satisfied. The central issue determined in the 1993 Action was whether the area marked “VOID” on the DMC Plan was common area, or whether it could be re-designated to be a car parking space. The same question arises in these proceedings, by reference to precisely the same car parking space. I do not think that because some aspects of the evidence may be enlarged or differently presented that that changes the fundamental factual basis of the question answered and to be answered.
91. As to requirement (6), this also seems to me to be satisfied. As Mr Chang submits, there is commonality of interest over the common parts as between the IO and Sanwa (as one co-owner of the Building). Ms Eu submits that estoppel is binding on a person in an official capacity and binds his successors as privies, but does not bind him personally or in another capacity. Here, she says, the IO acts in a representative capacity, in relation to the use of common areas, but cannot have represented Sanwa as regards ownership of Sanwa’s car parking space. But whilst the principle put forward may be correct, its application must depend upon the circumstances. The relevant issue on which the estoppel is said to arise is the issue as to whether the “VOID” area is common area. Therefore, whilst it might be said that the IO does not represent Sanwa as regards ownership of CPS 2, the IO plainly does represent all the owners in the Building (who are all its privies) as regards whether the “VOID” area is capable of having been unilaterally re-designated by Wing Ming from common area. Indeed, in that regard the IO represents both Wing Ming and Sanwa, who are both its privies for this purpose. In any ordinary sense, and to use language commonly adopted in this area, Sanwa is being vexed twice.
92. Thus, whilst I acknowledge the point made in Yip Service Co Ltd v Mauretania Co Ltd (unreported, HCSA 73/2007, 12 January 2009, DHCJ To) at §18, that it is only where the factual basis is the same that one goes on to consider the question of issue estoppel, it seems to me that the factual basis is the same, dependent as it is upon the DMC. Once the DMC came into force, Wing Ming as a matter of fact did not have the right of exclusive possession to the common areas, including the “VOID” areas.
93. It is also impermissible for Wing Ming to blow ‘hot and cold’ on the point about the “VOID” areas. Even if the counterparty to the LDBM proceedings is the IO (and not just Sanwa as one individual co-owner), it seems to me to be an abuse for Wing Ming to assert and rely upon a legal and factual position in those proceedings which is diametrically opposite to the legal and factual position it wishes to assert in these proceedings.
94. Estoppel: The principles of estoppel by convention have been identified in ‘Spencer Bower: Reliance-Based Estoppel’ 5th Ed at §8.6 as follows:
(1) It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. It must be shared between them expressly, or implicitly by words or conduct from which the necessary sharing can properly be inferred.
(2) The expression of the common assumption by the party alleged to be stopped must be such that he may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party and understanding that he expected the other party to rely upon it.
(3) The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter.
(4) That reliance must have occurred in connection with some subsequent mutual dealings between the parties.
(5) Some detriment must thereby have been suffered by the person alleging the estoppel or benefit thereby have been conferred upon the person alleged to be stopped, sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position.
95. Ms Eu also relies on the authority of Amalgamated Investment & Property Co ltd v Texas Commerce International Bank Ltd [1982] 1 QB 84, where Lord Denning MR held at 121H:
Where the parties to a contract are both under a common mistake as to the meaning or effect of it – and thereafter embark on a course of dealing on the footing of that mistake – thereby replacing the original terms of the contract by a conventional basis on which they both conduct their affairs, then the original contract is replaced by the conventional basis. The parties are bound by the conventional basis. Either party can sue or be sued upon it just as if it had been expressly agreed between them.
96. But the essence of the application of the principle of estoppel by convention is to circumstances where it would be unjust or unconscionable for the person alleged to be estopped from asserting a different legal or factual position, or from going back on the shared assumption.
97. The principle does not factually apply in this case. This is because the shared assumption seems to me to have been that the conveyance related to 5 equal undivided shares together with the relevant ‘carried’ rights to exclusive use and possession of a CPS 2, being something properly approved and legally permissible. In so far as either party thought that might have applied to Re-Designated CPS 2, that turned out to have been incorrect, as has been specifically ruled on in the Reyes Judgment and the CA Judgment.
98. In any event, it is difficult to understand why any form of estoppel by convention might be applied to the circumstances of this case, as that would require the Court to give effect to an arrangement which the Court has held in previous proceedings – and where I independently conclude in these proceedings – to be one which would trample on the rights of third parties.
99. I would reject Wing Ming’s argument on estoppel by convention.
100. Limitation: The limitation argument is tied to the title point, which I think to be something of a red herring.
101. Damages: Though the point no longer arises, I think there is more force in Wing Ming’s position as regards damages. If Sanwa is entitled to rectification, it can use the Original CPS 2 in future, and it has had some use of the Re-Designated CPS 2 in the past. I do not think it has suffered damage. If it is not entitled to rectification, Sanwa can unlikely obtain damages via the back door.
102. Trespass and Remedy: If I had found that the subject-matter of the Assignment was the Re-Designated CPS 2, the corollary would be that the Original CPS 2 has never been conveyed to anyone, and ownership was retained by Wing Ming. On that basis, then Sanwa’s use of the Original CPS 2 would amount to trespass. The parties have agreed, for the purpose of these proceedings, that the fair market rental of the Original CPS 2 from 1 June 2011 to 31 May 2021 is $3,300 per month, which for 126 months until November 2021 would total $415,800. However, I am not sure the question of remedy is that simple. As the photographs show, there is no parking space delineated where it is said that Re-Designated CPS 2 should be or is. I also note that the photographs indicate that Wing Ming continues to use only the Original CPs 3 and 4 (and not the space immediately in front of them) – though this was not further explored in evidence. So there seems to me to be at least some doubt as to whether or not there was any true loss to Wing Ming.
G. Rectification
103. First, I reject Ms Eu’s submission that the fact that Sanwa now seeks an order that the Assignment Plan be rectified to depict the correct location of the CPS conveyed as the Original CPS 2 amounts to an “admission” that the subject matter of the Assignment is the Re-Designated CPS 2. Obviously, it does not.
104. Rather, once the conclusion is reached that the subject-matter of the Assignment included the exclusive right and privilege to use, occupy and enjoy the Original CPS 2, there can be no reasonable dispute that Sanwa is entitled to a declaration that it has since the date of the Assignment been the legal and beneficial owner of the Original CPS 2, as reflected in the 5 equal undivided shares.
105. I remind myself of the legal principles relating to rectification, which are well-established. In essence, rectification is limited to those circumstances where the contract does not accurately reflect the parties’ true agreement, with the following requirements:
(1) There must be a common intention in regard to the particular provisions of the agreement in question, together with some outward expression of accord.
(2) The common intention must continue up to the time of execution of the instrument.
(3) 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.
(4) The instrument, if rectified as claimed, would accurately represent the true agreement of the parties at that time.
106. On the basis of my earlier conclusions, I have found 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. It logically follows that the Assignment should be rectified so as correctly to reflect the true intention and the correct location of the car parking space as the Original CPS 2.
107. I do not accept Wing Ming’s earlier suggestion that the claim for rectification is statute-barred (though this was anyway abandoned in opening submissions). Nor do I accept that the belatedly raised (but unpleaded) argument on laches should lead the Court to refuse to grant rectification in the circumstances of this case. It is, of course, correct that Sanwa learned of the Reyes Judgment in late December 2007, and of the CA Judgment in mid-2008. But, precisely because of the content of those judgements, and the reinstatement works that were performed as a consequence, it does not seem to me that there is any basis for criticising Sanwa for not seeking formal rectification of the Assignment until it was sued for trespass. Acknowledging that rectification is a discretionary remedy, I see no reason in the overall circumstances why (if otherwise appropriate, as I have held to be) Sanwa should be denied that remedy as a result of any timing matters.
H. Result
108. I find in favour of Sanwa. Therefore, I dismiss Wing Ming’s claim. I allow Sanwa’s counterclaim to the declaration and order for rectification as pleaded in the prayer to the counterclaim.
109. As to costs, I see no reason why costs should not follow the event. In those circumstances, Wing Ming is to bear Sanwa’s costs of the action (including any reserved costs), to be taxed if not agreed, with certificate for two Counsel.
| (Russell Coleman) | |
| Judge of the Court of First Instance High Court |
Ms Audrey Eu SC and Ms Chantel Lin, instructed K&L Gates, for the plaintiff
Mr Jonathan Chang SC and Ms Esther Mak, instructed by Howell & Co., Solicitors, for the defendant
