SAM HEI TAI HING FOODS CO LTD AND ANOTHER v. THE INCORPORATED OWNERS OF WAFORD INDUSTRIAL BUILDING
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HCA 1417/2019
[2026] HKCFI 781
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
HIGH COURT ACTION NO 1417 OF 2019
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BETWEEN
| SAM HEI TAI HING FOODS COMPANY LIMITED | 1st Plaintiff | |
| YAU CHAK HONG | 2nd Plaintiff | |
| and | ||
| THE INCORPORATED OWNERS OF WAFORD INDUSTRIAL BUILDING | Defendant |
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| Before: | The Hon Mr Justice S T Poon in Court |
| Date of Hearing: | 20 May 2024 to 23 May 2024 and 28 May 2024 |
| Date of Judgment: | 5 February 2026 |
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J U D G M E N T
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Introduction
1. This is a dispute between owners in Waford Industrial Building (the “Building”).
2. The 1st plaintiff is the owner of a significant number of units of the Building. It is a company incorporated in Hong Kong carrying on business as a distributor of rice, oil and other food products.
3. The 2nd plaintiff is the managing director and shareholder of the 1st plaintiff and responsible for the general management of the 1st plaintiff. He is also the owner of car parking spaces numbered P3 and P4 in the Building.
4. Together with the 1st plaintiff’s associates, the two plaintiffs hold approximately 30% interest in the Building. The 2nd plaintiff’s father (“Mr Yau”) was the vice-chairman of the management committee (“MC”) of the Defendant (“IO”) in the period between May 2001 and January 2017. Apparently, the MC was under the control of the plaintiffs during that period.
5. In January 2017, Mr Yau and the plaintiffs did not get re-elected as office bearers of the MC. Since then, the MC has been under the control of Ms Law Pik Wan (“Ms Law”) and her husband. The then officials and members of the MC became:
(1) Guang Yi Company Limited (“Guang Yi”), the Chairman;
(2) Guang Yi International Limited (“Guang Yi International”), vice-chairman, represented by Wu Xiaomin (“Wu”);
(3) Ms Law, Sai Tai Company Limited ("Sai Tai ") and Sun Tin Shing Coffee Company Limited ("Sun Tin Shing") as Secretaries, with Sai Tai and Sun Tin Shing represented by Ms Law; and
(4) Acerich Investment Limited (“Acerich”), represented by Leung Mei Fung and Lee Sin Kwai (“Mr Lee”), Ms Law’s husband, as members.
6. At the time of this trial, Ms Law has become the Chairperson of the MC.
7. In this action, the plaintiffs maintain that the IO has implemented unreasonable house policies (“House Rules”) on loading and unloading goods and the use of the carpark, which are targeted at the plaintiffs and have infringed the plaintiffs’ rights under the Deed of Mutual Covenant (“DMC”) of the Building.
8. The plaintiffs seek injunctive reliefs against and damages from the IO for, basically, obstructing the 1st plaintiff from loading and unloading goods in the Building, including the prohibition of their use of forklifts.
9. It is the case of the plaintiffs that the IO was in breach of the DMC and committed private nuisance against them.
10. On the other hand, the IO maintains that the House Rules are reasonable and for the benefits of the owners of the Building. Use of forklifts in the Building is dangerous and should be banned for safety reasons.
11. The IO alleges further that the 1st plaintiff has obstructed others’ use of the carpark and erected unauthorized structures at the common parts and facilities of the Building. The IO counterclaims against the plaintiffs for injunctive reliefs and damages. The basis of the IO’s claims is also breach of DMC and private nuisance.
Factual Background
12. The interlocutory stage of this matter was argued before DHCJ To in May 2020 and the Learned Judge gave a detailed written decision[1] (“Decision”) on his rulings.
13. In the Decision, the Learned Judge granted the following interlocutory injunctive orders against the IO:
(1) requiring the IO to remove the additional bar installed at the entrance of the driveway of the Building (“Driveway”);
(2) restraining the IO from blocking the entrance and exit of the Driveway;
(3) restraining the IO from obstructing or interfering with the plaintiffs’ access and use of car parking spaces P3 and P4; and
(4) restraining the IO from interfering with the plaintiffs’ placement of wooden, plastic or metal planks on the speed bumps to facilitate entry of their forklifts into the Driveway and from interfering with the same.
14. The factual background of the present dispute, at least prior to 27 May 2020, has been summarised by the Learned Judge in [6] to [21] of the Decision. It is convenient to recite here the Learned Judge’s summary:
‘The background facts
6. There are no serious material disputes between the parties. The 1st plaintiff is the owner of a number of units in Waford Industrial Building (the “Building”). It is a company incorporated in Hong Kong carrying on business as a distributor of rice, oil and other food products. The 2nd plaintiff is the owner of car parking spaces number P3 and P4 in the Building. He is responsible for the general management of the 1st plaintiff. Together, the plaintiffs hold about 33% interest in the Building. The 2nd plaintiff’s father (“Yau Senior”) was the vice-chairman of the management committee of the incorporated owners of the Building (the “IO”) from May 2001 to January 2017.
7. There was a change in the membership of the management committee in January 2017. Yau Senior refused to pass control of the management to the new committee. That resulted in legal proceedings in the Lands Tribunal in which Yau Senior was ordered by consent to pay costs. The relations between the plaintiffs and the IO deteriorated since. The IO accused Yau Senior of abuse of power and causing breaches of the deed of mutual covenant (“DMC”) during his term of office as vice-chairman. The plaintiffs accused the present management committee of obstructing and preventing them from lawfully accessing and using the driveway (“Driveway”) which is part of the common area of the Building.
8. The Building is an industrial building erected on a plot of land between Kwai Hei Street and Kwai Lok Street. The Driveway runs all the way from the entrance on the ground level in Kwai Hei Street to the exit in Kwai Lok Street. The width of the Driveway was about 5 metres. There is no pavement for pedestrians. As the photographs show, a container truck could drive comfortably on the Driveway from the entrance to the exit with adequate clearance for forklifts and pedestrians. On one side of the Driveway at about its midway is the loading area where goods are to be unloaded from lorries onto an elevated loading platform served by three cargo lifts. The goods are then delivered to the various floors of the Building using the lifts.
9. There are seven lorry parking spaces and four car parking spaces along the side of the loading platform, four car parking spaces along the other side of the Driveway and one container parking space near the entrance. Eleven of these sixteen parking spaces were owned by Acerich Investment Limited (“Acerich”). These spaces were all rented to the defendant. The 2nd plaintiff owns two car parking spaces but no lorry parking spaces inside the Building.
10. There is a factual dispute between the parties as to the parking arrangement between them. According to the plaintiffs, they had an unspecified parking space arrangement with the defendant since 2004 (when Yau Senior was the vice-chairman) under which the 1st plaintiff pays the defendant $2,600 per month for the use of any two lorry parking spaces for the sole purpose of loading and unloading goods. According to the defendant, the 1st plaintiff only rented lorry parking space L2 from January 2001 to March 2019 for the purpose of parking its lorries at a monthly rent of $4,300. For the purpose of this determination, there is no need to resolve this factual dispute.
11. Before considering the parties’ dispute, it has to be noted that the Building is a small industrial building with poor loading and unloading facilities because of its size and design. Ideal loading and unloading facilities include a loading area located in a recessed parking bay for lorries off the driveway and an elevated loading platform served by lifts to the various floors of the building. A lorry can be park[ed] with its back against the elevated loading platform. The loading platform of the lorry could be lowered onto the loading platform of the building to provide a gangway so that goods can be unloaded from the lorry onto the loading platform by forklifts or trolleys to the lifts for onward delivery to the various floors. The unloading lorry would not cause any obstruction to the traffic on the driveway and there would be no need for forklifts to be used on the driveway. Loading is carried out by a reverse process.
12. In this Building, there is no recessed loading area. The loading area is in fact part of the Driveway. The unloading lorry cannot be parked with its back against the elevated loading platform as it would wholly obstruct the traffic on the Driveway. It has to be parked alongside the loading platform or better still in one of the lorry parking spaces. Goods have to be unloaded from the lorry at the lorry parking space, transported by forklifts or trolleys to the loading area, lifted up to the loading platform and then transferred to trolleys etc. Use of forklifts is an efficient and beneficial means of loading and unloading from point of view of the deliverer as well as other users of the Building. Unlike a building with proper loading and unloading facilities as described above, any loading and unloading in this Building must be an obstruction to other users of the Driveway.
The hostility
13. Prior to commencement of hostility, the 1st plaintiff used to park their lorries near the entrance or exit of the Building, unload its goods and convey them to its units inside the Building. By this mode of operation, the plaintiffs do not have to pay parking fees for entering the Building. The plaintiffs’ case is that they have been operating in this manner using the two unspecified lorry parking spaces for the past twenty years. The defendant says that the 1st plaintiff only rented one specified lorry parking space for parking its lorries. The defendant had commenced proceedings in the Small Claims Tribunal against the 1st plaintiff in early 2019 claiming overdue parking fees of $21,060. However, that claim was dismissed for want of prosecution on 14 March 2019. For the purpose of the determination, I do not find it necessary to resolve the parties’ disputes on this issue save to bear their differences in mind.
14. Hostility commenced on 19 April 2019 when the defendant put up a notice on the Building prohibiting forklifts from accessing or using the Driveway. Without the forklifts, the 1st plaintiff could not load the goods onto the loading platform. As it was raining, the 1st plaintiff had to move the goods consisting of about 1,000 packs of rice, each weighing 25 kilograms, from the entrance to the lorry parking spaces L4, L5 and L6 to prevent damage by rain. The defendant also chained one of the 1st plaintiff’s forklifts to a fence and demanded a sum of $12,000 for its release and for the use of the lorry parking spaces. After some negotiation, the forklift was released upon payment of $3,000. Subsequently, the 1st plaintiff commenced proceedings in the Small Claims Tribunal to recover the said payment. That claim is still pending.
15. On 20 April 2019, the defendant’s security guard refused to allow the 2nd plaintiff’s private car access to his car parking spaces P3 and P4.
16. On 17 May 2019, one of the 1st plaintiff’s forklifts hit a pedestrian on the Driveway. There was nothing to suggest that the accident resulted in serious injury to the pedestrian. In her 2nd affirmation filed by the defendant’s secretary, Ms Law Pik Wan (“Law”), on behalf of the defendant, Law mentioned a similar earlier incident in April 2019, but gave no particulars or supporting evidence.
17. On 14 July 2019, the defendant installed two speed bumps at the entrance and exit of the Driveway. These made access by the plaintiff’s forklift difficult. Nevertheless, the 1st plaintiff was still able to transport its goods using forklifts and trolleys.
18. On 31 July 2019, the defendant installed an additional bar (the “additional bar”) at the entrance to the Driveway such that this additional bar together with the existing bar wholly block the entrance to the Driveway. The defendant’s agents who manned the entrance refused to lift up either of the bars when the 1st plaintiff’s staff intimated their intention to access the Driveway by forklifts.
19. As result, the 1st plaintiff resorted to using the exit at Kwai Lok Street to access the Driveway. On 1 August 2019, the plaintiffs placed a pile of wooden pallets and/or their vehicles under the gate after it was opened to prevent it from closing so as to enable the forklifts to enter and exit the Driveway. Up till then, the 1st plaintiff’s forklifts could still access the Driveway.
20. Then on 2 August 2019, the defendant’s staff pulled down the gate at the exit making the 1st plaintiff’s ingress impossible. The defendant also parked a private car in the immediate vicinity of the loading platform and put chains and fences around it, which completely blocked the 1st plaintiff’s access to the loading platform.
21. On 3 August 2019, the defendant caused Law and her husband to park their vehicles at the entrance and exit of the Driveway and put up fences between the two speed bumps. The 1st plaintiff’s container truck was thus trapped within the Driveway. Law demanded $21,060 to allow the container truck egress from the Building. Later that day, the 2nd plaintiff and his brother were also denied egress by the defendant’s security guard.’
15. The plaintiffs commenced the present action on 6 August 2019. On 8 August 2019, Mr Yau assaulted Ms Fung Man Yee (“Ms Fung”), a security guard employed by the IO. As a result, Mr Yau was convicted of assault occasioning actual bodily harm and sentenced[2] to 2 weeks’ imprisonment suspended for 18 months. He was also ordered to pay compensation to Ms Fung in the sum of HK$5,000.
16. On or around 14 August 2019, the IO implemented another new policy requiring all vehicles to enter from the entrance at Kwai Hei Street and exit through the exit at Kwai Lok Street and pay parking fees for each entry. With this new policy, once exited, the forklifts used by the 1st plaintiff have to drive on the public road round the block of buildings, cross intersections until they return to the entrance at Kwai Hei Street. This is an impossibility as forklifts are not permitted to be used on public roads as they do not fall within any class of vehicle under Schedule 1 of the Road Traffic Ordinance (Cap 374) to which a vehicle licence may be issued.
The Plaintiffs’ case
17. It is the plaintiffs’ case that, as co-owners of the Building, they are entitled to access their units and the Driveway under Clause 2 of the DMC, and to load and unload goods on the Driveway without obstruction or interference from other owners including the IO, under Clause 4.
18. In breach of the DMC, the IO denied the plaintiffs’ access to the Driveway and obstructed their right of way and right to dispatch, i.e., being allowed to enter and exit, and stop in the loading and unloading area, with no parking fees required to be paid.
19. It is the 1st plaintiff’s case that under the rental agreement with the IO, they have been using two unspecified lorry parking spaces for the past 20 years for loading and unloading goods. It has also been their practice to park their lorries outside either Kwai Hei Street or Kwai Lok Street to unload their goods using forklifts to convey them to unload in the Building. By these modes of operation, the 1st plaintiff did not have to pay hourly parking fees for entering the Building.
20. The plaintiffs asserted that by virtue of the above practices that have been in existence for 20 years, the doctrine of estoppel by convention comes into play which should be reflected when the relevant provisions of the DMC are interpreted.
21. The 1st plaintiff maintained that, as observed by DHCJ To in the Decision, goods could not be loaded to or unloaded from the loading platform without the lorry staying beside the platform or using forklifts. Thus, the use of forklifts to transport goods is reasonable and necessary and should not be prohibited by the IO.
22. Further, the plaintiffs alleged that the IO allows other owners of the Building to exercise these rights, but only selectively prevents the plaintiffs from enjoying the same. This gave rise to an action of private nuisance.
23. Further, it is the 1st plaintiff’s case that the rules which were introduced by the MC of the IO, namely (a) the “House Rule on L1 to L7”, restricting the lorry parking spaces on monthly tenancy with the IO for one designated vehicle; and (b) the “House Rule to Ban Forklift”, amounted to a total curtail of the 1st plaintiff’s rights under Clause 2.
24. Regarding the 2nd plaintiff, it is his case that in the evening of 3rd August 2019, when he wished to exit the Building by his private car, he was not allowed egress by the security guard under the instruction of Ms Law.
25. It is the plaintiffs’ case that, on divers dates from 19 April 2019 until 6 December 2020, the IO has been acting in breach of the DMC, which for the prolonged duration and severe quality of the breaches also amounts to private nuisance. The IO, through its security guards assaulted and harassed the 1st plaintiff’s staff and agents under the disguise of enforcement of the DMC, which individually and collectively constitute breaches of the DMC and private nuisance.
26. The plaintiffs alleged that, during the abovementioned period, they had been in different occasions wrongfully refused ingresses or egresses by the agents of the IO that their quiet enjoyment of the Driveway, loading platform and car parking spaces were interfered with.
27. The plaintiffs also alleged that as a result of the IO’s employees’ assault and harassment on Mr Yau and the 2nd plaintiff, the plaintiffs suffered loss and damages.
The IO’s case
28. The IO relied on Clauses 3 and 4 of the DMC and maintained that it has the power to make rules and regulations to regulate the common parts of the Building.
29. The IO has no dispute with the general proposition that the plaintiffs are entitled to use the Driveway. However, the IO asserted that, on a proper construction of the DMC, the rights of the plaintiffs are not unlimited and the plaintiffs have to follow the IO’s directions issued either at the spot or through the House Rules in exercising those rights.
30. Moreover, the IO asserted that the plaintiffs used the vehicle parking spaces without paying the necessary fees in accordance with the fee schedule and maliciously and deliberately caused obstruction to the Driveway, parking spaces, entrance and exit of the Building, and the operation of the Octopus reader system. The IO therefore considered that the existing policies and rules for use of the parking spaces must be strictly enforced and new policies and rules are also necessary.
31. The IO raised counterclaims against the plaintiffs for (a) committing trespass and nuisance and (b) unlawfully installing unauthorized building works in the Building. The IO asked for mandatory injunctions against the plaintiffs for removal of the said unauthorized building works.
32. At trial, parties indicated to the court that the 1st plaintiff has actually rectified all the unauthorized structures and the IO’s claims for mandatory injunctions have now become academic.
Relevant Provisions of the DMC
33. The parties principally relied on the following provisions under the DMC:
‘Clause 2: “That each of the owners for the time being thereof shall have the right in common with the others of such owners and all others having the like right to use for the purpose of access to and egress from the Units so allotted to each of them the common parts of the said Building and the said premises.”
Clause 3:“That the owners for the time being thereof shall not be entitled to use any common area or driveway on of or in the said Building or the said premises for the purpose of loading and unloading goods vehicles or for any other purpose except in such space as may be designated from time to time as loading and unloading area by the Manager for the time being of the said Building in such manner as such Manager shall direct.”
Clause 4: “That the owner for the time being thereof and every owner shall not obstruct or interfere with the said common parts, services and facilities, loading and unloading spaces and shall use the same in a proper and careful manner so as not to cause any damage thereto or any obstruction or inconvenience to any of the other owners and further shall not use the same or any of them for any other purpose than those for which they are respectively intended. The Manager for the time being of the said Building shall have full power to take away or cause to take away any goods articles or vehicles of any owner or occupier which obstructs or interferes such common parts, services, facilities or areas at the sole expenses of such defaulting owner or occupier and the Manager shall not be liable for any loss or damage whatsoever for such removal. The Manager for the time being of the said Building is hereby empowered to make any rules or regulations from time to time regulating the use of the common areas including imposing fines or storage charges against any party in breach of such regulation.”
Clause 5:“That the owners for the time being thereof shall at all times observe and perform the terms and conditions contained in the New Grant set out in the Second Schedule and use the units of the said Building for general industrial and godown purposes excluding any trade which is now or may hereafter be declared to be offensive trade under the Public Health and Urban Services Ordinance 1960 and any enactment amending the same or substituted thereafter and in accordance with the user designated by the Occupation Permit and the design and loading in relation to the said Building. In the event of such Units being used for godown purposes, the method of storage of goods and the nature and the volume or quantity of the goods stored thereon shall be subject to the approval of the Director of Fire Services.”
…
Clause 8(c):“… the Manager shall have the following powers and duties, namely:-
…
(xi) To prevent obstruction of any of the common parts of the said Building or of the roadway (if any), pavements and open areas within the said premises.
…
(xv) To prevent any person from unlawfully occupying or using any of the common parts or areas of the said Building or the said roadway, pavements, open areas or any parts thereof.
(xvi) To prevent and to take action to remedy any breach by any person in the said premises or in the said Building of the provisions of the said New Grant or this Deed or any of them in so far as the same relate to the said premises and the said Building.
Clause 14: “That each of the owner for the time being thereof hereby covenants with the others as follows:-
…
(h) Not to permit or suffer or permit anything to be done in the said Building or on the said premises or any parts or part thereof or thereupon which may be or become a nuisance or annoyance or cause damage or inconvenience to the owners or occupiers of any unit of the said Building or of adjoining or neighbouring buildings.
(i) Not to do or cause or permit or suffer to be done anything whereby any insurance of the said Building against fire may be rendered void or voidable…
…
(k) Not to use any Car Parking Space for any other purpose other than for parking a motor vehicle for which the same has been designated.”
Clause 27(i): “owner” shall include each person who is vested and registered in the Land Office with the legal estate or (where the Crown Lease has not yet been granted) with all the benefit title right or interest in any undivided share in the said premises and the said Building and shall also include every joint-tenant or tenant-in-common of such share, and where the said undivided share has been assigned by way of mortgage, the word “owner” shall include both the Mortgagor and the Mortgagee but in respect of the Mortgagee only (i) if such Mortgagee is in possession or (ii) if notice has been given to such Mortgagee of any breach (provided however that the Mortgagee’s liability in respect of any such breach shall accrue only from the date of the Mortgagee’s receipt of such notice) Provided however that subject to the provisions of the said Mortgage the voting rights of the owners shall be exercisable by the Mortgagor unless the Mortgagee is in possession or in receipt of the rents and profits of such share.
Clause 27(iv): “common parts and facilities” means the following parts of the said premises and the said Building:-
…
2. The road, ramps and driveway within the said premises and the said Building.
…
4. The loading and unloading area on the Ground Floor of the said Building as designated by the Manager subject to such house rules as may from time to time be stipulated by the Manager.’
34. Parties also relied on the following provisions of the Special Conditions of the Land Grant of the Building:
“15(a) Space shall be provided within the lot…for the manoeuvring, parking, loading and unloading of vehicles (excluding containers on trailers with their prime movers attached) at the rate of not less than one vehicle for each 930 square metres or part therof 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 460 square metres or part thereof of the site area, whichever rate provides the greater amount of such space.
…
15(d) The space provided for the loading and unloading shall about a goods handling platform or area which must be provided and so laid out that goods loaded or unloaded from or to such platform or area may be transported within the lot to all parts of the building both vertically and horizontally…
…
15(f) 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.”
35. I am not minded to set out those provisions relevant to the issue of unauthorized structures as they are now of little relevance.
Legal Principles
36. In 383HK Limited v The Incorporated Owners of Tak Bo Building[2018] HKCA 164, Cheung CJHC (as he then was) had this to say[3]:
“21. As was observed by Chan PJ in Grande Properties Management Ltd v Sun Wah Ornament Manufactory Ltd (2006) 9 HKCFAR 462, para 2, the provisions of a DMC and the Ordinance are usually aimed at facilitating the management of the building by reducing conflicts among co owners on the one hand and preventing abuse by the manager and the majority owner on the other. It is fair to say that most disputes are resolved by a purposive construction and common sense application of the relevant provisions of the DMC and the Ordinance.”
37. The principles concerning interpretation of a DMC has been summarised comprehensively by K Yeung J in paragraph 111 and 113 of Fine Right Enterprise Ltd v Wealth Fine Ltd[2022] HKCFI 3840:
‘111. This court has in Pierhead Garden Management Co Ltd v Incorporated Owners of Pierhead Garden [2021] HKCFI 678 at §51 summarized the applicable legal principles in interpreting a DMC. Both leading counsel accept them as correct. They are as follows:
“(a) A DMC is a contract which runs so as to bind all owners and their assignees and the manager: Grande Properties Management Ltd v Sun Wah Ornament Manufactory Ltd (2006) 9 HKCFAR 462, §2 (per Chan PJ);
(b) The provisions of the deed are usually aimed at facilitating the management of the building by reducing conflicts among co-owners on the one hand and preventing abuse by the manager and the majority owner on the other. Such conflicts should be resolved by a purposive construction and common sense application of the relevant provisions of the deed and the DMC: Grande Properties Management, §2 ( per Chan PJ);
(c) The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties to mean. 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. The overriding objective is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean: Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279 at 296C — 297H (Lord Hoffmann NPJ); Smart Essence Development Ltd v Hong Kong Housing Authority , unrep, HCA 450/2016 (28 April 2016), per DHCJ Paul Lam SC at §§44 and 47 citing Multi Link Leisure Developments Limited v North Lanarkshire Council [2010] UKSC 47 at [11];
(d) In commercial contracts, the construction of the contract should generally accord with commercial common sense: Tai Fat Development (Holding) v Incorporated Owners of Gold King Industrial Building, unrep, CACV 22/2014 (23 December 2014) at §16 (per Barma JA);
(e) The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear. But on the other hand, the Court must be alive to the possibility that one side may have agreed to something which with the benefit of hindsight may not have served his interest: Building Authority v Appeal Tribunal (Buildings) (ENM Holdings Ltd) (2018) 21 HKCFAR 194 at §54;
(f) When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties: Smart Essence at §46 (DHCJ Paul Lam SC). Subsequent conduct of the parties is generally inadmissible when construing a contract: SNE Engineering Co Ltd v Chim Kee Machinery Co Ltd , unrep, CACV 101/2016 (11 July 2017) per G Lam J at §52 citing James Miller & Partners Ltd v Whitworth Street Estate Ltd [1970] AC 583 at 603; Marble Holding Ltd v Yatin Development Ltd (2008) 11 HKCFAR 222, §22; The New China Hong Kong Group Ltd (in liquidation) v AIG Asian Infrastructure Fund LP , unrep, CACV 24/2008 (12 February 2009), §78; and
(g) While construing a DMC, the Court is entitled to consider other relevant documents such as the first assignment, the government grant and the approved building plans: Tai Fat Development at §17.
112. In Eminent Investments (Asia Pacific) Ltd v DIO Corp (2020) 23 HKCFAR 487, Ribeiro PJ and Lord Collins of Mapesbury NPJ at §§42-45 restated the general approach to interpretation of contracts, and explained at §44 that:
“In Wood v Capita Insurance Services Ltd , Lord Hodge JSC reviewed the many cases on interpretation and emphasised that interpretation was a unitary exercise. That is why, where there are conflicting interpretations, account should be taken of the natural and ordinary meaning of the provision in question, the purpose of the contract and of the provision, other relevant provisions, the facts and circumstances known or assumed by the parties at the time that the contract was executed, the quality of the drafting of the instrument, and commercial common sense.”
113. I highlight the observations of Chan PJ in Grande Properties Management at §2, that the “provisions of the deed … are usually aimed at facilitating the management of the building by reducing conflicts among co-owners on the one hand and preventing abuse by the manager and the majority owner on the other.” In my respectful view, the provisions of a DMC should also aim at the prevention of abuse by co-owners between themselves. That must be part and parcel of the aim of reducing conflicts among co-owners.’
38. In a building management context, the rights of a party under a DMC are not absolute and must as a matter of construction be subject to the element of reasonableness and also co-exist with other provisions in the DMC, unless specifically excluded: Whole Grand Ltd v IO of Bo Fung Building (unrep, LDBM 57/2019, 30 July 2021).
39. In Lee Yin Hong v Serenade Cove (IO) [2011] 5 HKLRD 660, the Court of Appeal explained that the Court should not assume supervisory control over the IO:
“The Court’s task is to adjudicate whether there has been a breach of the contractual terms and not to exercise a supervisory function over the decision of the IO as if it is hearing a judicial review application on whether a discretionary power by a public body or tribunal has been lawfully exercised.”
Interpretations on the relevant provisions of DMC
40. Having the above principles in mind, I am of the view that the relevant provisions of the DMC shall be interpreted in the following ways.
41. The Building is an industrial building. The units of the Building are used as factories or godowns. Loading and unloading goods formed an essential part of the usage of the Building. In other words, the right of way and right to despatch of the owners or occupants, as conferred under Clause 2, are of significant importance.
42. However, as those rights are important and equally important to all owners and occupants, those rights conferred under Clause 2 cannot be absolute. The rights of an owner or occupant shall not unreasonably prejudice the same rights of other owners or occupants.
43. In fact, Clause 4 of the DMC expressly states that every owner shall not obstruct or interfere with the said common parts, services and facilities, loading and unloading spaces and shall use the same in a proper and careful manner.
44. For instances, as the loading and unloading areas of the Building are quite limited, it would not be right to allow a single user to occupy all or a substantial part of the areas continuously for too long that may hinder others’ use of the same.
45. In my view, an absolute right to enjoy free loading or unloading in the Building by owners is unrealistic in light of the design of the Building’s carpark, driveway and loading platform. Measures must be employed to deter frequent users to abuse their rights in loading or unloading goods in a prolonged way and thereby, paying insufficient regard to other owners’ rights. A structured payment scheme for the use of the loading and unloading areas is therefore necessary.
46. Reading together Clauses 3, 4, 5, 27(iv)(4) of the DMC and 15(a), (d) and (f) of the Special Conditions of the Land Grant, the IO shall have the power and duty to designate a loading and unloading area for use of the occupants. It is incumbent upon the IO to designate loading and unloading areas reasonably sufficient for use of all the owners or occupants.
47. The IO is expressly given the power to make house rules under Clause 4. There is no dispute that the power of IO to make house rules must be exercised reasonably and not arbitrarily.
Discussion
Estoppel by convention
48. As rightly pointed out by DHCJ To in the Decision, the design of the loading and unloading facilities of the Building is not an ideal one.
49. Because of the width of the Driveway, it is not feasible to designate the area abutting the front portion of the platform as the loading and unloading area. If a lorry is parked beside in parallel to the platform for loading or unloading goods, the remaining part of the Driveway will hardly be sufficient for another lorry to get through. This can be seen from the photographs exhibited.
50. The inadequacy of the loading and unloading facilities of the Building could have been compensated by using the back portion of the platform where goods can still be moved from the lorry onto the platform then directly to the cargo lifts. However, all the spaces adjacent to or abutting the back portion of the platform have been designated as lorry parking spaces which were all sold to a private owner, Acerich.
51. With all the lorry parking spaces privately owned, the IO can only pay to rent the parking spaces for designation of those as loading and unloading areas. In fact, this has been done since the time when the IO was still under the control of the plaintiffs. In the evidence, the monthly rent for the 7 lorry parking spaces (L1-L7) has all along been in a total sum of $65,000.
52. There is a dispute as to the terms of the rental agreement on the lorry parking spaces between the IO and the 1st plaintiff. According to the plaintiffs, the 1st plaintiff rented two unspecified lorry parking spaces from the IO in a monthly rent of $2,600. Whereas according to the IO, the rental agreement was $4,300 for one specified parking space.
53. Leaving aside whose version is to be preferred, the monthly rent is apparently too low. The IO needs to pay $65,000 monthly to Acerich for use of its 7 parking spaces, which means that, on average, an amount of over $9,200 for each parking space. By renting out to the 1st plaintiff in the amount of $2,600 for two spaces or even $4,300 for one space is effectively subsidising the 1st plaintiff on rent.
54. I see no reason why the IO should rent out any lorry parking spaces monthly to any owner. It is reasonable for the IO to charge users for the parking spaces for loading and unloading goods to cover the amounts for payment of rent. However, as the parking spaces rented from Acerich are for the benefit of all owners, they should not be sublet to a single owner for his exclusive use. If a particular owner’s use of the parking spaces is in such a rate that justify the occupation of a parking space monthly, the owner can consider renting a parking space directly from Acerich at market rate.
55. In my view, the act of the IO of subletting lorry parking space monthly to the 1st plaintiff should not be considered as an act performed in discharge of its duty to designate loading and unloading areas under the DMC. It is in its nature a private commercial transaction between the IO and the 1st plaintiff and their respective rights and obligations under this transaction shall be determined only in accordance with the rental agreement and has nothing to do with the provisions of the DMC.
56. Therefore, the house rule on allowing only a specified vehicle to use a particular monthly rented lorry parking space is only a variation of contractual term of the rental agreement by the IO and not subject to be challenged by the 1st plaintiff relying on the DMC.
57. By the same token, even if the 1st plaintiff had been using the monthly rented lorry parking spaces for unspecified vehicles for 20 years, this cannot create any estoppel by convention for the purpose of interpretation of the DMC.
58. On the point of estoppel by convention, the 1st plaintiff also suggested that they have been using forklifts to transport goods from lorries parked outside the Building into the Building for over 20 years. In contrast, the IO said this mode of transport has been used only from March 2019 when the 1st plaintiff stopped renting the lorry parking space.
59. I find the version of the 1st plaintiff unconvincing. For the period where the 1st plaintiff has rented the lorry parking space(s) for loading and unloading, it would not be necessary for the 1st plaintiff to adopt a much inconvenient mode to transport goods from outside the Building. There might be on occasion where the height of the lorry used had exceeded the height of the ceiling of the carpark that the lorry cannot enter the Driveway. But that would not have happened so frequently that might justify the purchase of forklifts and constitute an estoppel by convention.
60. Furthermore, the forklift used by the 1st plaintiff was found initially to be unregistered and the driver did not hold a valid licence. If forklifts had really been used for so many years, it would be most unlikely that the forklift was still not registered and the driver unlicensed.
61. I find as a fact that the practice of using forklifts by the 1st plaintiff to transport goods in the Building started only after they stopped renting lorry parking space(s) from the IO and therefore, cannot constitute any estoppel by convention whatsoever.
62. As I found that the use of forklifts by the 1st plaintiff to transport goods from outside cannot constitute any estoppel by convention, the 1st plaintiff also failed to establish that pass and re-pass at the same aperture in loading and unloading goods constitute any estoppel by convention.
63. I find further that the 1st plaintiff failed to prove any estoppel by convention regarding the loading or unloading goods by the 1st plaintiff.
Rental Agreement
64. Regarding the issue on whether there was a rental agreement between the 1st plaintiff and the IO for unspecified lorry parking spaces, having considered the minutes of the MC dated 18 August 2004, I accept that there existed such an agreement between the 1st plaintiff and the IO since 2004. However, I do not accept that the agreement covered two unspecified parking spaces as in the correspondences between the 1st plaintiff and the IO, it was specifically mentioned by the 1st plaintiff that they have rented one specified lorry parking space (L2) and one unspecified lorry parking space. Renting two unspecified parking spaces was never mentioned.
65. Furthermore, considering the monthly rent of $65,000 paid to Acerich for 7 parking spaces, a monthly rent of $2,600 for two unspecified parking spaces would be incredibly low and unlikely to exist.
66. I found as a matter of fact that in or before 2004, the 1st plaintiff and the IO entered into rental agreements in respect of one specified lorry parking space (L2) and one unspecified lorry parking space and the agreements were terminated on 19 March 2019.
67. I found also that the new policy on monthly rented lorry parking space was applicable only to specified lorry parking spaces as properly understood from the correspondence between the 1st plaintiff and the IO at the material times.
68. The 1st plaintiff’s case is that the IO implemented a new policy on 5 November 2018 that only one designated vehicle is allowed to park in a lorry parking space under a monthly rental agreement. By a letter to the IO dated 19 March 2019, the 1st plaintiff purported to accept the “repudiatory breach” of the IO regarding all the rental agreements of car parking spaces in the Building.
69. In the 1st plaintiff’s pleaded case, although the new policy was implemented on 5 November 2018, the 1st plaintiff was not affected by the new policy until 29 November 2018 when the IO refused to allow them to park two lorries in two vacant lorry parking spaces at the same time to conduct simultaneous loading and unloading operations.
70. As I mentioned above, the monthly rental agreement of lorry parking space is a commercial deal between the IO and the 1st plaintiff. The monthly rental agreement was a periodic contract between the parties and it would be up to either party whether to continue the contract in the same terms. The change of policy of the IO was in effect a variation of the existing terms of the contract and if the 1st plaintiff decided not to accept it, there will be no contract.
71. In the 2nd plaintiff’s evidence given on behalf of the 1st plaintiff, there is no particulars given regarding the refusal of entry of the 1st plaintiff’s lorry on 29 and 30 November 2018. I am of the view that the 1st plaintiff has failed to prove on balance there was a breach of rental agreement on the part of the IO on that two occasions.
Right of way and Right of despatch
72. Following my findings on the interpretations of the DMC, the owners’ right of way and right to despatch cannot be absolute. A fortiori, there is no absolute right to choose the mode of despatch. If sufficient loading and unloading areas abut the platform are provided, the use of forklifts is not necessary. In my judgment, it is within the IO’s discretion to regulate the use of conveyances including forklifts, pallet jacks and trolleys. However, such regulation must be subject to the test of reasonableness and not be arbitrary.
73. In the present case, although the IO maintains that the banning of forklifts was because of safety reason, I am unable to accept that this was wholly genuine. In my view, the decision to ban forklifts was at least motivated partly by the IO’s aim to stop the 1st plaintiff from loading or unloading goods without paying any parking fees.
74. Having an overview of the sequence of events and parties’ conducts, it is apparent that the parties were under a conflict stemmed from the issue on the use of loading and unloading areas and parking fees. For many years the 1st plaintiff had been enjoying the use of lorry parking spaces adjoining the platform with a relatively low fees, but with the change of policy to restrict the parking spaces to be used by only one specified lorry, the benefits enjoyed by the 1st plaintiff ceased. This happened right after the change of memberships of the MC.
75. It is discernible that the 1st plaintiff then changed their mode of transport in order to avoid their lorries to enter the Building with the use of forklifts. The purpose of which is obviously to avoid payment of parking fees. To counter this, the IO then employed different measures, including the installation of bars, ramps and extra bars; and introduced house rules to restrict the direction of travel and prohibit the use of forklifts.
76. In my view, the two camps had been in a war triggered by the change of control of MC and payment of parking fees for loading and unloading goods. The conflict had later escalated to the use of abusive languages and even physical attacks.
House rules
77. The House Rules were introduced by the IO with a view to winning this war, aiming at the plaintiffs. They were not made bona fide for the benefits of all owners. However, having considered the situation of the Ground Floor of the Building, I am unable to say the House Rules are objectively unreasonable.
78. There is no designated area at the Ground Floor of the building for parking of forklifts and apparently, I can identify no suitable common area on Ground Floor that is suitable to be allotted for parking of forklifts. If the IO can fulfil its duty under the DMC to designate sufficient loading and unloading areas abutting the platform, it would not be necessary for forklifts to be used for loading and unloading. In consideration of the relatively small size of the Driveway and carpark of the Building, allowing the use of forklifts might potentially be dangerous. On balance, I am unable to conclude that the house rule of banning forklifts is unreasonable.
79. Regarding the house rule on single direction traffic, I am of the view that traffic within the Building can be regulated more easily if vehicles travel in a single direction. The chance of accidents to occur can also be reduced. Furthermore, keeping one entrance and one exit only would be more convenient for charging parking fees. It is also not uncommon for industrial buildings to have such a rule. On balance, I am unable to conclude that such a rule is unreasonable.
80. Regarding the installation of bars, I agree that it is an efficient way for collection of parking fees, working together with the Octopus system. This is also a very common device for buildings and carparks for regulation of vehicle access and not unreasonable.
81. However, I can see no purpose for the installation of the extra bars, apart from blocking the entrance of the 1st plaintiff’s forklifts. This is an act of the IO aiming personally at the 1st plaintiff. I would say it is unreasonable and the IO should not have done it.
Assault and harassment against Mr Yau and the 2nd plaintiff
82. As I mentioned above, the war between the two camps had escalated to verbal abuse and even physical assaults.
83. Regarding the alleged assaults and harassment on Mr Yau and the 2nd plaintiff by the security guards, I am satisfied that they did occur. Although Mr Yau did not give evidence in this trial, the evidence of the 2nd plaintiffs on these incidents were clear and not being much challenged in cross-examination. Given the background of this matter and the degree of hostility between the parties, I tend to believe, on balance, that the security guards of the IO had developed personal grudges with Mr Yau and the 2nd plaintiff that led to the inappropriate conducts towards them.
84. However, I am of the view that the harm done to Mr Yau and the 2nd plaintiff by the complained conducts is trivial and no actual injury or damages occurred. Moreover, considering the nature of the incidents, in particular, the abusive words used by the security guards against Mr Yau and the 2nd plaintiff, it is more probable that the security guards committed the wrongdoings personally to Mr Yau and the 2nd plaintiff and not against their capacity as members of the 1st plaintiff.
85. In the circumstances, there shall be no damage suffered by the 1st plaintiff as a result of the assault and harassment. By the same token, there is no private nuisance against the 1st plaintiff arising from the assault and harassment against the plaintiffs.
86. Regarding the 2nd plaintiff, in view of the trivial nature of the harassment, nominal damages would be sufficient.
Private nuisance
87. It is the case of the 1st plaintiff that the continuous breach of DMC by the IO constitutes private nuisance against the plaintiffs.
88. On the other hand, the IO alleged that the plaintiffs’ obstruction to or interference with the common parts constituted private nuisance.
89. In view of my findings above, the IO had committed no breach of the DMC regarding the banning of forklifts, change of policy on monthly rental of lorry parking spaces, installation of bars and the implementation of one-way traffic policy.
90. However, certain acts of the IO were excessive and inappropriate. The IO had also been acting against the plaintiffs and Mr Yau personally.
91. The parties had been engaging in a distasteful war and both sides reacted in an unsophisticated way. The acts of the parties, including the blocking of the entrance and exit by vehicles, occupying parking spaces with goods, chaining of forklifts, pulling down the metal gate of the exit, using abusive languages and having physical contacts with others, have been unreasonable and disproportionate. The series of acts during the time committed by the parties were action and reaction of rivals, they were excessive acts in response to unreasonable acts by others. Those excessive responses cannot be regarded as exercising the parties’ rights of abatement.
92. In my judgment, both sides committed nuisance against the others in that they have interfered with the others’ right to quiet enjoyment of the common parts of the Building.
93. Regarding damages, I am not satisfied that the 1st plaintiff has established the causation of its special damages.
94. In my view, it was the 1st plaintiff’s choice of not using the hourly lorry spaces abutting the platform to load or unload its goods. Should the 1st plaintiff elected to do so and pay the necessary hourly charges, it would not be necessary for the 1st plaintiff to seek alternative place for storage and engage extra logistical services.
IO’s counterclaims
95. As above mentioned, the injunctive reliefs claimed against the plaintiffs regarding the unauthorized structures have become academic.
96. Moreover, the IO had been personal in exercising its power to manage the Building against the interests of the plaintiffs. No remedies in equity should be awarded in favour of the IO as it has not come with clean hands.
Conclusion
97. In the circumstances, the claims of the plaintiffs for injunctive reliefs against the IO be dismissed.
98. The 1st plaintiff’s claims for general damages for breach of DMC be dismissed.
99. The 1st plaintiff’s claims for special damages for nuisance be dismissed.
100. The IO do pay the plaintiffs $1,000 each as nominal damages for nuisance.
101. The IO do pay the 2nd plaintiff $1,000 as nominal damages for harassment.
102. The IO’s claims for injunctive reliefs against the plaintiffs be dismissed.
103. The plaintiffs do pay the IO $1,000 as nominal damages for nuisance.
104. I make a costs order nisi that the parties do bear their own costs in these proceedings. This costs order nisi will become absolute unless either party apply to vary within 14 days.
| (S T Poon) | |
| Judge of the Court of First Instance High Court |
Mr Sin, Wung Fung Oscar instructed by Huen & Partners, for the 1st Plaintiff and the 2nd Plaintiff
Mr Yeung, Ming-Tai and Mr Huen, Clay instructed by Gilbert Tang & Co., for the Defendants