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HONG KONG SPECIAL ADMINISTRATIVE REGION - Legal Reference System

By Eleanor Martin,2014-08-17 13:38
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HONG KONG SPECIAL ADMINISTRATIVE REGION - Legal Reference System

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    A A HCA 8805/1993 B B IN THE HIGH COURT OF THE C C HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE D D ACTION NO. 8805 OF 1993 E E ____________ BETWEEN F F

     WING MING GARMENT FACTORY LIMITED Plaintiff G G and H H THE INCORPORATED OWNERS OF I I st Defendant WING MING INDUSTRIAL CENTRE 1 nd NEW GAS & COMPANY (a firm) 2 Defendant J J and K K ESSMAN CONSTRUCTION COMPANY L L LIMITED Third Party ____________ M M N N Before: Hon Reyes J in Court Dates of Hearing: 11-13 and 17 December 2007 O O Date of Judgment: 20 December 2007 P P ______________ Q Q J U D G M E N T ______________ R R S S T T U U V V

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- 2 - A A B I. INTRODUCTION B 1. Since 1993 the owners of the Wing Ming Industrial Centre C C have been locked in bitter dispute about almost all aspects of the buildings D D management. E E 2. On one side of the dispute is Wing Ming. It was the F F buildings original developer and retains an interest in some units within G the building. On the other side are all other owners. They are here G represented by the Incorporated Owners. H H I 3. In these proceedings, Wing Ming claims against the I Incorporated Owners for breach of the building’s Deed of Mutual J J Covenant (DMC). K K 4. By the DMC Wing Ming reserved a right to construct a loft in L L the air space over Car Parking Spaces 2, 3, and 4 as indicated in a plan M M annexed to the DMC. Wing Ming contends that in breach of that right, without authority from Wing Ming, the Incorporated Owners permitted N N New Gas in August 1993 to install a fire services pipe which entered into O O and ran through the length of such air space. Wing Ming says that, as a result, its plans to construct a loft in the air space and to rent out the same P P once constructed were delayed. Wing Ming claims damages arising out of Q Q such delay. R R 5. Wing Ming also claims that, to construct the pipe, New Gas S S must have entered into the air space. Such entry not having been authorised, Wing Ming wants damages against New Gas for trespass. T T U U V V

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- 3 - A A 6. The Incorporated Owners and New Gas deny liability. B B C C 7. They say that there has been no encroachment on any air D space over Car Parking Spaces 2, 3 and 4 shown in the DMC plan. They D argue that Wing Ming unilaterally re-designated common area (marked E E “VOID” in the DMC plan) as Car Parking Spaces 2, 3 and 4. Wing Ming F F (according to the Incorporated Owners) then constructed a loft over the true Car Parking Spaces 2, 3 and 4 and the adjacent re-designated Car G G Parking Spaces 2, 3 and 4. Wing Ming also erected a wall below this loft H H and thereby enclosed the true Car Parking Spaces 2, 3 and 4. This caused those parking areas to be separated from the re-designated Car Parking I I Spaces 2, 3 and 4. J J 8. All this (the Incorporated Owners and New Gas contend) was K K unlawful, being contrary to the DMC and Conditions of Sale relating to the L L building. M M 9. In any event, the pipe (the Incorporated Owners and New Gas N N contend) merely runs through the length of the space above the re- designated Car Parking Spaces 2, 3 and 4. When installing the pipe, New O O Gas never entered the space over the true Car Parking Spaces 2, 3 and 4. P P Since the re-designated Car Parking Spaces 2, 3 and 4 are in fact common area which Wing Ming wrongly arrogated to itself, there could not (the Q Q argument runs) have been any breach of any air space right held by Wing R R Ming. S S 10. The Incorporated Owners counterclaim against Wing Ming for T T arrears of management fees. This is because, citing various reasons, Wing Ming has not paid its share of management fees since at least 1994. U U V V

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- 4 - A A 11. The Incorporated Owners additionally seek an injunction B B directing Wing Ming to demolish the wall enclosing the true Car Parking C C Spaces 2, 3 and 4. The Incorporated Owners say that the wall was built on D top of a hole or opening which serves as the only means of access to an D overflow water tank in the Basement of the building. E E F F 12. Wing Ming’s principal response to the Counterclaim is that the management fees claimed are excessive and unparticularised. Wing G G Ming asserts a set-off of any damages due to it against any management H H fees payable. Wing Ming denies the existence of any hole under the wall. I I 13. Apart from the main claims just summarised, there are J J 3 subsidiary claims. K K 14. New Gas as a contractor of the Incorporated Owners claims an L L indemnity against the latter for any damages payable by New Gas to Wing Ming. The indemnity is said to arise because New Gas installed the pipe M M on the Incorporated Owners’ orders. N N 15. The Incorporated Owners claim against Essman, the original O O manager of the building, by way of third party proceedings. Essman is P P related to Wing Ming. Mr. Yuen Man is a director of both companies and gave evidence on behalf of both. Q Q R R 16. According to the Incorporated Owners, as manager in August 1993, Essman should have supervised the installation of the pipe by New S S Gas. This duty of supervision would have been owed to owners of units in T T the building. If New Gas trespassed onto Wing Ming’s air space, that would only have been due to Essman’s lack of supervision. Essman U U V V

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- 5 - A A should thus compensate the Incorporated Owners for any liability on the B B part of the latter to Wing Ming arising out of Essman’s faulty supervision. C C D 17. Essman denies liability. In turn, it has counterclaimed for D unpaid management fees said to be due from the Incorporated Owners. E E F F 18. Essman initially alleged that its tenure as manager had been wrongfully terminated by the Incorporated Owners. But that last claim G G was dropped at the start of trial. H H 19. Finally, there was an issue between the parties as to whether I I Wing Ming had wrongly allowed its units in the building (in particular, the J J Ground Floor and loft) to be used by tenants in breach of the Special Condition (3) of the Conditions of Sale. Special Condition (3) provides K K that the building shall not be used other than for “industrial or godown L L purposes”. Just before trial, Wing Ming’s counsel (Mr. Lee Yee Hung) indicated that he would not resist a permanent injunction against Wing M M Ming on this issue. N N O II. BACKGROUND O 20. Wing Ming leased the land on which the building is situated P P from the Government in September 1974. The lease was subject to Q Q Conditions of Sale. R R 21. Wing Ming then erected the building (consisting of 11 storeys) S S on the land. It notionally divided the building into 1,323 equal undivided T shares allocated among various units in the building. T U U V V

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- 6 - A A 22. In March 1991 Wing Ming assigned certain units in the B B building to Superkind. At the same time it entered into the DMC with C C Superkind and Essman. D D 23. DMC clause I.C.4(i) gave the owner of the Front Portion of E E the Ground Floor the right to construct a loft over that part of the Ground F F Floor identified as the “Southern Half Portion” in the Ground Floor Plan annexed to the DMC. Such right was subject to approval by the Building G G Authority of any proposed loft. H H 24. DMC clause I.C.5 reserved to the owner of the Front Portion I I of the Ground Floor a right to construct a loft over Car Parking Spaces 2, 3 J J and 4. This right was subject to the Building Authority giving approval and to a head room of at least 7 feet 6 inches being left to Car Parking K K Spaces 2, 3 and 4. L L 25. DMC clause V.A.2 appointed Essman as manager of the M M Building for 6 years and afterwards until determination by 6 months’ N N notice. O O 26. In May 1991 Wing Ming divided the Front Portion of the P P Ground Floor into 2 parts which Wing Ming identified as Portions V1 and V2. Q Q R R 27. In February 1992 Wing Ming assigned Car Parking Space 2 on the Ground Floor to Sanwa. S S T T 28. In March 1992 Wing Ming assigned Portion V1 to Hung Tak. U U V V

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- 7 - A A 29. In May 1992 Wing Ming assigned the Container Space and Car B B Parking Space 10 on the Ground Floor to Hung Tak. C C D 30. In April 1993 Wing Ming engaged Li & Partners to supervise D the construction of a loft in the air space over Car Parking Spaces 2, 3 and 4. E E This construction was to be pursuant to plans which Wing Ming had been F F submitted and approved by the Building Authority in late 1991. G G 31. Li & Partners submitted structural plans for its project in April H H 1993. The Building Authority approved these in July 1993. I I 32. In May 1993 the Incorporated Owners were established. J J 33. There is no dispute that the fire services in the building had to K K be repaired. The Incorporated Owners engaged New Gas to do this. As L L part of such work, on 7 or 8 August 1993 New Gas installed the fire pipe, including that part which Wing Ming says encroaches on its air space. M M N N 34. As at August 1993, within the building, Wing Ming retained the Basement, the Storeroom at the rear of the Ground Floor, the Southern O O Half Portion of the Ground Floor, Portion V2, Car Parking Spaces 3 and 4, P P the 10th Floor, the Roof Floor (also known as the 11th Floor) and the Upper Roof. Wing Ming also held a right to build a loft over Car Parking Q Q Spaces 2, 3 and 4 under DMC clause I.C.5. R R 35. At Annex I to this Judgment is a Ground Floor plan of the S S building. The plan is taken from the Incorporated Owners written T T opening submissions. The following may be noted:- U U V V

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- 8 - A A (1) Annex I is similar to the Ground Floor plan in the DMC. But B B in the DMC plan:- C C (a) the area identified in Annex 1 as having been sold to D D Sanwa is marked “VOID”; E (b) Car Parking Spaces 2 through 10 and the “VOID” areas E in front of each are coloured green; F F (c) the “Container” space is hatched and coloured green; G G and, H H (d) the area identified in Annex 1 as “STORE ROOM 8 ft ABOVE” is coloured green. I I (2) Annex 1 shows the route of the fire pipe which New Gas J J installed. The route runs thus:- K K (a) Starting as a black line in the “VOID” in front of Car Parking Space 10, the pipe runs through to the “VOID” L L areas in front of Car Parking Spaces 2, 3 and 4. M M (b) In the latter “VOID” areas, the route has been shown in N red. That is the section of the fire pipe which is N “impugned” in the sense of having been erected without O O Wing Ming’s authority. P P (c) The pipe line continues in black in that part of Annex I identified as Portion V1. Q Q (d) Within V1, the pipe makes a bend (from which point its R R route is designated in blue). S S 36. The pipe has been the subject of various interlocutory T T judgments. Wing Ming sought an interim injunction for the removal of the U U V V

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- 9 - A A pipe. That application failed at first instance and on appeal. Eventually, B B without prejudice to the parties’ contentions, the pipe was re-routed in July C C 1995. D D 37. At the time when the fire pipe was installed by New Gas there E E was no loft over Car Parking Spaces 2, 3 and 4 as shown in the DMC. F F 38. There is at present a loft over Car Parking Spaces 2, 3 and 4 as G G marked in the DMC. The loft is not confined to the space over Car H H Parking Spaces 2, 3 and 4 but extends into the space above the “VOID” areas marked out in the DMC plan in front of Car Parking Spaces 2, 3 I I and 4. J J 39. Immediately below the loft a wall now separates Portion V2 K K and the areas marked as Car Parking Spaces 2, 3 and 4 in the DMC plan on L L the one hand from Portion V1 and the areas marked as “VOID” in front of Car Parking Spaces 2, 3 and 4. Lines have been painted on the latter M M “VOID” areas so as to divide the same into car park spaces. These last N N spaces have then been re-designated as Car Parking Spaces 2, 3 and 4. O O 40. If a 40 foot container were parked in the Container Space P P shown in the DMC plan, Sanwa would not be able to park a vehicle in the re-designated Car Parking Space 2 assigned to it. Lines marking off the Q Q Container Space in the Ground Floor have consequently been painted so as R R to extend no further than the edge of Portion V1 abutting Sanwa’s car Parking Space 2. S S T T U U V V

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- 10 - A A B III. DISCUSSION B A. Whether breach of Wing Ming’s right to air space over Car Parking C C Spaces 2, 3 and 4 D D 41. It will be apparent that the impugned section of the pipe does E E not run anywhere near the space over Car Parking Spaces 2, 3 and 4 as set out in the DMC. The impugned section simply runs along the length of the F F areas marked “VOID” in front of Car Parking Spaces 2, 3 and 4. G G 42. Those “VOID” areas in front of Car Parking Spaces 2, 3 and 4 H H can only be “Common Areas and/or Common Facilities” as defined in the I I DMC. This is because the “VOID” areas have to be kept clear in order to enable vehicles to drive in or out of Car Parking Spaces 2, 3 and 4. In the J J words of the DMC definition of “Common Areas,” the “VOID” areas must K K be “roadways and driveways”. L L 43. Such conclusion is self-evident if one considers the original M M Car Parking Space 2 in the DMC plan. If a container and its prime mover occupy the space designated “CONTAINER”, it will be impossible to N N drive in or out of Car Parking Space 2 unless the “VOID” areas in front of O O Car Parking Spaces 2, 3 and 4 are kept clear. P P 44. It follows that, contrary to Wing Ming’s allegation, in erecting Q Q the fire pipe, New Gas did not trespass onto any air space belonging to R Wing Ming. Nor could the Incorporated Owners have authorised or R caused New Gas to commit any trespass. S S T 45. There has consequently been no breach of the DMC by the T Incorporated Owners. U U V V

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