Easements of necessity

July 17, 2017

In Manjang v Drammeh ((1990) 61 P & CR 194, PC) R, having already occupied 63 Wellington Street in The Gambia for some time, was granted a lease of it for 21 years from 2 February 1977.

R also occupied an adjoining strip of land that lay between 63 Wellington Street and the River Gambia (‘the River Strip’). The only means of access to the River Strip on foot was through 63 Wellington Street. Again after a period of occupation on an uncertain legal basis, R was granted a lease of the River Strip in  1986.

In 1982, R assigned the lease of 63 Wellington Street to A. The assignment did not reserve an express right of way over 63 Wellington Street to access the River Strip.

R argued that a reservation of the right of way should be implied into the assignment. This argument failed.

Lord Oliver set out the three essential requirements for an easement of necessity to be implied: (1) there should have been a common owner of the two plots of land at the time of the assignment; (2) it had to be established that the only way to get to the public highway from the River Strip was across 63 Wellington Street; and (3) there must not have been a specific grant of the right claimed (196 – 7).

The first condition was not satisfied: R had not been the owner of the River Strip at the time of the assignment (R was granted the lease of the River Strip four years later).

It was also arguably the case that the second condition was not satisfied either: it was possible to access the River Strip by boat.

Contrary to the view of the majority of the Gambian Court of Appeal, an easement of necessity can not be implied purely on the grounds of convenience.

Michael Lower

Car parking spaces: common parts?

July 14, 2017

Tai Fat Development (Holding) Co Ltd v Gold King Industrial Building (IO) ([2017] HKEC 1366, CFA) concerned a dispute as to whether or not thirteen car parking spaces in the building were common parts. The first owner of the building claimed to be entitled to their exclusive use.

As always, this was a question of interpretation of the words used in the light of the DMC as a whole, other relevant documents and the factual matrix. The CFA agreed with the courts below that these factors all pointed to the conclusion that the car parking spaces were common parts.

The DMC referred to the spaces as ‘loading and unloading areas’. If the spaces were not common parts there would be a breach of the terms of the Government Grant. There would also be severe practical difficulties.

The first owners also relied on estoppel by convention. The incorporated owners had taken leases of the spaces from them. The necessary common understanding that the first owners owned the spaces was lacking, however; the incorporated owners disputed this claim even as they accepted the leases. Nor could the first owners point to any detriment.

Michael Lower

 

Repairing covenant and the removal of a handrail from a staircase

July 3, 2017

In Dodd v Raebarn Estates Ltd ([2017] EWCA Civ 439, CA (Eng)) Mr D was staying in a friend’s first floor flat. He died after falling while walking down the staircase leading from the flat to the ground floor.

Raebarn owned the freehold of the building. Part of the building was sub-let to an intermediate landlord which had granted further sub-leases of individual flats. The intermediate landlord had, with Raebarn’s consent, altered the building. It removed two existing staircases and replaced them with a new staircase.

The staircase as built did not conform to the plans approved by the local authority in that it seemed likely that the new staircase never had a handrail.

Mrs D brought proceedings against Raebarn under section 4(4) of the Defective Premises Act 1972. Under section 4(4) Raebarn could only be liable if the fact that the new staircase had no handrail amounted to a failure to maintain or repair the property. The question, then, was whether the lack of a handrail amounted to disrepair.

Lewison LJ gave the main judgment with which the other members of the Court of Appeal agreed. The obligation to repair only arises when the demised premises are out of repair ([16]). The duty to repair is not a duty to make safe ([17]). Where, however, there is a need to repair, the work must be carried out in accordance with any applicable regulations and in accordance with standards of good practice at the time that the work is carried out ([25]).

Mrs D’s argument was that the removal of the original staircases was a deterioration in the property giving rise to a need to repair them. The repair works had to be carried out to the requisite standard. The missing handrail meant that they did not satisfy this standard. There had therefore been a failure to maintain and repair the property so that Raebarn was liable under s. 4(4).

This argument failed. The work on the staircases did not give rise to a lack of repair since the head-lease contemplated that such work might be carried out with Raebarn’s consent.

Once the new staircase had been installed, the repairing covenant applied to the staircase as altered. Had it deteriorated? It had not if there had never been a handrail.

Even if the altered staircase had once had a handrail which had been removed, it did not necessarily follow that the staircase was in disrepair. If there was no disrepair, the duty to carry out repairing works to the requisite standard never arose.

Michael Lower

Adverse possession: death of licensor terminates a licence

June 26, 2017

The facts of Hsieh Haw Shane Gary v Chang Ho Ying ([2017] HKEC 1246) illustrate that a licensor’s death terminates a licence to occupy land.

Madam Chang was registered as the owner of a flat (‘the flat’). She died intestate in 1966. Letters of Administration were granted to Mr. Chang, her husband, in 1967. He was solely beneficially entitled to the flat but the legal title was never assigned into his name.

Mr. Chang married Madam Lee in 1970. He died intestate in 1984. Madam Lee did not seek Letters of Administration de bonis non in respect of Madam Chang’s estate. Madam Lee took possession of the flat on her husband’s death and rented it out.

Madam Lee moved to Malaysia in 1998. She gave the keys to the flat to her son, Gary. Gary paid all of the expenses in respect of the flat and collected the rents from then on. Madam Lee died in 2002.

The question was whether Gary had acquired title by adverse possession by 2013 when the flat (and the whole building of which it formed part) was acquired by a developer pursuant to the Land (Compulsory Sale for Redevelopment) Ordinance (Cap. 545).

Mr. Chang’s death in 1984 brought an end to any licence that he may have granted to Madam Lee. Gary began a new period of possession in his own name when he was given the keys and managed the property from 1998. He had therefore been in adverse possession for more than twelve years by 2013.

Gary had defeated Madam Chang’s title and he was entitled to the proceeds of sale of the flat.

Michael Lower

Adverse possession and the Land (Compulsory Sale for Redevelopment) Ordinance

June 19, 2017

In Chung Chiu Hing v Law Sam ([2017] HKEC 1198) Madam Law was the registered owner of a flat (‘the Flat’). P claimed to have acquired title through adverse possession. The Flat had been sold pursuant to the Land (Compulsory Sale for Redevelopment) Ordinance (‘the Ordinance’) and P further claimed to be entitled to the share of the proceeds of sale attributable to the Flat.

Madam Law was the registered owner of the Flat. She granted an oral tenancy to P’s mother-in-law. Madam Law died in 1981. At some point she had simply stopped collecting the rent due under the agreement.

C, P’s husband, moved into the Flat to look after the Mother-in-Law in 1985 and they had joint possession of the Flat. The Mother-in-Law moved out in 1999 and P moved in at around the same time. C died in 2000. P continued in possession from then on.

Chu J. had little difficulty in accepting that the Mother-in-Law and C had been in possession with the necessary intention to possess since 1986 at the latest. P had taken over this possession

Time could only start to run when the oral tenancy agreement came to an end. There was no evidence that the Mother-in-Law or C would have been prepared to pay rent if it had been demanded in 1986; this evidence of their intention to possess suggested that the tenancy had ended.

In any event, section 12(2) of the Limitation Ordinance deems an oral periodic tenancy to come to an end one year after its grant (or from the date of the most recent receipt of rent if later than that).

P had defeated Madam Law’s title. Madam Law’s shares had, however, been sold pursuant to the Ordinance. The Ordinance provided for the relevant share of the proceeds of sale to be paid to the person who had been the owner of the undivided shares prior to the sale. The question was whether the adverse possession claim made P the owner of the undivided shares for this purpose.

Chu J. held that it did; the Ordinance required the owner of the undivided shares to give vacant possession. Madam Law could not give vacant possession because of P’s adverse possession defence. P could be regarded as the owner of the undivided shares for the purposes of the Ordinance.

Alternatively, P’s title was to be regarded as an incumbrance. The Ordinance required the proceeds of sale to be applied towards the discharge of any incumbrance.

Michael Lower

Interpretation of DMC apportionment provision and order for sale of defaulting owner’s shares

June 11, 2017

In Hertford Mansion (Un Chau Street) (IO) v Wong Shing Kwan ([2017] HKEC 1154, DC) the Management Committee of an Owners’ Corporation decided to carry out major renovation works at the property.

The building’s DMC provided that each owner would contribute the proportion of the expenses of managing the property set out in the Fifth Schedule to the DMC. This made the defendant liable for 110 / 1300 of any expenditure. The Management Committee demanded that proportion of the costs of the renovation works.

The Third Schedule to the DMC contained another charging provision. It required the owners to pay a ‘due proportion’ of management expenses including costs of repair, renewal and redecoration.

The defendant refused to pay the proportion of the renovation costs demanded of him. He argued that he was only responsible for a ‘due proportion’ of these costs and that the due proportion should be calculated (in the absence of any indication to some other effect) by reference to the proportion of the undivided shares in the building owned by the defendant. Thus calculated, the due proportion would be less than the sum demanded.

Judge Andrew Li rejected the defendant’s argument. The ‘due proportion’ (on a proper interpretation of this DMC) could only be the proportion specified in the Fifth Schedule. The Third Schedule required owners to pay a due proportion ‘in accordance with the provisions of this Deed’. The Fifth Schedule was the relevant provision of the deed for this purpose. It would be absurd to suppose that the Third and Fifth Schedule contained divergent mechanisms for apportioning exactly the same expenditure.

The defendant repeatedly refused to pay the contribution demanded. The DMC provided that unpaid sums were to be charged on the defaulting owner’s shares. The Management Committee registered a Memorandum of Charge accordingly. They now sought an order for sale of the defendant’s undivided shares.

The order for sale was granted. The DMC made the charge enforceable by the Management Committee. The defendant had ignored repeated warnings.

Michael Lower

Adverse possession: the significance of a failure to fence rural land

June 3, 2017

In Winpo Development Ltd v Wong Kar Fu ([2017] HKEC 1093) P sought an order for possession in respect of land occupied by D. D relied on adverse possession in his defence and counterclaim.

The claim concerned a large and remote area of land in the New Territories. D’s family had lived on and farmed the land since at least 1968.

The land was unfenced. Recorder Whitehead SC accepted that this fact tells strongly against D having had possession of the land ([64]). Here, however, the natural landscape formed clear barriers; fencing would have been superfluous and impractical ([65]).

D had shown the intention to possess. He and his family dealt with the land ‘as an occupying owner might have been expected to deal with it, and to the exclusion of the world at large, including the owner with the paper title’ ([69]).

D’s adverse possession defence succeeded.

Michael Lower

Relief from forfeiture will ordinarily only be granted once during a lease term

May 27, 2017

In Ramadour Industries Ltd v Bullen ([2017] HKEC 974, CA) L granted T a lease of a house on Lamma Island for a two year term. T fell into arrears with the rent but was granted relief from forfeiture. T quickly fell into arrears again and L brought new proceedings seeking possession. T sought relief from forfeiture a second time but this was refused.

The Court of Appeal (Yuen JA giving the court’s judgment) upheld this refusal. The court’s power to grant relief is now codified in section 21F of the High Court Ordinance. Section 21F(1A) provides that relief will only be granted to a tenant once during the term, ‘unless the Court is satisfied that there is good cause why this section should apply in favour of a lessee’.

The intention is clear: relief pursuant to section 21F will normally only be granted once to a tenant during a lease term. The onus is on the tenant trying to invoke section 21F for a second time during a term to show that there is good cause.

Michael Lower

Developer’s informal allocation of private parking space in the common area

May 20, 2017

In Faraday House (IO) v Shine Wheel Ltd ([2017] HKEC 957, LT) P was the purchaser of a flat in Faraday House in 1992. The estate was then a new development and she bought from the developer. She wanted three car parking spaces. Two of the spaces she was offered were allocated as private car parking spaces. The third space (‘the Adjacent Space’) was next to these spaces but was in the common area of the development.

The selling agent assured P that he would arrange for the developer to expressly acknowledge her right to use the Adjacent Space as a private car parking space (‘the Assurance’). P paid HK$250,000 for the two ‘official’ spaces and HK$50,000 for the Adjacent Space.

The Adjacent Space was never re-designated as an area for P’s exclusive use but P was issued with a Permission Letter allowing her to use the space. She was given three car parking permits. The owners incorporated in 1996 and a new manager was appointed at that time.

P used the three spaces for sixteen years until 2014. The owners’ corporation then demanded that she cease using the Adjacent Space. When P refused to comply, the corporation brought proceedings seeking an injunction preventing P from parking in the Adjacent Space. Parking in the common areas was a breach of the DMC.

The Lands Tribunal (Judge Kot) started from the proposition that the Permission Letter to use the Adjacent Space was a licence. The developer could not have granted a licence over the Adjacent Space since it had already been designated as a common area; the licence was invalid. Even if it were valid, it would be revocable; there were no equitable grounds for restraining this revocation. Even if it were irrevocable, it would not bind the IO which took over control of the common parts in 1996.

Promissory estoppel, the principles of which were most recently articulated in Hong Kong in Luo Xing Juan v Estate of Hui Shui See ((2009) 12 HKCFAR 1) could not help. The IO were not bound by an assurance given by the developer. The act of allowing P to park in the Adjacent Space for many years could be seen as an assurance. P had not, however, incurred any detriment in reliance on this (the HK$50,000 having already been paid).

Acquiescence was a possible defence given the nature of the covenants that had been broken. There had been an assurance or lying by on the part of the owners. It was not, however, unjust in all the circumstances to grant the injunction sought. P had had the benefit of the Adjacent Space over many years and would not be caused any hardship.

Michael Lower

Ouster and car parking: applying Batchelor

May 12, 2017

In Kettel v Bloomfold Ltd ([2012] EWHC 1422) the claimants were long leaseholders of flats in a development. Their leases granted them the right to park in the car parking space identified in the lease. The developers wanted to allocate them new spaces and build on the existing spaces. The developers fenced off the area that they wanted to build on and enclosed the spaces. The flat owners sought an injunction to restrain this interference with their car parking rights.

The owners argued that they had either a lease or an easement of the space. It was agreed on all sides that, if there was no lease,  they had an easement. The judge (HHJ David Cooke) found that there was no lease. Despite the fact that the parties agreed that there was an easement, he considered whether the ouster principle prevented the flat owners from having an easement.

Moncrieff had not overruled Batchelor v Marlow and the judge accepted that Batchelor was binding on him: the test was whether the exercise of the car parking right left the developer with no reasonable use of the car parking space. It was a question of fact in each case whether the right granted made ownership of the servient land illusory.

In this case, the developer could pass over the space on foot when there was no car parked there and could authorise others to do so: it had granted such rights to pass over the spaces to other tenants in the leases to them. It could change or repair the surface, arrange for service media to pass under, or wires to pass over, the space. It could build over the space (and had made plans to do so). These rights had importance and value to the developer in managing the estate ([24]). The ouster principle was not infringed.

The flat owners were entitled to an injunction to restrain the actual and threatened interference with the car parking rights. This was not one of these exceptional cases where damages should be awarded instead. It would not be right to expropriate the car parking rights.

The judge held that if, contrary to his view, damages were to be awarded then they should be more than purely nominal. Even assuming that the flat owners were given an equivalent car parking space, they were entitled to damages on a release fee basis:  the flat owners should be awarded a sum that would be negotiated between willing parties for the right to build on the spaces ([61]).

Michael Lower