Building Ownership Multiple in DMC: Easements result

As the judge said that "the system [of ownership of units in multiple storey buildings in multiple occupation in Hong Kong] is unique in the common law world." And "legal tenancy in common of land was abolished in the UK by the Law of Property Act 1925." (see para. 26) Thus, we can hardly h***e any reference***rom other parts of the world on the DMC and multiple ownership matters in Hong Kong.

For people who are not familiar with the Hong Kong system of property ownership, the report highlights that there are two main features of this system, namely:
1. persons own interests in the property hold as legal tenants in common, by taking an assignment of undivided shares;
2. individual owners execute a deed of mutual covenant (DMC) regulating by contract their rights inter se regarding the exclusive use and occupation of the units alloted to their respective parcels of undivided shares, their use of the common parts of the building, as well as their mutual obligations on such matters as management charges.
 
In the light of these 2 features of property ownership in Hong Kong, it has been discussed academically that "the Hong Kong system does not permit the creation of easements as between co-owners."  The principle was upheld in Chiu Shu-choi v Merrilong Dyeing Works Ltd. [1990] 1 HKLR 385.  But this Kung Ming Tak Tong case is probably the highest level court case deciding on this easement among co-owners argument.  Background of the case can be found at http://blog.yahoo.com/ecyyiuu/articles/85755/index

But, interestingly, in this case, the exclusive possessive rights of a part of the property was said to be granted by a co-owner within his exclusively possessed part, by means of an assignment .  Thus, a real easement was created between these two owners.  The argument is whether a co-owner can grant any exclusive possessive rights to any other persons, without the agreement of other co-owners?

The court said NO, and cited the supporting cases of Lai Wing-ho v. Chan Siu-fong [1993] 1 HKLR 319 and Jumbo King Ltd v. Faithful Properties Ltd. [1993] 3 HKLRD 231.  And the following statement by Rogers JA in Jumbo case was emphasized:

"It was pointed out that a co-owner could not create or carve out a right of exclusive possession so as to bind the other co-owners and assign it separately. ...the right of exclusive possession of any part of the premises could only arise out of the deed of mutual covenant."

The court therefor upheld the principle that there cannot be separate tenements in a co-owned building, unless a collective decision of all owners:

"It is accordingly our view that the apparent grant by the DMC to the occupier of a unit of the exclusive use occupation and enjoyment of his unit is properly regarded as a separate contractual undertaking by every other co-owner not to exercise the rights of occupation and enjoyment which he would otherwise be able to do as co-owner over units other than his own.  It does not result in the creation of separate tenements capable of sustaining a legal easement." (para. 34, emphasis mine)

Furthermore, the standard clause in the Modification Letter also supports the principle reads a***ollows. Any sub-grant of exclusive possessive rights of a part of the lot would breach the government lease:

"the grantee shall not assign, mortgage, charge, underlet or part with the possession of or otherwise dispose of the lot or any part thereof or any interest therein or enter into any agreement to do so except by way of the assignment or other disposal of undivided shares in the whole of the lot, but not part of the lot, together with the right to the exclusive use and occupation of individual ***oors or units in any building ... erected thereon ..."

Then, how about quasi-easements? Let's discuss later in a separate post.

mutualobligations，rightsinter，multiplestorey，separately.，accordingly，Furthermore。

Modification，assignment.，。