In Falcome Company Limited v ZJ300 (IO) ([2024] HKCFI 2992) the court had to consider: (a) whether a naming right in a Deed of Mutual Covenant (‘DMC’) is proprietary; and (b) whether the naming (or re-naming of a building) is a matter for the owners collectively to decide in accordance with the DMC’s decision-making procedures.
Deputy High Court Judge Yuen decided that a naming right is not proprietary. The ability to exercise the right (and the corresponding duty to abide by any name change) does not attach to the ownership of shares in the building.
The owners collectively do have the right to decide on the building’s name, following the decision-making procedures of the DMC and the Building Management Ordinance (‘BMO’). This applies equally to re-naming a building.
The DMC in this case gave the developer, the original owner of the building, the right to re-name the building.
The developer assigned units in the building to D along with the benefit of, among other rights, the right to re-name the building.
D purported to exercise this right and to register the new name at the Land Registry.
The Land Registry queried this, referring to the decisions in Lamaya Limited v Supreme Honour Development Limited and in Pak Fah Yeow Investment (Hong Kong) Company Limited v Proper Invest Group Limited.
The Incorporated Owners, by a majority vote, then resolved to re-name the building as D proposed.
The Land Registry then agreed to enter the new name in the register.
The plaintiff, one of the owners of the building, objected.
Deputy High Court Judge Yuen reviewed the decisions in Lamaya and Pak Fah Yeow and concluded that naming rights do not touch and concern land ([79]).
The naming right clause in the DMC was ineffective.
On the other hand, the co-owners of a building have a common interest in the naming of the building and the DMC provided for the owners collectively to reach decisions concerning the land and the building ([45] – [46]).
Thus, the DMC expressly empowered the owners to make a decision about the name of the building by following the decision-making procedures of the DMC ([47]).
Section 18(2) of the BMO also empowers the Incorporated Owners to re-name the building since this is a matter of ‘common interest’ for the owners ([58]).
The resolution to re-name the building was binding ([59]).
Michael Lower