Nanjing Gulou District Houses Company, Zhong Baoqiang, et al v. Jiangsu Shengming Industrial Co., Ltd.

(Case of Tortious Disputes over Houses)

Plaintiff: Jiangsu Nanjing Gulou District Houses Company
Address: No. 24 Yunnan Road, Nanjing, Jiangsu Province
Legal Representative: He Zhinan, general manager of this company
Agent: Xu Yan, attorney from Nanjing Lianhe Law Firm
Plaintiffs: Zhong Baoqiang and other 18 households
Litigation representative: Zhong Baoqiang, dwelling at Rm. 502, No. 166 of Louzi Lane, Nanjing, Jiangsu Province
Litigation Representative: Yang Yuanxing, dwelling at Rm. 302, No. 164 of Louzi Lane, Nanjing, Jiangsu Province
Litigation Representative: Cheng Daode, dwelling at Rm. 301, No. 166 of Louzi Lane, Nanjing, Jiangsu Province
Litigation representative: Xia Xiulan, dwelling at Rm. 402, No. 164 of Louzi Lane, Nanjing, Jiangsu Province
Defendant: Jiangsu Shengming Industrial Co., Ltd.
Address: No. 166– 2 Louzi Lane, Nanjing, Jiangsu Province
Legal representative: Dai Guoliang, general manager of this Company
Agent: Li Weimin, Attorney from Jinling Law Firm
Agent: Dai Yimin, vice manager of Jiangsu Shengming Industrial Co., Ltd.

Plaintifs Jiangsu Nanjing Gulou District Houses Company, Zhong Baoqiang and other 18 households (hereinafter referred to as the Real Estate Company) initiated a lawsuit in Jiangsu Nanjing Gulou District People’s Court against defendant Jiangsu Shengming Industrial Co., Ltd. (hereinafter referred to as Shengming Co.) due to tortious disputes over houses.

The plaintiffs claimed that the first floor of the buildings, in which the plaintiff were dwelling, were in the ownership of the defendant and the second and higher floors were in the ownership of the plaintiffs. Without permission of the plaintiffs, the defendant dismantled and changed the first floor for decoration. In order to build an inserted floor between two floors, it dug deeply into the indoor ground, making the foundation girders exposed to the outside. It fixed the V-iron on the framework and fours walls of the building with expansion bolts, which obviously added to the burden of the main structure of the building. Such acts of the defendant caused fissures in the walls, water permeating through the floors and the water leaking from the water pipes in the houses of the plaintiffs, which seriously affected the residential safety of the plaintiffs. The acts of the defendant impaired the lawful rights and interests of the plaintiffs as the owners of property. The plaintiffs pleaded the court to order the defendant to restore the original status of the houses and take remedies and measures to consolidate and restore the main structures as well as the water supply and drainage systems of the buildings that had been damaged.

The defendant argued that it decorated the houses owned by itself. All projects were designed by a qualified entity, based upon the approval of the administrative organ and were recognized by the housing safety appraisal organ, so it had not encroached on any right or interest of the plaintiffs. What the plaintiffs claimed was a quality problem of building, it had nothing to do with the decoration of the defendant. It was unjustifiable for the plaintiffs to initiate the lawsuit, so their allegations should be rejected.

In first instance, the court found that:

The 6-floor commercial and residential buildings of reinforced concrete frame structure, which are situated at No. 164, No. 166 and No. 166-2, Louzi Lane, Nanjing, were built in 1992. On the first floor were houses for commercial use, of which the story height was 4.2 meters with a construction area of 362. 04 square meters, and the property rights were in the ownership of Shengming Co. The second floor to the six floor were residential houses, they were owned by the Real Estate Company, Zhong Baoqiang and other 18 households after the system of residential houses distribution was reformed.

In March 1998, when Shengming Co. was decorating the houses on the first floor and was ready to build an inserted story, it dismantled all filler walls between the reinforced concrete frame-columns, dug 0.9-1.2 meters into the ground, making some of the foundation girders exposed to the outside. For this reason, disputes were triggered. In June of the same year, Shengming Co. entrusted Nanjing Housing Safety Appraisal Office (hereinafter referred to as the Safety Appraisal Office) appraised the safety of the inter-story built by the defendant and it concluded that the construction of the inserted story did not cause any obvious structural damage to the main structure of the building, nor were the residential and utilization safety of the buildings affected at that time. The said problems lay actually in the design and construction. It proposed to let qualified entities to undertake the design and construction. After that, Shengming Co. made rectifications according to the requirement proposed by the Safety Appraisal Office. In September of the same year, it re-entrusted the Safety Appraisal Office to appraise the new design for its inter-story to be built, which concluded that the formal construction drawing issued by a design entity holding a qualification certificate could satisfy the requirements for safe use. It proposed to strengthen the supervision during the construction period so as to ensure the construction quality. In November of the same year, the Anti-seismic Office of the Construction Commission of Jiangsu Province, approved, upon examination, the plan of Shengming Co. on the building of an inserted story. The Real Estate Company, Zhong Baoqiang and other households did not consent to Shengming Co.’s construction under the design plan, so they lodged a lawsuit in January, 1999.

During the process of trial, Shengming Co. fetched a permit for the construction project plan on the building of an indoor inserted story at No. 166-2 Louzi Lane, Nanjing. The court entrusted the Safety Appraisal Office to appraise the extent of damage to the residential houses of Zhong Baoqiang et al. The Safety Appraisal Office concluded that the houses were in good condition on the whole. The fissures occurring in the tiles, jointed boards, internal angles on the wall surface were not caused by the inserted story created by Shengming. It proposed Shengming Co. to use high quality cement mortar to brush the fissures on the walls of the stair well of the big flat floor of the public parts of the first floor and to make a good protection layer for the exposed part of the foundation girders.

The above-mentioned merits were supported by the housing property right certificate, construction drawing for the rebuilding of the indoor inserted story at No. 166-3 Louzi Lane, the appraisal report, the earthquake-proof examination form for the rebuilding of the inserted story, the document on the examination and approval of fire safety in construction design, the permit for the construction plan, vouchers for fee payments, etc.

The court of first instance held that:

Article 83 of the General Principles of the Civil Law of the People’s Republic of China provides that “For the purpose of helping production, making things convenient for people's life, enhancing unity and mutual assistance, and being fair and reasonable, neighboring users of real estate shall maintain proper neighborly relations over such matters as water supply, drainage, passageway, ventilation and lighting. Anyone who causes obstruction or damages to his neighbor, shall stop the infringement, eliminate the obstruction and compensate for the damages.” The plaintiffs and the defendant were neighboring parties of real property, they should maintain proper neighborly relations and jointly protect the safety of the relevant buildings. Shengming Co. created an inserted story within the scope of property right, its new plan was made by a qualified department and it was examined and approved by the administrative organs of construction project planning, earthquake-proof and fire control. If Shengming Co. could organize the construction in strict compliance with the construction quality standards as approved, the safety of the buildings could be ensured. The Real Estate Company, Zhong Baoqiang, et al, claimed that the damages to the houses from the second floor to the sixth floor were caused by the inserted story built by Shengming Co.. Shengming Co. had presented proofs to show that it had nothing to do with such damages, but the Real Estate Co., Zhong Bao Qiang, et al, did not submit any more counterevidence. The litigation pleadings filed by Real Estate Company and Zhong Baoqiang on such grounds should not be supported. For the construction that disturbed the neighboring parties, Shengming Co. was voluntarily ready to compensate Zhong Baoqiang and other households 1, 000 yuan for each, such compensation should be permitted. For the reasons given above, the court ruled that:

1. Shengming Co. shall brush the fissures on the walls of the stair well of the big flat floor of the public parts of the first floor, make a good protection layer for the exposed part of the foundation girders and dredge the drainage pipes. The Real Estate Company and Shengming Co. shall jointly entrust a supervision department to carry out the on-the-spot supervision, with the supervision expenses being borne by Shengming Co..

2. Shengming Co. shall compensate Zhong Baoqiang and other households 1, 000 yuan for each.

Zhong Baoqiang and other households refused to accept the judgment of first instance, it appealed to Jiangsu Nanjing Intermediate People’s Court on the same grounds as they filed in the first instance, pleading the court to revoke the original judgment and make a new judgment.

Upon hearing the case, Jiangsu Nanjing Intermediate People’s Court held that:

The merits determined in the judgment of the first instance were irrefutable on the whole and the proofs were sufficient.

Zhong Baoqiang and other households as well as the Real Estate Company became neighboring parties to Shengming Co. because of their real property right. The adjacent right restricts and extends the real property right. It is a property right that relates to the real property right. If no real property right exists, there would be no adjacent right of real property. For this reason, to properly settle the disputes over adjacent real property, it must correctly make clear the form of the real property right of each neighboring party.

In the past, an independent building was owned by one person (namely one right for one property). With the reform of the system of residential houses, it becomes more and more common that an independent building is owned by several persons (namely multi-rights for one property).

One independent building built by a construction investor must have a foundation, framework, bearing walls, clapboard, coping, walkway, stairs, doors, windows, various pipes and lines, as well as the necessary places for public activities so that it can divide different spaces for independent use by different persons, respectively. Only when the two conditions are met, can a building exist independently. And only when the building exists independently, can the different spaces for the independent use by different persons play their respective roles. When an independent building meets the physical conditions for dividing different spaces for independent use and the construction investor transfers these spaces to different buyers so that the building is owned by several persons, the features of the building indicate that what each property owner obtains is the divided housing property right, which is not completely the same right as the housing property right in the form of one right for one property. Though a contract on the transfer of divided housing property right only specifies the transfer of the space for divided use (hereinafter referred to as the exclusive part), it does not imply that the foundation, framework, bearing walls, clapboard, coping, walkway, stairs, doors, windows, various pipes and lines, and necessary places for public activities (hereinafter referred to as the public parts) have not been transferred. If the public parts have not been transferred, the exclusive part will not become the object of the property right available for transfer. Merely because the public parts are certainly transferred along with the exclusive part, it is unnecessary to register the public parts, one by one, in the transfer contract.

First of all, the divided housing property right means that all owners of the divided property right share the ownership of the whole independent building and the public facilities within the building; second, it means that each owner of the divided property right has the exclusive ownership of a particular space. The joint ownership in the divided housing property right is inseparable and can’t be transferred unless it is transferred along with the exclusive ownership. The owners are entitled to properly use the public parts according to its category, nature, structure and purpose of use, share the yields generated from the whole building or the public parts of the building, and stop any impairment to the whole building or to any of the public parts of the building. When such an owner enjoys the rights, it should simultaneously perform the obligations to maintain the status quo of the public parts, not to request to separate it, to maintain the normal use state of the public parts, nor to occupy, change or destroy it, and to share the reasonable expenses for maintaining the normal use of the public parts. For the right in such a form, because the whole building and all public facilities within the building are in the joint ownership of all owners of the divided property right, all owners of the divided property right enjoy the rights and should undertake the obligations relating to the whole building, and they may form legal relations of a group herein. Because the particular parts of the building are exclusively co-owned by the owners of the divided property right. An owner of divided property right should perform the rights and undertake the obligations relating to the exclusive part, so legal relations of ownership relating to a certain area between the owner of divided property right and other persons are formed. Because each owner of divided property right enjoys the right of a particular space which is equivalent to the property right of an independent house, adjacent legal relations between the divided property right and the owners of other adjacent real properties are formed.

The 6-floor commercial and residential buildings situated at No. 164, No. 166 and No. 166-2, Louzi Lane, Nanjing are co-owned by Zhong Baoqiang and other households, the Real Estate Company and Shengming Co. on a divided basis. Each owner of the divided property right not only enjoy independent property of their respective exclusive part, but also enjoys joint ownership of the whole building and its public parts. The exclusive part refers to a closed space of building formed by construction materials. Except for the exclusive parts, other parts of the building (including the hidden projects under the ground of the first floor) should be public parts. Any change to the public parts should not be contrary to the common interests and should be subject to the consent of all owners of the divided property right, otherwise it would constitute an impairment to the joint ownership of others.

Though Shengming Co. built an inserted story in its exclusive part, but it made use of the girders, pillars and the hidden projects under the ground and built the bearing of the girders and pillars and exposed the foundation girders. It abnormally used the public parts and affected the common interests of all owners of the divided property right. Though Shengming Co.’s act of building an inserted story had been approved by the administrative organ, it only means that, from the point of administrative management, the administrative organ did not believe that such act would do harm to the society, so it could be carried out. The building of an inserted story needs to make use of the public parts of the building, while the public parts of the building is jointly owned by all owners of the divided property right rather than by the administrative organ which granted the approval, so whether or not the act of building an inserted story should be carried out must depend on the consent of all owners of the divided property right. It was groundless for Shengming Co. to argue that it did not encroach on the right of others in decorating the houses owned by itself. No matter whether or not the houses of Zhong Baoqiang, et al, were damaged, no matter whether or not the damage, if any, was related to Shengming Co., that Shengming Co., without the consent of all owners of the divided property right, built the inserted story by making use of the public parts encroached on the joint ownership of other owners of the divided property right. For this reason, the appeal, which was initiated by Zhong Baoqiang and other households on the grounds that Shengming Co. had encroached the lawful rights and interests of the property owners, should be supported. Shengming Co. should dismantle the inserted story and restore the original state of the part dug into the ground. Failing to analyze the form of the housing ownership of all parties concerned, the judgment of original instance settled the disputes according to the provisions on adjacent right, so the law was improperly applied. It was correct for the original judgment to order Shengming Co. to use high quality cement mortar to brush the fissures on the walls of the stair well of the big flat floor of the public parts of the first floor and to make a good protection layer for the exposed part of the foundation girders. However, it was wrong for the original judgment to dismiss the litigation pleadings of the Real Estate Company, Zhong Baoqiang and other households on the ground that the damages to the houses of their houses had nothing to do with Shengming Co., so the original judgment should be changed. For the reasons given above, Nanjing Intermediate People’s Court ruled as follows according to Items (1) and (2) of Article 1 of Article 163 of the Civil Procedural Law of the People’s Republic of China on July 21, 2000:

1. Item (1) of the judgment of the first instance shall be maintained;
2. Item (2) of the judgment of the first instance shall be revoked; and
3. Shengming Co. shall, within 60 days after this judgment becomes effective, dismantle the inserted story within the house of the first floor of the building at No. 166-2, Louzi Lane, Nanjing, and restore the original state of the part dug into the ground. The Real Estate Company, Zhong Baoqiang and other households shall jointly entrust a supervisory department to take charge of the supervision over the construction site and Shengming Co. shall pay the supervision expenses.

The litigation cost of the first instance is 150 yuan, the litigation cost of the second instance is 150 yuan and the appraisal fee is 6208 yuan. The total amount of the said 3 items, which is 6808 yuan, shall be paid by Shengming Co.