李延康及另其他人 v. 韻濤居業主立案法團及另一人

CACV 21/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 21 OF 2011

(ON APPEAL FROM DISTRICT COURT ACTION NO. 4861 OF 2008)

________________________

BETWEEN

________________________

________________________

REASONS FOR JUDGMENT

________________________

Background

1.  The present appeal is concerned with the 1^st, 2^nd, 7^th and 10^th named plaintiffs (‘the appellants’).  The 7^th named plaintiff is an owner of a flat in a multiple-storey residential development called Serenade Cove situated at 623, Castle Peak Road, Tsuen Wan, New Territories (‘the estate’).  The 2^nd named plaintiff is the husband of the registered owner of one of the flats in the estate.  The 1^st and 10^th named plaintiffs were respectively former owners of two other flats in the estate. They sold their flats after the trial.

2.  The 1^st defendant is the owners corporation of the estate (‘IO’).  The IO was incorporated in 2002. The 2^nd defendant is appointed by the IO to manage the estate.

3.  The estate does not allow the owner to keep dogs except with the permission of the IO.  The appellants kept dogs in their flats.  Following a warning letter by the solicitors for the IO to the appellants and other owners of the estate to cease keeping dogs, they applied to the IO for permission to keep dogs.  Their requests were rejected. The appellants together with other plaintiffs issued the present action, seeking, among other things, a declaration that the IO could not specifically enforce the prohibition on keeping dogs against them.

4.  Deputy District Court Judge Roy Yu heard the case and dismissed the claim.  The appellants appealed.  This Court dismissed the appeal.  I now give the reasons. 

Clause 19

5.  Clause 19 of Schedule 3 of the Deed of Mutual Covenant (‘DMC’) of the estate provides that,

‘ No dogs, cats or pets or other animals or live poultry shall be kept or harboured in any Unit or any part thereof save and except with the prior written consent of the Manager.’

The appellants’ case

6.  While at the trial arguments were raised, among other things, on the binding nature of Clause 19, the issue in this appeal turns on a narrow compass.  The appellants argued that Clause 19 requires the IO to exercise a discretion whether to grant permission to the appellants to keep dogs.  The discretion was subject to an implied term that it must be reasonably exercised.  The discretion had not been exercised at all and in any event it was unreasonably exercised.

7.  The appellants now seek the following relief :

1)  A declaration that in rejecting the appellants’ application for written consent to raise dogs, defendants have failed to properly exercise their discretion and was in breach of their duty under Clause 19 Schedule 3 of the DMC.

2)  A declaration that defendants’ decision in refusing appellants’ application for written consents to raise dogs be quashed.

3)  A declaration that defendants shall not carry out mandatory injunction against the appellants to remove their dogs unless and until the appellants have had proper consideration from defendants as to their respective applications for written consent to raise dog(s) on a case by case basis on their individual merits.

Non-exercise of discretion

8.  The difficulty with the appellants’ case is that they had never argued in the Court below that the discretion had not been exercised at all.  Their pleaded case was simply that the IO must consider the application reasonably, the consent to give permission to keep dogs cannot be unreasonably withheld and it had failed to consider the application reasonably and the permission was unreasonably withheld.  The oral submission of counsel for the plaintiffs (not Mr. Charles Wong, who only appeared for the appellants in the appeal) maintained this approach and did not rely on the non-exercise of the discretion by the IO.  While there was some evidence from the defendants that they had decided not to grant permission to the owners to keep dogs even before they received the requests for permission, the appellants did not specifically run a case that the discretion had not exercised at all. The relief now asked by the appellants were not sought in the Court below, even if, for the purpose of argument, they embrace the non-exercise of the discretion.

9.  For this reason, I am of the view that the appellants were not entitled to argue that the discretion had not been exercised at all. 

Contractual disputes

10.  Mr. Wong relied on a number of administrative law decisions such as Reg. v Home Secretary, Ex pp Venables [1989] A.C. 407; British Oxygen Co. v Minister of Technology [1971] A.C. 610; R v Secretary of State for the Home Department and another, Ex parte Tarrant [1985] 1 Q.B. 251; Lo Yuet Hing v Hong Kong Housing Authority and another HCAL 95/2002; Vu Ngoc Dung v Criminal and Law Enforcement Injuries Compensation Appeal Board [1996] 3 HKC 346 on how a discretion should be exercised by a public body or tribunal.

11.  Although the duties and powers of the IO are specified by section 18 of the Building Management Ordinance (Cap. 344) which included, among other things, to do all things reasonably necessary for the enforcement of the obligations contained in the DMC for the control, management and administration of the estate, I am not convinced that one can import wholly the long established principles regarding the exercise of discretionary powers by public bodies or tribunals to what is essentially a contractual dispute between the parties.  It is important to bear in mind that the rights and obligations of the owners in a multi-ownership development are based, first and foremost, on contract.  A DMC is after all a contract under seal and the IO in the exercise of the contractual provisions of the DMC is subject to the established principles such as that it must exercise a discretion reasonably and where the IO is required to give consent, the consent must not be unreasonably withheld.  The latter is a specific example of how a discretion is to be exercised.  The Court’s task is to adjudicate whether there has been a breach of the contractual terms and not to exercise a supervisory function over the decision of the IO as if it is hearing a judicial review application on whether a discretionary power by a public body or tribunal has been lawfully exercised.

Reasonable standard

12.  To the extent that when considering a request for permission to keep dogs from the owners, the IO is exercising a discretion, the appropriate standard to be applied is simply whether the decision by the IO is reasonable and not whether it is ‘absurd or ridiculous’ : Goldlion Properties Ltd v. Regent National Enterprises Ltd (2009) 12 HKCFAR 512 at paragraph 108-113 where the Court of Final Appeal distinguished Regal Success Venture Ltd v. Jonlin Ltd (2000) 3 HKCFAR 364 which adopted a higher threshold on the facts of that case.

13.  The reasonableness of the decision has to be considered from the circumstances of the case.

Implied term

14.  The implication of a term that consent must not be unreasonably withheld is based on the contractual principle of giving business efficacy to the transaction.  Thus in Cryer v. Scott Brothers (Sunbury) Ltd. (1988) 55 P & CR 183, Waite J at 202 stated that,

‘ I agree with Slade L.J. that the question to be asked in all cases is whether the implication of a proviso of reasonable grounds of refusal is necessary to give business efficacy to the transaction of which the covenant to obtain approval forms part. The question, in other words, is whether a capricious or unreasonable withholding of consent would amount to “a destruction of the thing granted”—Dellman v. King, per Tindal C.J.’

Problems with dogs

15.  It is clear from the evidence that the question of problems caused by the keeping of dogs had vexed the IO and the residents since the establishment of the IO.

16.  In the management meeting of the IO held on 3 December 2002, there was reference to the management company issuing notices to dog owners to cease keeping dogs.

17.  In 2005 and 2006, the 2^nd defendant had posted notices to the owners of the estate about the complaint by residents of nuisance caused by dogs.  The notices referred to Clause 19 and requested the dog keepers to exercise restraint to take care of their dogs and to put muzzles on the dogs when they go out.  Ho & Tam, solicitors for the IO issued a letter to the owners dated 2 February 2007 referring to Clause 19 and the nuisance caused by the keeping of dogs.  The letter demanded that

‘ ……

(3)     Despite the repeated reminders and requests from the Manager, certain owners are still keeping dogs, creating nuisance including but not limited to making or permitting disturbing noise in their units and/or allowing their dogs to urinate or dumb (sic) at common parts.  The IO hereby gives final notice that if such owners do not cease such acts immediately, the IO shall take legal actions, including applying to Court for an injunction and seek damages and costs against them without further notice.

  All owners and occupants are respectfully requested to comply with the provisions of the Deed of Mutual Covenant in order to avoid inconvenience and monetary loss.’

18.  At the Annual General Meeting of the owners held on 6 October 2007, it was resolved that further actions would be considered if the dog owners did not exercise restraint in respect of the nuisance and disturbance caused by the keeping of dogs.  At the 10 and 20 June 2008 management committee meetings, problems concerning dogs urinating and defecating in common areas, noise from dog barks and dogs without muzzle frightening residents were discussed.  Eventually the IO through Ho & Tam issued a warning letter dated 18 July 2008 requiring the dog owners to cease keeping dogs in their flats.  The requests for permission to keep dogs came a few days thereafter.

19.  The explanation for the IO’s refusal to give the permission can be seen, for example, from the letters dated 8 August and 15 August 2008 respectively from the 2^nd defendant which stated that

‘ In generally, the hygiene & noise nuisance are the most common problem made by dogs. On the other hand, dogs have the peculiar smell and leave lingering odor cause our hygiene environment to turn worst. Moreover, sharp harsh sound (such as bark and yell) made by dogs also cause the disturbed noise that to annoying other occupiers. Last but not least, dogs will attack people unexpectedly which to cause the potential hazard to all occupiers.’

20.  While the earlier letter stated that under Clause 19 the occupiers are not allowed to keep dogs, the latter letter stated that

‘ Thus, to ensure all occupiers to have a comfortable, safe and tidy hygiene living environment, Incorporated Owners of Serenade Cove and Customer Service Office according the clause 19 of the Third Schedule of the Deed of Mutual Covenant, no dogs, cats or other animals or live poultry shall kept or harboured in any Unit or any part thereof save and except with the prior written consent of the Manager.’

My view

21.  Considering that the DMC in the first place prohibits the keeping of dogs in the estate except with the consent of the IO, this term had been repeatedly drawn to the attention of the dog owners prior to the final warning letter of 18 July 2008, the lack of response of the owners to the previous warnings and the background of nuisance caused by the keeping of dogs in the estate, I am of the view that the IO’s refusal to give permission was reasonably made.  The IO cannot be faulted if the refusal was to ensure that the residents of the estate would not be disturbed by the keeping of dogs.

22.  It would be, on the contrary, most unreasonable if having regarded to these factors, the IO would then give permission to the owners to keep dogs when there was no change of circumstances which would justify the permission to be given.  The owners had certainly not relied on any special factors such as the humanitarian need to take care of an old or dying dog or the practical need of an owner in keeping a guide dog.

Conclusion

23.  Accordingly the appeal was dismissed with costs to the defendants.

Hon Chu JA :

24.  I agree.

Hon Lam J :

25.  I agree and have nothing to add.