THE INCORPORATED OWNERS OF GRENVILLE HOUSE v. KEEN JOY ENTERPRISES LTD

LDBM 200/2020

[2024] HKLdT 57

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO.200 OF 2020

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D E C I S I O N

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1.  On 14 May 2024, I handed down Judgment of this application and counterclaim (the Judgment)[1] after trial. For this Decision, I adopt the same expressions and abbreviations in the Judgment. In the Judgment, I dismissed the entirety of the counterclaim raised by Keen Joy against IO[2]. Keen Joy has raised two counterclaims[3]. By its second one, Keen Joy sought specific performance of IO’s obligations under the DMC and BMO regarding Fire Alarm Problem with a view to ensure an effective fire alarm system for Apartment F12 owned by it, and/or damages in lieu of, or in addition to, specific performance[4].

2.  By Form 1 filed on 11 June 2024, Keen Joy sought leave to appeal against the Judgment only on my dismissal of its second counterclaim relating to Fire Alarm Problem (the Leave Application). Two proposed grounds of appeal are annexed to the said Form 1. A fourth affirmation of Nora together with exhibit “FLLN-1” was filed on 11 June 2024 in support of the said application.

3.  On the two dates stated above, Keen Joy has lodged and served its skeleton submissions (R’s Skeleton) and skeleton submissions in reply (R’s Reply Skeleton), annexed with Keen Joy’s opening submissions[5], in support of the Leave Application.

4.  On the date stated above, counsel for IO, Mr Iverson Wong (Mr Wong), who had not appeared for IO at trial, has also lodged and served IO’s skeleton submissions (A’s Skeleton) in opposition to the Leave Application.

5.  At the hearing of the Leave Application on 28 June 2024, both Nora and Mr Wong appearing respectively for Keen Joy and IO made no substantive submission on the Leave Application and agreed for it to be disposed on papers after Keen Joy files and serves R’s Reply Skeleton.

6.  In arriving at this Decision, this Tribunal has carefully considered the Judgment and all proposed grounds of appeal in light of, among others, all submissions advanced by parties in the above 3 skeletons, all pertinent contents of 4^th affirmation of Nora and exhibit thereof, and all pertinent evidence adduced by parties at trial regarding the second counterclaim of the Fire Alarm Problem.

Legal principles for leave to appeal

7.  Under s.11(2) of Lands Tribunal Ordinance (LTO)[6], any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment of the Tribunal on the ground that such judgment is erroneous in point of law.

8.  S.11AA(1) of the LTO requires leave to be granted by the Tribunal or the Court of Appeal before an appeal under s.11(2) can be made. S.11AA(5)(a) of LTO provides that leave to appeal may be granted in respect of a particular issue arising out of the judgment. S.11AA(6) of LTO further provides that leave to appeal shall not be granted unless the Tribunal is satisfied that:

(a)  the appeal has a reasonable prospect of success; or

(b)  there is some other reason in the interests of justice why the appeal should be heard.

9.  For the principles on s.11AA(6) on LTO above, I adopts the authorities cited at paragraphs 6 to 8 of R’s Skeleton. The threshold for meeting limb (a) above requires the prospect of succeeding in the appeal “reasonable” and therefore more than “fanciful”, without having to be “probable”. One is required to show more than just an arguable case, but an appeal that has merits and ought to be heard, although one does not have to demonstrate that the appeal will probably succeed.

10.  As to the circumstances limb (b) above could be met, leave to appeal may be granted if the question is one of general principle, decided for the first time or a question of importance upon which further argument and a decision of the Court of Appeal would be to the public advantage.

Grounds of proposed appeal

Ground One

11.  It is first complained by Keen Joy that this Tribunal had erred in law in finding that Existing Fire Alarm was in “good working order” such that it did not require any replacement: Judgment at §§73 to 74.

(1)  In light of the pertinent findings at §§64 to 67 of the Judgment, this Tribunal, it was said, erred in law in holding that the Existing Fire Alarm was in good order purely because (i) the warning sound level likely conformed with the minimum legal requirements set by FSD by way of code of practice and that (ii) IO had complied with the law and arranged for registered fire service installation contractor to inspect, inter alia, the Existing Fire Alarm every 12 months resulting in the certification of conformity with the legal minimum requirements set down by the 2012 version of Code of Practice for Minimum Fire Service Installations and Equipment and Inspection, Testing and Maintenance of Installations and Equipment (COP MFSI), when the Fire Alarm Problem was found to have existed: Judgment at §64. This, it was said, is inconsistent with this Tribunal’s own ruling (which is correct) at §§68 to 70 of the Judgment.

(2)  Whilst it is correct that in discharging its duty under s.18(1)(a) of BMO[7], IO shall have regard to and be guided by code of practice issued by the Authority under s.44, it is complained that it is legally wrong for this Tribunal to rule, in the absence of any legal authority or guidance, that compliance with such bare legal minimum requirements in blatant disregard to the actual context of Apartment F12 and GH as well as inaudibility entailed by the Fire Alarm Problem would discharge IO’s mandatory duty under s.18(1)(a) of BMO: Judgment at §§75 to 76.

(3)  This Tribunal, it was suggested, thereby also erred in adopting a literal and narrow meaning of “good working order” and/or “good working conditions” under Clause 9(b)(8) and (10) of DMC and s.18(1)(a) of BMO: Judgment at §74. This Tribunal failed, it was said, to apply or otherwise give effect to the well-established approach in construing the relevant provisions of DMC and BMO which is “a unitary exercise involving an iterative process”: Lai Wai Hung v. Sino Estates Management Ltd [2020] HKCA 448 at §26.

Ground Two

12.  It follows, Keen Joy argued, that this Tribunal had erred in law in holding that IO was not in breach of the relevant provisions of DMC and s.18 of BMO: Judgment at §71:-

(1)  Given the Fire Alarm Problem existed and the Existing Fire Alarm forms part of the “common parts” of GH (see Judgment at §68), it is complained that it is legally wrong for this Tribunal to hold that resolving the Fire Alarm Problem would be an “upgrade” or “improvement” to the common parts of GH which is something that IO “may (not must), at its discretion, decide to do, or decide not to do under s.18(2)(fa) of BMO”: Judgment at §§77-79.

(2)  Even if resolving the Fire Alarm Problem could be described as an “upgrade” or “improvement” as opposed to “replacement” of the common parts of GH, this Tribunal, it was said, had completely overlooked IO had a mandatory duty under s.18(1)(c) of BMO “to do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building”. This Tribunal ought, it was said, to have but did not consider and rule that such mandatory duty on the part of IO under s.18(1)(c) of BMO included carrying out such an “upgrade” or “improvement”.

(3)  At the very least, this Tribunal ought, Keen Joy argued, to have but did not consider and rule that IO is and was under a mandatory duty as per s.18(1)(c) of BMO to seriously look into the Fire Alarm Problem and investigate or consult the owners on whether (i) such problem existed and affected GH estate-wide and (ii) a “replacement” or even “upgrade” and “improvement” ought to be carried out in GH in view of the following pertinent factual findings: -

(a)  IO was well aware of Fire Alarm Problem but had taken no concrete action on and sought to downplay the problem or keep it at a low profile: Judgment at §§65-67; and

(b)  There is every reason to believe that the same problem could happen to other equally large apartments of GH as opposed to it being a matter of “individual concern”: Judgment at §§4 & 73(1).

(4)  In all circumstances and in reaching the conclusion that there was no breach of DMC and BMO on the part of IO pertaining to the Fire Alarm Problem, this Tribunal, Keen Joy argued, had misconstrued the intentions and objectives of DMC and BMO, contrary to the well-established principles for a purposive construction and common sense application of the relevant provisions of DMC and BMO: The Grande Properties Management Ltd v Sun Wah Ornament Manufactory Limited (2006) 9 HKCFAR 462 at §2.

Discussion

New grounds in proposed grounds of appeal

13.  Contrary to Keen Joy’s denials at paragraphs 20 to 23 of R’s Reply Skeleton, it had, I think, never relied for the purpose of its second counterclaim at trial s.18(1)(c) of BMO and, if I may add, clause 9(b)(8) of DMC.

14.  I agree with Mr Wong that Keen Joy has raised s.18(1)(c) of BMO and clause 9(b)(8) of DMC for the first time in its proposed grounds of appeal. It is plain from the followings: -

(1)  Unlike s.18(1)(a) &(b) of BMO and clause 9(b)(10) of DMC which were specifically recited in its Notice of Opposition, s.18(1)(c) of BMO and clause 9(b)(8) of DMC were not: see paragraphs 4, 5, 7(a)-(c), 10(a)(ii) & 10(d), 10(e), 19, 20, 21 and prayers (2) & (3) thereof.

(2)  At paragraphs 18 and 19 of its opening submissions, Keen Joy also saw fit to recite only s.18(1)(a)&(b) of BMO and clause 9(b)(10) of DMC. Nowhere in entire opening was s.18(1)(c) of BMO or clause 9(b)(8) of DMC referred to.

(3)  Nora never in her witness statement refer to s.18(1)(c) of BMO or clause 9(b)(8) of DMC.

(4)  Neither did Keen Joy refer to s.18(1)(c) of BMO or clause 9(b)(8) of DMC in its oral closing submissions.

15.  I wholly agree with IO’s submissions at paragraphs 21 and 22 of A’s Skeleton that Keen Joy had elected at trial not to rely on s.18(1)(c) of BMO (and, I would add, clause 9(b)(8) of DMC).

16.  Secondly, Keen Joy had, I think, never made submissions for its second counterclaim at trial that clause 9(b)(10) of DMC and s.18(1)(a) & (b) of BMO it solely relied upon ought to be construed in any alleged “purposive”, “liberal” or “wide” manner as it now complains this Tribunal had failed to do so in its proposed grounds.

17.  Keen Joy never cited the two authorities at [11(3)] and [12(4)] above at trial.

18.  Thirdly, Keen Joy had never relied on 2018 COBMS at trial as it now does for the first time at paragraphs 16(2) & 16(3) of R’s Skeleton.

Keen Joy’s limited evidence at trial

19.  At trial, Keen Joy solely called Nora (and mainly produced many complaint letters written by it to the Manager of GH, IO and FSD) to prove that Fire Alarm Problem had existed but that, save for the Proposal, IO (and others) took no concrete action on the same despite her repeated complaints.

20.  As IO noticed in section E1 of its written opening[8], Keen Joy had not adduced any expert evidence at trial[9]. Neither did Keen Joy call i) FSD officer Chin Ka Ho (whom it had invited to attend to Apartment F12 to observe the Fire Alarm Problem)[10] or ii) staffs of registered fire service installation contractor (who signed 3 FS Certificates after annual fire alarm testing in 2019, 2020 and 2021)[11] to give evidence at trial.

Keen Joy’s construction of IO’s pleaded duties

21.  Keen Joy had, we observe, submitted at paragraph 29 of its written opening: “[IO] has not otherwise sought to explain … whether it is [IO]’s case that a fire alarm system which could not properly carry out its function is nonetheless in “good repair and condition” or in “a state of good and serviceable repair”. Notably, the test for whether [IO] has complied with its duties under DMC and BMO is not whether it has complied with the statutory minimums (italics and underline original, bold supplied)”.

22.  Two points should be noted from the above submissions from Keen Joy.

(1)  First, the original italic words within quotation marks are sourced from, one thinks, clause 9(b)(10) of the DMC and s.18(1)(a) of BMO and nowhere else.

(2)  Secondly, judging the words in bold, Keen Joy apparently submitted that, to answer whether or not IO’s pleaded duties at clause 9(b)(10) of the DMC or s.18(1)(a) of BMO was complied with, one asks whether or not the Existing Fire Alarms could properly carry out its function.

23.  As shall be demonstrated below, this Tribunal had applied exactly Keen Joy’s own construction (and not any alleged wrong test or assumption) in arriving at its factual findings in the Judgment on the evidence adduced at trial.

Limited inaudibility entailed by the Fire Alarm Problem

24.  The Fire Alarm Problem proven by Keen Joy after trial is not, one must point out, that “warning sound” emitted by Existing Fire Alarms could not be heard inside Apartment F12 at all. I also refer to paragraph 7 of R’s Reply Skeleton.

25.  While such “warning sound” could not be heard in the bedrooms, kitchen and staff quarter (i.e. inner parts) of Apartment F12, on the findings of this Tribunal, it could be heard in the living and dining room of Apartment F12[12] to serve as fire warning to occupants of Apartment F12 in its living and dining room.

All relevant matters considered to construe IO’s duties

26.  Contrary to paragraph 16(1) of R’s Skeleton and as Mr Wong rightly recognized at paragraph 13.2 of A’s Skeleton, the aforesaid limited inaudibility entailed by the Fire Alarm Problem was in the forefront of this Tribunal’s consideration in the Judgment.

27.  Neither did this Tribunal lose sight in the Judgment that the cause of such limited inaudibility is the large size of Apartment F12[13] and not, say, mechanical failure or defects of the Existing Fire Alarms[14].

28.  When this Tribunal used the words “warning sound” in the Judgment, it was fully aware that the purpose of Existing Fire Alarms was to give fire alert in the event of fire.

29.  At the same time, any alleged “purposive” construction of clause 9(b)(10) of the DMC executed in 1971 now raised by Keen Joy cannot, one thinks, overlook the undeniable background fact that all apartments of GH, including Apartment F12, were built as large apartment exceeding 3,300 square feet in saleable area from day one[15].

30.  However, reading the said clause 9(b)(10) of the DMC, one does not find word of “improvement” or “upgrade”. Only words of “repair”, “keep in good repair and condition” and “replace” are found in the said clause[16].

31.  In addition, any alleged “purposive” construction of s.18 of DMC now raised by Keen Joy cannot ignore also, one thinks, the separation of (mandatory) duties of IO in s.18(1) thereof from its different (discretionary) powers in s.18(2) thereof.

32.  The word “improvement” is only found in s.18(2)(fa) of BMO[17] but not in its s.18(1)(a) (which uses the words “maintain” and “good and serviceable repair and clean condition”)[18].

33.  With respects, any complaint in the proposed grounds of this Tribunal having wrongly adopted any alleged “literal” and “narrow” meaning of the pleaded DMC clause and pleaded BMO section at [11(3)] above, and to have allegedly failed to have adopted any alleged “purposive” construction and “common sense” application of, DMC and BMO to the second counterclaim at [12(4)] above is, I agree with Mr Wong, completely without merit.

Mere Fire Alarm Problem not enough

34.  Contrary to paragraph 16(1) of R’s Skeleton, it simply does not follow, I must point out, from mere presence of Fire Alarm Problem (i.e. the limited inaudibility of the Existing Fire Alarms) as proven by Keen Joy that the Existing Fire Alarms were not “in good working order” and/or required “repair/replacement”. Keen Joy was, I am afraid, totally mistaken to equate the two.

35.  Absent expert or like evidence, putting aside for the moment contrary evidence to be discussed below, the Fire Alarm Problem per se is, I think, no proof that Existing Fire Alarms were not functioning properly as Keen Joy posed, and answered, at paragraph 29 of its written opening at [21] above.

36.  To borrow paragraph 14.3 of A’s Skeleton, it is, I agree with Mr Wong, a “quantum leap” for Keen Joy to argue that the Existing Fire Alarms were (or are) not functioning properly and demand repair or replacement by the mere proof of Fire Alarm Problem.

Contrary evidence that Existing Fire Alarm functioning properly

37.  There are also adduced at trial other evidence (adduced by IO and Keen Joy) that was accepted by this Tribunal pointing to the contrary direction asserted by Keen Joy.

38.  With respect, the Judgment, including the many findings made by this Tribunal pertinent to the Fire Alarm issue at its different paragraphs, must be read as a whole.

39.  The fact that “extra” fire alarms at owner’s own costs were proposed to be “installed” by the Manager of GH[19] suggests that the Existing Fire Alarms were “in good working order” or did not require “repair/replacement” (or else the Manager could have repaired or replaced them using funds out of, say, annual maintenance budget).

40.  Nora’s own admission in the box of “upgrading” (i.e. not repairing) Existing Fire Alarms[20] point also to the contrary direction.

41.  The compliance of Existing Fire Alarms with minimum legal requirements set by FSD in 2012 version of COP MFSI[21] as certified in the 3 FS Certificates issued by registered fire service installation contractor for the material years of 2019, 2020 and 2021 after annual fire alarm testing[22] is also one of these contrary evidence/findings.

42.  If one reads the 3 FS Certificates, one can find Part 3 box for “Defects” discovered in the annual testing, and “Comment” thereon, to be filled in by the contractor.

43.  Reading certificate for the year 2020, while “FH/HR system” was certified in Part 1 of the said certificate to “conform with FSD requirements”, it was also marked in the same part to have “defects” listed in Part 3 of the same certificate i.e. “missing” instruction plate that requires “replacement”.

44.  Had the Existing Fire Alarms not functioned properly or at all during the said three annual tests above, they plainly would not have been certified by the registered fire service installation contractor in the 3 FS Certificates “in efficient working order” in accordance with COP MFSI as they now appear on the face of them.

45.  Mr Wong was right at paragraph 13 of A’s Skeleton. Contrary to paragraph 12 of R’s Skeleton and paragraphs 5 and 7 of R’s Reply Skeleton, this Tribunal did not simply assume from mere compliance of legal minimum requirements per se that the Existing Fire Alarms were “in good working order”, or had applied any alleged wrong test or assumption to that effect.

46.  To the contrary, Keen Joy had, I am afraid, misread the Judgment in this material respect.

47.  The fact that FSD officer Chin Ka Ho took no follow-up action on Exiting Fire Alarms after Nora’s repeated complaints of Fire Alarm Problem to FSD[23] is another piece of contrary evidence (or else FSD would have followed up on Nora’s repeated complaints with IO, the Manager and/or the registered fire service installation contractors that signed 3 FS Certificates).

Consistent factual findings open on evidence

48.  On the totality of trial evidence and findings in the Judgment, notwithstanding the Fire Alarm Problem, it is certainly, I think, open to this Tribunal to arrive at the factual finding that the Existing Fire Alarms were in good working order, and did not require repair or replacement, at all material times[24] (and that Keen Joy had, as I find, failed to prove to the contrary i.e. the Existing Fire Alarms were not functioning properly or at all during the material times due to IO’s breach of clause 9(b)(10) of DMC or s.18(1)(a) of BMO).

49.  On the same totality of trial evidence and findings, it would, I agree with Mr Wong, be absurd for this Tribunal to find the Existing Fire Alarms not functioning properly or at all when occupants of Apartment F12 in its living and dining room could hear warning sounds emitted by them, which had been tested by registered fire service installation contractor in 3 past annual tests and certified to be “in efficient working order” in line with COP MFSI.

50.  There is, one should point out, simply no factual or expert evidence of malfunctioning or non-functioning of the Existing Fire Alarms at trial.

51.  Reading the Judgment as a whole properly, there is absolutely, I think, no alleged inconsistency complained by Keen Joy at [11(1)] above between this Tribunal’s finding of Fire Alarm Problem and this Tribunal’s finding at paragraph 74 of the Judgment that the Existing Fire Alarms were in good working order that did not require repair or replacement. I reject the contrary submission at paragraph 6 of R’s Reply Skeleton.

First ground to challenge facts unarguable

52.  Hence, the first ground of appeal at [11] above that this Tribunal had erred in law in making the above factual finding at paragraph 74 of the Judgment is, I think, unarguable. This is not to mention that Keen Joy can only appeal on points of law as was stressed at paragraphs 10 and 11 of A’s Skeleton.

Additional proof of discharge of s.18(1)(a) of BMO

53.  At paragraph 74 of the Judgment, this Tribunal had already found that there was no breach of both clause 9(b)(10) of DMC and s.18(1)(a) of BMO.

54.  Reference to paragraphs 7.2.7 and 7.2.8 of 2018 COBMS and s.44(2) of BMO in paragraph 75 and 76 of the Judgment complained of by Keen Joy in R's Skeleton is, I would point out, only an additional reason to “support” the factual finding and “conclusion” of no breach of s.18(1)(a) of BMO already reached by this Tribunal on other evidence and findings in the preceding paragraph 74.

55.  So, unless Keen Joy makes good its challenge to my factual finding and conclusion at paragraph 74 of the Judgment (which, I think, it fails completely), any alleged error of law at paragraphs 75 and 76 of the Judgment that it makes good, if at all, would not suffice to persuade the Court of Appeal to allow the proposed appeal.

56.  To put the record straight, this Tribunal has not, as Keen Joy complained, simply assumed from mere compliance with 2018 COBMS per se that the Existing Fire Alarms were in good working conditions that did not require repair or replacement.

s.44(2) of BMO applies also to compliance of 2018 COBMS

57.  Notwithstanding Keen Joy’s submissions at paragraphs 14 and 15 of R’s Skeleton, this Tribunal remains of the view in the Judgment (and agree with paragraph 14.2.3 of A’s Skeleton) that, while “failure” to comply with Code of Practice may, on s.44(2) of BMO, be relied upon to “establish” liability in civil proceedings, it makes, I think, no sense that “compliance” with Code of Practice like 2018 COBMS in this case cannot be used to “negative” such liability when the said section expressly includes the word “negative” and when s.18(2A) of BMO requires IO “have regard to and be guided by” Code of Practice. S.44(2) of BMO should, I think, be construed to apply as well to the “compliance” scenario.

58.  This is, I would stress, all the more so when the factual evidence of “compliance” of paragraphs 7.2.7 and 7.2.8 of 2018 COBMS by IO is otherwise admissible evidence adduced at trial that this Tribunal has already considered together with other evidences or findings to reach its factual finding at paragraph 74 of the Judgment: see [41] to [44] above and paragraph 14.2.4 of A’s Skeleton.

59.  Moreover, as this Tribunal held in the Judgment[25], while Code of Practice issued by the Authority does not have force of law on the case law, it is still directory in the sense that the Authority had issued 2018 COBMS as “standard and practice” to be “observed and followed” by owners’ corporations in terms of, inter alia, “fire safety”: see s.44(1)(b) of BMO.

60.  Furthermore, as Keen Joy admitted at [11(2)] above and at paragraph 8 of R’s Reply Skeleton, under s.18(2A) of BMO[26], IO “shall have regard and be guided by”, also, 2018 COBMS issued by the Authority “in the performance of its duties”.

61.  Hence, the complaint by Keen Joy at [11(2)] above that it is legally wrong for this Tribunal to have ruled, in absence of legal authority or guidance, that compliance with bare legal minimum requirements in blatant disregard to the actual context of Apartment F12 and GH as well as the inaudibility entailed by the Fire Alarm Problem would discharge IO’s mandatory duty under s.18(1)(a) of BMO under paragraph 75 and paragraph 76 of the Judgment cannot, I think, be arguable.

(1)  This Tribunal had plainly paid full regard in the Judgment to the size problem posed by large apartments built at GH from day one and what the Fire Alarm Problem entailed.

(2)  S.44(1)(b) and s.18(2A) of BMO (if not also s.44(2) of BMO) afford proper legal foundation and authority for this Tribunal to find from “compliance” of paragraphs 7.2.7 and 7.2.8 of 2018 COBMS additional support for factual finding and conclusion already reached at paragraph 74 of the Judgment.

Factual finding of improvement open on evidence

62.  For the same totality of evidence and findings in the Judgment, including Nora’s own admissions[27], contrary to Keen Joy’s complaint at [12(1)] above, it is also, I think, perfectly open and correct for this Tribunal to have found that resolving the Fire Alarm Problem requires “upgrade” to the Existing Fire Alarms[28].

No omission to consider s.18(1)(c) of BMO

63.  As Keen Joy has not relied for its second counterclaim at trial s.18(1)(c) of BMO, it is, I think, incorrect for it to complain at [12(2)] above that this Tribunal had “overlooked” IO’s mandatory duty under the said section and/or “failed to rule” on such mandatory duty in the Judgment.

No fair notice of s.18(1)(c) of BMO at trial

64.  Due to contents of Keen Joy’s Notice of Opposition, Nora’s evidence, its written opening and closing submissions, this Tribunal had been led by Keen Joy to believe at trial that it only relied on s.18(1)(a) & (b) of BMO and clause 9(b)(10) of DMC for its second counterclaim: see paragraphs 22, 38, 39 (including heading & corrigendum), 41 (including heading), 69, 70 and 71 of the Judgment.

65.  In similar vein, I think it likely that Mr Suen appearing for IO at trial was also led by Keen Joy to believe likewise such that he only cited authorities on s.18(1)(a) of BMO (and not that on s.18(1)(c) of BMO) in his closing submissions[29].

66.  While Keen Joy saw fit to cite paragraph 42 of Whole Grand Limited v The Incorporated Owners of Bo Fung Building [2024] HKCA 626 and s.10(5)(a) of LTO at paragraph 18 of R’s Reply Skeleton to stress that its Notice of Opposition is not pleadings but serves as “indication of the issues” “likely to be raised”, G. Lam JA in same paragraph 42 also said:

“Nevertheless, basic fairness requires that there should be advance notice of the points taken and issues raised and that no party should be prejudiced by being taken by surprise and having to deal with issues raised without a proper opportunity of preparing for them: see Grand Power v Chan Sing Hoi [2020] 2 HKLRD 142, §§27-42; Great Source Enterprise Ltd v Sino Estates Management Ltd (CACV 253/2003, 7 May 2004), §§14-17. The application of this principle – and the rigour with which ordinary rules of pleading may be applied by analogy – will of course depend on the facts and the procedures adopted in the particular case (bold supplied).”

67.  Fair notice of s.18(1)(c) of BMO issue has, I am afraid, not been given to this Tribunal, if it has been given to IO at all (which I think likely not) at trial. Had it been given, this Tribunal would have invited submissions on it and expressly ruled on it in the Judgment as I did with s.18(1)(a) & (b) of BMO.

s.18(1)(c) of BMO not arguable either

68.  Moreover, s.18(1)(c) of BMO provides that IO shall “do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building (bold and italics supplied)”.

69.  Having read R’s Skeleton and R’s Reply Skeleton, this Tribunal is still in the dark against whom and for which alleged obligation(s) in the DMC (or BMO) that Keen Joy complained IO to have, in breach of s.18(1)(c) of BMO, failed to do all things reasonably necessary to enforce.

70.  In See Wah Fan v The Incorporated Owners of Kit Tak Garden (Phase I) [2003] 3 HKLRD 1 cited by Keen Joy at paragraph 24 of R’s Reply Skeleton, it is at least clear from paragraphs 13 and 14 of the said judgment that the corporation therein had “resolved not to take action” against Mr Tam for breach of s.34I of BMO and clause 2 of the deed of mutual covenant therein.

71.  Had Keen Joy had in its mind of IO failing to do all things reasonably necessary to enforce against IO itself s.18(1)(a) of BMO and clause 9(b)(10) of the DMC, it adds, I think, nothing on top of its existing grounds against IO.

72.  Properly construed above, IO is, as held in the Judgment, under no duty under s.18(1)(a) of BMO or clause 9(b)(10) of the DMC to “upgrade” the Existing Fire Alarms. IO has, as held in the Judgment, a discretion to decide whether or not to make “improvement” to common parts under s.18(2)(fa) of BMO. Or owners may so resolve at general meetings pursuant to s.14(1) of BMO[30].

Evidence pertinent to s.18(1)(c) of BMO not fully explored

73.  Regarding the “state of evidence” bar Bokhary PJ stated in Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356 referred at paragraph 18 of See Wah Fan, supra, this Tribunal disagrees with paragraph 24 of R’s Reply Skeleton that the application of s.18(1)(c) of BMO to this case is not fact sensitive.

74.  The contrary is, I think, true and that the evidence had not been fully explored at trial due to lack of proper notice from Keen Joy to IO and this Tribunal. In other words, Keen Joy could not get over the above “state of evidence” bar.

75.  IO’s obligation under s.18(1)(c) of BMO is not absolute – it is only required to do all things reasonably necessary for the enforcement of DMC (or BMO) obligations concerned.

76.  On my findings in the Judgment, IO had arranged for the Manager to attend to Apartment F12 to investigate the Fire Alarm Problem and that subsequently the Manager had put forward the Proposal that was, however, rejected by Nora: see paragraph 64(3), (4), (5) and 67 of the Judgment.

77.  On the factual issues whether further investigation and/or consultation with GH owners was warranted or not, Derek had maintained in the box that IO had received no similar complaint of Fire Alarm Problem from other owners than Keen Joy, that IO was satisfied with the investigation done by, and the Proposal suggested by, the Manager and with the annual testing results of the Existing Fire Alarms in line with FSD requirements as was evidenced by the 3 FS Certificates.

78.  Keen Joy (and parties) had not explored, I think, the above answers further or fully at trial.

79.  The followings said by Lam V-P (as he then was) at paragraph 10 of the Court of Appeal judgment in Lehmanbrown Ltd v Union Trade Holdings Inc & Others, unreported, HCMP 977/2015, 17 June 2015, cited by Mr Wong are, I think, also pertinent to our case: -

“Whilst the Court of Appeal obviously has power to entertain new points in an appeal, it is also clearly and firmly established that new points which are fact sensitive or otherwise affect the course of evidence or conduct of the case at the hearing below should not be allowed. Though this principle is usually applied in situations where the new points necessitate further evidence to be adduced, it is not confined to such scenarios. Very often, the raising of new point by one party may lead to the other party raising counter arguments and the consideration of such counter arguments may involve factual assessment in a different light from that undertaken by the court below. Sometimes, it may involve a different weighing of factors in the exercise of discretion. Alternatively, the other party may embark on a different course of forensic conduct if the new point were taken earlier. The appellate court, in considering whether the new point would be entertained, is entitled to take these matters into account in order to avoid unfairness to the other party (bold supplied).”

The possibilities of different factual evidence and/or different trial development regarding Fire Alarm issue cannot, I think, be excluded had proper notice of s.18(1)(c) BMO issue been given by Keen Joy at trial to IO.

New point of s.18(1)(c) of BMO not open to Keen Joy

80.  Hence, the said new point of s.18(1)(c) of BMO is, I think, not open to Keen Joy on appeal on the state of evidence bar. To allow Keen Joy to raise it on appeal is also unfair to IO. It is, I think, not arguable either.

81.  In any event, it is up to the Court of Appeal vested with power to allow new point on appeal to decide for itself whether to entertain such new point.

Second ground not arguable

82.  Therefore, the proposed second ground of appeal is, in my view, not arguable either.

No public interest involved

83.  It is, I think, wholly speculative for Keen Joy to assert at paragraph 26 of R’s Skeleton that similar problem like the Fire Alarm Problem “may well exist in other equally large apartments in Hong Kong”. There is no such evidence before me. Nora at best deposed in her fourth affirmation that GH as a whole suffers, she thought, from the Fire Alarm Problem.

84.  For same lack of evidence, I disagree with paragraphs 3 and 4 of R’s Reply Skeleton that the alleged legal question posed at paragraph 3 thereof requires clarification from higher court for the first time in the public interest. In any event, the said legal question was posed on a wrong reading of the Judgment.

85.  As such, it is not, I think, a matter of “public interest” for leave to appeal to be given on the Fire Alarm Problem as per the proposed grounds of appeal.

Conclusion

86.  All grounds proposed by Keen Joy to appeal against dismissal of its second counterclaim in the Judgment carry, I think, no reasonable prospect of success on appeal.

87.  Neither is it, I think, in the interest of justice for leave to appeal to be given on the issue of Fire Alarm Problem as per the proposed grounds of appeal.

Disposition

88.  I therefore dismiss the Leave Application filed by Keen Joy on 11 June 2024. I refuse leave to Keen Joy to appeal against dismissal in the Judgment of its second counterclaim relating to the Fire Alarm Problem.

89.  Under r.30B(4) of Lands Tribunal Rules[31], where this Tribunal refuses an application for leave to appeal, a further application for leave to appeal may be made to the Court of Appeal within 14 days from the date of refusal.

Costs order nisi

90.  As IO has prevailed on the Leave Application, I make a costs order nisi to follow the result of this application that Keen Joy do pay IO costs of this application, including all reserved costs and the costs of hearing on 28 June 2024, to be taxed on District Court scale if not agreed. The said order nisi shall automatically become effective and binding on both parties without further order if no party applies to vary it within 14 days of this Decision.