GRAND POWER INTERNATIONAL LTD v. CHAN SING HOI ENTERPRISES LTD AND OTHERS

LDBM 329/2014

[2018] HKLdT 86

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 329 OF 2014

_______________

_______________

_______________

JUDGMENT

_______________

A. Background

1.  This is not the classic building management dispute.  The dispute concerns the building at Nos 70, 72, 74 and 76 Percival Street, No 60 Russell Street and Nos 21, 23, 25 and 27 Lee Garden Road (“Building”), which is located at the heart of Causeway Bay.

2.  The Deed of Mutual Covenant of the Building is registered by Memorial No UB394096 and dated 22 February 1963 (“DMC”).  Pursuant to clause 1 of the recital of the DMC, the owners shall have the full right to occupy during the residue term of 982 years from 25 June 1860.  The Building is now over 50 years old^[1] dividing into 9 shops units on the ground floor and 84 domestic units, making the total of 93 units.  It does not have any incorporated owners or the agent as appointed to undertake the management of the Building under clause 16 of the DMC.

3.  The applicant (“A”) is a $1 company^[2], shareholder of which is a BVI company. In June 2013, A purchased and becomes the registered owner of 2 units in the Building, namely:

i.   The front portion of the 3rd floor of No 70 Percival Street (“3/F No 70”); and

ii.   The rear portion of the 5th floor of No 72 Percival Street (“5/F No 72”).

4.  The 1st respondent (“R1”) is the registered owner of the following 4 units:

i.   the ground floor of No 72 Percival Street (“G/F No 72”) since September 2000;

ii.   the front Portion of the ground floor of No 74 Percival Street (“G/F No 74”) since November 2004;

iii.   the front Portion of the 1^st floor of No 74 Percival Street (“1/F No 74”) since June 2005; and

iv.   the 1^st floor of No 76 Percival Street (“1/F No 76”) since July 2005.

5.  The 2nd respondent (“R2”) is listed company in Hong Kong and has been the tenant of R1 in respect of the G/F No 72, the G/F No 74, the 1/F No 74 and the 1/F No 76 under the tenancy agreement registered by Memorial No 09091100780030 since 11 August 2009 and remains the current tenant under the subsequent tenancy agreements.

6.  R1 converted the wall enclosing the 1/F No 74 and the 1/F No 76 into glass wall extending from the floor of 1st floor to its ceiling (“Glass Wall”) in around June 2009. It is not disputed that building approval for the Glass Wall had been obtained from the Buildings Department^[3].

7.  There are erected 3 signages (“3 Signages”), each bearing R2’s trade name and/or logo “Sasa” and/or “莎莎” after commencement of the tenancy as follows:

i.   One signage adjacent to the shop front of the G/F No 72 hanging from the soffit (ie the underside) of the balcony of the front portion of the 1^st floor of No 72 Percival Street (“No 72 Signage”);

ii.   One signage adjacent to the shop front of the G/F No 74 hanging from the soffit (ie the underside) of the balcony of the 1/F No 74 (“No 74 Signage”); and

iii.   One signage attaching to the surface of the external wall enclosing the 1/F No 76 (“1/F Signage”) which has the approval of the Buildings Department as minor works^[4].

8.  The said soffits (ie the undersides) of the balconies of the front portions of the 1/F No 72 (“No 72 Soffit”) and the 1/F No 74 (“No 74 Soffit”) are horizontal to and downward surface facing the public footpath of Percival Street (collectively “Soffits”).

B.   A’s case and claims

9.  A contends that the external wall and the Soffits form parts of the common parts of the Building and that erection of the 3 Signages and the conversion a part of the external wall into the Glass Wall are in breach of the DMC and/or the Building Management Ordinance (“BMO”).

10.  A alleges not knowing that the 3 Signages and the Glass Wall were unauthorised under the DMC when it purchased the 3/F No 70 and the 5/F No 72 in June 2013.  After discovering their unauthorised nature, A issued a notice on 16 August 2013 to convene an owners’ meeting for the purpose of incorporating the owners of the Building and appointing a management committee.  However, no resolution was passed at the meetings held on 10 September 2013 and 16 October 2013.  Then, A raised objections concerning the unauthorised signages by issuing legal letters through its solicitors (“MBJSM”) to all the then registered owners including R1 in January 2014 and all the then signage users including R2 in March 2014.

11.  As R1 and R2 refused to remove the 3 Signages and to reinstate the Glass Wall, A commenced the present proceedings in the Lands Tribunal on 5 November 2014 seeking various reliefs, such as declarations, mandatory and restrictive injunctions, damages for conversion etc.

12.  A raises the issue of bona fide purchaser for value without notice in its Reply filed on 8 August 2018.

C.   R1’s case and counterclaim

13.  R1 contends that there exists an acquisition campaign (“Acquisition Campaign”) over the Building as well as a few of its adjoining buildings.   It is noteworthy that A took out a summons to expunge certain paragraphs in the witness statements of both R1 and R2 filed pursuant to the consent order dated 2 August 2018 concerning the Acquisition Campaign.  Such summons was dismissed by me with costs in the morning of the 2^nd day of the trial. 

14.  R1’s defences are summarized as follows:-

i.   no breach of any clause of the DMC or section 34I(1) of the BMO:

a.   In the light of the DMC and the relevant assignments as properly construed, the external wall of the Building and the Soffits which the 3 Signages and the Glass Wall are erected or installed are not common parts or areas within clause 2 of the DMC (“Clause 2”).

b.   So far as the 3 Signages are concerned, there is no conversion on R1’s part.

c.   In any event, R1 has not used or permitted to be used the alleged common parts in such a manner as unreasonably to interfere with the use and enjoyment of those parts by any owner or occupier or to cause a nuisance to any person lawfully in the Building.

ii.   Even if R1 is in breach of the DMC as alleged, R1 relies on the common assumptions shared among all the co-owners and/or their predecessors-in-title (“Common Assumptions^[5]”) and can establish the defence by way of waiver, acquiescence, estoppel and/or laches (“said Equities”), under which A is bound by the representation or conduct made or performed by A’s predecessors-in-title.

iii.   A has failed to establish that it is a bona fide purchaser without notice of the said Equities.

iv.   Having considered all the circumstances (in particular the arbitrary actions against R1, the absence of grave damage to A, laches and A’s unclean hands by way of the dirty tactics deployed in the Acquisition Campaign), the Tribunal should exercise its discretion against granting injunctions to order R1 to demolish the 3 Signages and reinstate the Glass Wall.

15.  R1 also seeks by way of counterclaim various declarations in its Amended Notice of Opposition^[6].

D.   R2’s case

16.  According to R2’s Amended Notice of Opposition, its position is quite similar to R1which is as follows:

i.   The surfaces to which the 3 Signages are attached are not common parts of the Building;

ii.   Even if they are common parts, R2’s use of them is not in breach of the DMC or section 34I of the BMO, nor amounts to trespass;

iii.   The said Equities are available to R2 given the entrenched history of signages being erected at the Building;

v.   In any event, the Tribunal shall refuse to exercise discretion to grant the reliefs sought by A in the circumstances of the case.

17.  In the afternoon of the 2^nd day of the trial, A and R2 reached the settlement by consent and endorsed by me on the same day, in which upon A’s undertaking inter alia not to enforce against R1 any injunction to the like effect of paras. (1A) and (2) of the prayer of the Amended Notice of Application, ie order compelling R1 to demolish the Glass Wall and the 3 Signages before 31 December 2022 provided that R2 remains R1’s tenant, and against an indemnity given by R2 to A in respect of any liability the 3 Signages may occasion to A, A do withdraw the present proceedings against R2 without recourse and with no order as to costs between them.

18.  In practical terms as submitted by Mr Man SC leading Mr Jason Lee for A, this would mean that the 3 Signages and the Glass Wall could remain in place until 31 December 2022 or until R2 ceases to be R1’s tenant, whichever is sooner (“A’s Undertaking Not to Enforce”).  Mr Man SC further submitted that A intends to enforce the injunction orders it is seeking from this Tribunal immediately after the expiry of A’s Undertaking Not to Enforce (if R1 has not removed and reinstated the 3 Signages and the Glass Wall before then).

E.   Main Issues and Factual Evidence

19.  The following are the main issues in dispute:

i.   Whether the external wall of the Building and the Soffits are common parts;

ii.   If yes, whether the erection of the 3 Signages and the Glass Wall are in breach of the BMO or the DMC;

iii.   If yes, whether the said Equities are established as against A and/or its predecessor;

iv.   Whether A can prove to be a bona fide purchaser for value without notice;

vi.   If yes, whether A is bound by the said Equities;

vii.   Whether the Tribunal shall exercise the discretion to grant the equitable reliefs sought by A.

20.   Each of A and R1 called one factual witness at the trial:-

i.   Yip Chi Hung (“Yip”) (A’s witness);

ii.   Yuen Chi Ho (“Yuen”) (R1’s witness).

21.  By consent of Counsel for A and R1 during the trial, the following items, such as photos, company and business registration search records etc originally adduced by R2 were also admitted as evidence:-

i.   Trial bundle B4: Tab 137-139;

ii.   Trial bundle B6: Tab 170-172, 174-176^[7];

iii.   Trial bundle B9: Tab 177-181.

E.1.   Yip’s evidence

22.  Yip’s witness statement dated 19 May 2017 and his supplemental witness statement dated 8 August 2018 stood as evidence in chief.

23.  Yip gave evidence at the trial that he worked for A as “representative” and “consultant” since 2012. In particular, he as a registered general building contractor provided professional consultancy services in relation to sales and purchases of landed properties, group acquisitions of landed properties, matters pertaining to building and legal issues involved therein. Yip was also responsible for general repair and maintenance for the buildings and liaising with Fire Services Department and Buildings Department. He admitted that he also represented A as member of the management committee of the Incorporated Owners of Happy Mansion as of September 2013.

24.  He is the chairman and director of Fong Wing Shing Construction Co.,Ltd. (方永勝建築有限公司), a Registered General Building Contractor registered with the Buildings Department, which indicated in Buildings Department’s record that they are interested in providing services in the removal of unauthorised building works and carrying out necessary consequential reinstatement works. Yip specifically admitted that he is familiar with compliance and regulatory issues pertaining to building works.

25.  Yip revealed that he was very experienced in the industry of building service with more than 35 years of experience. Prior to being engaged by A, during 1997 up to 2010, Yip was working for a listed company involving in investment in electronic businesses while he also kept making personal investment in landed properties and acting as building consultant. Yip had extensive experience in sale and purchase of residential properties including old Chinese tenement buildings, some of which were aged more than 40 years.

26.  Yip said that A is a special purpose vehicle (“SPV”) incorporated for investment purpose. One of the 2 directors of A, one Mr. Yeung Chung Hei (also known as Yeung Sai Cheung) is a family friend of Yip. Yeung Chung Hei’s father, Yeung Kwok Shan[8] (楊國生)　(“YKS”) is the boss in charge of A. Yip claimed that he was acquainted with, personally invested in and from time to time worked for many similar SPVs but could not recall exactly how many or even the names of the other SPVs.

27.  As agreed between Yip and A, Yip would not receive direct remuneration in respect of each successful sale and purchase of properties but would be remunerated by a certain percentage of the profit deriving from the overall development project in future.

28.  As regards the purchase of the 3/F No 70 and the 5/F No 72, Yip claimed that it was the first time that he had been involved in advising sale and purchase of landed properties for the commercial purpose of redevelopment. In the present case, he visited the vicinity of Percival Street in Causeway Bay with a view to identifying appropriate properties. He specifically assessed the potential return from redevelopment of the lots by observing the clientele in the vicinity and considered the suitability of shop types. He said that the lots involved had the potential of being redeveloped into the “2^nd Times Square”. Once Yip spotted individual units in the vicinity available for sale in appropriate price range, he would report to YKS who then made the decision to purchase. Nevertheless, Yip emphasized that he did not specifically visit the area but for the acquisition of the 3/F No 70 and the 5/F No 72.  

29.  In respect of the acquisition of the 3/F No 70 and the 5/F No 72, Yip negotiated for the price merely through the estate agents and he did not know the vendors himself and was not personally involved in the signing the provisional sale and purchase agreements or the formal sale and purchase agreements. A engaged a solicitors’ firm Messrs. Peter W. K. Lo & Co. (“PWKL”) to handle the conveyancing transactions.

30.  According to Yip, he had not read the DMC before the purchases of the 3/F No 70 and the 5/F No 72 as he considered that there was simply no need to retrieve the DMC at all. What mattered to him is only the Government leases which would assist him to assess the profitability of the future redevelopment. Concerning the exterior look of the Building when Yip visited prior to A’s purchase (“the Pre-Purchase Visits”), Yip said in his Supplemental Witness Statement at para. 6:

“I did visit the Building a few times in the weeks prior to the Applicant’s purchase of the 2 Units. During those visits, I did not notice anything out of the ordinary. I did notice that some signages were erected on the external wall of the Building, but I did not pay much attention to them. I assumed that they must have been erected with proper authorization or consent.”

31.  Further, according to Yip:-

i.   During the Pre-Purchase Visits, Yip did notice the Glass Wall whilst he could not recall whether he noticed the 3 Signages.

ii.   Yip to the date of trial was not aware of any glass wall situate at 3/F No 76 Percival Street.

iii.   Yip could not recall whether he noticed the signages featured in the batch of letters issued to “all the then signage users” by MBJSM as contained in the relevant photos^[9] (“the Pre-Action Letters”).

iv.   Yip assumed some signages “must have been erected with proper authorization or consent” because common sense commands that no one would do anything unlawful or illegal in public and he thought that there was an incorporated owners of the Building charging rent for the erection of these structures.  Common sense tells that the lawfulness of the signages was proved by their existence.

v.   Yip had never thought about whether the external wall (where the signages were attached or erected) belonged to common part of the Building or part within owners’ exclusive possession.

vi.   Yip did not notice any security guard or guard station at the Building during the Pre-Purchase Visits but thought that there was an incorporated owners of the Building. However, Yip later said that, prior to the completion of the purchase of the 3/F No 70 and the 5/F No 72, Yip had already been aware that the Building had no incorporated owners and manager and was unable to be covered by third liability insurance (as had been advised by District Council Member Ms Yolanda Ng). 

vii.   Prior to the completion of the purchase of the 3/F No 70 and the 5/F No 72, although Yip considered the external wall of the Building being the common parts, Yip did nothing to verify whether the Glass Wall and the 3 Signages were approved by the incorporated owners of the Building or other owners of the Building.

32.  On 23 January 2014, A via MBJSM sent a batch of mass letters to all the registered owners of the Building to make enquiries about the signages as depicted in the photo annexure. None of the owners gave a reply.

33.  On 18^th March 2014, A via its MBJSM sent a batch of Pre-Action Letters to “all the then signage users” (including R2).  When being asked about the Pre-Action Letters and the photos annexed thereto, Yip said that:-

i.   He could not recall whether any targeted signage users and owners did actually reply.

ii.   Among all those signage users and parties concerned, A took legal actions against R1 and R2 only but no one else.

iii.   To this date, A has not commenced any legal proceedings against, among others, 大上海鐘錶珠寶 (香港) 有限公司 Grand Shanghai Watch & Jewellery (HK) Co. Ltd, Rabbit Shop, Nail Box although these shops are still keeping their signages.

34.  As regards Aladin Mess[10] situate at the 2^nd Floor No 76 Percival Street :-

i.   To this date, A has not sent any pre-action letter or commenced any legal proceedings against Aladin Mess in respect of the conversion of the external wall.

ii.   Yip considered the advertisement display layer was merely adhered to the surface of the external wall and therefore no pre-action letter was issued.

iii.   A has however made a complaint to the Buildings Department.

35.  As regards the glass wall (appearing with the sign of “翡翠玉壐”) situate at the 3^rd Floor No 76 Percival Street:-

i.   To this date, A has not sent any pre-action letter or commenced any legal proceedings in respect of the glass wall on the 3^rd Floor.

ii.   Yip claimed that, up to this date, he is unware of the existence of the glass wall on the 3^rd Floor.

36.  Yip emphasized the safety concern arising from the “rampant problem” of the unauthorised signboards in his witness statement.  He explained during cross-examination as to why A chose R1 and R2 for legal actions:-

i.   A has to focus on the costly proceedings against R1 and R2 so that the resources would not be dispersed.

ii.   A chose to take action against R2 because R2 instructed solicitors to respond to the Pre-Action Letter. A did not pursue other signage users or owners simply because no one jumped out to respond.

iii.   Yip expressed his worry that if no one took the initiative to take legal action, the problem would become more rampant. A wanted to “stop the unlawful acts and implement justice”.

iv.   Even though the 3 Signages were exempted by the Buildings Department as minor works, Yip said A would still pursue R2 since no insurance policy could be arranged for the Building.

v.   R2 was the largest shop in the Building.  A wanted to pursue R2 as it had positive effects to other signage users and R2 was responsive.

37.  As to potential negative or adverse impacts of the Glass Wall and the 3 Signages on the users or occupants of the 3/F No 70 and the 5/F No 72, Yip said as follows:-

i.   the 5/F No 72 is left vacant since it was acquired;

ii.   Balcony reinstatement work was carried out at the 3/F No 70 and ended in about 2015. Thereafter, this unit was leased out at $7,000 per month.

iii.   Given the respective locations of these 2 units and that of the Glass Wall and the 3 Signages:-

a.   The lights emitted by the 3 Signages (if any) would not affect them.

b.   Persons residing inside these 2 units would not be able to have any sight of the 3 Signages and the Glass Wall at all.

c.   A’s main concerns about nuisance is the commercial use of the lower floors of the Building, namely the long business hours of the shops and the absence of staircase gate which gave rise to security issue.

38.  Yip denied all the “acquisition tactics” as reported in the magazine articles^[11].

E.2.   Yuen’s evidence

39.  Yuen’s witness statement dated 16 May 2017 and his supplemental witness statement dated 6 August 2018 stood as evidence in chief.

40.  The main evidence relied on by R1 in establishing the existence of the Common Assumptions is the evidence in para. 41 of Yuen’s witness statement. Upon being cross-examined, Yuen admitted as follows:

i.   He did not truly understand that paragraph even after it had been translated into Chinese.  It was written into his statement for him.

ii.   He did not mean that the Common Assumptions were shared by all owners of the Building as it was impossible for him to contact every owner. 

iii.   He only meant that the Common Assumptions were shared by those commercial owners (meaning the owners who actually used their units for commercial purposes) with signages. 

iv.   He did not mean that the Common Assumptions were shared by the residential owners and that A’s predecessors-in-title shared those assumptions. 

v.   His basis for asserting the existence of the Common Assumptions is that some commercial owners have erected signages on the external wall of their units but he did not know whether there were any complaints about the signages. 

vi.   He acknowledged the possibility that the commercial owners may have “搏懵”, i.e. taken a risk that the other owners might not complain about the signages.

vii.   He further acknowledged the possibility that other owners might not complain not because they shared the Common Assumptions but because they considered it too costly to try to do something about the signages.

viii.   He only meant to say that the Common Assumptions (the version according to his understanding) had been in existence since his first visit of the Building in around 2003.  There is no allegation that these assumptions had existed for any extended period of time by 2003.

41.  Yuen acknowledged during his cross-examination that some commercial owners had erected signages in places other than the part of the external wall adjoining their units:

i.   As shown in the photograph exhibited by Yuen^[12], the signage for Kamlun Pharmacy Co referred to in para. 44 of Yuen’s witness statementwas erected not on the external wall of its G/F unit, but rather the external wall of units on the 1/F and 2/F.

ii.   It appears from the photograph exhibited by Yuen^[13] that signages belonging to tenants of the upper floors were hung near the entrance on the G/F.

iii.   It appears from a photograph attached to a letter issued by A’s solicitors dated 18 March 2014^[14] that a signage belonging to a tenant on the 3/F was hung near No 74 Signage.

42.  Yuen is unable to identify any instance where any owner has made any alteration to his unit in a similar way as the construction of the Glass Wall.

43.  He considered that demolition and reinstatement of the Glass Wall would cause R1 to suffer grave damage and loss.

F.   Whether the external wall and the Soffits are common parts

44.  The parties agree that there is no express verbal reference to “external wall” or “soffit” in the DMC.  However, Clause 2 sets out some examples of the common areas which states that:

“Each of the parties hereto and all persons authorized by him shall in common with all others having the like right have access to and be entitled to use the entrances staircases landings passages and common areas in the said buildings for all purposes connected with proper use and enjoyment of the Unit in the said buildings of which he is entitled to the exclusive use occupation and enjoyment and for the purpose of ingress thereto and egress therefrom PROVIDED ALWAYS that none of the parties hereto shall use or allow or permit to be used the said entrances staircases landings passages and common areas in the said buildings in any manner so as to cause nuisance obstruction or annoyance to the other or others of them.” (emphasis added)

45.  Regarding the construction of a deed of mutual covenant, Chan PJ said in The Grande Properties Management Ltd v Sun Wah Ornament Manufactory Ltd^[15] as follows:

“2.   The rights and obligations of the owners and the manager of a multi-storey building are usually defined and governed by a deed of mutual covenant in respect of the building.  This deed is a contract which runs so as to bind all owners and their assignees and the manager.  Some of these rights and obligations are modified by the Building Management Ordinance, Cap 344 (“the Ordinance”). The provisions of the deed and the Ordinance are usually aimed at facilitating the management of the building by reducing conflicts among co-owners on the one hand and preventing abuse by the manager and the majority owner on the other.  It is fair to say that most disputes are resolved by a purposive construction and common sense application of the relevant provisions of the deed and the Ordinance.” (emphasis added) 

46.  In Jumbo King Ltd v Faithful Properties Ltd & Ors^[16], Lord Hoffmann NPJ adopted a reasonable man test and said:

“…..The DMC is, as its name says, mutual. The parties contract as covenantor and covenantee and do not reserve anything. But whether or not the principle applies, it is only a last resort to resolve an ambiguity. In the present case, I do not think that there can be any doubt about what the parties intended. In my respectful opinion, the Judge’s approach was far too narrow and literal. The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties to mean.And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve. Quite often this exercise will lead to the conclusion that although there is no reasonable doubt about what the parties meant, they have not expressed themselves very well. Their language may sometimes be careless and they may have said things which, if taken literally, mean something different from what they obviously intended. In ordinary life people often express themselves infelicitously without leaving any doubt about what they meant. Of course in serious utterances such as legal documents, in which people may be supposed to have chosen their words with care, one does not readily accept that they have used the wrong words. If the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other. The court is not privy to the negotiation of the agreement - evidence of such negotiations is inadmissible - and has no way of knowing whether a clause which appears to have an onerous effect was a quid pro quo for some other concession. Or one of the parties may simply have made a bad bargain. The only escape from the language is an action for rectification, in which the previous negotiations can be examined. But the overriding objective in construction is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean. Therefore, if in spite of linguistic problems the meaning is clear, it is that meaning which must prevail.” (emphasis added)

47.  In applying the above legal principles, the following clauses of the DMC are, in my view, relevant to whether the external wall and the Soffits are intended to fall within the common areas which are designated under Clause 2 to be shared in common amongst the co-owners:

i.   Clause 4(b) stipulates that the cost of “white-washing, distempering and painting the exterior” shall be borne by the co-owners in the proportion of their undivided shares.

ii.   Clause 6 stipulates that the expense of keeping “the interior” of each unit in good and tenantable repair shall be borne by the owner with exclusive use occupation.

iii.   Clause 7 allows each owner to make any non-structural improvement “inside” his unit at his own expense. 

48.  Besides, the definition of “common parts” in section 2 of the BMO provides as follows:

“(a) the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being the exclusive use, occupation or enjoyment of an owner; and

(b) unless so specified or designated, those parts specified in Schedule 1” (emphasis added)

49.  The very first item in Schedule 1 of the BMO is “External walls”.

50.  In Incorporated Owners of Elite Garden v Profit More Co. Ltd.^[17], the Court of Appeal held that in a multi-storey building in Hong Kong, the external walls were not owned by the owners of the relevant unit.

51.  To begin with, I am of the view that the external wall in a particular case is decided by the court to be common part may not necessarily mean the external wall in another case should also be decided to be common part since different deeds of mutual covenant may have different drafting or definitions.  If the external wall is not expressly defined as common part in the deed of mutual covenant, the starting point is section 2 of the BMO.  I accept the submission of Mr Fan for R1 that before looking into Schedule 1 of BMO, the Tribunal should first go through the DMC and the relevant first assignments of units as properly construed in order to see whether a particular part of a building has been “specified or designated as being for the exclusive use, occupation or enjoyment of an owner”. 

52.  In my view, it is crystal clear in the present case that there is no such specification or designation in the DMC and the relevant assignments. The first assignments^[18] do not mention the external wall.  In the plan annexed to each of these assignments, the walls are simply delineated by way of thin lines and only what is inside of the lines has been coloured.  I am of the view that the coloured area is the internal space or volume of the particular unit which the owner has the exclusiveuse, occupation or enjoyment.

53.  Mr Fan for R1 argued that the interpretation exercise shall go on before adopting the default position as stated in Schedule 1 of the BMO. He said that as Clause 2 mentions only “entrances staircases landings passages and common areas” in the Building and nothing more, the inference is that the external wall and the Soffit were deliberately omitted in Clause 2 by applying the principle of expressio unius est exclusion alterius^[19]. He also submitted that evidence of subsequent conduct, namely signages being erected around the exterior or external wall of the Building over the past few decades, is admissible as an aid to the interpretation of parcels clauses if it is probative of the parties’ intention at the date of the conveyance.  Hence, there is no need to go further into Schedule 1 in order to find the answer. 

54.  With respect, I disagree.  Given the DMC was drafted in 1963 and consists of only 16 pages including the signing pages and the back sheet, a reasonable man would not expect that the DMC would set out an exclusive list of common areas.  The DMC is unlike the deed of mutual covenant drafted in the recent years sometimes containing over hundred pages, in which a reasonable man may expect that it would set out an almost exclusive list of common areas, common facilities, apparatus, equipment etc.  That is why Chan PJ said in The Grande Properties’ case that some of the rights and obligations in the deed of mutual covenant are modified by the BMO.   Furthermore, the principle of expressio unius est exclusion alterius is not a rule of law, but merely a principle of interpretation which, like all principles, is no more than a guide to the true meaning of the contract^[20].   I therefore refuse to draw the inference that the external wall and the Soffit were deliberately omitted in Clause 2.

55.  For the admissibility of the evidence of subsequent conduct as an aid to the interpretation of parcels clauses as contended by Mr Fan for R1, Mr Man SC for A opposed and relied on James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd^[21], Lord Reid said at 603:

“I must say that I had thought that it is now well settled that it is not legitimate to use as an aid in the construction of the contract anything which the parties said or did after it was made. Otherwise one might have the result that a contract meant one thing the day it was signed, but by reason of subsequent events meant something different a month or a year later.”

56.  As recently confirmed by the Court of Appeal in SNE Engineering Co Ltd v Chim Kee Machinery Co Ltd^[22], James Miller remains good law in Hong Kong such that subsequent conduct of the parties is generally not admissible as an aid in construction.

57.  I agree with the submission of Mr Man SC.  If the Tribunal in construing a deed of mutual covenant shall not consider the evidence of negotiation of agreement as said by Lord Hoffmann NPJ in Jumbo King’s case, I doubt very much that the Tribunal has to consider the evidence of subsequent conduct as submitted by Mr Fan.  In the circumstances, I take the view that it is necessary to look into Schedule 1 in the present case.  Relying on item 1 of Schedule 1, I am able to conclude that the external wall of the Building is the common part within the definition of the BMO and a part of the common areas within the meaning in Clause 2 of the DMC.

58.  Indeed, even without relying on item 1 of Schedule 1, I will come to the same conclusion based on the effects of clauses 4(b), 6 and 7 of the DMC.  According to clause 4(b), the costs of “white-washing, distempering and painting the exterior” shall be borne by the co-owners in the proportion of their undivided shares.  Applying the common sense, if the external wall of a particular unit solely belongs to the owner of this unit as contended by R1, this owner shall normally bear such costs according to the DMC.  However, it will be contrary to clause 4(b) since no reasonable man would agree that the other co-owners shall share such costs in whatever proportion.  Just like clause 6, under which the owner shall bear the expenses for keeping his/her unit’s interior simply because he/she is the owner of his/her unit’s interior.  The effect of clause 7 is more or less the same as clause 6.  In other words, if it is the intention of the DMC to give the exclusive use and enjoyment of the external wall of a particular unit solely to the owner of this unit, clauses 6 and 7 shall expressly mention not just “interior” and “inside” but also “exterior” and “outside”.

59.  Turning to the Soffits, Mr Fan for R1 submitted that No 72 Soffit belongs to the owner of the 1/F No 72 who is not a party to these proceedings and No 74 Soffit belongs to the owner of the 1/F No 74 ie R1.  With respect, I disagree.  Based on the reasons aforesaid, I conclude that the Soffits which are exterior of the Building (as opposed to the interior of a unit) are the common areas within the meaning in Clause 2 of the DMC and the common parts within the definition of the BMO.  In addition, I would say that the Soffits (in fact the entire underside of the balcony of the whole 1^st floor^[23]) provides shelter to all co-owners of the Building who use the ground floor pavement area beneath the Soffit to enter and exit the Building.  It must be a matter of common interest to all the co-owners.

60.  Besides, item 10 in Schedule 1 of the BMO includes those installations intended for the use and benefit of all the owners generally as common parts.  Although the Soffits may not be regarded as installations, I consider that the Soffits are intended for the use and benefit of all the owners generally and hence, they shall be treated as common parts.

61.  Indeed, it is possible to argue that No 72 Soffit belongs to the owner of the G/F No 72 and that similar to No 74 Soffit.  Nonetheless, there is not the cases of A and R1.

62.  Regarding the applicability of Sturge v Hackett^[24], Mr Fan for R1 contends that owners of individual units are entitled to exclusive use of the corresponding external wall and soffit under a presumption enunciated in this authority that a demise of a part of a building includes the external walls enclosing the part so demised.  Mr Man SC for A submitted that in IO of Elite Garden’s case^[25], the Court of Appeal held that the principle relating to the demise of a part of building is “of no assistance” to the system of landholding in multi-storey buildings, which is peculiar to Hong Kong.  Mr Man SC further submitted that the same applies equally in respect of the Soffits.  In Century Star Ltd v Kenford Enterprises Ltd^[26], a case also concerning signboards erected onto the external wall of a building, Deputy District Judge K Lo (as she then was) held^[27] that the Sturge v Hackett principle has no application.

63.  In my view, if section 2 and Schedule 1 of the BMO which are statutory provisions apply, the common law principle in Sturge v Hackett must be inapplicable or statutory provisions shall prevail or modify the common law if they have conflict.  In para. 2.26 of Colin Sara, Boundaries and Easements (5^th ed.), the learned author relied on Sturge v Hackett and said that where there is a conveyance or demise of a room, a flat, or a storey, the outside wall enclosing the property conveyed or demised, together with any fixtures attached to the outside, is included unless a contrary intention is shown.  Even if section 2 and Schedule 1 of the BMO do not apply for some reasons, I am of the view that contrary intention has been shown in the clauses 4(b), 6 and 7 of the DMC that the Soffits, namely exterior parts of the 1/F No 72 and the 1/F No 74 shall not belong to the owners of these units (nor the G/F of No 72 and No 74).  Further, I think that it is illogical for the Tribunal to hold the external walls which include the exterior parts of the balconies of the 1/F No 72 and the 1/F No 74 (vertically facing the street) to be common parts but to hold the undersides of the balconies of the 1/F No 72 and the 1/F No 74 (horizontally facing the pavement) not to be common parts.  Indeed, the Soffits serve no purpose to the individual owners of the 1/F No 72 and the 1/F No 74 save to provide shelter to them as well as to all other co-owners of the Building when using the ground floor pavement area beneath the Soffits to enter and exit the Building.

64.  In any event, it is purely academic for the Tribunal to find whether the Soffits are common parts or not for the reasons given below.

G.   Whether the 3 Signages were erected by R1 or with its permission

65.  Mr Fan for R1 submitted that so far as the 3 Signages are concerned, no evidence suggests that R1 converted the relevant parts to its own use and has used or permitted to be used those parts of the external wall and the Soffits for erecting the 3 Signages.  I accept his submission since Mr Man SC for A simply made no submission in reply.

66.  As a fact, I find on balance of probabilities that the 3 Signages were not erected by R1 and not erected with its permission because:

i.   There is no oral or documentary evidence from A as to whom (ie R1 or R2) erected the 3 Signages and as to the question whether R1 has granted permission to R2 to do so.  Indeed, Mr Man SC for A never argued that R1 granted such permission whether express or implied;

ii.   R1 clearly denied that the 3 Signages were erected by it or with its permission^[28];

iii.   R2 did not deny that the 3 Signage were erected by it as they all obviously bore its trade name and logo;

iv.   Lastly, Mr Man SC for A conceded in his closing submission that R2 admitted to have put up the 3 Signages when entering into the settlement with A.  As mentioned above, A has withdrawn the claims against R2 without recourse by consent.

67.  Hence, in respect of the 3 Signages, R1 cannot be held to commit trespass or nuisance, or in breach of the BMO or the DMC since R1 never erected or permitted R2 to erect the same.  In the circumstances, all A’s claims against R1 in so far as the 3 Signages concerned shall be dismissed.  That is why it is purely academic for the Tribunal to find whether the Soffits (ie the underside of the balconies of the 1/F, No 72 and No 74) are common parts, to which No 72 Signage and No 74 Signage are attached.

68.  In any event, when R2 is no longer the tenant of R1, it is highly likely that someone either R1, R2 or the new tenant will remove or demolish the 3 Signages which bear R2’s trade name and logo.  There is a term in the tenancy agreement between R1 and R2 that:

“The Landlord (ie R1) has no objection to the Tenant (ie R2) at its own costs to erect advertising signages on the external wall…. save that the Tenant shall at all times maintain the signages at its own expense in good and proper condition and repair and shall at the Landlord’s discretion to dismantle the signages at the Tenant’s cost upon expiration or sooner determination of the Term[29].”

69.  Thus, I consider that it is entirely meaningless for the Tribunal to grant mandatory injunction against R1 for demolition of the 3 Signages in view of A’s Undertaking Not to Enforce.

H.   Whether the construction of the Glass Wall amounts to trespass, or is in breach of the BMO or the DMC

H.1.   Trespass

70.  Mr Man SC submitted that the construction of the Glass Wall amounts to trespass since the other co-owners have been ousted from those parts of the external wall which R1 and R2 have occupied to the exclusion to other owners.  Mr Fan for R1 submitted that the common law right to sue on trespass in a multi-storey building in Hong Kong, if any, has been subsumed under the BMO regime and the DMC.   Both Counsel rely on 383 HK Limited v The Incorporated Owners of Tak Bo Building^[30], in which Cheung CJHC held that:-

“18.   Turning first to the issue of whether the plaintiff has a right, whether subject to the defendant’s consent (and whether any such consent, if required, is itself subject to the requirement of reasonableness), to install connecting pipes over the common parts of the building for the supply of fresh water and drainage purpose, there are, in my view, several interrelated matters.  First, there is the common law right of a co-owner to use and enjoy each and every part of the land under co-ownership subject to the question of ouster.  Secondly, there is clause 3(c) of the DMC, which Mr Chan submitted gives the plaintiff the right to do so.  Lastly, there is section 34I(1)(a) of the Ordinance, which essentially prohibits anyone (including a co-owner) from converting any common parts of a building to his own use without the authorisation by resolution of the owners’ committee or, where there is one, the management committee (as per section 34K of the Ordinance).  (In the rest of this judgment, I will simply use “management committee” to mean either the owners’ committee, or, as the case may be, the management committee.)

19.   The position, as a matter of law, appears to me to be this.  The common law right described above is of course subject to the provisions of the DMC and of the Ordinance.  As between the DMC and the Ordinance, if the DMC provides for a right to do the thing in issue on or over the common parts of the building, the co-owner may do so accordingly.  Section 34I(1)(a) does not stand in the way because in the scenario under discussion, the management committee would be bound under the DMC (as a contract between all co-owners for the time being) to give its consent.  There is therefore no contradiction between the DMC and section 34I(1)(a) even though section 34C(2) says that in the event of any inconsistency between provisions contained in Part VIA of the Ordinance (where section 34I is found) and a DMC, that part shall prevail.  If the matter is not empowered under the DMC, section 34I(1)(a) is determinative of the issue and everything turns on whether a resolution by the management committee authorising the act in question can be obtained.  To this extent, section 34I(1)(a) modifies the common law on ouster, as a resolution passed by a simple majority of the votes of the members of the management committee present at a meeting (per section 34D(2)) can now approve what under common law cannot be done without unanimous agreement of all co-owners.” (emphasis added)

71.  In my view, the common law right to sue on trespass by a co-owner against another co-owner of the same multi-storey building in Hong Kong has not been subsumed under the BMO regime and the DMC, as submitted by Mr Fan but only been modified especially when there is a management committee, an owners’ committee or incorporated owners.  Nonetheless, in the present case, there is no management committee, etc.  Therefore, the necessary approval cannot be granted under section 34I(1)(a) of the BMO. In common law, unanimous agreement of all co-owners is needed.

72.  I am of the view that the construction of the Glass Wall which involves the demolition of certain parts of the external wall (ie the exterior part of the balcony) and conversion into glass to R1’s own use amounts to trespass since the other co-owners have been ousted from those parts of the external wall which have become the Glass Wall.  In other words, the other owners can no longer use or enjoy these parts of the external wall nor can R1 say that the other owners are free to use or enjoy the Glass Wall together with R1.  I therefore conclude that R1 commits trespass in this regard.

H.2.   Breach of the BMO

73.  The relevant section of the BMO is section 34I(1), subsection (a) of which concerns conversion of those parts to a particular owner’s own use and subsection (b) of which concerns use of those parts in such a way as unreasonably to interfere with the use and enjoyment of those parts by other owners.

74.  As R1 cannot get the consent from the incorporated owners of the Building which does not exist and no express consent from all other co-owners is given, it must follow that R1 is in breach of section 34I(1)(a).

75.  For section 34I(1)(b), it is analogous to a claim in private nuisance^[31]. There is no or insufficient evidence from A as to how its use and enjoyment is unreasonably interfered.  Indeed, there is no evidence at all as to the fact that A and the other co-owners of the Building have ever used or enjoyed this part of the external wall in the past.  As accepted by Yip during the cross-examination, the Glass Wall cannot or can hardly be seen from the 3/F No 70 and the 5/F No 72.  Hence, I conclude that R1 is not in breach of this sub-section.

76.  Under section 34I(2) of the BMO, contravention of section 34I(1) is deemed breaches of the DMC. 

H.3.   Breach of the DMC

77.  The relevant clauses of the DMC are clauses 2, 7, 8 and 10.

78.  Clause 2 states, inter alia, that none of the parties hereto shall use or allow or permit to be used the common areas in the Building in any manner so as to causenuisance obstruction or annoyance to the other co-owners.

79.  For establishing breach of Clause 2, I consider that A has to prove that the construction and use of the Glass Wall would cause “nuisance obstruction or annoyance” to the other owners.  Similarly, I disagree that A has adduced sufficient evidence to prove the same.  Hence, I conclude that R1 is not in breach of Clause 2. 

80.  Clauses 7, 8 and 10 provides as follows:

“7. Each of the parties hereto may at his own expense make any non-structural improvement inside the Unit of which he is entitled to the exclusive use occupation and enjoyment which can be fixed and removed without any structural alteration or damage to the said buildings and such party shall have the right to remove the same at his own expense.

8. None of the parties hereto shall make any structural alteration to the Unit of which he is entitled to the exclusive use occupation and enjoyment or cut, maim, injure, damage, alter or interfere with or make any unauthorized installation in any part or parts of the said premises or buildings in common use or any of the sewers, drains, water-courses, conduits, pipes, cables, wiring fixtures, equipment, apparatus or service thereof. (emphasis added)

10.   Each of the parties hereto shall be responsible to all other parties for the act, negligence or default of all persons occupying or using the same with his consent, express or implied, the Unit of which he is entitled to the exclusive use occupation and enjoyment and to pay all costs charges and expenses incurred in repairing or making good any loss or damage caused by the act negligence or default of all such persons and to indemnify all other parties against all actions, proceedings, claims and demands whatsoever arising out of or in respect of any loss or damage to any person or property caused by the act negligence or default of all such persons.”

81.  As Mr Fan for R1 does not object that the construction of the Glass Wall amounts to “structural alteration” for the purpose of clauses 7 and 8, I conclude that R1 is in breach of them.

82.  However, clause 10 has no application to the construction of the Glass Wall but relates to the erection of the 3 Signages.  For the sake of completeness, I accept Mr Fan’s submission that clause 10, as properly construed, only extends to cover, and would hold R1 liable for, R2’s act and default committed with R1’s consent, express or implied.  Accordingly, R1 should not be held liable for the erection of the 3 Signages by reason of clause 10 since, as found by the Tribunal above, the 3 Signages were erected by R2 without R1’s permission whether express or implied.

I.   Whether the said Equities are established as against A and/or its predecessor

I.1.   Pleading issue complained by A

83.  Mr Man SC for A contended in his closing submission that to allow R1 to rely on equities different from those set out in its Amended Notice of Opposition is to allow R1 to run an unpleaded case and that would be grossly unfair to A.

84.  Mr Man SC rightly refer me to Section 10(5)(a) of the Lands Tribunal Ordinance, Cap 17 (“LTO”) which stipulates as follows:

“The proceedings of the Tribunal shall be conducted with as much informality as is consistent with attaining justice and, for this purpose, the President may give directions as to the manner and form in which proceedings shall be conducted.” (emphasis added)

85.  In 莫炎熙 v 香港房屋委員會^[32], the Court of Appeal set aside the Judge’s decision and exercise the discretion afresh to permit the respondent in that case (who was all along represented by senior and junior counsel) to rely on the limitation defence which was not pleaded in the notice of opposition.  Lam VP (giving the judgment of the Court of Appeal) held as follows:

i.   The Tribunalcertainly has discretion to decide whether a point not set out in the notice of opposition could be relied upon at the trial: para. 29 of the judgment.

ii.   Whether s.10(5)(a) of LTO and Direction No 4 issued by the Tribunal override the requirement of Order 18 rule 8 for certain matters to be specifically pleaded “must depend on the circumstances of the case” and the Tribunal “must do what is just between the parties”: para. 30(a) of the judgment (emphasis added).

86.  Direction No 4 states, inter alia, that Presiding Officers of the Tribunal should not regard Notices as in the nature of pleadings by which parties are bound, but as an indication of the issues which are likely to be raised.

87.  Mr Fan for R1 referred me to R1’s Amended Notice of Opposition which pleaded, among others, as follows:-

“52A. Over the years, there have been various objects erected on or attached to the external walls of the Building or the exterior part of the respective individual units of the Building by the co-owners of the Building

52B. To this date, no co-owner of the Building apart from the Applicant has ever taken any step or action to alter or otherwise challenge the Common Assumptions, or otherwise interfere with:

(1) the 1st Respondent’s exclusive use, occupation and enjoyment of the external walls adjoining the G/F units and the 1/F Units and the exterior part thereof; and

(2) the 1st Respondent’s right to alter the external walls adjoining the 1/F Units and the exterior part thereof.

53.   Prior to 23rd January 2014:-

(1)   the Applicant and/or their predecessors-in-title have not taken any action with a view to alter altering or otherwise challenge challenging the Common Assumptions;

(2)   the Applicant has known for a long time that:-

   (a)   the external wall adjoining the 1/F Units or the exterior part of the 1/F Units has been converted to the Glass Wall with the Glass Wall Approval;

(b)   the Advertising Signages have been erected as they are.

…

56.   Further or alternatively:-

(1)   if (which is denied) the external walls or the exterior part of the units on the ground floor and on the 1st floor form part of the common parts of the Building, the Applicant (and/or its predecessor-in-title) has waived their rights to enforce the DMC pursuant to section 34I(2) of the Ordinance or has acquiesced to the 1st Respondent’s contravention of the same;

(2)   the Applicant (and/or its predecessor-in-title) has waived their rights to enforce Clauses 2, 7 and/or 8 of the DMC or has acquiesced to the 1st Respondent’s breach of the same.” (Emphasis added)

88.  The heading before para. 49 of R1’s Amended Notice of Opposition is “Acquiescence, waiver and estoppel”^[33] but the word “laches” is not stated.  Mr Fan only loosely mentioned “laches” in paras. 5(2), 22 and 33 of his opening submission and in paras. 5(2), 58, 69, 72, headings of Part I and J of his closing submission without detail elaboration save that he submitted in para. 22 of his opening that the legal principles in relation to waiver, acquiescence, estoppel and laches are well settled.

89.  The defences of acquiescence, wavier, estoppel and laches are technically different lines of defence although the ultimate result for each is likely to be the same^[34]. In my view, reading the entire R1’s Amended Notice of Opposition as a whole, R1 has properly pleaded the defences of waiver, acquiescence and estoppel but not laches as laches is not mentioned at all in R1’s Amended Notice of Opposition.

90.  In any event, I would exercise my discretion to allow R1 to run the defences of waiver, acquiescence and estoppel as I can see no real prejudice suffered by A.  It is also consistent with attaining justice since R2 is running the similar defences of waiver, acquiescence and estoppel even including laches^[35]. But for the sudden settlement as between R2 and A on the second day of the trial, A should have fully prepared to oppose the defences of waiver, acquiescence and estoppel whether raised by R1 or R2 and shall not be taken by surprise.

I.2.   Whether waiver, acquiescence and estoppel are established as against A and/or its predecessor

I.2.1.   wavier and acquiescence

91.  It is beyond dispute that the defences of waiver and acquiescence are based upon the conduct of A’s predecessors-in-title as it is not argued by R1 that A has been guilty of any delay in taking enforcement action, given that A only acquired the 2 units in the Building in 2013 before issuing the Pre-Action Letters and making the present application in 2014.  Accordingly, I conclude that the defences of waiver and acquiescence are not established as against A. But it is necessary for me to find whether they are established as against its predecessor.

92.  In Freder Centre (IO) v Gringo Ltd^[36], Chu JA summarized the defence of acquiescence that:-

“26. Hence, to succeed in a defence of acquiescence, it must be shown firstly, there was on the part of the plaintiff, an assent or lying by in relation to the acts of another person; and secondly, in view of the assent or lying by and consequent acts it is unjust in all the circumstances to grant the relief in question: see Spry, Equitable Remedies, (9th ed.), p.56.”

93.  In Yick Fung Holdings Ltd v Sandwood Ltd^[37], Le Pichon JA dealt with the issue of knowledge for the purpose of establishing acquiescence and held that:-

“(1) It is sufficient that at the relevant time the party concerned knew of the facts or matters that gave rise to his right to equitable relief, even although he may not have fully understood, as a question of law, the rights that he possessed. The paramount question relates to the justice or injustice of granting the particular relief that is sought and the degree of knowledge required in any situation must depend on all other circumstances. See Spry on Equitable Remedies, 6th ed, pp 440-442.

(2) It is thus sufficient that the party knew the facts ‘constituting the title to relief’. See Spry, p 431; Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 at 241.

(3)   It is ordinarily sufficient that the plaintiff has been put on suspicion, that is, that he is aware of sufficient matters to raise in his mind a doubt whether an infringement of his rights has taken place. See Spry, p 431; Marquis of Clanricarde v Henning (1861) 30 Beav. 175, 54 ER 855.”

94.  For waiver, as briefly explained in Wilken & Ghaly: The Law of Waiver, Variation and Estoppel (3^rd ed., 2012) at para. 4.45, the elements are as follows:

i.   an unequivocal representation by the party either by words or conduct that it will forgo certain rights;

ii.   the said party makes that representation when it is aware of the facts that give rise to the rights which are being forgone, of the right to forgo those rights and the connection between the two.

95.  Regarding the issue of knowledge, as the Glass Wall (which existed since 2009) is constructed in such a patent and obvious manner in the Building, I consider that A’s predecessors-in-title must have been fully aware of R1’s breach (or at the very least the facts and circumstances in relation to R1’s breach) in respect of the Glass Wall.

96.  Concerning the relevance of similar breaches by other owners or occupiers as mentioned by the Court of Appeal in Freder Centre’s case, I accept that whether in Yuen’s witness statement, his supplemental witness statement or oral testimony,Yuen is unable to identify any instance where any owner has made any alteration to his unit in a similar way as the construction of the Glass Wall.  Mr Fan for R1 accepted that the only alteration similar to the construction of the Glass Wall is the glass wall situate at 3^rd Floor No 76 Percival Street as shown in the photos^[38] dated from July to October 2009^[39] and exhibited to R2’s witness statement made by Mr Garrick Chiu.   However, in 38/2A/11 of Hong Kong Civil Procedure 2018 vol. 1, it states:

“Generally, where the party serving a statement under this rule does not call the witness to whose evidence it relates, no other party may put the statement in evidence at the trial (r.2A(6)).”

97.  As Mr Garrick Chiu has not been called, his witness statement together with the exhibits cannot be adduced as evidence.  Furthermore, on the third day of the trial, Mr Man SC and Mr Fan had only agreed to adduce some evidence by R2 which did not include those photos in Trial bundle B4, Tab 136^[40]. To be fair to A, I therefore refuse to consider these photos.  Even if they are considered, the weight to be attached is very minimal as no one is able to tell when these photos were taken.

98.  Yip claimed that, all along even up to the date of giving evidence at the trial, he was unware of the existence of the glass wall on the 3^rd Floor. Nonetheless, from the Pre-Action Letter to R2 dated 18 March 2014, it is clear from the photo^[41] annexed thereto that glass wall has been constructed on the 3^rd Floor.  I suppose that this photo should be taken on the day very close to the date of issuing the Pre-Action Letter to R2 ie 18 March 2014.  In the circumstances, I can accept that the glass wall on the 3^rd Floor has existed since 18 March 2014 but not earlier.

99.  In the circumstances, I am not satisfied before the purchase of the 3/F No 70 and the 5/F No 72 by A in June 2013, there was any breaches by the other owners in the Building in a similar way as the construction of the Glass Wall. However, it is unnecessary for R1 to establish similar breaches since there was lapse of four months between the affixing the unauthorized signboard and the issue of the solicitors’ letter in Freder Centre’s case whereas there was inaction of all the co-owners including A’s predecessor for at least 4 years in the present case.

100.  Mr Man SC for A also contended that an element common to acquiescence, waiver and estoppel by convention is the existence of a representation made by one party (either by statement or conduct) which is then relied on by the other party.  He submitted, which I agree, that:

i.   For acquiescence, the Court of Appeal found in Freder Centre’s casethat the lying by on the part of the applicant who is an incorporated owners in respect of breaches committed for some 14 years by one of the respondents and by other owners could reasonably be taken as representation that similar breaches would be tolerated.

ii.   For waiver, there must be an unequivocal representation by the party either by words or conduct that it will forgo certain rights: Wilken & Ghaly: The Law of Waiver, Variation and Estoppel(3^rd ed., 2012) at para. 4.45.

101.  He argued that no such representation has been made out on the evidence in the present case.

102.  On the other hand, Mr Fan for R1 cited a very useful chapter written by Professor Lusina Ho of the University of Hong Hong, The Importance of Being Earnest: The Doctrines of Laches and Acquiescence in Davies, Douglas and Goudkamp (Ed.), Defences in Equity. The learned professor classified the doctrine of acquiescence into strict sense and loose sense and said at pg. 324:

“Even in its strict sense, acquiescence overlaps with concurrence and is a subset of it. The strict sense refers to knowingly standing by during a continuing violation which makes it inequitable to bring a claim subsequently. In the words of Lord Cottenham in Duke of Leeds v Earl of Amherst:

If a party, having a right, stands by and sees another dealing with the property in a manner inconsistent with that right, and makes no objection while the act is in progress, he cannot afterwards complain. That is the proper sense of the word acquiescence.

This formulation does not mention, let alone require, any inference of assent from the inaction. It is wide enough to encompass inaction that gives rise to an inference of an implied representation, or simply inaction that encourages the defendant’s mistaken belief. Nonetheless, this passage has been widely explained on the basis of assent. In De Bussche v Alt, Thesiger LJ remarked as follows:

If a person having a right, and seeing another person about to commit, or in the course of committing an act infringing upon that right, stands by in such a manner as really to induce the person committing that act, and who might otherwise have abstained from it, to believe that he assents to its being committed, he cannot afterwards be heard to complain of the act. This, as Lord Cottenham said in the case already cited, is the proper sense of the term 'acquiescence', and in that sense may be defined as quiescence under such circumstances as that asset may be inferred from it.

On this formulation, acquiescence refers to silent assent to a contemporaneous act, and has nothing to do with delay. This narrower formulation has been widely adopted in earlier authorities, and recently in Deane J’s detailed analysis of the doctrine of acquiescence in Orr v Ford and Brynes v Kendle. Its proper place is within the doctrine of concurrence, as an alternative way to establishing assent from active conduct. As is well established in the authorities, the conditions for establishing concurrence and acquiescence are the same, just that the former typically involves positive acts of assent, whereas the latter involves implied assent inferred from silence.” (emphasis added)

103.  In my view, the representation does not have to be express but can be implied by conduct.  As in Freder Centre’s case, even there was no express representation, the Court of Appeal inferred the representation made by the applicant (an incorporated owners) from its particular circumstances.  In the present case, I am satisfied that implied assent can be inferred from the silence of A’s predecessors-in-title.  In other words, the fact that A’s predecessors-in-title is inaction for at least 4 years from 2009 to 2013 is sufficient to give rise an inference of an implied representation which encourages R1 to believe or misbelieve that R1 is entitled to construct the Glass Wall or that the Glass Wall will be tolerated.  With respect, Mr Man SC’s argument on representation is rejected.

I.2.2.   Whether detrimental reliance is an element for acquiescence

104.  This is not a straightforward issue. The laws in both UK and HK seem not settled.  Mr Man SC submitted that in addition to the existence of a representation, the party raising equitable arguments such as acquiescence, waiver and estoppel must also establish that the circumstances are such that it would be unjust to grant relief.  This depends on the acts done during the relevant time which result in a balance of justice justifying the refusal of relief, and would usually involve some sort of detrimental reliance.  In the House of Lords case Fisher v Brooker & Anor^[42], Lord Neuberger said in para. 64:

“…In the Court of Appeal, Mummery LJ said that there was “no requirement of detrimental reliance for the application of acquiescence or laches” [2008] Bus LR II23, para 85. Although I would not suggest that it is an immutable requirement, some sort of detrimental reliance is usually an essential ingredient of laches, in my opinion….”

105.  Mr Fan disagreed and contended that reading from the judgment in Freder Centre’s case, detrimental reliance is not a requisite element to find acquiescence.  Mr Man SC argued that the fact that the issue of detrimental reliance is not discussed in Freder Centre’s case does not mean that it is not a requirement or element for acquiescence.  My understanding is that the Court of Appeal may not deal with those issues which is not mentioned either in the notice of appeal or the respondent’s notice under Order 59 RHC.

106.  Based on the authorities cited by parties, it seems to me that this issue may not have been fully argued in Hong Kong courts.  Indeed, acquiescence can sometimes be regarded as a form of estoppel[43]. As discussed in the abovementioned chapter written by Professor Lusina Ho, she said at pg. 312:

“… A claimant’s inaction may affect his claim in at least four ways:

(1) it may be evidence from which a promise not to exercise his right is inferred;….if detrimental reliance on this promise is also established, relief may be denied on the additional ground of estoppel;

(2) it may be evidence from which a representation that he has no rights is inferred; if the defendant has detrimentally relied on the representation, estoppel will apply;

(3) it may, in the absence of any inferred promise or representation, encourage the defendant’s mistaken belief that he has rights; if he has detrimentally relied on the such a belief, estoppel will apply;

(4)   it may, in the absence of any conduct of the parties (including detrimental reliance on the part of the defendant), cause irreversible prejudice to the defendant, in which case the second strand of laches may apply.” 

107.  In my view, the learned professor considers that estoppel will apply if detrimental reliance is established. Hence, for the application of estoppel, detrimental reliance must be a requisite element.  However, for the application of acquiescence, the learned professor seems to suggest otherwise.  In any event, I agree with the comments made by Lord Neuberger in Fisher’s case that instead of labelling as requisite element or immutable requirement, what is required is only “some sort of detrimental reliance”.  In other words, the court shall not impose a high threshold or burden for showing the same on those who rely on the defence of acquiescence.

108.  In the present case, R1 has leased the 2 units of the 1/F No 74 and the 1/F No 76 together with the Glass Wall since 2009 for at least 4 years up to the complaint made by A in 2013.  The period of 4 years must be a substantial lapse of time.   Even without any valuation expert’s opinion, I can say that for commercial use as a shop, the rental of a unit in 1/F with the Glass Wall is obviously higher than that with the original balcony but without the Glass Wall. Simply judging from the photos produced, the unit in 1/F with the Glass Wall looks more attractive in its appearance than that without the Glass Wall or with the original balcony.  Besides, R2 entered into the tenancy agreement with R1 for 3 years in August 2009 and then renewed several times up to this date. Without the Glass Wall, I doubt very much that R2 will renew the tenancy unless there is some downward adjustment of the rent by R1.

109.  I am also of the view that the circumstances have made it inequitable for A’s predecessors-in-title to enforce the DMC to demolish the Glass Wall especially at the time when R1 and R2 decided to renew the tenancy in about July 2012[44] or before the expiry of the remaining terms of the subsequent tenancy agreement since R1 may be sued by R2 for breach of the tenancy agreement if R1 is compelled to reinstate the unit. 

110.  In the circumstances, I am satisfied that “some sort of detrimental reliance” has been shown on the balance of probabilities.   I therefore come to the conclusion that the defence of acquiescence is established against A’s predecessors-in-title.

111.  For the sake of completeness but not necessary, I am also satisfied that the defence of wavier is established as unequivocal representation by conduct of A’s predecessors-in-title to forgo his right to enforce under the DMC in the past of at least 4 years has been shown.

I.3.   Estoppel by convention

112.  For estoppel by convention, there must have been some manifest representation of the common assumption which crosses the line between the representor and representee, either by statement or conduct: Unruh v Seeberger^[45]. Putting aside the representation, it is necessary to prove common assumption in accordance with the legal principles before establishing estoppel by convention.

113.  Regarding the Common Assumptions, it is alleged by R1, inter alia, that the respective owners of the individual units of the Building are entitled to exclusive use, occupation and enjoyment of the part of the external wall adjoining their respective units and the exterior part of their respective units^[46]. As Yuen agreed in the cross-examination, some commercial owners had even erected signages in places other than the part of the external wall adjoining their units such as the signage for Kamlun Pharmacy Co.   It is also not disputed that R2 affixed No 72 Signage from the soffit (ie the underside) of the balcony of the front portion of the 1/F No 72 which is not owned by R1. R1 contended that R2 erected the 3 Signages without R1’s permission, which is accepted by the Tribunal.   In my view, many owners or occupiers of the Building simply erect the signages wherever they like as they think that there are so many signages having been erected presently or in the past.  I have no doubt to find as a fact that the Common Assumptions as alleged by R1 simply do not exist.  Defence of estoppel by convention based on the Common Assumptions must fail.

J.   Whether A can prove to be a bona fide purchaser for value without notice

114.  The legal principles in respect of the requirement of “no notice” for the bona fide purchaser defence against prior equities are authoritatively summarized in Snell’s Equity (33^rd ed.) at para. 4-027 at pg. 67, which reads:-

“4-027

The purchaser must have had no notice of the equitable interest at the time when he gave his consideration for the conveyance. Thus if notice was received before all the money was paid, even after the conveyance was executed, the purchaser remained subject to the equitable interest. Also if he received notice of a prior equitable interest after the money was paid but before the legal estate was vested in him, he remained subject to the equitable interest…

… it is clear that a purchaser would be affected by notice of an equity in three cases:

1) actual notice: where the equity was within his own knowledge;

2) constructive notice: where the equity would have come to his own knowledge if proper inquires had been made; and

3)   imputed notice: where his agent as such in the course of the transaction had actual or constructive notice of the equity.”

115.  It was admitted by Yip that he was aware of the Glass Wall at the time of purchase but simplyassumed that it must have been erected with proper authorization or consent.  A does not challenge that approval for the Glass Wall had been obtained from the Buildings Department.  Therefore, the only remaining authorization or consent is from the incorporated owners of the Building, which Yip thought that it exists but in fact does not exist at the time of the Pre-Purchase Visits.  Given that Yip accepted that there was no security guard or guard station at the Building during the Pre-Purchase Visits, I doubt very much that he did believe in the existence of the incorporated owners at that time.  Further, if the existence of the incorporated owners of the Building is so important to A, Yip could simply instruct A’s conveyancing solicitors PWKL to check if it did exist.  If PWKL did so, it will reveal that the incorporated owners never exists. Besides, in view of the extensive personal experience of Yip in the industry of building service, I am sure that he himself is capable to check even without the assistance from the solicitors.   I am of the view that Yip and A simply turns their blind eyes as to the existence of the incorporated owners without making any or any reasonable or proper enquiries.

116.  In fact, Yip eventually admitted during the cross examination that he became aware of the non-existence of the incorporated owners before the completion.  In my view, his assumption of proper authorization by the incorporated owners was made without any basis.  Further, if he considered that the construction of the Glass Wall with or without proper authorization by the incorporated owners was a very important matter to A, he should seek legal advice from PWKL, especially when he subsequently knew that the incorporated owners did not exist.  There is no explanation from Yip in this regard.  In my view, A would in any event proceed to completion regardless of the so-called proper authorization because the main purpose for A to acquire these 2 units is for redevelopment.

117.  Based on the reasons above, I find that A has constructive, if not actual, notice of the Glass Wall which is unauthorised under the DMC, and also notice of R1’s defences of acquiescence and waiver as A ought to know that no co-owners of the Building has taken any action against R1 for the Glass Wall.

K.   Whether A is bound by the defences of acquiescence and waiver

118.  This topic attracts hot arguments from the parties.  Mr Man SC submitted that the defences of acquiescence and waiver only give rise to defences which are personal in nature but not to any proprietary interest capable of binding successors.  In a Scottish case Brown v Baty[47], Lord Walker said:

“The authorities, though perhaps not directly in point, appear to me to support the view that a singular successor cannot be barred by acquiescence on the part of his predecessor in title except in special circumstance which do not arise in this case. In any event, if the matter has to be decided on principle, I should come without hesitate to that conclusion. The bar which is raised by acquiescence is a personal bar, that is to say, personal to the person who acquiesces and his heirs. It cannot, in my view, affect singular successors. I regard this as being an instance of the wider proposition that a personal contract relating to land does not run with the land against singular successors purchasing on the faith of the records.” (emphasis added)

119.  In para. 6.35 of Spencer Bower: Reliance-Based Estoppel[48], the learned editors reviewed numerous authorities and concluded that an estoppel will bind a successor in title only if it is an estoppel which the court will satisfy by the grant of a proprietary right in the property (e.g. proprietary estoppel). In para. 6.37 thereof, it said:

“… if the court determines that A was entitled to no more than a non-exclusive licence to use the property (which is not a proprietary interest) against the predecessor; then, unless the successor has so acted as to become estopped himself from determining the licence, it may be said that, even though the predecessor was estopped from terminating the licence and the successor took with notice, the successor should not be bound by the estoppel any more than he would be bound by a contractual licence. If the antecedent equity is not satisfied by the grant of a proprietary interest, then the equity was purely personal and will not bind successors, even with notice, unless their consciences are affected.”

120.  Mr Man SC also argued that the effect of the defences of acquiescence and waiver in allowing R1 to construct the Glass Wall can at most be that of a contractual licence granted by all the co-owners of the Building.  A contractual licence is merely personal and incapable of binding a successor (even with notice) unless his conscience is affected so as to justify the imposition of a constructive trust: Chen Tek Yee & Ors v Chan Moon Shing & Anor[49].  Based on the analysis in Spencer Bowerat paras. 6.30-6.40 (in particular para. 6.37), Mr Man SC submitted that an equity which gives rise to an entitlement no more than a contractual licence (as opposed to an equity which is satisfied by the grant of a proprietary interest) should similarly be purely personal and incapable of binding a successor (even with notice) unless his conscience is affected.  

121.  Mr Fan cited 2 Hong Kong authorities, which support that acquiescence and waiver by a predecessor-in-title of a breach of the deed of mutual covenants will normally bind its successor-in-title.  In 高英姿 v 何東道貳、肆、陸、捌號業主立案法團[50], HH Judge Kot said at para. 61:

“Acquiescence and waiver is an equitable defence to the enforcement of breach of covenant, including s.34I. Waiver and acquiescence binds successors-in-title. If the predecessor-in-title was being estopped from enforcing the covenant against the IO, the successor-in-title, who derived the interest and title on the property from the predecessor-in-title waiving the breach, cannot be in a better position than the predecessor-in-title. Ko must be bound by the inaction of her predecessor-in-title which constitute a waiver or acquiescence and be estopped from enforcing s.34I(1)(b) against the IO.”

122.  In Perfect Name Ltd. v Fung Chi Mui[51], Chief District Judge ST Poon said as follows:

“67. As submitted by Mr. Hui, waiver and estoppels binds successors-in-title. The rationale being that the successors-in-title, whose interest and title on the property is derived from the person waiving the breach, cannot be in a position better than the predecessor-in-title.

68. …..

69. The proposition of Mr. Hui is that, the Plaintiff’s title to the Shop was derived from Fu. Fu, who was the undertaker of the UBWs and must not have the intention to enforce the DMC against himself, can be regarded as having waived or acquiesced or consented to the breach. As the predecessor-in-title of Fu, the plaintiff is now bound by the waiver or acquiescence and estopped from enforcing the DMC against the Defendant.

70. In my judgment, although the proposition appears to be artificial, there is nothing wrong in principle in it. It does not require the knowledge of the Plaintiff about the UBWs and Ms Lam can give no answer to it.

71. Moreover, when Cheung and Yu acquired their respective unit, in my factual findings, they must have intended to acquire the units as they were, being two single units divided partly by the UBWs. They, and their successors-in-title, had paid the value of he units as they were at the time of acquiring the units. To allow one party now to retreat from the original understandings, by means of enforcing the DMCs or otherwise, would result in an unfair situation where the doctrine of estoppels shall come into play.

72. The UBWs have been there for over 4 decades. The original floor plans of the properties have been available to the owners all along. The differences in appearance of the Shop with other shops of On On Building should be apparent. It was readily open to the predecessors-in-title of the Plaintiff to form the view that there were illegal or unauthorized structures there and consider taking action to enforce the DMC.

73.   In my view, the inaction for over 4 decades of the predecessors-in-title of the Plaintiff can sufficiently constitute a waiver or acquiescence to bar the Plaintiff now to enforce the relevant clause(s) of the DMC against the Defendant, should there be any breach of the same by the Defendant.”

123.  Mr Fan also relied on E.R. Ives Investment Ltd v High[52]  , in which Lord Denning said an equity arising out of acquiescence also available against the successors in title:

“ 2. Equity arising out of acquiescence

The right arises out of the expense incurred by Mr. High in building his garage, as it is now, with access only over the yard: and the Wrights standing by and acquiescing in it, knowing that he believed he had a right of way over the yard. By so doing the Wrights created in Mr. High's mind a reasonable expectation that his access over the yard would not be disturbed. That gives rise to an "equity arising out of acquiescence." It is available not only against the Wrights but also their successors in title. The court will not allow that expectation to be defeated when it would be inequitable so to do. It is for the court in each case to decide in what way the equity can be satisfied: see Inwards v. Baker ; Ward v. Kirkland and the cases cited therein. In this case it could only be satisfied by allowing Mr. High and his successors to have access over the yard so long as the block of flats has its foundations in his land.” (emphasis added)

124.  Apart from contractual licence as mentioned by Mr Man SC, there is another form of licence which coupled with interest is not only irrevocable but also enforceable against successor.  Megarry & Wade: The law of Real Property (8^th ed., 2012) at pg. 1440, para. 34-005 which is not cited by parties states:

“The one form of licence which caused no problems at common law was a licence coupled with a recognised interest in property. A right to enter another man’s land to hunt and take away the deer killed, or to enter and cut down a tree and take it away, involves two things, namely, a licence to enter the land and the grant of an interest (a propfit a prendre) in the deer or tree. At common law such a licence is both irrevocable and assignable, but only as an adjunct of the interest with which it is coupled. It therefore has no independent existence merely as a licence. It may be reinforced by the principle that a person may not derogate from his grant, which is explained further above. In any case, such a licenc is not only irrevocable but is enforceable by and against successors in title of the grantee and grantor respectively, as part and parcel of the interest granted.

The interest to which the licence is “coupled” must, of course, have been validly created. Similarly, the licence is only effective against a third party if the interest to which it is attached is enforceable against the third party under the normal rules of registered and unregistered conveyancing. If the licence was to go upon land to take game or dig for materials, these rights, being profits a prendre, must have been duly granted by deed or acquired by prescription. An interest in chattels, however, can be created with less formality, as where there is a sale of hay or timber already cut, coupled with a licence to the purchase to cart them away. An interest in standing timber or growing crops can be created, it seems, only by the formalities appropriate for land. In equity, as usual, effect will be given to a specifically enforceable agreement to grant such an interest; and thus a licence coupled with a profit a prendre granted for value but merely in writing can be enforced by injunction.

Licences have occasionally been held to be coupled with an interest, and so irrevocable, even though no recognisable interest was involved.  But the better view must be that some kind of proprietary interest is necessary.”

125.  The law in this area seems not yet well settled.  But I prefer the view that a contractual licence (as opposed to a licence coupled with interest and an equity satisfied by the grant of a proprietary interest) is purely personal and incapable of binding a successor (even with notice) unless his conscience is affected.  Nonetheless, if a licence coupled with interest or proprietary interest is established, it will certainly bind the successor even without notice.  In the present case, I disagree that the inaction of all the co-owners of the Building for at least 4 years in allowing R1’s construction of the Glass Wall creates only a contractual licence on the following reasons:

i.   The expenses incurred by R1 for its construction including the costs for demolition of certain part of the external wall of the balcony and expenses for the application to the Buildings Department for approval should be quite substantial;

ii.   If all the co-owners of the Building merely grant a contractual licence to R1, it means that it is capable in law to be revoked by the co-owners of the Building by giving a reasonable notice at any time.  R1 may then be sued by its tenant for breach of tenancy as the tenant has to be vacated before the Glass Wall can be reinstated;

iii.   Costs for reinstatement of the Glass Wall to its original condition should not be small if such contractual licence is terminated by the co-owners;

iv.   Time for construction and reinstatement obviously constitutes loss of rental on the part of R1.

126.  In the circumstances, I consider that R1 is entitled to a licence coupled with interest or proprietary interest to use the Glass Wall instead of just a contractual licence against A’s predecessor and that such interest binds A even A does not have notice.

127.  Since R1 can successfully raise the defence of waiver and acquiescence against A’s predecessor which binds A, the necessary consequence is that A’s Application shall be dismissed.

L.   Whether the Tribunal shall exercise the discretion to grant the equitable reliefs sought by A

128.  In the event R1 fails in establishing the defence by way of the defences of acquiescence and waiver, it does not mean that A is entitled to the injunctive reliefs as of right. Being a discretionary remedy[53], there have been many occasions on which the court found it unjust and inequitable to grant mandatory injunctions (as opposed to negative injunctions to prevent the continuance or recurrence of a wrongful act)[54] to demolish and reinstate building works carried out in breach of the deed of mutual covenants.

129.  For whether an injunction to restrain trespass should be granted, Mr Man SC submitted, which I agree, that the relevant principles are summarised by Thomas Au J in Billion Star Development Ltd v Wong Tak Chuen[55] and outlined as follows:

i.   A landowner is prima facie entitled to bring a suit for trespass to claim damages or an injunction or both.

ii.   A permanent injunction will be prima facie granted and will be denied only if special circumstances exist (which may include circumstances that damages are an adequate remedy for the wrong, in that where the expected injury to land is small and the grant of an injunction would cause disproportionate hardship to the defendant).

iii.   However, damage suffered is not a prerequisite to the grant of an injunction in such a case, nor is the triviality of the interference alone sufficient reason to justify a departure from the general rule of granting injunctions.  In a case concerning trespass to land (in particular for threats of trespass and acts of trespass in the future), the court is concerned with the protection of a property right, which, if not protected by an adequate remedy, becomes diminished.

130.  In addition to what was said in para. 124 above, I consider that special circumstances exist in the present case for refusing the mandatory injunction:

i.   There was no evidence from Yip that nuisance or inconvenience has been caused by the Glass Wall to A or other co-owners who have not suffered any real loss and damage.  

ii.   Demolition and reinstatement of the Glass Wall will cause disproportionate hardship to R1, in particular the great expenses have been incurred and to be incurred.

iii.   As the approval of the Buildings Department for the Glass Wall has been obtained, that means no imminent danger and no urgency to order demolition of the same. 

iv.   It is admitted by Yip that the main reason of the purchase of the 3/F No 70 and the 5/F No 72 by A is for the commercial purpose of redevelopment. I also find as a fact that the Acquisition Campaign does exist and that A does participate in such campaign.  In other words, the Building is likely to be demolished entirely one day though no one is able to forecast this day.  The mandatory injunction, if granted, will not be enforced by A for about 4 years pursuant to A’s Undertaking Not to Enforce. By that time, A with or without other conglomerates may be able to acquire the sufficient percentage of ownership of the Building to commence the compulsory sale. It will be redundant for the Tribunal to grant the mandatory injunction to reinstate the Glass Wall.

131.  Based on the evidence given, although R1 accused A of deploying dirty tactics in the Acquisition Campaign, I am not able to say or guess what A’s motives of commencing the present proceedings are.  Nonetheless, I cannot accept Yip’s evidence in paras. 35 to 38 of his witness statement[56] that the issue of safety is the reason for instituting this action.  

132.  To conclude, I do not think it just and equitable to grant the mandatory injunction in respect of reinstatement of the Glass Wall as sought by A.

M.   Declarations sought by A and R1

133.  It is trite that the power to make binding declaration of right is a discretionary power.  In exercising its discretion, the court will consider whether any useful purpose would be served by granting declaratory relief[57].

134.  There is no evidence from both Yip and Yuen as well as no submission from Mr Man SC and Mr Fan as to the useful purpose of the respective declarations sought.  In the Amended Notice of Application, A is seeking declaration that not just the external wall of the Building but also exterior part of the 1/F Units are common parts of the Building.  I am not sure if the exterior part of the 1/F Units only means the Soffits (as defined in this Judgment above as the undersides of the balconies of the 1/F No 72 and the 1/F No 74) but nowhere else, like the undersides of the balconies of the 1/F No 70 and the 1/F No 76, Percival Street.  There is a similar problem in the declarations sought in R1’s Amended Notice of Opposition.

135.  In the circumstances, I refuse to grant the declarations sought by A and R1 as I am not satisfied that there is any useful purpose.

N.   Conclusion  

136.  All A’s claims and R1’s counterclaims in these proceedings be dismissed.

137.  Regarding the question of costs, I consider that R1 is the winning party and A shall pay costs of these proceedings including all costs reserved, if any.  As to the scale, the Tribunal has the jurisdiction to order the costs to be taxed on the District Court or High Court scale according to section 12 of LTO.  I have no doubt to say that the issues in dispute are very complicated and each of them are hotly contested by the parties’ Counsel.  There are altogether 10 trial bundles.  Mr Man SC for A submitted 47 authorities, Mr Fan for R1 submitted 48 authorities whilst Mr Leung SC for R2 submitted 20 (though A had settled with R2 on the 2^nd day of the trial) making the total number of authorities submitted over 110.

138.  It is also worth noting that A is claiming costs on indemnity basis pursuant to Clause 10 of the DMC and that A has commenced another action in the Court of First Instance (HCMP 430 of 2015[58]) against one C & B Advertising (Outdoor) Limited and R2 for affixing a placard to the external wall of the Building.  In the circumstances, I exercise my discretion to make an order nisi that A do pay R1 costs of these proceedings including all costs reserved, if any, to be taxed on the High Court scale if not agreed, with certificate for counsel, which shall become absolute unless any of the parties apply for variation within 14 days by summons.

139.  Last but not least, I must thank all Counsel for their helpful assistance to the Tribunal.