THE INCORPORATED OWNERS OF SHIU FUNG MANSION v. WONG YUK MING AND ANOTHER

LDBM 341/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 341 OF 2014

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J U D G M E N T

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1.  This trial concerns whether the respondents are entitled to exclusively occupy and enjoy the lavatories of a shopping arcade, which are public parts of a building but have been so occupied for about 18 years, by raising various equitable defence of estoppel, acquiescence, waiver and laches.

Brief Background

2.  Shiu Fung Mansion is a multi-storeyed building comprising shops/office on the ground and first floors, and residential units on upper floors constructed on Bedford Road of Tai Kok Tsui in or about 1974/75 (“the Building”). The applicant is the incorporated owners of the Building (“IO”) whereas the respondents are the tenants in common in equal shares of Shop 19 (marked as “Shop J” on the approved building plan”) on the ground floor (“G/F”) of the Building (“the Shop”). The respondents purchased the Shop in 1996. The Assignment effecting the transfer was dated 15 August 1996.

3.  The G/F of the Building is rectangular in shape comprising 19 shops. The Shop is one of them. These shops are arranged in 2 parallel rows separated by a L-shaped corridor. It is not in dispute that this corridor is a common part of the Building. The first row of shops fronting Bedford Street opened onto the street with their back onto the common corridor. The shops on the second row (referred to as “the back row”) have their frontage opened onto the corridor. The G/F can only be accessed from the 2 ends of the common corridor, one opened onto Bedford Street and the other, Lime Street.

4.  The original design, according to the approved building plan, the DMC[1] and the occupation permit[2], appear to be that the shops on G/F are to form a shopping arcade. However, according to evidence, the G/F has not been used as such for a very long time, at least as at all material times of this case. Two metal gates have now been erected respectively at the 2 corridor entrances. They are normally locked and can only be opened from inside. The shops at the back row are now being occupied by construction companies or workshops. According to Mr. Lo, the current IO’s chairman, the G/F has not been used as a shopping arcade, at least since 1987, when he moved in.

5.  The 1^st floor (“1/F”) can be accessed from Bedford Street through a staircase next to the shopping arcade entrance. It is separate from the shopping arcade and is not connected to it. The entire floor has since about 2003 been used as a home for the aged after the restaurant operating there ceased business. According to the occupation permit[3] and the Building’s DMC[4], the 1/F is for office and non-domestic use.    

6.  The Shop is one of the 9 shops at the back row. It is the first one counting from the left according to plans. Since purchase, the respondents have used the Shop as their office/workshop. The Shop is unique in design in a number of ways. Although each shop on the back row does come with a private toilet, those at the front row have none. Further, on each side of the Shop there is a stair leading to an area immediately above it, or the Mezzanine Floor of the Building (“M/F”). This M/F is of more-or-less the same size as the Shop. It is common ground that because of this M/F, the height of the Shop is only half that of the other shops on the back row. There is no dispute that the respondents built an iron gate at the entrance of each of these staircases (collectively “the Staircases”) in or about 1996 shortly after they had become owners of the Shop. There is also no dispute that the M/F and the Staircases had since been used and occupied exclusively by the respondents for storage purposes.

7.  The IO’s case is that the M/F is where the common male and female lavatories of the shopping arcade used to locate according to the Building’s approved plans. From the available evidence[5], the only access to the M/F is via the Staircases. The IO said the M/F and the Staircases should be for the general use of all Building’s co-owners, occupiers and visitors to the G/F.

8.  Although the IO also pleads that the respondents have placed their goods along the common corridor thus obstructing the same, at trial no particular evidence has been adduced to cover this part. The M/F and the Staircases are the centre of attention. The IO’s case is simple. The conversion of common areas of the Building, namely, the M/F and the Staircases, is in contravention of the Building’s Deed of Mutual Covenants dated 11 March 1975 (“DMC”) and the Building Management Ordinance, Cap 334 (“BMO”), particularly section 34I. The IO seeks a number of reliefs, including mandatory orders that the respondents do remove the gates installed at the entrance of the Staircases leading to the M/F; stop appropriating the M/F and the Staircases for self-use; and remove the goods stored inside. The IO also asks that injunctions be granted to restrain the respondents from using the M/F and the Staircases in manners they are now doing. Alternatively, the IO asks for orders that the IO is entitled, in execution of its duties, to remove the said structures and good from the M/F and the Staircases, and be reimbursed by the respondents.

9.  Initially the respondents’ primary defence is that the M/F is not common parts of the Building. They said the areas belong to part of a “store room”owned by the developer and have not been assigned. Accordingly, the IO lacks the locus standi to sue. This ground of defence was abandoned, and the Tribunal considers it reasonably and sensibly, by Mr Lui on the respondents’ behalf at the commencement of trial[6]. It has now been conceded that the M/F and the Staircases are common parts of the Building.

10.  The respondents are now relying solely on the equitable defence of estoppels, acquiescence, waiver and laches, based on the facts that:

i) there had been express representation from the IO in or about 1996 after the respondents had discovered the M/F were in a heavily damaged state. It is the respondents’ case that a staff of the management company of the IO and a member of the management committee of the IO called陳伯 (meaning “Senior Chan” and is hereafter referred to by its transliteration “Chan Pak”) represented to them to the effect that the IO would not be repairing the M/F, and the respondents could repair it as they deemed fit (“express representation ground”); and

ii) there has been inaction knowingly on the IO’s part for a lengthy period of 18 years from 1996 to 2014 (“knowingly inaction ground”).   

The Expert Evidence

11.  Expert evidence was initially called for because of the locus defence with a view to identifying from assignment(s) and approved plans where exactly the “store”, if any, is. Mr. Joe Poon, an architect and authorized person, had prepared a report dated 17 August 2015 for the IO. The respondents, perhaps after reading his report, did not propose to put in theirs. Mr. Joe Poon’s report was therefore admitted without calling Mr. Poon.

12.  Mr. Poon identified from the plan attached to the first assignment of the Shop a room marked “st”. It was situated behind shop 8 (or shop F according to the approved plan). It is his opinion that “st” is the usual abbreviation for “store” in the industry around the time of the plan. Since his view is unchallenged this tribunal accepts his opinion.

13.  Further, the first assignment plan in respect of the Shop expressly identified the Shop by an area coloured pink. Only the shop unit marked “19” was coloured. The M/F, like other shops on the ground floors, was not coloured.

14.  In the course of R2’s evidence, he admitted that before he purchased the Shop, he was expressly told by the then owner that the premises immediately above was not the subject matter of the sale. It was controlled by the management office[7]. Further when he found out that the ceiling of the Shop was seriously damaged, he was referred by the previous owner to approach the IO which he did. He later sealed off the M/F not because he considered the area his or belonging to the developer. According to his own evidence, he mainly feared that third parties might damage the areas again[8], though he said he entertained doubts as to their ownership (which this tribunal does not find his alleged belief truthful and genuine). All the evidence suggested clearly at the material times he could not have mistaken the M/F as the “store room” belonging to the developer as he originally contended. He was sure that the M/F was common area of the Building otherwise he would not have approached the IO for repair. In fact, prior to his purchase of the Shop, he was told M/F belonged to the management company, apparently under the control of the IO. Had he not conceded through counsel, this Tribunal would have come to the conclusion that the M/F is not a “store” as contended but a common area, which is where the former male and female lavatories of the shopping arcade were located.

The Factual Evidence

15.  At trial, each party called one witness. They are:

i) Mr. Lo Kam Choi: he is the current chairman of the IO and made 2 statements respectively dated 12 May and 14 October 2015 on behalf of the IO; and

ii) Mr. Wong Pak Por, the second-named respondent, (“R2”): he is one of the respondents and made 2 statements respectively on 12 May and 24 August 2015. He said he was authorized by his elder brother, who is the first-named respondent (“R1”) to give evidence on his behalf [9].

16.  The 2 witnesses adopted the evidence contained in their respective statements as their evidence-in-chief. R2 also made certain top-ups.

Mr. Lo’s Evidence  

17.  Mr Lo has become an owner of a residential unit of the Building since 1987. He has become a member of the management committee of the IO since 1992 and the chairman as from 2002 until now. It was his evidence that the conversion of the M/F, which was formerly common lavatories of G/F of the shopping arcade, by the respondents for their personal use took place in or about 1996. It has since then caused a lot of inconvenience to visitors and occupiers of the said shopping arcade. The respondents did not remove them despite repeated requests by the IO.

18.  He denied that the IO had ever given any consent, no matter express or implied, to the conversion of the M/F to store room for private use of the respondents as allege or at all. Neither had there been application by the respondents to the IO for such conversion of the lavatories for private use.

19.  During Mr Lo’s cross-examination:

i) He admitted he did not know whether or not in 1996 the M/F had been used for lavatory purpose. He admitted that he had never been to the M/F before;

ii) He was only told by staffs of the management company that the conversion of the M/F for private use had caused inconvenience to occupiers of the shopping arcade as well as to the management company staffs. He personally had not received any such complaints direct;

iii) He agreed to the suggestion that the M/F might have ceased to be used as lavatories a long time before the alleged conversion took place in 1996;

iv) He agreed each shop along the back row has a built-in private toilet, but there was none in each of the front row shops. There are also toilets on the 1/F of the Building, but they were separate from those on the M/F;

v) He could not recall whether R2 had attended any of the management committee meeting as alleged or at all in 1996. He was not sure whether there was any member with surname Chan in or about that time in the IO’s management committee. He, however, categorically denied there was any member in the management committee of the IO by the name of陳伯, i.e. Chan Pak. He accordingly denied the respondents’ allegation that Mr. Wong, a District Board member, Chan Pak and also a manager of the management company had made a visit to the M/F during which consent had been given for them to convert the M/F for private use;

vi) He denied having seen the respondents’ renovation invoice for the sum of $119,000 in 1996 or at all, though he agreed as he might not have a chance to do so as he was not the IO’s chairman then;

vii) He admitted that he visited the G/F shopping arcade 2 to 3 times a month, noticing the lock-up of the Staircases since 1996 by the respondents. Since becoming the chairman in 2002, he occasionally raised this matter for discussion at management committee meetings. He said he had asked staffs of the management company to persuade the respondents surrendering the M/F and the Staircases back to the IO, though he personally did not do so;

viii) He agreed that in or about April/May 2014, he took with him management company staffs to the Shop with a view to recovering the M/F and the Staircases for use as the IO’s store. He agreed that a building order has been issued against an illegal structure in the cockloft where the IO used to store its documents. The structure had been demolished. Initially the IO would like the M/F back for storing its documents. Now the IO had got another room on the Building’s roof for storage purpose. He said the M/F and the staircases should be restored back to their original design according to the approved building plans, and it was not up to the IO to convert the M/F for use other than that permitted by the approved plan(s); and

ix) the lavatories of the restaurant formerly occupying the 1/F were available for use by the public. However, these toilets were not public ones in the sense they were owned and managed by the restaurant operator. They were not opened to public when the restaurant was closed for business. Further the entire 1/F was now being used as a home for the aged. No public can use their toilets any more unless with the permission of the operator of the said home.

Mr. Wong’s (R2’s) Evidence

20.  The respondents were and are owners of the Shop which was used as their workshop for their aluminium and glass works, repairing concrete and waterproofing works business. R2’s evidence, together with his top-ups, is basically this. In mid-1996 he had to urgently look for premises as the tenancy of his then workshop would soon expire. He noticed from the outside of the Shop that the landlord offered it for letting or sale. After viewing the Shop twice, they agreed to purchase it.

21.  He said when they viewed the Shop they noticed that the entire ceiling and the beams of the Shop except the toilet inside were covered by wood panels painted white. He asked the owner why. The reply was that the wooden panels were there for ease of painting. Although he could see cracks along the beam of toilet inside the Shop, it did not ring a bell about the structural conditions of the Shop. He said he did not inspect the M/F before completion, which took place on 15 August 1996.

22.  After completion, the wooden panels were removed. He was surprised to note the serious concrete spalling on the ceiling. It was so serious that concrete had fallen off from a number of areas exposing the rusting steel bars inside the ceiling slabs and beams. From the photographs of the Shop taken by R2 on 17 August 1996, there were at least 2 holes on the ceiling resulting from fallen off of spalled concrete. One can see the M/F above through these holes from the Shop below. He approached the former owner but to no avail. He was asked by the former owner to approach the management office and IO. The former owner said the IO should be responsible to repair.

23.  They then approached the management office, and were referred to attend a management committee meeting of the IO to state their request. They did and showed the photos to the committee members. He was told the IO would not be doing any repairing work to the M/F.

24.  According to R2, there was a subsequent inspection of the M/F initiated by the IO. In his 2 witness statements, he said it was only attended by himself, R1, a District Board counsellor Mr. Chan Man Yau and a manager of the management office. At trial he said the inspection was also attended by a management committee member of the IO by the name of Chan Pak. At the inspection, it was represented to him both by the management office staff and Chan Pak to the effect that the respondents had to repair the damaged parts by themselves, and the IO would not do it. In his first written statement he said the said representative of the management company told them “『申請人不作處理，你們（即我和哥哥黄旭明）作為該物業之業主，有需要的話可自行處理』[10]” (translation: “the applicant would not be dealing with [the matter]. You (i.e. me and my brother Wong Yuk Ming), being the owner of your own property, may wish to deal with [the matter] if necessary).

25.  In his supplemental witness statement dated 24 August 2015, R2 stressed that the representative of the management company was of the rank of manager. At trial, he said it was by Chan Pak.

26.  He explained that he did not recall the presence of Chan Pak until after reading 2 statements of Mr. Lo who disagreed with what he had said. That triggered off his re-collection of the presence of Chan Pak when he gave the matter a deeper thought.

27.  After the inspection, he engaged a contractor to repair the ceiling. Such was achieved by removing the entire heavily damaged ceiling, re-fixing reinforcement steel bars and re-pouring of cement to remake the ceiling. The beams were also reinforced. Certain photos were taken when the ceiling was re-made. A sum of $119,000 was incurred. He produced an invoice dated 28 August 1996 issued by contractor Yan Kuen Kee Construction Co. Ltd[11]. He said payment had already been settled.

28.  He said when he took photos of the M/F on 17 August 1996, he had not seen any sanitary fitments such as toilet bowls, urinals, water basins, water closets, etc which a lavatory normally had. Neither was the place being partitioned like a lavatory. He clarified that when he referred the M/F being formerly used as toilets in his statements, he was merely told by his contractor’s engineer who had inspected the approved building plan. He admitted that he had not spelt out his source of belief until trial.

29.  R2 said as the IO had refused to take up the duty to repair, shortly after completion of the repair work, out of safety concern they erected iron gates at the Staircases’ entrances to fence off third parties from entering. To keep the M/F under the respondents’ control, according to R2, was the most effective way to avoid damage to the M/F again, thus protecting the Shop below. He said that the M/F and the Staircases had since been used for storage of his workmen’s uniform, safety ropes, safety helmets of his workers. No heavy stuffs would be kept in the M/F for fear that the ceiling might collapse. Some empty paint drums might have been placed on the Staircases. He admitted the M/F was now with electricity supply. The 2 gates at the entrances of the Staircases were locked by them.

30.  From the totality of R2’s evidence, apart from safety consideration, he refused to hand back the M/F and the Staircases because he had incurred expenses in repairing the floor slab and for its up keeping. He also said he had been using the said areas for a very long time. It was only in 2014 that Mr. Lo, together with management company’s staffs attended the Shop to claim possession of the M/F and the Staircases.

31.  It is his evidence that the toilets formerly on the 1/F of the Building were toilets available for use by the public.  

32.  During cross-examination, he agreed that:

i) he did not know whether the re-making of the ceiling required approval of the Building Authority; and if so whether approval had been obtained as it would be the responsibility of the contractor who, presumably, would take care of this;

ii) the drum of paint, if fully loaded, may be as heavy as 25 to 30 kg per drum;

iii) there was neither representation by Chan Pak nor any management company staff that the respondents could occupy the M/F and the Staircases exclusively for their own use; and

iv) prior to his purchase of the Shop, he was told the M/F was under the control of the management company.

Discussion

33.  Section 34I of the BMO stipulates that:

“(1) No person may –

(a) convert any part of the common parts of a building to his own use unless such conversion is approved by a resolution of the owners’ committee (if any);

(b) use or permit to be used the common parts of a building in such a manner as –

(i) unreasonably to interfere with the use and enjoyment of those parts by any owner or occupier of the buildings; or

(ii) to cause a nuisance or hazard to any person lawfully in the building.

(2) Any person who contravenes subsection (1) shall be deemed to be in breach of an obligation imposed on him by the deed of mutual covenant in respect of the building.”

34.  Each owner covenants under clause 11 of the DMC:

“Not to place any furniture or object in or to occupy any part of the said building not included in his flat or shop and to use the parts of the said building intended for common use for the purpose of access to and from his flat or shop and not otherwise.”

35.  It is now common ground the M/F is a common part of the Building. Neither had there been any express consent given by the IO to convert the M/F and the Staircases for private use of the respondents. In the Tribunal’s judgment, there are broadly 3 issues for this trial, namely, (i) whether there was express representation by Chan Pak to the respondents as alleged by the respondents or at all; (ii) whether there has been knowingly inaction on the part of the IO for 18 years as alleged; and (iii) if any of the aforesaid factual scenarios can be established, whether the injunctions now sought by the IO should be denied on equitable grounds of defence of estoppel, acquiescence, waiver and laches.

36.  The first 2 issues turn on facts, and to a large extent, depend on credibility of witnesses. In assessing the credibility of a witness, the Tribunal will test their evidence against contemporaneous or uncontroversial documents, their various statements and the explanation for discrepancy (if any), and inherent probabilities, etc. 

Express Representation or Not

37.  It has been pleaded in the both Notice of Opposition and the Amended Notice of Opposition respectively dated 8 December 2014 and 27 July 2015 that the M/F is where the “store” of the Building is situated. These 2 pleadings were each verified by a statement of truth duly signed by each of the respondents. During cross-examination, R2 admitted that the toilet on the M/F was used in fact as public lavatories. Further, it is R2’s case that upon discovering the ceiling being in a state of disrepair, they approached the former owners, and were told the IO should be responsible. In fact, according to R2’s own evidence before the purchase he was told that the M/F was controlled by the management office[12] and thus belonged to the IO. It can therefore be inferred that before the respondents became owners, or at least shortly after their purchase of the Shop, they had already known that the M/F was not a “store” belonging to somebody else as alleged otherwise the respondents would not have approached the IO for repair. They in fact knew the M/F had been used the lavatories, at least they had been told according to R2’s own evidence[13]. It is not somebody’s else property as pleaded. Nothing about their efforts to pursue after the IO had ever been disclosed in first Notice of Opposition. In fact according to his 1^st written statement, he also referred the M/F to as “toilet”[14]. In the Tribunal’s judgment, what R2 has verified to be true and correct in his 1^st set of pleadings is inconsistent with R2’s belief as revealed in his evidence at trial.  R2 saw fit to verify a case inconsistent with his belief.

38.  Further, in his 2 witness statements he failed totally to mention anyone by the name of Chan Pak. Rather he expressly said it was the manager of the management company who made the representation. It was his explanation that he started to give the matter a deeper thought after seeing Mr Lo’s statements disputing a lot of what he had said.

39.  On a balance, this Tribunal finds his evidence in this respect unconvincing and unreliable.

40.  This Tribunal accepts that the matter referred to happened some 18 years ago. Memory may have faded away due to long lapse of time. However, this is not a case in which R2 failed totally to recall anything. Instead, he was able to provide quite a lot of particulars such as the gist of the representation, the maker (short of name), his rank and the circumstances under with such representation was made. He is also able to recall the full name of the District Board member before whom the representation was made. Further, he saw fit to preserve photos and quotation for 18 years. Obviously he must have realized, or must have been advised of, the importance of any representation to his case and to preserve evidence accordingly. However, he made no mention of Chan Pak until almost at trial.

41.  Further, it does not occur to the Tribunal that the respondents have no opportunity to give the matter any serious thoughts until shortly before trial. R2 had filed 2 witness statements. The second one was intended to supplement his first one after amendment of the Notice of the Opposition introducing all sorts of equitable defence. Both pleadings were settled by counsel. The newly raised defence placed emphasis on express representation by a manager of the IO. R2’s supplemental witness statement served to emphasize the representation was made not by nobody but a manager[15]. By then, R2 should have had thorough discussion with his legal team. He should have received proper advice. R2 must have recognized the representation, as well as the identity of its maker, is essential to his case. The identities of persons from the IO/management office attending the inspection were repeated 3 times, one in the amended pleadings, and one in each of R2’s witness statements. Yet Chan Pak has never been mentioned. R2 explained that he only recalled the presence of Chan Pak a few days before trial. Balancing R2’s evidence in this respect and taking into account all the circumstances, this Tribunal does not find his explanation acceptable and his evidence reliable. From the totality of R2’s evidence, this Tribunal does not find him a truthful witness.  

42.  Given the Tribunal’s assessment of R2’s credibility, R2’sevidence must be looked at with scepticism. Unless otherwise stated by this Tribunal, when the evidence of the witnesses is inconsistent with each other, Mr Lo’s evidence will be accepted in preference to that of R2.

43.  On a balance, this Tribunal does not believe there has ever been any expressed representation, no matter by Chan Pak or staff of the management company, either as alleged or at all. This Tribunal believes that upon removal of the covering wooden panels shortly after they purchased the Shop, the respondents discovered the ceiling of the Shop was in a surprisingly poor condition. Holes were found on the concrete floor slab between the Shop and the M/F. It was caused by the disrepair of the public lavatories on the M/F.

44.  This Tribunal also believes the respondents then approached the former owner. They were asked to approach the IO but to no avail. According to R2’s evidence, a manager of the management company (and later Chan Pak) made this representation “... since you are the owner of your own property you may wish to deal with [the matter] if necessary[16]”. This Tribunal rejects totally as facts that the alleged representation has been made as alleged or at all. The Tribunal only believes the IO had refused to repair as requested. Nothing further in the form as alleged by R2 or at all was said. The respondents then decided to repair it on their own as soon as possible because they were in urgent need of a place for their workshop[17]. They then sealed off the Staircases with a view not to allowing anyone damaging the M/F again which would adversely affect them, and vey soon turned the cordoned off places for their own private use. They kept records of the repair, including the photos and invoice with a view to claiming back from the IO in future if they were requested to leave.

45.  Even assuming, without accepting, for the purpose of discussion that the alleged representation had ever been made, in the Tribunal’s judgment, this does not amount to any representation suggesting or implying that, after the repair, the respondents could occupy the M/F or otherwise be given some or more rights in respect of the place, not to mention the Staircases. It is Mr Lui’s submission that a common sense interpretation should be adopted, and the representation should be given the meaning of what an ordinary people like R2 should understand it to mean. He submits that since the M/F has been in a terribly rundown condition, such representation would have been clear to R2, submitted Mr Lui, that “... the IO did not intend to repair or use the M/F, and... the [IO] did not care about, and did not wish to deal with the [M/F] and the respondents were free to repair and make use of the [M/F] as they saw fit”[18].

46.  This Tribunal considers the submission too far-fetched to be acceptable. It may be true that the IO, for reasons only known to it, did not want to deal with the repair. The management committee might be indifferent. The IO might be lacking fund or had a misunderstanding of their obligations. However, this Tribunal does not think by asking the respondents to deal with the matter as owners of their own properties, it can be inferred the IO had suggested and/or invited the respondents to use and occupy the M/F as they saw fit. Even according to R2’s own evidence, he was only asked to repair it as owner of the Shop[19]. Obviously, the concrete slab forms the Shop’s ceiling and the M/F’s floor. It would not be surprised for the IO to ask the respondents to repair it as owners of their Shop. 

47.  This Tribunal does not believe that there is any express representation as alleged or at all.

Knowingly Inaction for 18 years

48.  From the available evidence, this Tribunal accepts it as fact that the M/F comprising a male and female lavatories of the shopping arcade had been in a state of disrepair and been abandoned for some time before the respondents moved in. This Tribunal also believes that the IO had knowledge of the repair to the M/F and the cordon off of the 2 Staircases by the respondents since 1996 upon completion of the repair work. Although the Tribunal believes management company staffs had since 1996 occasionally asked the respondents to remove the iron gates and vacate the M/F and the Staircases, the Tribunal believes the IO does not take the matter seriously. There is no follow-up to recover the M/F and the Staircases by the IO until April/May 2014 when Mr Lo came together with a workman asking for possession of the Staircases and the M/F. It was refused. The IO through its staffs came again on 29 July 2014 but was again refused entry. This Tribunal accepts the recovery action being triggered off by a building order requiring demolition of the IO’s office which is an illegal structure[20]. Accordingly, the IO has been inaction for 18 years since 1996 until 2014 knowing that the M/F and the Staircases were occupied by the respondents.

49.  It is also the Tribunal’s finding that the M/F and the Staircases have since been converted to a storage place for the respondents’ personal use. The Tribunal accepts that sanitary fitments enabling the M/F to be used as a lavatories for the G/F have ever been installed there since the occupation of the Building as they were there according to the expert opinion of Mr Joe Poon[21]. They are no longer there now, and at least has been so before the respondents moved in 1996. Heavy stuffs, such as fully or partially filled up drums of paints are sometimes stored on M/F and the Staircases though lighter materials such as workmen helmets and gloves are also stored there.

Whether the Various Equitable Defence of Estoppel, Acquiescence, Waiver and Laches can be Set Up

Estoppel

50.  Although the defence of estoppel is raised, Mr Lui has not formulated the exact nature of such defence. From what can be discerned from his submission, he relies mainly on an express representation and/or further representation by way of silence, conduct and inaction on the part of the IO. How contemporaneous documents such as photos and invoice of the re-roofing work help fit in and satisfy the elements of the particular species of estoppel contemplated by him is not clearly set out[22]. 

51.  Estoppel is a doctrine which regulates the relations between parties. Generally understood, it precludes one party from unconscionably contradicting certain facts or certain proprietary expectations bearing upon the position assumed by another party[23]. It is an area of law which is rapidly developing over the last few decades. As pointed by Ribeiro PJ in Unruh v Seeberger[24], it is necessary to distinguish among different categories of estoppels, each constituted by particular elements and carrying legal consequences which may vary[25]. There is at least for the time being no single over-arching doctrine giving rise to a directly enforceable equity, and such approach has been declined on a number of occasions by the court[26], though there are attempts to do so[27].

52.  This Tribunal will not seek to go through the various species of estoppel with a view to identifying a category that most suits the respondents’ case. Suffice it to say that estoppel by convention discussed in Unruh v Seeberger (supra) is not what has been submitted by Mr Lui. His submission is more akin to advancing a case of promissory estoppel in which the respondents as promisee, relied on the representation of the IO as promisor, had altered its position to its detriment and it will be inequitable for the IO to act inconsistent with the representation/promise.

53.  In Luo Xing Juan Angela v The Estate of Hui Shui See, Willy, Deceased[28], Hon Ribeiro PJ set out the requirements of promissory estoppels at [55]. It is said to arise where:

i) the parties are in a relationship involving enforceable rights, duties or powers;

ii) one party, the promisor, by words or conduct, conveys or is reasonably understood to convey a clear and unequivocal promise or assurance to the other, namely, the promise, that the promisor will not enforce or exercise some of those rights, duties or powers; and

iii) the promise reasonably relies upon that promise and is induced to alter his or her position on the faith of it, so that it would be inequitable or unconscionable for the promisor to act inconsistently with the promise.

54.  Apparently the IO is an embodiment of owners and the respondents are 2 of them. Their relationship, rights and obligations vis-à-vis each other is governed by the DMC and the BMO. In the Tribunal’s judgment, that is a sufficient relationship for the purpose of promissory estoppel.

55.  As stated above, the Tribunal rejects R2’s evidence that there has been any express representation as alleged or at all. The Tribunal’s finding was that the IO simply refused to effect repair. Accordingly, it would be unnecessary to discuss whether the representation is, in substance, clear or unequivocal which are important ingredients for the second element in the formula: see [59] and [60] of Luo Xing Juan Angela. Since the Tribunal also accepts from time to time there were visits by management company staffs asking for return of the Staircases and the M/F, though not serious in taking action, it cannot be said that there is any promise not to enforce the relevant rights or powers of the IO.

56.  On the other hand, even assuming (only for the purpose of discussion but not accepting) the alleged representation had ever been made, as discussed above, the mere asking of the respondents, being owners of their own premises, to deal with their own problems is insufficient to constitute a clear and equivocal promise that the respondents can use the said M/F and Staircases to the exclusion of others including the IO. Neither, viewed objectively, is there any suggestion or unambiguous implication that by effecting repair at the costs of the respondents, they could thereafter use or occupy the M/F and the Staircases as their own as suggested by Mr Lui. There is a quantum leap between the words uttered and the promise said to have arisen even assuming the said representation had ever been made.   

57.  As to whether silence or inaction amount to assurance or promise satisfying the second requirement of the equity, this tribunal inclines to answer in the negative because it is the Tribunal’s finding that there have been occasional demands for handing back of the M/F and the Staircases from the IO through management office staffs. It will also be unnecessary for the Tribunal to discuss whether there has been detrimental reliance under the head of estoppel. However, the knowingly inaction for 18 years attracts the coming into play of the equitable defence of acquiescence.  

Acquiescence

58.  Counsel for both parties rely on the principles distilled by Mr Recorder Rimsky Yuen SC in Hollywood Shopping Centre Owners Committee Limited v The Incorporated Owners of Wing Wah Building Mongkok Kowloon[29]. In that case, the defendant IO asked for an injunction against the plaintiff restraining it from occupying the canopy, a common part of the building. Section 34I of the BMO was relied on. Acquiescence was raised as a defence. The learned Recorder recognized 2 different lines of authorities, some were of the CA levels, which came to opposite conclusion. After analysis, the learned Recorder was able to resolve the apparently conflicting decisions and came to the following propositions which counsel for both parties herein relied on in their submission[30]:

“In summary, the position can be stated as follows:

(1) Whether or not acquiescence can be set up as a defence to a claim for breach of mutual covenants (whether express or implied by reason of section 34I(2) of the BMO) depends on the nature or type of breach in question;

(2) If the breach of mutual covenants in question is within the power of incorporated owners to acquiesce, acquiescence can be a valid defence provided all the requisite elements giving rise to acquiescence are established; and

(3) On the other hand, if the breach of mutual covenants in question is beyond the power of the incorporated owners to acquiesce, the defence of acquiescence will not be available since the incorporated owners cannot acquiesce in acts which they in law cannot do.”

59.  Hollywood Shopping Centre went on appeal to the CA on somewhat different grounds. The learned Recorder’s analysis concerning acquiescence did not receive disapproval from the CA.

60.  In Freder Centre (IO) v Gringo Ltd[31], the IO demanded the respondents, who are shop owners/tenants, to remove sign boards which had been displayed at the common parts of the building. The respondents raised, inter alia, acquiescence as a defence.  Certain provisions of the relevant DMC and section 34I of the BMO were relied on. DDJ Tracy Chan, relied on the analysis of the learned Recorder’s analysis in Hollywood Shopping Centre. However, she found that the IO had never acquiesced to the breach. It was also her finding that although the breach was only for a short period of time, there were similar breaches by other owners committed years ago and the IO took no action.

61.  Freder went on appeal as the The Incorporated Owners of Freder Centre v Gringo Limited[32]. The CA allowed the respondents’ defence on grounds the first instance judge had disregarded as irrelevant that for a long time there have been similar breaches by other owners, and the IO took no action.       

62.  The principles that can be distilled from the CA decision of Freder on acquiescence can be summarized as follows:

i) Quite apart from the DMC provisions,it is implicit in section 34(I) of the BMO that an IO can give approval to an owner to convert a common part to his own use. It is therefore within the IO’s power to acquiesce to any owner/occupier’s breach in respect of such conversion[33];

ii) The relevant statement of principle on acquiescence relied on by the CA is by Thesige LJ in De Bussche v Alt[34] which is cited in [25] of Freder as follow:

“If a person having a right, and seeing another person about to commit, or in the course of committing as 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 fact.”

iii) In order to succeed in a defence of acquiescence, it must be shown[35]:

“Firstly, there was on the part of the plaintiff, an assent or lying by in relation to the acts of another person; 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, 9^th edition, p.56.”

63.  It is also noted that the principles relied on by the Deputy District Judge in Freder, i.e. those stated by the learned Recorder Yuen, were not considered wrong by the CA.

64.  Mr Recorder Yuen’s propositions on acquiescence in Hollywood Shopping Centre[36] survive 2 appeals in the CA. When referring to acts which the IO cannot acquiesce, the learned Recorder was referring to illegalities, e.g. acts which done would be a breach of statutory duty[37], illegal alteration to a roof or illegal structures[38]. Examples where an IO can acquiesce includes painting the left lobby outside an owner’s flat in colour of the owner’s choice[39].

65.  Freder is not inconsistent with Hollywood Shopping Centre. In the first instance decision of Freder, it was the finding of the Lands Tribunal that the signboard displayed was not illegal structures. No illegality was found. When Freder was in the CA, Hon. Chu JA, who delivered the main judgment for the court, reiterated that the nature of the breach, which was affixing signboard to the external wall, did not involve any illegal structures or illegality[40].

66.  Mr Tang, counsel for the IO, relying on Hollywood Shopping Centre, submitted that the IO cannot acquiesce to something which it has no power in law to acquiesce on ground the conversion of the common part for private use involves illegality. The IO therefore has no power to approve or acquiesce. So far as can be discerned from Mr Tang’s submission, the purported illegality of such conversion can broadly be grouped under the following 3 heads:

i) The load bearing ground: Mr Tang contends on behalf of the IO that the design of the lavatory floor slab cannot bear the weight of goods of the respondents now placed on the M/F;

ii) The unauthorized work ground: The re-construction of the floor slab had never been approved by the Building Authority as required by the Building Ordinance, Cap 123 (“BO”), and is an offence;

iii) The sanitary fitments ground: it is contended that the conversion of the male and female lavatories into a store would breach the statutory requirements set out in the Building (Standards of Sanitary Fitments, Plumbing, Drainage Works and Latrines) Regulations (Cap 123I, Laws of Hong Kong) (“SFR”).

67.  Further, some evidence was introduced by the IO that owners, and in particular Mr Lo, were inconvenienced when they wanted to use the lavatory on the G/F, presumably with a view to engaging section 34I(1)(b)(i). However, from the available evidence, this Tribunal accepts that the M/F was in a state of disrepair and had not served the function of lavatories long before the respondents moved in. Inconvenience, if any, is not caused by the conversion of the M/F for private use but by the IO’s failure to repair the lavatories. No breach of section 34I(1)(b)(i) can be established

68.  Mr Tang also submitted that construction materials were stored at the M/F and the Staircases (understood by the Tribunal that Mr Tang is referring to drums of paints). It is hazardous to everyone using the shopping arcade[41]. Though Mr Tang is arguing in the context of acquiescence, presumably it has a bearing on whether that amounts a breach under section 34I(1)(b)(ii) of the BMO. However, in the Tribunal’s judgment, the IO has not discharged it burden of proof. There is no or insufficient evidence to show what hazard has been posed to users of the arcade by the respondents’ use of the M/F and the Staircases. Whether the goods stored there are dangerous or their amounts exceeds statutory limits have not been established.  

69.  Turning to the load bearing ground, Mr Tang submitted that it is common sense that the structure of the M/F can never bear the burden of storing anything heavy[42]. However, there is no judicial notice of such common sense. There is no evidence showing what in fact the designed strength of the M/F is. There is also no evidence, or sufficient evidence as to whether the weight of the goods placed there exceeds the designed strength, thus posing a danger to the structure or rendering it illegal under the current law of Hong Kong. Further, how the hazardous ground amount to illegality has not been clearly spelt out. The IO again fails to discharge the burden of proof.

70.  Regarding the unauthorized work ground, R2 said he did not know whether approval from the Buildings Authority in respect of the re-roofing work has been obtained. The evidence also does not reveal any Buildings Authority Order having been issued. The IO has therefore not discharged the burden of proof in establishing this. This ground has not been sufficiently or properly made out.

71.  Assuming (without deciding) that the restoration of the floor slab between the Shop and the M/F was not approved thus offending section 14 of the BO. It has been decided that the fact that illegality emerges as part of the background will not preclude a party from raising a defence of acquiescence so long as that party is not forced to plead or rely on the illegality as part of its defence: see [24] of the CA decision in Yick Fung Holdings Limited v Sandwood Limited[43] relying on Tinsley v Milligan [1994] 1 AC 340 at 376C-E, 377A-C. It appears what the IO has done here is to acquiesce in the conversion of the space for the respondents’ own use and not the re-marking of the floor slab without the approval of the Building Authority. This Tribunal considers this argument applies to the present situation.

72.  The last sanitary fitment argument of the IO requires more elaboration. Though the expert report was initially compiled to ascertain where the “store” asserted by the respondents is located, Architect Mr Joe Poon arrived at his conclusion by, inter alia, examining the number of sanitary fitments on the M/F. He has examined the approved plans and extracted the sanitary fitments schedule from them. He repeated the same as Schedule 4.3.1 in his report. The gist of the Schedule is that in respect of sanitary fitments for the shops at the front row, i.e. Shop 2 to 10[44], they are counted as a group. For those at the back row, i.e. Shop 11 to 19[45] each was individually counted. It was provided in the Schedule that for those front row shops on the Ground Floor, the required and the actually provided sanitary fitments are as follows:

Persons		Required			Provided
		W.C.[46]	Basin	urinal	W.C.	Basin	Urinal
65	M[47],33	2	2	1	3	3	1 trough urinal
	F[48],32	3	2	-	3	3	-

73.  Other than the back row shops which sanitary fitments had been provided individually according to the Schedule, a total of 3 W.C. and 3 basins were provided in each of the male and female lavatories on G/F. In addition, 1 trough urinal had also been provided for the male lavatory. The provisions exceeded the statutory requirement. Mr Poon concluded that from the layout plan and its access, these sanitary fitments should be referred to those installed in the M/F accessible through the Staircases. This is the common lavatory for the G/F. According to the Schedule, there are separate provisions of sanitary fitments for the 1/F, which was described as office, as well as for each of the domestic units from 2^nd to 13^th floor of the Building. This Tribunal accepts his opinion. The Tribunal accepts what had been described in the said Schedule as the fitments to be provided to the G/F as what had actually been fitted on the M/F.

74.  The SFR provides that the numbers of water closets fitments, urinals and lavatory basins should not be less than the numbers provided in Table 17 to 19. The formula of words, namely, “must be not less than the number specified in [Table reference]”, was employed in FSR. The statutory requirement is therefore, submitted by Mr Tang, mandatory. Now the only non-exclusive use lavatories on M/F for the G/F had been converted to a store by the respondents. Mr Tang’s submission, in a nutshell, is that such conversion could not have been consented or acquiesced to by the IO because to do so would render the IO acting in contravention of the SER.

75.  Mr Lui relies on the following 3 broad grounds to oppose the illegality issue:

i) The G/F is in fact not used as a shopping arcade and therefore there was serious doubt whether the required sanitary fitments necessary for a shopping arcade as set out in the SFR is required to be maintained;

ii) There is apparently sufficient sanitary facilities on G/F to satisfy the requirements of the SFR by including the lavatories inside the shops on the back row; and

iii) Even the toilet facilities at the back row was not counted, the 1/F toilet facilities should be counted. It would be sufficient to cover any shortfall for the G/F.

Not a Shopping Arcade Ground

76.  Mr Lui relied on the evidence of Mr Lo and R2 that the G/F had, as a matter of fact, not been used as a shopping arcade. Its use is more akin to a storage warehouse. This Tribunal accepts that at all material times it is the case. However, according to the First Schedule of the DMC, each unit on the G/F was described as a “SHOP”[49].  In the Occupation Permit issued on 21 November 1974, the G/F of the Building was permitted to be occupied for the purpose of 17 shops[50], 1 office hall and transformer room for non-domestic use. From the layout and descriptions in the approved plans exhibited, the G/F was described as an “ARCADE” with “SHOPS”. It was approved on this basis. In the Tribunal’s judgment, although the Building’s G/F had not been so used as a shopping arcade, it was built as such and remains so according to the approved plans, DMC and occupation permits. The shopping arcade is still the permitted use of the G/F. The requirements of the SFR remain applicable. This ground of opposition is not accepted.

Sufficient Sanitary Facilities have been Provided

77.  Based on the Sanitary Fitment Schedule annexed to Mr Joe Poon’s report[51], Mr Lui arrives at 635 sq m as the total areas of the entire G/F, comprising both the back row and front row shops. He then applied Regulation 7A(3)(a)(i) and, and comes to the number of male and female, being 85 and 127 respectively, for the purpose of calculating the water closets, urinals and wash basins. The following are the figures arrived at by him which this Tribunal accepts:

i)	Total no. of W.C. required for male:	1;
ii)	Total no. of urinal required for male:	1;
iii)	Total no. of lavatory basin required for male:	1;
iv)	Total no. of W.C. required for female:	4; and
v)	Total no. of lavatory basin required for female:	1

78.  Mr Lui submits that there are toilets located in each of the shops at the back row. The SFR only prescribes the requirement to provide sanitary facilities. However, there is no specific requirement that these facilities must be readily available or accessible to the public. Alternatively, the IO provides no evidence that the sanitary facilities were in fact not readily available.

79.  With due respect, Mr Lui’s said submission cannot be accepted. There is no dispute that the toilet within each shop at the back row is for exclusive use of that shop. Therefore, the toilet can only be used with the permission of the owners/operators of that shop. Assuming for the purpose of discussion that all those shops at the back row were closed at the same time by chance or for renovation or that all their operators refuse use by customers other than theirs, which is not unlikely. If Mr Lui’s argument were to be accepted there would be no breach of the SFR even if no public toilet facilities were available to users of the G/F. This Tribunal does not believe it was the intention of the SFR. This Tribunal believes that the sanitary fitments specifically spelt out in SFR are intended to be freely and readily available to the users of a shopping arcade and should not be under the exclusive control of particular owners the use of which can be denied at will. The facilities now inside each of the shops in the back row should be excluded for the purpose of compliance with the SFR. Accordingly, the conversion of M/F to a store would contravene SFR.

Sufficient Sanitary Fitments on 1/F

80.  Mr Lui relies on the facts that prior to the conversion of the 1/F to a home for the aged, it was a restaurant. The toilet facilities there were available to the users of the G/F as well. No doubt it is the case. However, it is not in dispute that after it had been changed to a home for the aged, such facilities are no longer available.

81.  Again with the greatest respect the Tribunal cannot agree with Mr Lui. In the DMC, the part of the 1/F was referred to as “the whole of FIRST FLOOR” and allotted 19 undivided shares. It was stated that the whole of the FIRST FLOOR was to be then exclusively used occupied and enjoyed by Tay On Enterprises Company Limited, the first owner. Its access is from a staircase with landing not inside the arcade. The two floors are not connected. Accordingly, whatever toilet facilities that may be available on the 1/F, it would be exclusively owned by owner of the 1/F. That explains why after the 1/F has been converted to an elderlies’ home, the toilet facilities there are no longer available to those G/F users. The use of the 1/F toilet facilities is entirely at the mercy of its owner/operator. Accordingly, the toilet facilities on the 1/F has nothing to do with the G/F in respect of its compliance with Regulation 8A of the SFR. Further, according to the occupation permit[52], the 1/F was to be occupied as an office. The requirement is governed by Regulation 5, which concerns workplace, instead of Regulation 8A, of the SFR.

82.  Mr Lui’s argument therefore cannot help the respondents.

83.  It is obvious that the IO has lain by in relation to the conversion of the M/F to a store for 18 years. However, from the analysis above, it is beyond the IO’s power to acquiesce to such conversion because to do so would be in breach of the SFR made under the BO. What cannot be consented to expressly cannot be acquiesced to impliedly. The Tribunal does not consider the equitable defence of acquiescence is available to the respondents.

Waiver

84.  According to the Amended Notice of Opposition made on the 27 July 2015, the defence of waiver was pleaded relying on the express representation of Cha Pak. The respondents’ evidence about Chan Pak has now been rejected.

85.  As this Tribunal has found as a matter of fact there have been management company’s staffs asking for the return of the M/F and the Staircases, though undoubtedly there has been a long delay in bringing this action. This Tribunal does not consider the IO has waived its right. The delay is not indicative of an intention to waive any right or to abandon the M/F and the Staircases. This Tribunal does not consider the defence of waiver has been properly made out.

Laches

86.  In Snell’s Equity (33^rd Ed), the doctrine of laches is stated as follows[53]:

“That doctrine is not based, however, on the mere fact of delay.Something more than mere delay, more even than extremely lengthy delay, is required before B will be denied equitable rights under the doctrine of laches, as the question is whether the lapse of time has given rise to circumstances that now mean it would not be inequitable to deny relief to B....

Laches may also bar claims for equitable remedies such as specific performance...and injunction.” (Emphasis added)

87.  The learned author Spry in his Equitable Remedies (9^th Ed) 2014 Sweet & Maxwell, has similarly stated the principles, though in a more elaborated way, as follows[54]:

“It has been seen that a court with equitable jurisdiction, when it is deciding whether the defence of laches should prevail, enquiries whether there has been, first, unreasonable delay by the plaintiff, and secondly, any consequent prejudice or injustice to the defendant or third persons in ordering specific performance. If these two matters are established, prima facie the plaintiff will fail. But he will fail only because in these circumstances it is ordinarily found to be unjust that he should succeed. It should not be forgotten that the real enquiry by the court relates to the “balance of justice or injustice in taking the one course or the other”, that is, in the grant or refusal of relief, and here any benefit to the defendant through the delay may be important. Here the position of the plaintiff, and particularly the detriment that he will suffer if relief is refused, cannot be regarded as irrelevant, but its importance is much diminished by the weight of countervailing considerations such as ...” (Emphasis added)

88.  This Tribunal will apply the principles above stated in its analysis of the defence of laches.

89.  There is undoubtedly a long delay of 18 years in bringing this action. It cannot be said that the IO does not know of its right to demand for its return because it has been said generally that when the facts are known from which a right arises, the right is presumed to be known[55]. As a matter of fact, the IO do ask for return of the M/F. Goods were stored, and can be seen through the iron gates. No doubt it has express knowledge of the conversion. There is no misunderstanding as to the IO’s rights over the M/F and the Staircases. Yet the matter receives no serious attention until 18 years after the breach. At any rate this is extremely lengthy delay, and the first condition is satisfied.

90.  However, as set out above, mere extreme delay is insufficient. The learned author of Spry’s Equitable Remedies (9^th Ed)[56] was of the view that although in early cases mere delay is sufficient to justify denial of equitable remedies, it is generally accepted those were early cases, and were decided when the doctrine of laches has not been fully developed. The learned author states[57]:

“It is established by the course of authorities that proceedings for specific performance will not fail merelybecause the plaintiff has been guilty of unreasonable delay.In order that relief be refused it is necessary that it should further appear that, as a consequence of that delay, it would be unjust that the plaintiff should obtain an order of specific performance.” (Emphasis added)

91.  Accordingly, the next question to ask is whether prejudice suffered by the respondents and the circumstances of the IO are such that it would be unjust or inequitable to grant the relief sought. It is a balancing exercise to be done by the Tribunal.

92.  This Tribunal accept R2’s evidence that during the course of 18 years, the respondents have continued to spend money to maintain and improve it. Now the M/F is with electricity supply. So far as can be discerned from the Amended Notice of Opposition, R2’s evidence and submission of Mr Lui, the prejudice suffered is that the respondents had incurred money in its repairs, utilized it as its store, incurred money in its improvement[58], and perhaps had lost its right to sue for the money incurred in its initial repair and/or maintenance and/or improvement[59].

93.  Had legal action been brought against the respondents earlier, this Tribunal believes the respondents would not have spent further money to maintain and improve it, and would most probably have sued the IO for refund of the initial repair costs. Though photos and invoices have been preserved, their action would have been barred by now by limitation. Of course the sooner the IO initiates legal action, the more unlikely the respondents will incur expenses to improve.

94.  In the Tribunal’s judgment, however, apart from the initial costs of repair of $119,000 which the Tribunal will come back later, spending money on its maintenance and/or improvement, if any, cannot be regarded as a prejudice. Unless the respondents can be more specific, these are necessary costs incurred for the continued occupation and enjoyment of the “extra space”. Without wiring and lighting for instance, the M/F and the Staircases cannot be best utilized and enjoyed as a store by the respondents as they do now. They benefit from the money they have spent. In the Tribunal’s judgment this cannot be regarded as prejudice. The money was incurred to extract the most out of the “extra space”.

95.  Further, it is obvious that the delay has in fact benefited the respondents. From the building plan submitted, the M/F and the Staircases are of similar, if not larger, in size as the Shop which the respondents bought in 1996 for $1,198,000 for a limited term[60]. Now that the respondents gain the use and enjoyment of an “extra space” of the same size of the Shop, for free. Therefore, the longer the delay, the longer the respondents can enjoy the benefits. Although there is no evidence on the market rent of the “extra space”, it averages out to about $550 per month[61] if the original repair costs of $119,000 are to be regarded as occupation rent. It is a big bargain apparently.  

96.  On the other side of the balance, the IO has a statutory duty under section 18 of the BMO to maintain the common parts and property of the corporation in a state of good and serviceable conditions, and to do all things necessary for the enforcement of the obligations contained in the DMC for control and management of the Building. Although there has been a long and unexplained delay in the enforcement, as discussed above, the IO cannot waive or acquiesce acts which it cannot consent to or waive expressly because to do will amount to a breach of statutory requirement, namely the SFR made under the BO.    

97.  The only injustice to the respondents, in the Tribunal’s judgment, may perhaps be, because of the delay in taking recovery action, the respondents having let past the opportunity to sue the IO for the repair costs of $119,000 which right may have already been time-barred by now, though this has not been raised by the respondents.

98.  The learned author Spry has this to say in his Equitable Remedies (9th Ed) at page 239 (3^rd paragraph):

“Since however it is in view of prejudice or unfairness to the defendant ... that relief is denied through the doctrine of laches, the plaintiff may nevertheless succeed if he accepts relief that is restricted or modified so as to reduce prejudice or unfairness to such extent that injustice is prevented ... And again, if the material prejudice to the defendant arises through the expenditure of money by him, in appropriate circumstances an order for specific performance may be made that is conditional upon his being indemnified. (Emphasis added)

99.  The IO now asks for (i) a mandatory injunction be granted against the respondents for removal of the gates erected at the Staircases, and removal of all goods and chattels stored in the M/F and the Staircases; (ii) failing which an order that the IO is entitled to do so pursuant to the power given under the BMO, and to be reimbursed by the respondents; (iii) a prohibitory injunction be granted against the respondents restraining them from erecting the gates as before and from occupying and placing any goods at the said M/F and Staircases.

100.  The Tribunal shares the learned author’s views set out in [98] above. In this case, the material prejudice to the respondents appears to be the money incurred for the repair which ought to be the responsibility of the IO. This can fairly be compensated by the IO repaying the respondents the money so expended. As discussed above, the respondents have already gained benefits from the delay. This can be regarded as some sort of compensation to the respondents for the delay in repayment. Taking the above into account, this Tribunal considers it not unjust and inequitable to grant the reliefs sought provided the repair costs incurred by the respondents are repaid, and the Tribunal do make orders to that effect.  

Disposition and Costs

101.  By reason of the above, the Tribunal do make the following orders:

i) a mandatory injunction be granted against the respondents that they do demolish and remove the gates erected at the Staircases; remove all goods and chattels stored in the M/F and the Staircases which are common parts of the Building;

ii) an order that the IO is entitled to demolish and remove the gates erected at the Staircases; remove all goods and chattels stored in the M/F and the Staircases pursuant to the power given under section 18(1)(c) and 18(2)(g) of the BMO, and to be reimbursed by the respondents if the respondents refuse and/or fail to carry out what has been ordered in (i) above;

iii) a mandatory order be granted against the respondents that they do deliver vacant possession of the M/F and the Staircases, which are common parts of the Building, to the IO;

iv) an injunction be granted restraining the respondents, whether by themselves, their servants, tenants, agents, representatives, occupiers and licensees from erecting any gate, door or structure at any part of the Staircases and M/F;

v) an injunction be granted restraining the respondents, whether by themselves, their servants, tenants, agents, representatives, occupiers and licensees from occupying and placing any goods, objects or chattels on the M/F and any part of the Staircases; and

vi) the aforesaid orders (i) to (v) will not take effect unless and until the IO pays the respondents a sum of $119,000 within 28 days from the date of this order, or within such further time as the Tribunal considers just and appropriate in the circumstances.

102.  In the circumstances this tribunal proposes and now makes a costs order nisi that the respondents do pay the IO costs of the Application, including all costs reserved, such costs be on the District Court Scale with certificate for counsel. This order nisi will be made absolute if there is no application to vary the same within 14 days from today.