THE INCORPORATED OWNERS OF CHUNG WUI APARTMENTS v. WUI FU COMPANY LTD

CAMP 198 & 199/2024, [2025] HKCA 550

On An Intended Appeal From [2024] HKLdT 82

CAMP 198/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 198 OF 2024

(ON AN INTENDED APPEAL FROM LDBM NO 360 OF 2014)

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AND

CAMP 199/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 199 OF 2024

(ON AN INTENDED APPEAL FROM LDBM NO 361 OF 2014)

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(Heard Together)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  There are before the Court two renewed applications of the Incorporated Owners (“IO”) of Chung Wui Apartments (“the Building”) for leave to appeal against the decision of Deputy District Judge S H Lee made on 6 June 2024 refusing to extend time for the IO to comply with two injunction orders made on 24 October 2023 and varied on 17 January 2024 in LDBM 360/2014 and LDBM 361/2014 (“the 360 Action” and “the 361 Action” respectively, and “the Actions” collectively).

2.  Having considered the documents and submissions filed by the parties in these proceedings, we consider that it is appropriate to deal with the present applications on paper without an oral hearing pursuant to Order 59, rule 2A(5) of the Rules of the High Court, Cap 4A.

BACKGROUND FACTS

3.  In December 2014, the IO commenced the Actions in the Lands Tribunal against the two Respondents to recover outstanding management fees and contributions to the renovation fund of the Building due from them. The Respondent in the 360 Action is the registered owner of a shop that situates at the corner on the ground floor of the Building (“Shop D1”), and the Respondent in the 361 Action is the registered owner of, amongst others, two other shops on the ground floor (“Shop B” and “Shop C” respectively). The two Respondents have a common director who is also their de facto controller.

4.  In January 2015, the Respondents each raised a counterclaim against the IO arising from, inter alia, defective common drainage pipes at the Building which caused the toilet of Shop D1 (in the 360 Action) and that of Shop C (in the 361 Action) (“Toilet D1” and “Toilet C” respectively) to go out of function, and (in the 361 Action only) foul water leakage at the ceiling and floor of Shops B and C. The Respondents claimed damages and injunctive relief against the IO.

5.  The IO’s claims in the Actions were settled by the parties on the first day of a four-day trial in February and April 2023, leaving the Respondents’ counterclaims as the outstanding matters to be resolved.

6.  On 24 October 2023, the Judge gave a written judgment (“the Judgment”) in favour of the Respondents, and ordered the IO, inter alia, to comply with an existing drainage order of the Buildings Department (“BD”) to rectify all existing problems and defects of the underground drains and sewers of the Building within 120 days from the date of the Judgment ([2023] HKLdT 63).

7.  The aforesaid drainage order is a reference to an order issued by BD pursuant to section 28(3) of the Buildings Ordinance, Cap 123, on 28 April 2015 with reference no. DR00091/HK/15 (“the 2015 Drainage Order”). Under paragraph 2(a) to (c) of the 2015 Drainage Order, the IO was directed to appoint an “Authorised Person” to conduct the following works to resolve the drainage problems of the Building no later than 27 October 2015:

(1)  to investigate and report on the location and extent of the defective and insanitary drains of the Building;

(2)  to submit a proposal for drainage works to be carried out to remedy the drainage problems found in the investigation to the Building Authority for approval or acceptance before commencement of the proposed remedial works; and

(3)  to carry out the approved/accepted remedial drainage works[1].

8.  On 17 November 2023, the IO applied for a review of the Judgment. Pending the determination of the review, the IO also took out 2 summonses on 15 January 2024 (“the 1^st Time Extension Applications”) to seek an extension of time to comply with the injunction orders, which would otherwise expire on 21 February 2024 under the timeline imposed by the Judgment.

9.  On 17 January 2024, the Judge varied the injunction orders after review[2], ordering the IO to do the following instead within 120 days from the date of the Judgment:

(1)  (in both Actions) comply fully with the 2015 Drainage Order to the satisfaction of BD;

(2)  (in the 360 Action only) rectify all existing problems and defects of underground drains and manholes of the Building (including sewage backflow and risk of sewage backflow to Toilet D1); and

(3)  (in the 361 Action only) rectify all existing problems and defects of underground drains and manholes of the Building (including sewage backflow and risk of sewage backflow to Toilet C, and foul water leakage and risk of foul water leakage to the floor of Shop B and Shop C) (collectively, “the Varied Injunction Orders”).

It appears to be common ground that if the 2015 Drainage Order is fully complied with, the problems complained of by the Respondents and covered by the Varied Injunction Orders would also likely be resolved in one go[3].

10.  On the same date, the Judge allowed the 1^st Time Extension Applications and extended the time for the IO to comply with the Varied Injunction Orders by two months from 21 February 2024 (the original deadline) to 21 April 2024 (the new deadline).

11.  On 24 April 2024, the IO took out 2 summonses in the Actions (“the 2^nd Time Extension Applications”) to seek a further extension of time to comply with the Varied Injunction Orders by 28 February 2025. In support of the 2^nd Time Extension Applications, Lam Koon Fung (“Mr Lam”), chairman of the IO, filed his 2^nd affirmation to explain why a further extension of time was required:

(1)  Since the Judge’s review decision on 17 January 2024, the IO had engaged Shun Wo Engineering Consultant Limited (“Shun Wo”) and Mr So Chi Wai (“Mr So”) as consultant to take action to comply with the 2015 Drainage Order.

(2)  The IO had complied with paragraph 2(a) of the 2015 Drainage Order by submitting to BD a CCTV Report dated 1 February 2024 in respect of all manholes of the Building, and also made substantial progress in respect of paragraph 2(b) thereof by submitting to BD a proposal for certain drainage works to be carried out.

(3)  By a letter from BD dated 15 March 2024 (“the March Letter”), BD commented on various matters in respect of the proposed drainage works.

(4)  In view of the comments raised in the March Letter, the IO had a meeting with the responsible officers of BD assigned to handle the 2015 Drainage Order on or around 18 March 2024 (“the March 2024 Meeting”). That meeting was attended by, amongst others, Mr Billy Yeung - project manager of Shun Wo (“Mr Yeung”), Mr So, and a legal representative for the IO.

(5)  By the time of filing of Mr Lam’s 2^nd affirmation, the IO had not yet received from all companies it invited to provide quotation for their services in relation to the appointment of an Authorised Person for the intended drainage works, and thus it required more time to comply with the Varied Injunction Orders.

12.  On 4 June 2024, the 2^nd Time Extension Applications were heard together by the Judge. At the hearing, the IO called two witnesses to give oral evidence, including Mr Yeung.

13.  The following aspects of Mr Yeung’s oral evidence, taken from the transcript of the hearing on 4 June 2024 (“the 4 June Transcript”), are relevant for the present purpose:

(1)  Shun Wo was initially engaged by the IO as consultant for the purpose of a prescribed inspection and/or repair of the Building under BD’s Mandatory Building Inspection Scheme (“MBI Scheme”). The inspection under the MBI Scheme covered the common parts of the Building, including the underground drainage[4]. Mr So was engaged by the IO as the “Registered Inspector” for the purpose of the inspection/repair[5]. Pausing here, it may be noted that the statutory provisions for the prescribed inspection/repair and the appointment of a Registered Inspector for such inspection/repair are to be found in sections 30B and 30D of the Buildings Ordinance.

(2)  There was a meeting between Mr Yeung and a Mr Siu, an officer of BD, on 21 November 2023 (“the November 2023 Meeting”). In their discussion about the remedial drainage works to be carried out under the MBI Scheme, Mr Siu did not object to the proposal that the relevant works be handled by a Registered Inspector[6].

(3)  However, at the March 2024 Meeting, a different officer of BD, namely, Mr Wong, insisted that the IO should appoint an Authorised Person for the remedial drainage works to be carried out in the Building in accordance with the approved drainage plan[7].

(4)  From Mr Yeung’s past experience, a drainage order in respect of drainage works to be carried out following an inspection under the MBI Scheme could be complied with through the appointment of a Registered Inspector only (without the necessity of appointing an Authorised Person), and the appointment of a Registered Inspector only in such circumstances was acceptable to BD[8]. He considered that the IO’s case could be handled by taking an exceptional course (特事特辦) without the need to appoint an Authorised Person as discussed with Mr Siu of BD previously[9].

THE DECISION

14.  On 6 June 2024, the Judge gave his decision orally in court refusing the 2^nd Time Extension Applications (“the Decision”). The Judge’s reasons for the Decision can be seen from the transcript of the hearing on 6 June 2024 (“the 6 June Transcript”). Those reasons have been summarised by the Judge at §25 of the Leave Decision (see §16 below).

15.  In short, the Judge considered that had an Authorised Person been engaged by the IO in October 2023 when the Judgment was handed down, the remedial drainage works as required by the 2015 Drainage Order could well have been completed by 21 April 2024 and, if not, by 6 June 2024, without the need for another extension of time. The Judge considered that the IO had failed to provide a proper explanation as to why it did not appoint an Authorised Person earlier to carry out the necessary works. The Judge also considered that it was the IO’s own fault in appointing only a Registered Inspector, and the IO should not be granted more time to comply with the Varied Injunction Orders to the Respondents’ detriment.

16.  The IO’s subsequent application for leave to appeal against the Decision was refused by the Judge on 30 September 2024 (“the Leave Decision”).

THE PRESENT APPLICATIONS

17.  By summonses filed in the Court of Appeal on 14 October 2024 (collectively “the Summonses”), the IO renewed its applications for leave to appeal against the Decision. Three intended grounds of appeal are raised in a draft Notice of Appeal attached to the Summonses, which may be summarised as follows:

(1)  The Judge erred in concluding that the IO had deliberately failed to comply with the 2015 Drainage Order (and therefore the Varied Injunction Orders) by failing to appoint an Authorised Person in compliance with the 2015 Drainage Order, notwithstanding its finding that the IO was at all relevant time intent on complying with the Varied Injunction Orders (“Ground 1”).

(2)  The Judge erred in finding fault on the part of the IO in that he failed to consider the IO’s evidence that (i) it had been led by Shun Wo into believing that the appointment of a Registered Inspector was sufficient to comply with the 2015 Drainage Order, which was part and parcel of an order (“MBI Order”) in respect of the Building made under the MBI Scheme, (ii) BD had expressed no objection to this approach prior to the change of personnel at BD, and (iii) the IO had accordingly suffered detriment as a result of Shun Wo and BD’s respective conduct (“Ground 2”).

(3)  The Judge erred in failing to take into account of all relevant matters, or consider the overall justice of the case (“Ground 3”).

DISCUSSION

18.  Section 11(2) of the Lands Tribunal Ordinance, Cap 17 (“the LTO”), so far as relevant, provides that any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law.

19.  Section 11AA(1) of the LTO provides that, subject to sub-section (2) (which has no application in the present case), no appeal may be made under section 11(2) unless leave to appeal has been granted by the Tribunal or the Court of Appeal. Section 11AA(6) further provides that leave to appeal shall not be granted unless the Court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.

20.  A “reasonable prospect of success” means an appeal with a prospect that is more than fanciful without having to be probable: SMSE v KL [2009] 4 HKLRD 125, at §17.

21.  Whether to extend time for a party to comply with a court order involves an exercise of discretion by the court. In the exercise of such discretion, the court should consider all relevant circumstances and the overall justice of the matter, instead of adopting a rigid or mechanistic approach (see Hong Kong Civil Procedural 2025, Vol 1, §3/5/2, citing Astro Nusantara International BV v PT Ayunda Prima Mitra (2018) 21 HKCFAR 118). The Court of Appeal will not lightly interfere with a first instance discretionary decision unless the judge erred in principle, or relied on irrelevant considerations, or failed to take into account of relevant considerations, or the decision is plainly wrong.

22.  In the Consolidated Written Statement for the IO lodged on 14 October 2024, Mr Justin Ismail submits that there are obvious errors committed by the Judge, in that he failed to take into account of various material factors raised in the three intended grounds of appeal in reaching the Decision.

23.  On the other hand, in the Statement in Opposition for the Respondents lodged on 28 October 2024, Mr Alex Lai submits that Grounds 1 and 2, although couched in terms of errors of law, are in fact challenges to the Judge’s findings of fact based on his evaluation of the evidence before him, and thus are not valid grounds of appeal under section 11(2) of the LTO: Oriental Moon Ltd v Golden Sino Link Ltd [2023] HKCA 608, at §34. As for Ground 3, Mr Lai argues that it is a bare assertion without particulars, and likewise cannot constitute a valid ground of appeal.

24.  In what follows, we shall first consider Ground 2, before dealing with Grounds 1 and 3.

Ground 2

25.  Ground 2 constitutes the main thrust of the IO’s case in the 2^nd Time Extension Applications. The IO essentially attributed its delay in complying with the Varied Injunction Orders to two factors, which were allegedly outside of its control, namely, (i) Shun Wo’s proposed approach that the appointment of a Registered Inspector would suffice not only for the purpose of carrying out the requisite works under the MBI Order, but also for complying with the 2015 Drainage Order, and (ii) the change of personnel at BD, which resulted in the rejection of the Shun Wo’s proposed approach by BD in March 2024.

26.  As for (i), Mr Ismail points to various parts of Mr Yeung’s oral evidence to the effect that the 2015 Drainage Order was part and parcel of an outstanding MBI Order which, according to Shun Wo, could be dealt with by a Registered Person (instead of an Authorised Person), and argues that the Judge failed to take such matters into account[10].

27.  It is clear that the Judge had considered Mr Yeung’s testimony and had not lost sight of his evidence as alleged[11]. However, as mentioned by the Judge at §36 of the Leave Decision, the 2015 Drainage Order and the MBI Order were issued by BD at different times pursuant to different statutory provisions (section 28(3) and section 30B of the Buildings Ordinance respectively), and the IO never produced the MBI Order as evidence. Other than Mr Yeung’s assertion, there was no evidence that the 2015 Drainage Order was part and parcel of the MBI Order (which remained outstanding) as submitted by Mr Ismail. Further, the Judge rejected Mr Yeung’s evidence that the change of personnel at BD was the reason for the IO’s delay in carrying out the requisite works to comply with the 2015 Drainage Order.

28.  More importantly, the Judge found that there was no evidence, whether from Mr Yeung or Mr Lam, to prove that the IO had been led into believing that it was not necessary to appoint an Authorised Person for carrying out the drainage works required for complying with the 2015 Drainage Order[12]. On the contrary, the Judge found that the IO was fully aware of the need to appoint an Authorised Person to comply with the 2015 Drainage Order having regard to the fact that (i) the IO had the experience of appointing three Authorised Persons in the past 17 years for the purpose of complying with BD’s drainage orders (though in vain)[13], (ii) the express wording of the 2015 Drainage Order, and (iii) the Judge’s reminder to the IO of the need to appoint an Authorised Person at the review hearing[14]. In our view, the IO’s complaint that the Judge had failed to consider Mr Yeung’s evidence that the IO had been led by Shun Wo into believing that the appointment of a Registered Inspector only was sufficient to comply with the 2015 Drainage Order is unsustainable.

29.  As for (ii), as earlier noted, the Judge rejected Mr Yeung’s evidence that the change of personnel at BD had contributed to the IO’s delay in carrying out the requisite works in compliance with the 2015 Drainage Order[15]. The Judge also found that BD never changed its requirement concerning the appointment of an Authorised Person for the purpose of compliance with the 2015 Drainage Order[16]. It was open to the Judge to make such findings on the materials before him. We do not consider it reasonably arguable that the Judge had failed to consider the IO’s evidence that BD had previously expressed no objection to Shun Wo’s approach of appointing a Registered Inspector only for the purpose of compliance with the 2015 Drainage Order.

30.  In all, Ground 2 is not reasonably arguable.

Ground 1

31.  Under this ground, the IO argues that it is inconsistent for the Judge to find that the IO was intent on complying with the Varied Injunction Orders, but at the same time to also find that the IO deliberately failed to comply with the same by failing to appoint an Authorised Person to carry out the requisite drainage works in compliance with the 2015 Drainage Order. In response, Mr Lai submits that the IO’s argument is based on a misreading of the Judge’s decision. We agree with Mr Lai’s submission.

32.  As can be seen from the 6 June Transcript, the Judge found that the IO was fully aware of the requirement of appointing an Authorised Person under the 2015 Drainage Order. He also took the view that the IO was not forthcoming as to the real reason why an Authorised Person was not appointed in the first place. The Judge considered that the IO had failed to disclose, if not deliberately hidden from him, the full circumstances of its decision to instruct a Registered Inspector instead of an Authorised Person to comply with the 2015 Drainage Order[17]. Nevertheless, as pointed out by the Judge, he did not hold that the IO had deliberately failed to comply with the 2015 Drainage Order (or the Varied Injunction Orders). What he found was that the IO “took risks” and was “at fault” in not engaging an Authorised Person to comply with the 2015 Drainage Order. We see no inconsistency between the Judge’s various findings.

33.  There is nothing amiss in the Judge’s finding that the IO had not been treating the 2015 Drainage Order seriously enough. The 2015 Drainage Order expressly required the IO to appoint an Authorised Person to carry out the requisite works, and the IO knew, or must have known, of this requirement. It had only itself to blame for failing to fully comply with the statutory order, which in fact required compliance by 27 October 2015.

34.  The IO’s reliance on the fact that the Judge did not make an indemnity costs order against it is plainly misconceived[18]. Whether to make an indemnity costs order involves a separate exercise of discretion, and should not be confused with the exercise of discretion by the Judge not to grant a second extension of time for the IO to comply with the Varied Injunction Orders. While the considerations relevant to the two matters may overlap, they are not the same.

35.  In short, Ground 1 is not reasonably arguable.

Ground 3

36.  Ground 3 is a bare assertion that the Judge erred in failing to take account of all relevant matters, or consider the overall justice of the case. It does not constitute a valid ground of appeal. In any event, given our conclusions under Grounds 1 and 2 above, Ground 3 has no substance, and is rejected.

37.  In conclusion, the IO has failed to raise any arguable ground that the Decision is erroneous in point of law. We do not consider that the Judge failed to take into account relevant considerations, or misunderstood the Applicant’s evidence, or made any palpable errors in the Decision. Neither do we see any valid basis to disturb the Judge’s exercise of discretion in refusing the 2^nd Time Extension Applications. There is no other reason in the interests of justice why the intended appeal should be heard.

DISPOSITION

38.  The Summonses are dismissed, with costs to the respective Respondents. We have considered the 2 costs statements lodged by the Respondents for summary assessment dated 28 October 2024, and summarily assess each Respondent’s costs in the amount of HK$60,000. The above costs orders, including the assessment of costs, are orders nisi, which shall become absolute unless an application is made to vary the same within 14 days from the date of this judgment.

39.  As the IO’s applications for leave to appeal are totally without merit, pursuant to Order 59, rule 2A(8) of the Rules of the High Court, we make an order that no party may request the present determination to be reconsidered at an oral hearing inter partes.