XCHRX URBAN PROPERTY MANAGEMENT LTD. v. HUI PUI SAN AND ANOTHER

HCA 2213/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2213 OF 1998

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J U D G M E N T

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1. The Plaintiff is and at all material times was the Manager of Greenland Garden, a Housing Estate erected on Tuen Mun Town Lot No. 242.

2. The Defendants are the registered owners and have exclusive possession of Flat D3, 4th Floor, Block D, Greenland Garden.

3. According to Clause 2(1) of the Management Agreement the Manager has to obey resolutions passed by the Owners Incorporation and to enforce rules and regulations of the Owners Incorporation and/or the Deed of Mutual Covenant.

4. The following clauses in the Deed of Mutual Covenant are relevant to the present proceeding:-

Clause 4 of Section I provides:-

"The Owners shall at all times hereafter be bound by and shall observe and perform the covenants, provisions and restrictions herein contained and the benefit and burden thereof shall be annexed to every part of the Land and the Estate and the undivided share or shares held therewith. The Conveyancing and Property Ordinance (Cap. 219) and any statutory amendments, modifications or re-enactments thereof for the time being in force shall apply to these presents."

Clause 18 of Section IV provides:-

"Except as herein mentioned and in particular subject to Clause 9 of Section I hereof no external signs, signboards, notices, advertisements, flags, banners, poles, cages, awnings, shelters or other projections or structures whatsoever extending outside the exterior of any building shall be erected, installed or otherwise affixed or projected from any building or any part thereof, nor shall any air-conditioning units or plants or any other fixture be installed through the windows or external walls of the Estate (except in the aperture(s) specially provided therefor) without the prior written consent of the Manager to any such installation having been first obtained and the conditions of such consent having been complied with."

Clause 19 of Section IV provides:-

"No Owner shall do or permit to be done any act or thing which may or will alter the external appearance of any building without the prior consent in writing of the Manager."

5. In or about June 1996 in breach of Section IV Clause 18 and 19 the Deed of Mutual Covenant, the Defendants had erected or installed an air-conditioning unit on the external walls of their unit without prior consent of the Plaintiff.

6. Despite of repeated requests or warning by the Plaintiff and its solicitors the Defendants had failed to rectify the breach.

7. On 14th February 1998 the Plaintiff filed the Statement of Claim and a Defence was filed on 9th April 1998. The Plaintiff now applies for summary judgment under Order 14 of the RSC.

8. The Defendants raised 2 issues

(1) laches and

(2) acquiescence.

9. As to laches the complaint is that by June 1996 the Plaintiff already knew of the existence of the air-conditioning unit and the writ was not issued until 14th February 1998.

10. As to acquiescence the Defendants allege that there are a lot of air-conditioning units which had been installed on the external wall without the management's approval and yet the Plaintiff had taken no steps for their removal. It would be unjust and inequitable for the Plaintiff to single out the Defendants.

11. In support of his argument Mr. Fung of counsel for the Defendants cited the Incorporated Owners of Dragon View v. Nalpak Ltd. [1989] 1 HKC 549 in which Godfrey J. as he then was held:

"(1) Injunction being a discretionary remedy, it was open to a defendant to show that it would be unjust and inequitable to require him to restore the position. In the circumstances, as the alteration had been made over three years ago and no harm had been done to anyone as a result, nor any damage done to any owner or the plaintiff, it would be unjust and inequitable to grant a mandatory injunction against the defendant.

(2) Over the years, the other owners had done much in the way of visible alterations to the building, including the installation of air-conditioners. Although this did not constitute acquiescence or a representation that the obligations under the deed of mutual covenant could be ignored, it showed that arbitrarily to restrain one owner from doing what many others had done in the past, whether with or without consent or knowledge of the management committee, could lead to an unjust and unfair result. Accordingly, the alterations made by the defendant should be viewed in the context of the altered appearance of the building by reason of the various previous alterations, and the mandatory injunction was refused."

12. He also cited Kishinchand Chellaram (Hong Kong) Ltd. v. Hang Yuan Management Ltd. [1987] 2 HKC 257. In that case the Court was of the view that the comparison of all previous breaches by other owners and the Defendants breach could not be satisfactorily decided by looking at 3 photographs and there should be a trial in which the judge would have the opportunity to consider all the aspects of the matter before deciding whether in the exercise of his judicial discretion he would allow the enforcement of the covenants.

LACHES

"..... A Court of equity refuses its aid to stall demands, where the Plaintiff has slept upon his rights and acquiesced for a great (any emphasis) length of time. He is then said to be barred by his laches. The defence of laches is, however, allowed only where there is no statutory bar. If there is a statutory bar operating either expressly or by way of analogy, the Plaintiff is entitled to the full statutory period before his claim becomes unenforceable and an injunction to in aid of a legal right is not barred until the legal right is barred, although laches may be a bar to an interlocutory injunction." Halsbury 4th ed. Vol. 16 para. 925.

13. In the present case clearly the action is not statute barred. The Defendants in para. 2 of their Defence admitted having installed the air-conditioning unit on the external wall in or about June 1996. The cause of action is definitely not statute barred. On 28th June 1996 the Plaintiff already gave a warning notice. This was followed by a letter from the Plaintiff's solicitors on 17th September 1996 and ultimately on 3rd December 1996. Although by the Management Agreement dated 12th July 1996 the Plaintiff was appointed for the period from 1st September 1996 to 31st December 1998, I take it that the Plaintiff was in June 1996 already the Manager properly appointed by the Incorporated Owners as the Defendants did not challenge this fact. The Plaintiff had acted promptly. I cannot see in what way there was any delay on the part of the Plaintiff.

14. In determining whether there has been such delay as to amount to laches, according to Halsbury Vol. 16 para 926 :

"the chief points to be considered are:

(1) acquiescence on the Plaintiff's part; and

(2) any change of position that has occurred on the Defendant's part."

15. With the issuance of the letters by its solicitors I do not find the Plaintiff had acquiesced the Defendant's breach. Equally I do not find the Defendants' position has changed.

16. Counsel for the Defendants put up a very ingenuous proposition and said that the delay of over a year had prejudiced the Defendants as they had to put up with the threat of litigation. I find such proposition ludicrous. Threat of litigation was inevitable and self induced and no Court of equity would deem this to be prejudicial to the Defendants.

17. The only point I have to consider is whether it is unjust and inequitable to require the Defendants to restore the position in view of the ruling in the Incorporated Owners of Dragon View v. Nalpak Ltd. [1989] 1 HKC 549. The facts of that case can be distinguished from the present one. In that case per Godfrey J. at p. 552 F:

"The alteration was made over three years ago, and no harm has been done to anybody as a result of it. No damage has been suffered by any other owner or by the plaintiff. Although I disapprove of the defendants' conduct, to grant a mandatory injunction, in the circumstances to which I have referred, would be unjust and inequitable; and I refuse to do so."

In the present case notice was given immediately in June 1996 and the Defendants have ignored the notice.

18. On the point of acquiescence, unjust and inequitable Godfrey J. went on at p. 552 letter H said:

"However, that is not, in my view, a representation by the Plaintiff that anybody who takes a flat is entitled to ignore his obligations under the deed of mutual covenant; nor is it, in my view, 'acquiescence' in any sense known to the law (despite the use of the term in this connection made by Huggins JA. in his judgment in Cheung Yuet v. Incorporated Owners of Oriental Gardens [1979] HKLR 536). It does, however, show that arbitrarily to restrain one owner from doing what so many other owners have done in the past, whether, with or without consent, or indeed with or without the knowledge of the management committee, could lead to an unjust and unfair result."

19. However in the Incorporated Owners of Hoi Luen Industrial Centre and Another v. Ohashi Chemical Industries (Hong Kong) Ltd. [1995] 2 HKC 11 Godfrey JA. as he now is held:

"(1) Under s 18(1)(c) of the Multi-storey Building (Owners Incorporation) Ordinance (Cap 344), incorporated owners were placed under a statutory duty to do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant. When the incorporated owners found that there was a breach of covenant being perpetrated by one of the owners, it was not only their right but their duty to seek to enforce the covenant (at 13A-B).

(2) It followed that in the instant case the plaintiffs were not only entitled but bound to take proceedings for the enforcement of these covenants. It also followed that they could not have granted expressly to the defendant or any other owner of any unit in the building the right to act in contravention of the deed of mutual covenant as the Defendant had done (at 13C-D).

(3) Although equity would sometimes restrain a plaintiff in the exercise of his legal rights because it would be inequitable and unjust in all circumstances to allow him so to exercise those legal rights, equity would not hold him bound by acquiescence to allow something which he could not have allowed by express grant (at 13D-E)."

20. This being a Court of Appeal decision and the latest, I am obliged to follow. As the Court of Appeal had ruled that it was the right and the duty of the Incorporated Owners to enforce the Deed of Mutual Covenant and that equity would not hold the Incorporated Owners bound by acquiescence to allow something which it could not have allowed by express grant and since the Defendants are in clear breach of the Deed of Mutual Covenant I cannot see how laches or acquiescence can be triable issues.

21. By reasons aforesaid I rule that the Defendants have no defence to this action.

22. Accordingly there be an order in terms of paras. 1 and 2 of the prayer in the Statement of Claim with damages to be assessed by the Registrar and costs to the Plaintiff.