POON CHI HUNG, WILLIAM v. THE INCORPORATED OWNERS OF TAK WING INDUSTRIAL BUILDING

LDBM 247/2011

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 247 OF 2011

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BETWEEN

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DECISION

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Introduction

1.  This is an application for interlocutory injunction.

Background

2.  The Applicant is and was the owner of Unit C, 4^th Floor & Flat Roof, Tak Wing Industrial Building (‘the Building”), No. 3 Tsun Wen Road, Tuen Mun, New Territories. 

3.  On 1 August 2011, he commenced the present proceedings against the Respondent, namely, the Incorporated Owners of the Building (“the IO”). Briefly, the Applicant complained that the IO had passed a resolution at the owners meeting on 28 July 2011. It was then resolved that the IO was to purchase the external walls and certain spaces and areas (collectively called as “the External Walls”) of the Building. The Applicant, opined, inter alia, that such action would turn the External Walls into the common parts of the Building. It therefore changed the Deed of Mutual Covenant (“the DMC”) of the Building. Such change could only be done with consensus of all the owners of the Building but it had not been obtained.

4.  The Applicant therefore sought various reliefs to put right the matter, including declarations and injunctions.

5.  The Applicant further took out the present interlocutory application for injunction. The matter was first heard by His Honour Judge M. Wong on 5 August 2011. Upon the undertaking by the Counsel acting for the IO that the conveyance of the External Walls was not to be completed on or before 10 August 2011, the application was adjourned to be dealt with by me in the afternoon on 10 August 2011.

6.  Upon hearing from the parties, the Applicant himself and Miss Connie Lee, Counsel for the Respondent, I reserved my decision to be handed down. I now do so.

7.  The applicable legal principles relating to whether an interlocutory injunction should or should not be granted were not disputed. They can be conveniently found in pages 622 to 638 of HKCP 2011. Briefly, they might be summed up in the followings.

(a)  Is there serious question to be tried?

(b) Are damages adequate remedy?

(c)  On which side does the balance of convenience lie?

(d) Are there any other considerations that the Court should take into account?

I will deal with each of these matters in turn.  

Serious question to be tried?

8.  The Applicant told me that there was serious question to be tried. It was because the acquisition of the External Walls by the Respondent might cause him to go bankrupt because he held his property in his own name. By turning the External Walls into the common parts would expose all the owners of the Building, including him, to unnecessary liability. Further, whether the Respondent could do so or not would be a matter of public concern.

9.  Practitioners will immediately spot that the Applicant misunderstood the nature of the test. It is not how serious or important the issue is. Rather, it requires the Court to assess the merits of the parties’ case by way of the affidavit evidence before him. Despite my efforts to clarify it with the Applicant at the hearing, it appeared to me that he did not quite follow.

10.  Anyway, in any event, I agree with Miss Lee that there is no serious of question to be tried in the present case.

(a)    The Applicant has not been able to point to me any provision of legislation or produce any authority to support his “cause of action”.

(b)    On the contrary, Miss Lee could demonstrate that there was good legal basis for the Respondent’s case.

(i)    Incorporated owners are entitled to acquire and hold interest of land in its building, other than the common parts thereof. It is a literal and purposive reading of the relevant legislation, section 8(2)(aa) of the Building Management Ordinance(“the BMO”), Cap.344.

“…the corporation shall have, and be deemed always to have had, the power to hold an undivided share in the building, together with the right to the exclusive possession of any part of the building other than the common parts thereof…”

(ii)Reyes J. also in his Judgment dated 12 March 2008, Incorporated Owners of Lee Hang Industrial Building v. Billion Development & Project Management Ltd. , HCMP 2243/2007, agreed with the above view and went further to confirm that the incorporated owners can sell the undivided share. 

“12… I would make a Declaration to the effect that the Incorporated Owners had the power to acquire and have the power to sell the properties in the Building registered in their name in the Land Registry.”

(c)     With the above, it makes the cause of action of the Applicant not sustainable. If the argument of the Applicant were to be upheld, all incorporated owners would never be able to hold any interest of land in the relevant buildings because such action turned those particular interests of land into the “common parts” thereof. 

Damages as adequate remedy?

11.  An order for an interlocutory injunction may be made with or without terms or conditions. However, usually, the applicant will volunteer with an undertaking as to damages. Evidence as to the financial position and arrangement will also be produced for the consideration of the Court. It has not been the case here.

12.  The IO pressed for the same. The Applicant did not directly deal with it until the same was raised by the Court at the hearing with him. He said that he was willing to provide the undertaking. He suggested that his property at the Building was worth of more than $1m.

13.  Miss Lee kindly conceded that the damages involved would not be great as the consideration for the purchase of the External Walls was only $28,000. However, she said in her supplemental skeleton submissions that:  

“20…damages would not be adequate to compensate the Respondent if the sale falls through because of the delay caused by the Applicant’s interlocutory injunction as landed property which one intends to buy is unique.”

14.  I agree with Miss Lee and should further add that there was evidence before me that the External Walls had been in need of urgent maintenance and repair. The IO tried to do so, but had encountered a number of difficulties. The management committee of the IO had spent quite some effort and ultimately was able to agree with the owner of the External Walls for the acquisition. Parties had contemplated that the transaction was to be completed within the first or second week of August 2011. The imposition of an injunction might delay or even “destroy” the conveyance transaction. As a result, not only that the IO would not be able to acquire the External Walls, the maintenance and repair problems were to be further dragged on. The damages might not be as little as $28,000.

Balance of convenience ?

15.  The Applicant said that, his interest would be seriously prejudiced should this Court refuse to grant him the interlocutory injunction. The maintenance and repair could still be done without the ownership.

16.  However, if one is to weigh the following factors mentioned by the IO. The balance of convenience must lie on its side.

(a) The External Walls were in need of urgent maintenance and repair.

(b) The IO had tried to do so some time in 2009. However, the Applicant then commenced LDBM 56/2009 trying to stop the works because, among others, the External Walls were not common parts of the building, and as such, the IO could not have decided to repair the same.

(c) Although the case of LDBM 56/2006 was thereafter settled by the last IO, the question of maintenance and repair of the External Walls was still pending in the air.

(d) Though the Applicant said that he would not do it again, the IO still wanted the ownership of the External Walls.

(e) Not only that it would made things more certain, but also it could allow it to get proper policy of insurance for the same as stipulated under section 28 of the BMO.

(f) Even if the ownership of the External Walls did not rest on the IO for the time being, it might still be held liable under the concept of public nuisance (Leung Tsang Hug & Anor. v. Incorporated Owners of Kwok Wing House [2007] 5 HKC 227, per Bokhary PJ).

(g) If the IO would be held so liable, it (as well as all owners of the Building, including the Applicant, indeed) was to be exposed to a risk of paying substantial damages, which might far exceed the costs of maintenance and repair.

(h) The IO was also likely to be dragged into any litigation regarding the External Walls as the current owner thereof was only an overseas company with no business and registered office in Hong Kong.

(i) The IO had received tender from contractor, including the maintenance and repair of the External Walls, any delay in the matter might cause the price to go higher. All owners of the building would be affected.

(j) Last, but not least, it was simply undesirable that any one was to be injured irrespective of who should be liable to pay.  

Other considerations?

17.  At the outset of the hearing before me, I told the parties that the granting or refusal of the interlocutory injunction by this Court would have a strong implication, which might in effect dispose the present proceedings finally. If interlocutory injunction was to be granted, the current owner of the External Walls might change its mind and would not agree to sell them to the IO. It might also disappear and could not be further contacted. On the other hand, if no interlocutory injunction was to be issued, the conveyance would go ahead and it was very unlikely that the current owner would agree to “take back” the External Walls should the Court eventually decide in favour of the Applicant.

18.  I remind myself of such implication.

19.  I should also consider the concept of natural justice. It was something specifically raised by the Applicant for my consideration.

20.  Upon thought, I do not think that such concept will not help him in the circumstances.

(a)  I can only agree with the Applicant to the extent that the acquisition of the External Walls at $28,000 calls for some careful thought over the matter. It cannot be a simple conveyance transaction. It might be very true that, at least, for the time being, the IO is asking for an obligation to repair only.

(b) However, as discussed above, with or without the ownership, the IO might still be liable for any injury caused by lack of maintenance and repair of the External Walls.

(c)  If any accident would happen, the involvement of the IO in the litigation is almost inevitable.

(d) The best case for the IO, all the owners, including the Applicant, must be that the current owner of the External Walls would kind enough to do all the maintenance and repair, as well as to effect a proper policy of insurance.

(e)  However, if it is not attainable, should one opt for the second best?

(f)   I believe that most of the owners at the building did make such a decision on 28 July 2011. It is only the applicant who took a different view with the majority.  

(g)  With respect, I do not consider that he has a better solution to the problem.

Conclusion

21.  To conclude, I find that there is no serious question to be tried. Even if I were not correct on it, damages are not adequate to compensate the IO in the present case. In any event, balance of convenience lies on the IO, not the Applicant. Finally, there is no further reason why interlocutory injunction should be granted in the circumstances.

Costs

22.  At the end of the hearing, I asked parties to make submission of costs, including preparing the costs statement for summary assessment, if appropriate. Now, I have decided to dismiss the application for interlocutory injunction by the Applicant.

23.  I see fit to award costs payable forthwith to the IO who successfully defend for the same. I also see fit to grant Certificate for Counsel for the hearing before me, as well as the time spent by Miss Lee in settling the affirmation in opposition. She did render useful assistance to the Court. Although the Applicant has been acting in person all along, he does have some legal knowledge and background. Irrespective of whether his arguments are to be accepted, one still has to spend time effort and legal research to deal with them.

24.  I further see fit to have the costs summarily assessed.

(a)  Miss Lee charged for $35,000 and $10,000 for her brief and refresher. Her brief included attending conference with the IO, settling the affirmation in opposition, preparing skeleton and conducting legal research, all on an urgent basis. Her refresher also included her fee for settling the supplemental skeleton submission. She further said that her hourly rate was about $1,400. Such rate must be more than reasonable in the circumstances.

(b) However, given the hearing before His Honour Judge M. Wong for only 0.5 hour and that before me, 2 hours, the fees are a bit on the high side.

(c)  I of course do not forget that no certificate of Counsel was granted at the call-over hearing.

(d)  Nonetheless, one should never forget about the comprehensiveness of affirmation in opposition (15 pages) together with exhibits of more than 200 pages as well as the thoughtfulness of her 2 skeleton submissions, I am sure that Counsel spent quite some time in the matter. Either the same would have been done by the solicitors or that the same has to be done again at the adjourned hearing before me.

(e)  With all these in mind, I will assess the brief and refresher to be levied at $28,000 and $7,000 respectively, to be paid by the Applicant on a party-and-party basis.

(f)  On the other hand, the solicitors asked for $52,000. It was calculated by 20 hours spent at the rate of $2,600. With the assessment of Counsel’s fee as aforesaid, I am afraid that the costs of the solicitors have to be reduced. On top of the hearing time in Court, I will further allow 3.5 hours for the preparation of documents and communication. Hence, a sum of $15,600 is allowed.

(g)  As to the disbursement, I will award the sum of $1,000.           

Orders

25.  To sum up the matter, I will make the following orders.

(a)  The application by the Applicant for interlocutory injunction is dismissed.

(b)The Applicant shall pay the costs of the Respondent in relation to the said application, including Certificate of Counsel for the hearing on 10 August 2011, in the assessed sum of $51,600 payable forthwith.