WING MING GARMENT FACTORY LTD v. THE INCORPORATED OWNERS OF WING MING INDUSTRIAL CENTRE

HCCT 60/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 60 OF 2006

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J U D G M E N T

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I.   INTRODUCTION

1.  This is an action about a building called Wing Ming Industrial Centre, located at Cheung Sha Wan, Kowloon.

2.  The plaintiff (“Wing Ming”) was the building’s original developer and still owns parts of the building including various parts of the Basement, G/F, 10/F, Roof Floor (also known as the 11/F) and the Upper Roof Floor.

3.  The defendant is the incorporated owners of the building (“IO”).  Whilst formally representing all the owners of the building, it is, in reality in this litigation, representing all the owners except Wing Ming. 

4.  As observed by Reyes J in the judgment of an earlier action in HCA 8805 of 1993 between, among others, the same parties (“the first action”), the plaintiff and defendant have since 1993 been locked in bitter dispute over almost all aspects of the building’s management.  I shall describe below the history and scope of the first action insofar as it is of relevance in the present proceedings.

5.  Wing Ming’s claims in this action relate mainly to alleged defects in certain structural and waterproofing elements of the building, which it says are common parts of the building that the IO has failed to maintain or keep in repair.  It is alleged that this failure by the IO in performing its duties has affected and continues adversely to affect the parts owned by Wing Ming (and other common parts), resulting in water seepage and concrete spalling.  Wing Ming claims orders for the IO to rectify and remedy the defects.

6.  The IO counterclaims against Wing Ming for various alleged breaches of the deed of mutual covenants and of the Building Management Ordinance (Cap. 344) (“the Ordinance”), including alterations to external walls and other unauthorised building works, occupation of common areas, and display of advertisement and signs.  Declaratory and injunctive relief is sought by the IO.  There are also claims that Wing Ming had exclusively used or occupied parts of the building that are, in fact, common parts and are therefore liable in damages or to account for the benefits received.

7.  In addition to the voluminous documentary evidence, Wing Ming has called its managing director, Mr Yuen Man Pui, and its director, Mr Ho Chick Yam, and the IO has called its current chairman, Mr Luk Siu Kai, and the Chief Property Manager of the current building manager, Mr Leung Siu Chiun Henry, to give evidence.  Both parties have adduced expert evidence in relation to the alterations of the building and leakage of water, and also on rental valuation for the purpose of quantifying the amounts claimed.  I have also had the benefit of a visit to the building on the second day of the trial and inspection of the relevant parts of the building in the company of the parties.

II. BACKGROUND

The land and building

8.  Wing Ming was the Government lessee of the land on which the building is situated.  The conditions of the grant are set out in the Conditions of Sale of October 1974.

9.  As required by the grant, Wing Ming erected the building on the land.  The final version of the building plans in accordance with which the building was constructed were approved by the Building Authority in 1978.  The Occupation Permit for the building was issued on 14 November 1978.

10.  The building has a rectangular footprint.  It is bounded on the south side by Tai Nam Street and on both the east and west sides by Cheung Yue Street, which is a U-shaped street.  It abuts another building on the north side.

11.  By Special Condition (3)(a), the user of the land is limited to industrial and godown purposes.

12.  The building has 12 storeys, namely, G/F, 1/F to 10/F, Roof Floor (also called 11/F), as well as a Basement and an Upper Roof.  Most of the Roof Floor is occupied by a large room originally called the Recreation Area on the plans but later called the Workshop.  The Upper Roof is the real roof of the building which is exposed to the elements.  There are 11 car parking spaces (numbered 1 to 11, which I shall refer to as CPS 1, CPS 2, etc) and a container space in the building, all of which are situated in the G/F. 

Ownership of the building

13.  Prior to March 1991, Wing Ming was the sole owner of the land and the building.

14.  On 2 March 1991, Wing Ming sold the 6/F and 7/F and CPS 6 and 7 to a company called Super Kind.  At the same time, Wing Ming entered into a deed of mutual covenants (“DMC”) with Super Kind and a company called Essman as the Manager of the building.  Essman is a related company of Wing Ming. 

15.  The DMC was drafted through negotiations between two firms of solicitors acting on behalf of Wing Ming (the first owner) and Super Kind (the second owner) respectively. 

16.  “For the purpose of sale and individual ownership[1]”, the DMC notionally divided the land and the building into 1,323 equal undivided shares and allocated them to various parts of the building.

17.  On 22 March 1991, Wing Ming assigned the 8F and 9/F and CPS 8 and 9 to a purchaser called Renley.

18.  By a deed poll executed on 15 May 1991, Wing Ming divided an area on the G/F, called the Front Portion of the G/F, into 2 parts identified as Portions V1 and V2 respectively.

19.  On 27 May 1991, Wing Ming assigned the 3/F and CPS 1, 5 and 11 to a purchaser called Conwan.  On the same date, Wing Ming also assigned CPS 10 and the container space on the G/F to a purchaser called Hung Tak.

20.  In the assignment of CPS 5, 6, 7, 8, 9 and 10 respectively that I have referred to, the car parking spaces as marked on the assignment plans included the areas marked “VOID” (“void areas”) on the plans, and excluded a narrow strip at the back of the spaces.

21.  In February 1992, Wing Ming sold what is said in the assignment to be CPS 2 to a purchaser called Sanwa, but what is marked in the plan attached to the assignment is in fact substantially the void area in front of the car parking space shown in the building plans and the DMC G/F plan.

22.  In May 1992, Wing Ming assigned certain parts of the building and Portion V1 on the G/F to the purchaser Hung Tak.  Subsequently, Wing Ming assigned the 4/F to another purchaser.

23.  Thereafter, since 1993, Wing Ming has retained and held the Basement, parts of the G/F, the Southern Half Portion on the G/F, the cockloft, Portion V2, CPS 3 and 4, the 10/F, the Roof Floor (also known as 11/F) and parts of the Upper Roof. 

24.  Under the DMC, the owner of the area called the “Front Portion” of the G/F (i.e. Wing Ming) has the right to construct a loft over another part of the G/F identified as the “Southern Half Portion” in the G/F plan annexed to the DMC, as well as the right to construct a loft over CPS 2, 3 and 4, provided it leaves a headroom of at least 7 feet 6 inches for those car parking spaces.

25.  In May 1993, the owners of the building incorporated themselves pursuant to the Ordinance.

Alterations in 1993-1994 and the first action

26.  Since about 1991, Wing Ming had intended to make a number of alterations to the building.  This was put into action in 1993 and 1994.  An architectural firm was engaged to prepare alteration plans.  Parts of the external walls on G/F facing Tai Nam Street were proposed to be replaced by glass panels.  A cockloft was proposed to be constructed above CPS 2, 3 and 4 and the void areas in front of them.  I shall refer to these works as “the 1994 alteration works” and return to describe them in greater detail so far as material in this action.

27.  In 1993, the fire services facilities in the building had to be repaired.  The IO engaged a company called New Gas to carry out the work.  As a result, on around 7 August 1993, New Gas installed a fire service pipe.  Part of that pipe passed at near ceiling height through the space over the void areas in front of CPS 2, 3 and 4, which Wing Ming claimed was its property and where, Wing Ming said, it had reserved in the DMC the right to build a loft.

28.  Accordingly, on 30 September 1993, Wing Ming instituted the first action against the IO and New Gas for having installed the pipe through the space over the void areas in front of CPS 2, 3 and 4, in breach of the DMC.  The IO joined Essman as the third party and also counterclaimed against Wing Ming for unpaid management fees.

29.  Soon after commencing the first action, Wing Ming sought an interim mandatory injunction for the removal of the pipe.  That application failed at first instance before Barnett J on 26 January 1994.  The judge thought that Wing Ming was bound to succeed on the issue of encroachment but nevertheless refused to grant an injunction in his discretion.

30.  Wing Ming appealed against that decision.  In July 1994, the Court of Appeal saw no ground to interfere with the judge’s exercise of discretion and accordingly dismissed the appeal. 

31.  At the time when the pipe was installed by New Gas, there was no loft over CPS 2, 3 and 4 or the void areas in front of them.  Meanwhile, before the hearing of the appeal and despite the presence of the pipe, Wing Ming began and completed the construction of a cockloft above CPS 2, 3 and 4 (as shown on the building plans) as well as above the void areas in front of CPS 2, 3 and 4.  Wing Ming also erected a wall below this loft which enclosed CPS 2, 3 and 4, leaving the void areas in front of them as the re-designated CPS 2, 3 and 4.

32.  Eventually, by agreement and without prejudice to the parties’ contentions, the pipe was re-routed in July 1995.

33.  Thereafter the first action went dormant.  In 2003, the IO issued an application to have the action dismissed for want of prosecution.  This succeeded before the master, but Wing Ming’s appeal to A. Cheung J (as Cheung CJHC then was) succeeded in April 2005.

The Manager

34.  The appointment of the first manager, Essman, was terminated by the IO on 1 June 1994 by notice given on 1 March 1994.  Its role as manager was initially taken over by Security Alliance Limited (which left after a short probation period), and from October 1994 onwards by Easyknit.  The managers after Essman were all appointed by the IO. 

35.  Easyknit, the Manager, was replaced by Guardian Property Management Ltd (“Guardian”) in around 2004.

Result of the first action

36.  The first action was eventually tried before Reyes J in December 2007.  The learned judge held, inter alia, that under the DMC, the void areas in front of CPS 2, 3 and 4 are not areas for parking vehicles but are common areas meant to be kept clear.  He granted a mandatory injunction requiring Wing Ming to demolish the wall that enclosed the real CPS 2, 3 and 4.

37.  Wing Ming appealed to the Court of Appeal (CACV 27/2008), which handed down a judgment dated 27 June 2008 affirming the judge’s decision.

38.  Meanwhile, the present action was commenced on 18 August 2006 by Wing Ming.  The IO filed a defence and counterclaim in September 2006.  Both the action and the counterclaim have undergone changes in their scope by way of repeated amendments.

Present ownership

39.  The present position with regard to ownership of shares and units in the building is as follows:

Wing Ming	holding 314 shares and the parts identified in paragraph 23 above
Conwan	holding 378 shares and, 1/F, 2/F, 3/F, container space, CPS 1, 5, 10, 11 and Portion V1 on G/F
Super Kind	holding 210 shares and 6/F, 7/F, CPS 6 and 7
Renley	holding 210 shares and 8/F, 9/F, CPS 8 and 9
Sanwa	holding 105 shares and 5/F and CPS 2
Orient Land	holding 106 shares and 4/F

III. WING MING’S CLAIMS

40.  Wing Ming’s claims in this action relate primarily to defects in certain structural or waterproofing elements of the building, namely, the waterproofing membrane in the Upper Roof floor, the soffit of the reinforced concrete slab which forms the ceiling of the 10/F, and certain walls, beams, pile caps and ceiling slabs in the Basement.

41.  Wing Ming submits that the defects complained of are all located in the common parts of the building and, as such, lie within the IO’s responsibility.  (The DMC uses the phrase “common areas” while the Ordinance refers to “common parts”.  In this judgment I use these terms interchangeably unless there is a need to distinguish between them.)

42.  Wing Ming submits that the failure of the IO to discharge its obligations has adversely affected Wing Ming’s enjoyment of its parts of the building as well as other common parts of the building.

43.  Some of the defects and modification works in respect of which Wing Ming originally complained were rectified by the IO in 2009 and 2010 and are no longer live issues in the action.

44.  I shall deal with Wing Ming’s claims in three sections below: (i) Basement, (ii) Upper Roof, and (iii) other claims.

45.  Since there is a dispute about what are and are not common areas or common parts of the building, it is convenient to set out the definition of “Common Areas” and “Common Facilities” in the DMC:

“Common Areas” and/or “Common Facilities” shall mean:-

(i) the entrances, staircases, lift halls, lift shafts, lift pits, stairways, landings, passages and other spaces of the Building which are intended for common use (other than the Floor Reserved Areas) and not for the exclusive use occupation and enjoyment by the First Owner or Second Owner as hereinafter specified,

(ii) the loading and unloading spaces, roadways and driveways (if any),

(iii) the cargo and passenger lifts and the machine rooms thereof,

(iv) the common lavatories and water closets and first aid rooms which are not included in any of the units (if any),

(v) such of the sewers, drains, drainage, water courses, pipes, gutters, wells, serials wires and cables (if any), and other services facilities, whether ducted or otherwise which are or at any time may be in, under or over or passing through the Land or the Building, through which water, sewage, gas, electricity and any other services are supplied to the Building or any part or parts thereof,

(vi) the water tank(s) (including potable water tank(s), flush water tank(s) industrial water tank and F.S. water tanks), transformer rooms, meter rooms, main distribution frame rooms (for telephone), pump rooms sprinkler pump rooms, switch rooms, mechanical rooms, for the use and benefit of the Building and not for the use and benefit of a particular unit,

(vii) the Mechanical Area, and the external wall, canopy and parapet,

(viii) lighting for Common Areas,

(ix) any other facilities installed for the use and benefit of the Building and not for the use and benefit of a particular Unit,

(x) generally and if applicable such Floor Reserved Area hereinafter mentioned.”

A. Basement

46.  There is no dispute that there is water leakage and seepage in a number of places at the Basement level of the building causing defects, namely:

(1) ceiling at staircase landing;

(2) small circular pit at staircase landing;

(3) Basement walls;

(4) smoke vent;

(5) a sump pit outside the pump room; and

(6) the staircase void.

I deal with these elements in turn.

(1)  Ceiling at staircase landing

47.  Wing Ming complains that water seepage from the G/F has resulted in spalling concrete in the ceiling of the Basement, and that water seeped through the spalled ceiling concrete and dripped onto the Basement floor.

48.  In its closing submissions, the IO conceded that it is responsible for the repair of the spalled concrete at the ceiling there, because water is leaking from drainage channels and a manhole above the landing area.

49.  There will therefore be an order that the IO do repair or cause to be repaired the spalled concrete and rusted reinforcement bars at the ceiling of the staircase landing at the Basement level.

(2)  Small circular pit

50.  Wing Ming complains that foul water oozes from a small circular pit with a diameter of 200 mm situated at the staircase landing in the Basement.

51.  The IO argues that the starting point is that in the DMC Basement plan, the entire Basement including the staircase and landing are coloured indigo.  The IO submits that the indigo area belongs to Wing Ming.

52.  There is however no legend in the DMC Basement plan saying that the indigo area is within the owner’s exclusive possession. As far as I can see, there is no provision in the DMC saying that all areas coloured indigo in that plan belong to the owner of the Basement.  Indeed, even the lift shafts, which clearly are common parts, are coloured indigo in the DMC Basement plan.  The DMC defines “Common Areas” and/or “Common Facilities” to mean, inter alia, stairways and landings.  Likewise, by virtue of paragraph 8 of Schedule 1 to the Ordinance, staircases and landings are common parts of a building.

53.  Further, the circular pit is located at and formed within the pile cap.  Pile caps are in my view “structural supports” within the meaning of paragraph 1 of Schedule 1 to the Ordinance and therefore as such are also common parts of the building.

54.  It follows, in my view, that the circular pit is made in a common part of the building and prima facie within the IO’s responsibility.

55.  The IO submits that notwithstanding the location of the small circular pit, whoever constructed it in the first place should be held responsible for the rectification work.  The IO admits that a square sump pit (near the pump room in the Basement level) was constructed on its behalf.  A written quotation that related to the expansion of that sump pit was found.  But the IO, relying on the absence of any similar document relating to the small circular pit, says that that pit was not constructed by it.  In my view, nothing can be inferred from the absence of a quotation, invoice or receipt relating to the small circular pit because, as the IO admits, many of the building management records were missing because when the previous manager Easyknit left, it took away a substantial number of documents with it and never returned them.

56.  Wing Ming’s witness Mr Ho Chick Yam says that the small circular pit was installed by the IO, though his evidence was based on reports he received rather than any personal knowledge.  Given that there were two other sump pumps in the Basement that were maintained by the IO or the Manager, and a sump pit there had been enlarged by them, it seems to me more likely than not that the small circular pit was also constructed by the IO or the Manager.

57.  In any event, unless the IO can prove that the small circular pit was constructed by Wing Ming or for Wing Ming’s own purposes, the IO who is responsible for the common areas is liable for the leakage and nuisance caused by that pit.  The IO has, in my judgment, failed to discharge that burden of proof.

58.  There will therefore be an order that the IO do reinstate the pile cap located at the staircase landing at the Basement level in such a way as to seal off the small circular pit and thereby prevent water ingress into the Basement through the pile cap.

(3)  Basement walls

59.  Wing Ming complains that underground water from outside the building has been seeping through the Basement mosaic-tiled walls, causing damage to the walls.  This is not in dispute.  The locations of seepage are identified in the experts’ reports, particularly Wing Ming’s expert Mr Cheung Wai Sum’s reports.

60.  These walls are either external walls, walls enclosing passageways or retaining walls.  As such, they form part of the common parts of the building both under the DMC and the Ordinance, which lie within the responsibility of the IO.

61.  There will therefore be an order that the IO rectify or cause to be rectified the defects and leakages in those walls.

(4)  Smoke vent

62.  Wing Ming complains that water has accumulated in the smoke vent behind a wall in the Basement level and has been seeping out resulting in damage to the Basement wall and the wall of the staircase landing.  There is no dispute about the fact of water leakage.

63.  Mr Pennicott submits on behalf of Wing Ming that the smoke vent falls within the following clause (v) of the definition of “Common Areas” and/or “Common Facilities” in the DMC quoted above.  However I am not satisfied that either water, sewage, gas, electricity or any other services (as specified in that definition) are supplied through the smoke vent.  As regards the Ordinance, under paragraph 5 of Schedule 1, only vents serving two or more flats are regarded as common parts.  The smoke vent here serves only the Basement. 

64.  Accordingly I am not satisfied that the smoke vent is a common part.  In my opinion the water leakage in the smoke vent falls outside the responsibility of the IO.

65.  Moreover, it appears that the position of the smoke vent had been moved and the smoke vent was reconstructed by Wing Ming in around 1994.  This can be seen by comparing the original building plans and the plans for the 1994 alteration works.  Mr Pennicott refers to a plan (Plan “A2”) attached to the joint experts’ report and submits that the smoke vent might not have been moved after all.  But it can be seen from the configuration of the smoke lobby there that Plan A2 does not seek to show the position after the 1994 alteration works.  On the evidence, it seems to me more likely than not that the smoke vent was indeed reconstructed and re-positioned in 1994 by Wing Ming’s contractors.

66.  On this basis it seems to me whether the water leakage was due to poor design, which allows the smoke vent to trap water without satisfactory waterproofing to the inside face of the smoke vent or basement wall (as the IO’s expert Mr Robin Howes suggests), or was due to defective waterproofing (as Mr Cheung Wai Sum suggests), Wing Ming should be held responsible for what is likely to have been the consequence of its own alterations to the Basement.

67.  This part of Wing Ming’s claim is therefore dismissed.

(5)  Basement floor slab – sump pit

68.  Wing Ming complains that flooding has been caused to the Basement from the uncovered sump pit outside the pump room. Again, the fact that this has been a source of water leakage and flooding problem in the Basement is not in dispute.

69.  The IO accepts that it had caused the sump pit to be enlarged and an automatic pump to be installed inside it in 2004. The pump was connected with PVC pipes leading to the ground floor.  Mr Cooney, who appears for the IO, submits, however, that there is no proof that it was the IO that constructed the original sump pit in the first place before its expansion.  In my opinion, more probably than not, it was the IO that installed it in the first place, with the consent of Wing Ming.  The pit was used, inter alia, to collect water discharging from an overflow pipe from the (communal) water tank located at the Basement level.  The overflow pipe has since been removed by the IO.  The previous manual pump was manned by the Manager’s staff.  Moreover, the IO saw fit to take it upon itself to have the sump pit enlarged in 2004 and to have the pump there replaced.  All these suggest that the IO was responsible for the creation of the sump pit.  The absence of documents, such as invoices and receipts for the relevant works, does not tend to show the opposite, for as mentioned above, a previous Manager had taken away many documents.

70.  Furthermore, it is likely, based on Mr Robin Howes’ evidence, that the sump pit was formed within a pile cap.  Alternatively, it was formed out of the Basement floor slab, which was the bottom outer limit of the building.  Both of these are, in my view, common parts of the building falling within the responsibility of the IO.

71.  Given that the overflow pipe that discharged into the sump pit had been removed by the IO, there is no suggestion that the sump pit serves any further useful purpose.

72.  There will accordingly be an order that the IO do remove the sump pit and rectify and reinstate the pile cap and floor slab at the location of the sump pit.

(6)  Staircase void

73.  There is no dispute that there is seepage of underground water from the walls in a “room” that comprises the area next to and underneath the soffit of the staircase that rises from the Basement and exits into the street.  I shall call this the “staircase void”.  It lies at the Basement level.

74.  There was initially an allegation by the IO that Wing Ming had, after commencing occupation of the building, carried out unlawful excavation at the Basement level to create that void.  The experts have however since come to an agreed view that the void was formed at the time of the original construction of the building to facilitate the construction of the pile cap, the retaining walls and other surrounding walls.  The void was left there as the space was not backfilled.  The experts noted that there was no marking of “unexcavation” on the building plans in that area in contrast to other areas in the Basement level.

75.  On the original building plans, the staircase void was separated from the Basement by a brick wall.  No door or other means of access to that void is shown in those plans. 

76.  The building plans for the 1994 alteration works show that the brick wall that separates the staircase void was moved towards the lifts.  There is likewise no means of access shown from the smoke lobby or otherwise to the staircase void.

77.  The DMC Basement plan is similar to the 1994 building plans.  The staircase void was shown coloured indigo.

78.  The walls and floor inside the staircase void are tiled.  There is an abandoned electric light box which had dropped to the ground and an electric fan fixed to a column.

79.  The experts agree that there is extensive spalling in the reinforced concrete elements of the staircase void, including the ceiling and beam.  There is a steel I-shaped column propping up the concrete beam.  The cracking and spalling are likely to have been caused by water seepage and dampness.

80.  It is clear that the walls of the staircase void abutting unexcavated earth are retaining walls, and that, as such, by virtue of paragraph 15 of Schedule 1 to the Ordinance, they are common parts.

81.  There is clearly a problem in the existing state of affairs.  Unless proper steps are taken, water could accumulate in the staircase void and the spalling of concrete and corrosion of metal bars would continue.  That would be dangerous, even if a waterproof brick wall is reinstated separating the void from the staircase landing.  The ceiling slab inside the void forms part of the floor slab of the G/F.  A collapse of the ceiling could therefore have disastrous consequences.  In my view, the leakages should be rectified, and it is the IO’s responsibility to do so.

82.  Mr Cooney says one can get the pump in the sump pit inside the staircase void working again to pump out any water accumulated there.  But as a matter of principle, this cannot, in my view, be a proper substitute for repairing defective common parts.  Nor can a pump remove water sufficiently to prevent the corroding dampness.  In any event this suggestion cannot work, given that the IO insists that the brick wall be reinstated so that the staircase void would be sealed off and become inaccessible.

83.  In my judgment, there should be an order that the IO do repair or cause to be repaired the spalled concrete and corroded reinforcement bars at the ceiling and beam in the staircase void and do repair or cause to be repaired the retaining walls inside the staircase void to prevent further water leakages.

B. Upper Roof

84.  On the DMC Upper Roof plan, the Upper Roof is divided into three areas:

(1) pink area – the Mechanical Area referred to in the definition clause of the DMC;

(2) green area – the Mechanical Area referred to in clause IV.43 of the DMC for the installation of cooling towers;

(3) indigo area – the area within the exclusive use, occupation and enjoyment of Wing Ming.

85.  Wing Ming complains that the Roof Floor (11/F) has, from time to time, been flooded with water on divers occasions since around 1995.  Part of the cause, it says, is that the water-proofing membrane or system in the floor of the Upper Roof (which is also the ceiling of the Roof Floor) had become defective.  Wing Ming also says that there were roof tiles and tile joints that were cracked.

86.  A water dye test and a thermo-imaging survey have confirmed, and there is now no dispute, that water had leaked through the Upper Roof floor into the ceiling of the Roof Floor level.  This has occurred mainly in the areas where the cooling towers are placed.  It seems likely that the cooling towers generated condensation which dampened the Upper Roof level, causing water leakage.  But there are also spots in the pink and indigo areas where there is leakage.  Water has seeped into and damaged the ceiling of the Roof Floor level.  There is no dispute that leakage was caused by the failure of the waterproofing membrane in the floor.

87.  It appears from the building plans that the waterproofing membrane within the Upper Roof floor is a continuous layer.

88.  IO admits that the areas marked pink and green[2] on the DMC Upper Roof plan are common areas.  It takes the position, however, that because the areas coloured indigo in the DMC Upper Roof plan are Wing Ming’s areas, and because the waterproofing membrane there is situated within the parts of the building in Wing Ming’s exclusive possession, Wing Ming, rather than the IO, is responsible for the leakages in those areas.

89.  Wing Ming contends that the IO is responsible even for those parts of the waterproofing membrane in the indigo areas for two reasons.

90.  First, Wing Ming argues that because the waterproofing membrane is a facility intended to serve the whole building, it is a common part and therefore entirely and exclusively within the responsibility of the IO.  The DMC relevantly defines common areas as follows:

“ “Common Areas” and/or “Common Facilities” shall mean:- … (ix) any other facilities installed for the use and benefit of the Building and not for the use and benefit of a particular Unit”

91.  Further, s.2 of the Ordinance defines common parts as follows:

“ “common parts” (公用部分) means-

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

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

92.  Paragraph 10 of Schedule 1 to the Ordinance reads as follows: 

“10. Lighting apparatus, air conditioning apparatus, central heating apparatus, fire fighting equipment and installations intended for the use and benefit of all of the owners generally and any room or chamber in which such apparatus, equipment or installation is fitted or installed.”

93.  Mr Robin Howes, the IO’s expert, pointed out that the building plans show that the waterproofing on the floor of the 11/F (comprising one course of cement tiles on 3 layers of 5‑ply bituminous roofing felt), as designed, was to be more robust than that on the Upper Roof (comprising 3‑ply bituminous roofing felt with gravels).  This suggests that the former was intended for the benefit of the whole building, whereas the latter served primarily to protect the premises on the Roof Floor level.  The IO argues, therefore, that the waterproofing membrane directly above Wing Ming’s premises on the 11/F serves only those premises and is not a common part.

94.  The problem with the IO’s argument is that in addition to the Workshop (marked “Recreation Area” in the building plans), which is exclusively enjoyed by Wing Ming, there are also common facilities on the 11/F, albeit occupying a minor portion of that level.  Although it appears that most of the common facilities on the Roof Floor level are also located directly beneath the pink areas on the Upper Roof, the two are not (based on my examination of the two plans) exactly co-extensive.  There seem to be pink areas on the 11/F which lie directly below indigo areas on the Upper Roof. 

95.  Furthermore, there is no acceptable evidence that a waterproofing membrane protects only the area directly underneath it.  It seems to me that water is a fluid that percolates through cracks and pores, and once there is a breach in the waterproofing membrane, it is not only the spot directly below the breach that will be affected.  I am unable to accept the contention that the waterproofing membrane should be notionally carved up and the part that is located directly above the Workshop should be regarded as being there for the exclusive use and benefit of the Workshop.  Rather, the membrane protects all areas on the 11/F which includes common facilities such as lift machine rooms and staircases.  I therefore accept the first reason submitted by Wing Ming.

96.  Secondly, Wing Ming argues that the waterproofing membrane in the Upper Roof floor is common part by virtue of paragraph 11 of Schedule 1 to the Ordinance, which is in these terms:

“11. Fixtures situated in a flat which are used in connection with the enjoyment of any other flat or other portion of the building.”

97.  The argument runs as follows.  The waterproofing membrane is a fixture.  The word “flat” is widely defined in section 2 of the Ordinance as meaning

“any premises in a building which are referred to in a deed of mutual covenant whether described therein as a flat or by any other name and whether used as a dwelling, shop, factory, office or for any other purpose, of which the owner, as between himself and owners or occupiers of other parts of the same building, is entitled to the exclusive possession”.

The indigo area on the Upper Roof, which is in the exclusive possession of Wing Ming, is a flat as so defined.  On the IO’s own case, the relevant part of the waterproofing membrane is situated within such flat.  Even assuming that the waterproofing membrane in the Upper Roof floor is meant for the protection only of the floor below, it is used in connection with the enjoyment of another flat of the building, namely the Roof Floor level.  It follows that it is a common part.

98.  This argument derives support from The Incorporated Owners of Hong Leong Industrial Complex v HL Resources Ltd [2009] 4 HKLR 692.  There, the dispute was over who should have paid for the repair and maintenance of the waterproofing layer in the roof.  The plaintiff argued that the roof was owned by and should be maintained by the developer.  Nevertheless, Sakhrani J held (at §60) that the waterproofing layer sandwiched within the floor slab of the roof of the building in question was a common part because “the waterproofing layer or system was a fixture used in connection with the enjoyment of any other flat or other portion of the building within the meaning of item 11 in Schedule 1 of the Ordinance”.  His decision was upheld on appeal: [2010] 4 HKC 463.

99.  I therefore also accept Wing Ming’s second argument.

100.  Alternatively, if the waterproofing membrane is situated in the floor slab and the floor slab is to be regarded as a common part, then equally the membrane is a common part.  It is one continuous layer serving the whole of the floor below, including common areas on that floor.

101.  It follows that the waterproofing membrane in the Upper Roof floor is a common part and the IO has failed to discharge its duty under s. 18(1)(a) of the Ordinance to

“maintain the common parts and the property of the corporation in a state of good and serviceable repair and clean condition”.

102.  There is no dispute that this statutory obligation is enforceable by injunction at the instance of Wing Ming.  In its statement of claim, Wing Ming seeks an injunction in these terms:

“(3) A mandatory injunction to order that the Defendant do forthwith remedy and/or procure the remedy of the existing defects at the upper roof of Wing Ming Industrial Centre and carry out and/or procure the carrying out of remedial measures and improvements to prevent further water seepage to the Roof Floor of Wing Ming Industrial Centre, including but not limited to:-

(a) replacing the cracked tiles and damaged tile joints at the Common Area at the upper roof over which the water cooling towers are erected;

(b) repairing, replacing and/or improving the grading of, the water drainage system and water-proofing system at the Common Area at the upper roof over which the water cooling towers are erected;

(c) repairing the existing cracks and detached rendering at the external wall beneath the slab of the upper roof; and

(d) removing the stains from the external wall beneath the slab of the upper roof.”

103.  Mr Pennicott argues that the IO should be ordered to replace the whole waterproofing membrane in the Upper Roof floor to a specification to be agreed between the parties’ experts.  There is no dispute that such specification would be a straightforward matter.

104.  The IO, however, takes the point that Wing Ming’s statement of claim only claims an order for repairs to the common areas on the Upper Roof (i.e. the pink and green areas), and that any relief granted should not extend to any part of the indigo area.  I am unable to accept this argument.  Wing Ming has contended in its Re-Amended Reply that the entire waterproofing membrane on the Upper Roof is a common part.  The case was opened on the basis that Wing Ming seeks an order relating to the whole of the membrane.  Further, the membrane is one whole system and the IO’s own expert, Mr Robin Howes, opines that the whole Upper Roof should be repaired and not merely the pink and green areas.  In these circumstances, I think that, subject to any formal amendment that may be necessary to the prayer in the statement of claim, the order I should make may legitimately extend to the entire waterproofing membrane in the Upper Roof.

105.  Mr Pennicott submits that I should order the IO to replace the entire waterproofing membrane, instead of allowing it to carry out patch repairing.

106.  Wing Ming’s expert, Mr Cheung, has stated:

“In order to prevent the seepage/leakage through the upper roof to the 11/F, the roof waterproofing must be re-laid and the roof surface graded with effective fall such that water will drain quickly and not pond on the upper roof.”

In response, the IO’s expert, Mr Howes, has said:

“Subject to proving that the waterproofing system is defective, the remedial measures, although non-specific are generally correct.”

107.  Mr Howes confirmed during his oral evidence that it is “good practice” to replace the whole of the waterproofing.  Although he also suggested one might save cost by patch repairing, he was not enthusiastic about that option and did not vouchsafe that such repairs would be effective, given the fairly extensive areas in which defects in the membrane have been identified.  In their closing submissions, Mr Cooney and with him, Mr Arthur Wong, appear to accept that the “good practice” of repairing or replacing the whole membrane should be adopted.  What they contend is that the cost of doing so should be apportioned between the parties.  Since I have found the whole membrane to be common parts, there is no question of apportionment of responsibility.

108.  I shall therefore grant a mandatory injunction that the IO do remedy or cause to be remedied the defects in the waterproofing system of the Upper Roof by replacing the waterproofing layer there to a specification to be agreed between the experts.

109.  There is also evidence that water leakage has affected the upper part of the external walls at the southern elevation on the Roof Floor level, leading to stains and detached rendering there.  There are also cracks in the external walls.  There is no dispute that the external walls are common parts.  I therefore also grant a mandatory injunction that the IO do repair or cause to be repaired the cracks and detached rendering at the external walls beneath the floor slab of the Upper Roof.

C. Other complaints

110.  Wing Ming has initially raised a number of other complaints in this action but they have mostly since been dealt with.  I mention them briefly below.

111.  The IO converted some toilets on the G/F and the adjoining yard into a management office.  Wing Ming averred that the works were unauthorised building works and sought relief requiring the removal of the works.  The IO has since reinstated the toilets.  Wing Ming accepts that no further relief is required.

112.  Wing Ming complains that water, which dampened the Upper Roof level, seeped into the ceiling of the 11/F, causing spalling concrete at the ceiling.  This has been rectified by Wing Ming itself at its own cost.  The only relief I am asked to and which I do grant is a declaration that the 11/F ceiling slab forms part of the common parts of the building, which the IO is responsible for maintaining.

113.  Wing Ming complains that water seeped from the 11/F flat roofs into the 10/F, causing damage such as spalling of concrete.  Numerous complaints had been made by the 10/F tenant since around 1998.  A claim was lodged by the tenant in June 2006.  This was rectified in part by the IO by re-roofing in 2009/2010.  But some spalling of concrete in the 10/F ceiling slab, which is a common part, remains to be remedied.

114.  There will therefore be an order that the IO do repair or cause to be repaired the cracks, spalled concrete and corroded reinforcement bars at the 10/F ceiling of the building, as identified in Mr Cheung Wai Sum’s 4^th report.

115.  Wing Ming complains that water seeped from the external wall of the light wells into the toilets on the 10/F.  This was rectified by the IO in 2009/2010.  No relief is required.

IV. IO’S COUNTERCLAIMS

116.  Ten counterclaims are made by the IO against Wing Ming, mainly for breach of the DMC or the Ordinance.  I shall discuss them in the order in which they appear in the pleading, as follows:

(1) Interference with common areas and common facilities

(2) Alterations to external wall at G/F and Loft

(3) Display of advertisements and signs

(4) Void areas in front of CPS 2, 3, 4, 5, 8 and 9

(5) Part loft over void areas in front of CPS 2, 3 and 4

(6) Roof Floor (11/F) storeroom

(7) G/F storeroom

(8) G/F Extension wall behind CPS 5-10

(9) Basement – excavated void

(10) G/F – Room A

117.  A number of defences that have been raised by Wing Ming are common to these claims or some of them.  They include lack of locus on the part of the IO, exclusive jurisdiction of the Lands Tribunal, the wider principle of res judicata (or abuse of process), estoppel by convention, limitation, laches and acquiescence.  I shall deal with these defences at the appropriate juncture below in the context of the specific claims to which the defences are pleaded and avoid repetition by making cross-references.

A. Interference with Common Areas and Common Facilities

118.  The IO complains that Wing Ming wrongfully interfered with the Common Areas and Common Facilities in the Basement, by blocking access necessary for the inspection, repair and maintenance of the pump house and sprinkler tanks.  Such interference allegedly occurred several years ago and, on any view, has long ceased.  Mr Cooney confirms that no relief is needed and the matter is relevant, if at all, only to costs.  No more need be said about this counterclaim in this judgment.

B. Alterations to External Wall at G/F and Loft

119.  The IO complains that Wing Ming had, on three separate occasions, demolished parts of the concrete external walls of Wing Ming’s premises on the G/F and the Loft and replaced them with glass panels and glass doors.  The facts of the alterations are not in dispute, although the date of the first alteration is an issue.

120.  Before 1994, and in accordance with the original approved building plans, the external wall of the G/F fronting Tai Nam Street had large glass panels over half of its length towards the west, and the external wall of the Loft had glass panels over three-quarters of its length towards the west.  In about 1994 (according to Wing Ming) or in the period 1994 to 1996 (according to the IO), Wing Ming caused glass panels to be installed on the eastern half of the external wall on the G/F level fronting Tai Nam Street.

121.  In 2005, the external wall on the G/F and the Loft facing Cheung Yue Street (on the west side and southwest corner) was demolished and replaced by louvered aluminium panels and glass panels.  The works appear to have been done by Wing Ming’s tenants. 

122.  In 2006, part of the external wall on the G/F and the Loft facing Tai Nam Street was demolished to create two door openings. Again, the works were done by Wing Ming’s tenant.

Relevant provisions of the DMC

123.  The IO pleads that the alterations were in breach of DMC clauses IV.4 and IV.18.  These two clauses provide as follows:

“4. Subject to clauses 3, 4 and 5 of Sub-section C of Section 1 hereof, no Owner shall make any structural alterations or additions to any part of the Building owned by him which may damage or affect or interfere with the use and enjoyment of any other part or parts of the Building whether in separate or common occupation nor will any Owner use, cut, injure, damage, alter or interfere with any part or parts of the Common Areas or any of the Common Facilities or any equipment or apparatus on in or upon the Lands or the Building not being equipment or apparatus for the exclusive use and benefit of any one Owner.”

“18. No Owner shall do or permit to be done any act or thing which may or will alter the external appearance of the Building, including but not limited to the colour and type of the external walls (including the parapet walls, if any) and the portion of the windows facing the streets without the prior consent in writing of the Manager and the Manager may specify any conditions for giving such consent.”

124.  Further, DMC clause IV.30 provides:

“30. (a) No Owner shall use any Unit for any purpose other than that as permitted by the Grant and the Occupation Permit of the Building …

(b) Provided however the Owner of any Unit may at its own costs and expense apply to the appropriate authorities to change the user of its unit to commercial/office purpose.”

125.  In his submissions Mr Cooney contends that the alterations were also in breach of s. 34I(1)(a) of the Ordinance.  It seems to me, however, that the provision is not engaged here.  S. 34I provides:

“(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) …”

126.  The expression “convert … to his own use” does not, in my view, refer to physical conversion in the sense of making alterations.  Rather, it refers to the appropriation of certain common parts or common areas by an owner for his own exclusive use.  In contrast, the allegation here, as pleaded, is that Wing Ming damaged the external wall, not that it converted it to its own use.

First set of alteration works

Whether Manager gave prior written consent

127.  The principal factual issue in relation to the first set of alteration works is whether there was prior written consent from the Manager, which would enable the works to be done under DMC clause IV.18. 

128.  There is in evidence a letter (in Chinese) from Wing Ming to Essman (for the attention of Mr Ho Chick Yam) dated 22 October 1993, stating that Wing Ming intended to make the external wall on the G/F look uniform by installing glass panels on parts of the wall.  The letter went on to say:

“If Essman Construction Co Ltd thinks that this is feasible and complies with the Ordinances, please hire an architect for our company to amend the floor plan and undertake the building renovation works. As for the construction fees and architect’s fees, please inform our company for payment upon completion of the works.”

129.  On 27 January 1994, a drawing appears to have been prepared by Essman (one Miss Ho was named as the contact person) specifying the dimensions of the glass panels to be installed.  Presumably, this drawing was sent by Essman to Wing Ming.

130.  Mr Yuen Man Pui claims that consent was given by Essman as manager of the building for the works.  Insofar as he purported to say he recalled receiving consent in writing, I do not accept he would or could have a reliable recollection.  No doubt Essman had no objection to the alterations, as it was in fact the main contractor for the 1994 alteration works and supervised and coordinated the works and charged Wing Ming for its services.  Essman also submitted the Form BA 14 (signed by Mr Yuen himself) to the Building Authority for the works.  The question remains, however, whether there was written consent given by Essman qua manager of the building.

131.  The IO points out that Essman was a related company of Wing Ming in that Mr Yuen, who controlled Wing Ming, was also a director and a major shareholder of Essman.  I think this is a neutral fact that does not make it either more or less likely that Essman as manager gave written consent.

132.  No written consent could be located by Wing Ming.  The critical question is whether it could and should be inferred. Looking at all the relevant circumstances, I have come to the view that I ought not to infer the existence of a piece of paper giving Essman’s consent as manager to the alterations.  I find there is nothing to show that more likely than not Essman would have given written consent as manager of the building. In fact there is nothing to show that anyone had been alerted to the provision in DMC clause IV.18 about the requirement of the manager’s written consent.

133.  Mr Cooney further argues that even if there was written consent pursuant to DMC clause IV.18, it would not suffice because clause IV.4 does not contain any similar exception.  It is strictly unnecessary to deal with it, but, as at present advised, I am inclined to think that clause IV.18, being the more particular, is the governing provision and that written consent of the manager, if given, would be a defence.

Laches and acquiescence

134.  If there was a breach of the DMC in that the works were done without the prior written consent of the manager, Wing Ming contends that the IO’s claims are barred by laches or acquiescence.

135.  Mr Cooney argues that because the works were not such as the IO could approve, the IO cannot, as a matter of law, waive or acquiesce in any breach but has a duty to enforce the provisions of the DMC. In this regard he contrasts alteration with re-decoration, which can be done with the approval of the manager and may therefore be the subject of waiver and acquiescence. 

136.  I reject this argument:

(1) The case cited by Mr Cooney, The Incorporated Owners of Champion Court v Pang Ping Fan Peter (CACV 317/2006, 23 May 2008) is only authority for the proposition that incorporated owners cannot acquiesce in the retention of illegal structures, not that they can never acquiesce in structures erected in breach of covenant: see §§15 and 17.  In fact, Yuen JA observed that incorporated owners are quite capable in law of acquiescing in a breach of covenant: see §15.

(2) In Hollywood Shopping Centre Owners Committee Ltd v The Incorporated Owners of Wing Wah Building Mongkok Kowloon (HCA 1582/2007, 16 August 2010), Recorder R Yuen SC held that an owners’ corporation could in law be held to have acquiesced in a breach of covenant if it had the power to approve the act in the first place: see §§56-65.  On appeal, the Court of Appeal did not disapprove of that analysis: [2011] 4 HKLRD 623, §§68-69.

(3) Mr Cooney’s submission appears to have been based on his argument that even the written consent of the Manager under DMC clause IV.18 cannot enable an owner to alter the external walls, which I have rejected.  By clause IV.18, the Manager, and through it, the IO, may consent to alterations being made to the external appearance of the building including the type of external walls.

(4) It follows that as a matter of law, the IO here can be held to have acquiesced in the unauthorised alteration of the external walls on the G/F.

137.  Should the IO be held to have acquiesced in fact in the unauthorised alterations done in the mid 1990s so as to be debarred from complaining about them now?  This depends on two conditions: first, there was, on the part of the plaintiff, an assent or lying by in relation to the acts of another person; and secondly, in view of that assent or lying by and consequent acts, it is unjust in all the circumstances to grant the specific relief in question: Spry, The Principles of Equitable Remedies, 8^th ed (2010), p.440.

138.  In my view the incorporated owners had clearly lain by in relation to the alterations done to the external walls on the G/F in the mid 1990s.

(1) The alterations to the external wall were obvious.  They were done on the G/F right next to the pavement.  Anyone entering or leaving the building would have seen them.  It is more likely than not that each of the owners at the time knew works were being done to the external walls on the G/F, and that part of the brick or concrete wall were being replaced by glass panels.  Indeed, Mr Luk Siu Kai said from his own recollection that Wing Ming demolished parts of the external wall and replaced them with glass panels and doors in 1995 and 1996.

(2) In fact there is a minute of the meeting of the IO dated 5 July 1994 which referred to a hole in the external wall of the G/F, showing that the works were the subject of discussion by the IO.  The only matter raised by the owners then was a concern about security arising from an unguarded entrance. 

(3) Moreover, the parties were already locked in disputes at the time, with Wing Ming complaining about the unauthorised alterations of the G/F toilets to convert them into the office of the IO.  The works on the G/F external wall were prima facie a breach of the DMC unless properly authorised.  The IO knew enough for it to investigate and challenge the alterations if it wished.

(4) Yet neither the IO nor any of the owners raised any objection to the alteration works as such at the time.  In fact the IO never raised complaint about the works until the Defence and Counterclaim in these proceedings which was filed in September 2006.

139.  In light of this lying by, would it be unjust to grant a mandatory injunction to require Wing Ming to reverse the alterations? In my view, the answer is yes. 

(1) On the IO’s own case, the alterations were not completed until 1996.  The IO, knowing those alteration works were being done by Wing Ming, let it carry on incurring further expenditure on such works.

(2) There is no suggestion that the alterations were in any way unsafe or that they damaged or endangered other parts of the building.  Nor is there any complaint that they were in breach of any laws or regulations.  On the contrary, the alterations were built in accordance with building plans approved by the Building Authority.

(3) Essman clearly knew about and consented to the works.  Up to June 1994 (when it ceased to be Manager), it could easily have given written consent for the works as Manager of the building pursuant to DMC clause IV.18.  It would almost certainly have given written consent had anyone challenged Wing Ming’s right to make the alternations.

140.  Even if the IO is correct in contending that the Manager’s written consent was insufficient to authorise any alteration to the external wall, and that DMC clause IV.4 is the overriding provision, my conclusion on acquiescence would have been the same because a breach of that clause was simply a breach of covenant that could be acquiesced in by the IO, which is the embodiment of the owners in relation to their rights in respect of the common parts.

141.  Mr Cooney argues that the alterations should be undone because they exist only for the purpose of using the G/F as a showroom, which was in breach of the user restriction in the Government lease (i.e. industrial or godown purposes) and in breach of an injunction granted by Reyes J in December 2007 restraining the user.  It is true that part of the G/F is being used as a “German Pool” showroom, but I do not agree that the glass walls could only be used in conjunction with a showroom.  The building as originally designed and built already had glass panels for half of the length of the external wall along Tai Nam Street, even though the user was industrial.  There was a modification in 1985 which allowed a canteen to be operated in the building, and there was indeed a canteen on the G/F between about 1985 and 1990.  In any event, the user of the building or part of it could be modified by further agreement with the Government as landlord, as envisaged in DMC clause IV.30(b).  In the absence of modification, the injunction as to user granted by Reyes J can be enforced on its own.  A breach of that injunction is not, in my view, itself a reason for granting a mandatory injunction to remove the alterations.

Alteration works in 2005 and 2006

142.  The alterations works on the external walls on the G/F in 2005 and 2006 appear to have been done by Wing Ming’s tenants. 

143.  Letters were written by the Manager to the tenants and Wing Ming at the time requiring them to stop taking down the relevant parts of the external walls.  In response, Wing Ming and the tenants asserted that Wing Ming had the right under the DMC to redecorate the exterior wall, and that the works did not require government approval, nor did they violate any provisions of the DMC.

144.  These contentions are in my view untenable. While DMC clause IV.39 proviso does stipulate that

“the Owner of the Front Portion of the Ground Floor may with the consent of the First Owner … or the Manager and subject to the design and the plan thereof being approved by them re-decorate the exterior of the Ground Floor …”,

it seems to me what was being done did not amount to merely “redecorating” the exterior wall, but to alterations.  As such, they required the authorisation of the Manager, if not the IO.  The fact is that the works in question were done without the requisite authorisation of the Manager or the IO and were therefore in breach of the DMC.  Objection having been raised against the works at the time, there is no question of there being any acquiescence or laches. 

145.  I perceived a faint attempt by Mr Pennicott in the cross-examination of Mr Henry Leung, Chief Property Manager of Guardian Property Management Limited, which has been the Manager of the building since 2004, to suggest that the Manager had no good reason to refuse consent.  The documentary evidence shows that the Manager was concerned about structural safety of the building and safety to the occupants of the building and the public.  The Manager also requested the tenants to engage an Authorised Person to advise and to obtain the Building Authority’s approval.  Those requests were not complied with.

146.  Irrespective of whether in fact the Building Authority’s approval was required for the works in question under the Buildings Ordinance (Cap 123), the Manager’s concern and request cannot, on the material before me, be said to be irrational.  It follows it would not be right for me to refuse injunctive relief on the ground that the Manager should have given consent.

147.  Mr Pennicott submits a mandatory injunction must be so precise that the defendant knows exactly what he has to do: Morris v Redland Bricks Ltd [1970] AC 652; Cooperative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1.  He says that because there is no evidence of the appearance of the external walls prior to the alterations, which Wing Ming could properly be enjoined to restore, any injunction would fall foul of that principle.  I reject this point which seems to be an argument of last resort.  The order in Morris v Redland Bricks that fell short of the particularity required was an order that appellants “do take all necessary steps to restore the support to the [respondent’s] land within a period of six months” (p. 664A).  It failed because it “imposed upon the appellants an absolutely unqualified obligation upon them to restore support without giving them any indication of what was to be done”: per Lord Upjohn at p.667F.  As Lord Hoffmann said in the Argyll Stores case at p. 14D:

“Precision is of course a question of degree and the courts have shown themselves willing to cope with a certain degree of imprecision in cases of orders requiring the achievement of a result in which the plaintiffs’ merits appeared strong; like all the reasons which I have been discussing, it is, taken alone, merely a discretionary matter to be taken into account: see Spry, Equitable Remedies, 4^th ed (1990), p 112. It is, however, a very important one.”

The general principle is not in doubt.  In its application to this case, the principle does not preclude requiring restoration of the status quo ante in accordance with the original building plans including, in particular, the elevation plans for the relevant parts of the building.  These plans are available.  They were sufficient for the building to be built; there is no reason why they should not suffice for the external wall to be restored.

148.  Mr Pennicott further submits that the effect of an injunction would be out of all proportion to the benefit to be gained and, on that basis, the mandatory injunctive relief sought should in the discretion of the court be refused.  I recognise the discretionary nature of equitable relief and, in particular, mandatory injunction, and that even where liability is established, mandatory injunctive relief may be refused on discretionary considerations: see Morris v Redland Bricks, supra, pp 665-666, per Lord Upjohn; Spry, Equitable Remedies, 8^th ed, pp 546-553; Charrington v Simons & Co Ltd [1970] 1 WLR 725, 730; Incorporated Owners of Dragon View v Nalpak Ltd [1989] 1 HKC 549; PC Fortune Co Ltd v Incorporated Owners of Kwong Fu Building [2009] 5 HKLRD 787 at §§68-76.  The exercise of the discretion depends on all the circumstances of the case.

149.  Taking into account the above matters and the following factors, in my judgment a mandatory injunction should issue to require removal of the 2005 and 2006 alterations:

(1) Wing Ming and its tenants acted with clear knowledge of the provisions of the DMC and the IO’s objections.  It is clear that Wing Ming is responsible for the acts of its tenants: see DMC clause IV.7.  In proceeding with the alterations in the face of complaint and without obtaining the Manager’s approval, they took a decision at their own risk.

(2) No evidence of hardship has been put before me by Wing Ming to show that the works required to restore the external wall would be unduly burdensome to itself or the tenants.  On the contrary, in the correspondence with the Manager at the time, the tenants asserted that the works were general minor internal renovations. 

(3) Unlike the alterations to the external wall carried out in 1994 to 1996, no evidence has been put forward by Wing Ming to show that the alterations done in 2005 and 2006 had been approved by the Building Authority, or at least certified to be acceptable by an Authorised Person, or that they were structurally safe.

Orders

150.  Accordingly, there will be the following orders on this head of the IO’s counterclaim:

(1) The IO’s counterclaim in relation to the works done in 1994-1996 (as indicated in Appendix I to the Re-Re-Amended Defence and Counterclaim) is dismissed.

(2) Wing Ming do remove or cause to be removed the alterations to the external walls of the building on the G/F carried out in 2005 and 2006 (as shown for identification purposes on Appendices II and III to the Re-Re-Amended Defence and Counterclaim) and reinstate or cause to be reinstated the relevant parts of the external walls in accordance with the approved building plans for the building dated April 1994.

C. Display of advertisements and signs

151.  The IO complains that Wing Ming had wrongfully and without prior approval permitted or suffered its tenants on the G/F and the Loft to display advertisements and signs on the glass panels (which the IO says Wing Ming had wrongfully erected in place of the concrete external walls).  It is pleaded that this constituted a breach of DMC clause IV.19.

152.  DMC clause IV.19 provides as follows:

“19. No Owner shall erect, affix, install, attach to or in or on or display from the interior or exterior of any Unit or at any window thereof, or permit or suffer to be so erected, affixed, installed, attached to or in or on or displayed from the interior or exterior of any Unit or at any window thereof any notice, advertising or other sign of any description, or additional drainage or sewage pipes or chute any other thing (except such cooling tower pipe lines provided in clause 5(ii) of SUBECTION C of SECTION 1 and clause 43 of this SECTION) whatsoever which projects beyond the frontage of such Unit or across or in the front of the frontage of any other Unit without the previous written approval of the Manager. Any such approval may be given subject to such conditions as the Manager may specify and shall be subject to revocation on reasonable notice Provided that each Owner may place a name plate giving the name of the Owner or occupier of the Unit in question outside the entrance door of such Unit and also at the main entrance and the lift lobby of the Building at the place provided by the Manager at the expense of Owners.” (underlining added)

153.  The principal issue between the parties is one of construction of the DMC, specifically, whether the underlined words in clause IV.19 as quoted above qualify the entire prohibition (as Wing Ming contends) or only the prohibition of “any other thing” (as the IO contends).

154.  In my opinion, those words plainly qualify all the objects referred to in clause IV.19.  First, the main point of that clause is to prohibit objects extending “beyond the frontage of such Unit or across or in the front of the frontage of any other Unit”.  In that way it complements the prohibition in clause IV.17 of projections outside the exterior of the building.  Secondly, it is notable that there is no comma between the words “chute” and “any other thing”.  The phrase “or additional drainage or sewage pipes or chute any other thing” is uninterrupted by any punctuation.  There is no linguistic basis to say that the underlined words only qualify the words “any other thing”.  Thirdly, Mr Cooney’s construction would in my view lead to a sweeping prohibition against attaching any notices and signs inside a unit even though they lie entirely within the boundaries of the unit.  With respect, such prohibition makes no sense.

155.  Breach of clause IV.19 being the only pleaded cause of action, it is unnecessary to consider the further defence raised by Wing Ming, namely, that it is, as owner of the Front Portion of the G/F and as First Owner within the meaning of the proviso in DMC clause IV.39 (quoted in §144 above), entitled to re-decorate the exterior of the G/F (which I doubt, given the decision of the Court of Appeal in Incorporated Owners of Tak Cheong Building (Battery Street) v Tong Wai Tak [1999]1 HKC 238).  Nor is it necessary to consider the defence of time-bar raised by Wing Ming.

156.  Wing Ming also argues that the IO lacks standing to bring this counterclaim.  I refer to the discussion of the point in section IV.G below.  It is unnecessary to deal with this argument in the context of this particular claim.

157.  There will accordingly be an order that this head of the IO’s counterclaim be dismissed.

D. G/F – void areas in front of CPS 2, 3, 4, 5, 8 and 9

158.  The next claim of the IO is the “wrongful conversion” of the void areas in front of CPS 2, 3, 4, 5, 8 and 9.  It is said that Wing Ming wrongfully converted those areas to its own use in that it (i) purportedly sold the void areas in front of CPS 2, 5, 8 and 9 to various purchasers in 1991 and 1992, and (ii) wrongfully occupied for itself the void areas in front of CPS 3 and 4.

159.  This is said to be in breach of DMC clause IV.27 and section 34I of the Ordinance. 

160.  CPS 10 is not part of the claim because the void area in front of it was not assigned to the purchaser of CPS 10.  That was no doubt because the area was needed for entrance to the switch room.  It is not clear, however, why the void areas in front of CPS 6 and 7 are not part of the claim.

161.  The IO claims (i) a declaration that the void areas form parts of the common areas of the building; (ii) an injunction to restrain Wing Ming from continual conversion of the void areas to its own use; and (iii) an order for Wing Ming to account for and pay over all the sale proceeds, profits, income and occupation fees in respect of the void areas.

162.  It is now common ground that:

(1) Wing Ming thought that the void areas were areas of which it was entitled under the DMC to exclusive possession and enjoyment, and so contended in the trial of the first action before Reyes J and in the appeal to the Court of Appeal.  In fact in earlier interlocutory decisions, the courts had expressed preliminary views that the areas belonged to Wing Ming.

(2) Reyes J held that the void areas are in fact common areas (being part of the roadways) within the meaning of the DMC.  His decision was upheld by the Court of Appeal.  They must therefore be regarded to be, and always to have been, common areas.

(3) Between 1991 and 1992, Wing Ming assigned CPS 8 and 9 to Renley, CPS 5 to Conwan, and CPS 2 to Sanwa. These assignments define CPS 2, 5, 8 and 9 as being (partly) on the void areas.  In other words, Wing Ming did appear to have purportedly assigned to the respective purchasers the right of exclusive possession over those areas.

(4) Since 1995, until about 2010, Wing Ming had used the void areas in front of CPS 3 and 4 for parking its vehicles from time to time.

(5) Following the conclusion of the first action, in 2011, the lines delineating the car parking spaces were redrawn so that the void areas were no longer incorporated into the car parking spaces.

163.  DMC clause IV.27 provides:

“27. No Owner shall cause any damage to or interference in any way with the Common Area or Common Facilities.”

164.  S. 34I of the Ordinance provides :

“(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 building; 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.”

165.  S. 34I(1) has two limbs.  Although s. 34I is referred to by the IO generally in its plea, the conduct complained of being wrongful conversion makes it clear that the IO asserts a breach of s. 34I(1)(a) alone.  This is fortified by the fact that there is no pleading or evidence of interference with use and enjoyment or any nuisance or hazard referred to in s. 34I(1)(b).

166.  The following issues arise on this claim which I shall address in turn:

(1) whether the claim lies within the exclusive jurisdiction of the Lands Tribunal;

(2) whether Wing Ming is liable under DMC clause IV.27 or section 34I(1)(a) in relation to CPS 2, 5, 8 and 9;

(3) whether the IO’s claims are barred by the wider principle of res judicata or abuse of process;

(4) whether the IO’s claims are barred by the Limitation Ordinance or laches; and

(5) what the proper relief is, if any.

Exclusive jurisdiction of Lands Tribunal

167.  Mr Pennicott took in his closing submissions a point not made before.  However, as it goes to the jurisdiction of this court which cannot be conferred by the parties by consent, I think it is right to allow him to raise it.  Mr Cooney was given the opportunity to and did make supplemental written submissions in response.

168.  Mr Pennicott submits that the IO’s claim for conversion of common parts to private use is based on s. 34I and is, as such, a right of action arising from the Ordinance alone.  He relies on Wong Hing Cheong v Wah E Investment Ltd [2002] 2 HKLRD 175, §26, where Rogers VP said:

“… The only thing that can be said, as has been said by Findlay J, is that if there is a right or remedy which arises out of the Ordinance alone, the only tribunal which would have jurisdiction in respect of that right or remedy would be the Lands Tribunal. Save in that very restricted sense, I can see no basis for holding that the Lands Tribunal has exclusive jurisdiction in respect of matters falling within the Tenth Schedule of the Ordinance.”

169.  Mr Pennicott submits that because the cause of action asserted by the IO is “a right or remedy which arises out of the Ordinance alone”, only the Lands Tribunal has jurisdiction to entertain it.

170.  I reject this argument.  First, the passage in Rogers VP’s judgment relied upon by Wing Ming was preceded by the following passage:

“In those circumstances, it appears to me to be simply untenable that the provisions of section 45(1) and the Tenth Schedule when taken together can be interpreted as giving exclusive jurisdiction to the Lands Tribunal in respect of matters falling within the Tenth Schedule. I see no basis for construing, as it would appear on one reading at least that Mayo J considered was possible, the Tenth Schedule in a restricted way. …”

171.  Taken together as a whole, it does not seem to me that paragraph 26 of Rogers VP’s judgment was intended to lay down a definitive rule – as opposed to saying merely that it was arguable – that a right or remedy created by the Ordinance that has no independent existence outside of it lies within the exclusive jurisdiction of the Lands Tribunal.

172.  In Incorporated Owners of Summit Court v Full Surplus Investment Ltd [2002] 3 HKC 193, in a judgment on the trial of a preliminary issue handed down on the same day as the Court of Appeal’s judgment in Wong Hing Cheong, Kwan J (as she then was) reached the conclusion that the action before her did not fall within the exclusive jurisdiction of the Lands Tribunal and that the High Court had concurrent jurisdiction.  The claim there arose out of a complaint by the incorporated owners of a building against the owners of a portion of the main roof for interference with the water supply system to the building.  The cause of action relied upon was a breach of the deed of mutual covenant and the Ordinance (see §4).  In particular, it would appear that a breach of s. 34I was asserted: see the reference to s. 34I in paragraph 16 of the judgment at p. 201D.  Notwithstanding that, Kwan J held that the claim could be brought in the High Court.  The reasoning of her Ladyship did not depend on whether a particular right or remedy was created by the Ordinance alone.  Rather, she focussed on the nature of the proceedings set out in the 10^th Schedule to the Ordinance as a whole, and stated:

“31. … If all of the proceedings specified in the 10th Schedule could rightly be regarded as proceedings in respect of rights and remedies created by Cap. 344, one would have no quarrel with the view that exclusive jurisdiction in such proceedings should be vested in the Lands Tribunal, as there would not have been any ouster of jurisdiction of the High Court (see Ngan Chor Ying, supra at 608F to H). This, however, is not the case.” (original italics)

In conclusion, she stated:

“32. I would respectfully agree with the views of Findlay J. in Ngan Chor Ying that the width of the 10th Schedule points to the conclusion that the Lands Tribunal is not meant to have exclusive jurisdiction of the proceedings in the schedule. …”

173.  I respectfully agree.  The factors canvassed in Summit Court do not show that the Lands Tribunal has exclusive jurisdiction over all the types of proceedings set out in the 10^th Schedule, nor do they support the proposition that the Lands Tribunal has exclusive jurisdiction over a claim based on the Ordinance alone.

174.  Since Wong Hing Cheong and Summit Court, the courts appear to have proceeded simply on the basis that the High Court and the Lands Tribunal have concurrent jurisdiction in respect of proceedings specified in the 10^th Schedule to the Ordinance, irrespective of whether the cause of action asserted is a breach of an obligation found only in the Ordinance.  Thus in Provident Commercial Investments Ltd v Incorporated Owners of Provident Centre [2005] 4 HKC 155 at §24, the Court of Appeal said:

“… The Tribunal does not have exclusive jurisdiction over the proceedings specified in the Tenth Schedule (see this court’s decision in Wong Hing Cheong and another v Wah E Investment Ltd and another [2002] 2 HKLRD 175), so it was certainly open to PCIL, on the summonses issued, to ask the Tribunal to exercise its discretion to transfer the proceedings to the Court of First Instance. …”

175.  Specifically, in Hollywood Shopping Centre Owners Committee Ltd v The Incorporated Owners of Wing Wah Building Mongkok Kowloon (HCA 1582/2007, 23 April 2008 per Recorder Fok SC; 16 August 2010 per Recorder R Yuen SC; and [2011] 4 HKLRD 623 (CA)), where the incorporated owners counterclaimed against the plaintiff for having breached s. 34I of the Ordinance by converting a canopy, which was a common part, to its own use, it seems to have been taken for granted that the High Court had jurisdiction to entertain the counterclaim.

176.  In my view, a claim for breach of s. 34I of the Ordinance does not exclusively lie within the jurisdiction of the Lands Tribunal.

177.  In any event, s. 34I(2) provides that a contravention of s. 34I(1) is to be treated as a breach of the deed of mutual covenant in respect of the building.  The cause of action is therefore a claim for breach of covenant, which is perfectly within the jurisdiction of this court.  Moreover, the IO here also complains of breach of an express provision of the DMC, i.e. clause IV.27.  Clearly it is within the jurisdiction of this court to determine such a claim.

Liability under DMC clause IV.27 and section 34I of the Ordinance

CPS 3 and 4

178.  It is clear that Wing Ming had itself used the void areas in front of CPS 3 and 4 as car parking spaces starting from about 1994 or 1995.  To that extent, there was clearly, in my view, a breach of DMC clause IV.27 and section 34I(1)(a) of the Ordinance by Wing Ming.

CPS 2, 5, 8 and 9

179.  Wing Ming, however, never occupied the void areas in front of CPS 2, 5, 8 and 9.  What it did was to assign the relevant undivided shares in the land and building purportedly with the right of exclusive possession of those areas to certain purchasers. 

180.  The question that arises is whether in such circumstances Wing Ming had “caused any … interference in any way with” the common areas in question within the meaning of DMC clause IV.27 (there being no question of damage caused to the common areas), and whether it had converted those common areas to its own use within the meaning of s. 34I(1)(a) of the Ordinance.

181.  A person who takes over the common parts of a building and occupies and uses them exclusively for his own purposes has clearly converted them to his own use.  It seems to me that an owner in a multi‑storey building who purportedly sold certain common parts of the building to another person, with the result that the other person has subsequently purported to use and occupy the common parts exclusively, may also fairly be said to have converted those common parts to his own use within the meaning of s. 34I(1)(a).  He has done so by purporting to sell and give exclusive possession of that which is not within his right to dispose of.

182.  Likewise, on a true and proper construction of the DMC, it seems to me that such an owner has, by purporting to sell the areas in question, “caused … interference … with” the common parts within the meaning of clause IV.27.  According to the Shorter Oxford Dictionary, “interfere” contextually means “enter into something without right or invitation, or intending to hinder or obstruct”.  Wing Ming had in my view caused interference by the purchasers by purporting to sell the void areas to them and purporting to pass to them exclusive possession over those areas.

183.  It follows that, in my view, Wing Ming acted in breach of clause IV.27 of the DMC.  Insofar as s. 34I(1)(a) is concerned, by virtue of s. 34I(2), Wing Ming is also deemed to have acted in breach of an obligation imposed on it by the DMC.

184.  As for the owners who purchased CPS 2, 5, 8 and 9 from Wing Ming, it would appear that the assignments from Wing Ming were ineffective to pass to the purchasers any right of exclusive possession in relation to the void areas, as they are common areas: Provident Commercial Investment Ltd v The Incorporated Owners of Provident Centre [2005] 4 HKC 155 (CA), at 160B, §21; The Incorporated Owners of the Lorna Villa v Chan Yan Wah [1999] 4 HKC 524 at 530-531.  However, those purchasers are not parties to these proceedings and I am not concerned with the question whether they are liable to the IO and, if so, whether they have a claim for indemnity against Wing Ming.

Res judicata / Abuse of process

185.  Wing Ming argues that it is an abuse of process for the IO to raise this claim in this action, when the matter could and should have been raised in the first action.  This defence is raised in relation to CPS 2, 3, 4, 5, 8 and 9, alternatively CPS 2, 3 and 4, and as a further alternative, CPS 2 only.

186.  The plea proceeds on the basis that because of what happened in the first action, it would be vexatious for the IO to bring the claim and require Wing Ming to deal with it in the present action.  Thus it is pleaded that “the raising of such matters in these proceedings amounts to an abuse of process and hence such pleas are subject to being struck out”.  The oddity of this plea in the present context is immediately apparent, because it is not being raised in a strike-out application but as a defence in the trial.

187.  A similar situation had occurred in Ko Hon Yue v Chiu Pik Yuk (2012) 15 HKCFAR 72, where Ma CJ at §§84-86 highlighted the importance of taking such abuse point early:

“84. … [W]here an application is made to strike out proceedings or any part thereof on the basis that they should not be permitted to go to trial, it is obvious that such an application should be made at the earliest possible opportunity, before the parties and the court’s resources are potentially wasted. … [W]here proceedings may constitute an abuse on the basis that it would be vexatious for a court to try the case, the sooner this is dealt with the better; otherwise, the very evils sought to be avoided (the wastage of time and resources causing vexation or harassment of the other party) would continue to accumulate. The present case provides a glaring example of this.

85. In the speeches of Lord Bingham of Cornhill and Lord Millett in Johnson v Gore Wood, references were made to the importance of expedition in such a situation: at 34C-D and 61C-E. A delay in raising this point of abuse gives rise to a reasonable inference either that the relevant defendant is not really vexed at all by the second set of proceedings or has acquiesced in it. It is certainly not acceptable from the point of view of the administration of justice.

86. The trial judge’s decision to dismiss the plaintiff’s claim on this basis was reversed by the Court of Appeal.  A number of reasons were articulated in support of this conclusion, but I need only refer to one: the delay on the defendants’ part to raise the point of abuse.  It was not until the trial itself that the point was raised by the defendants that the action ought to be dismissed on the basis of abuse.  An argument was made along the lines that the defendants had expressly in their pleadings reserved their position in this regard.  Reference was made to paras 34 to 35 of the Re-Re-Amended-Defence.  It is far from apparent that such a reservation was actually made in those paragraphs of the pleading but it matters not.  Even if there was such a reservation, this did not justify the defendants waiting until such a late stage – it could hardly have been later – to make an application to strike out.”

188.  In the present case, this part of the IO’s counterclaim existed in the original counterclaim filed in September 2006.  The plea of abuse of process was only added by Wing Ming by amendment of its reply and defence to counterclaim in February 2011.  As far as I am aware, no application was made by Wing Ming to strike out that counterclaim.  There is clear guidance in Ko Hon Yue as to what the court should do in these circumstances, where Ma CJ said at §87:

“87. By the time Chu J was invited to deal with the issue, the parties were already fully prepared for trial on each of the issues raised in the action. In other words, there was an irony here that presented itself before the court: Chu J was asked to strike out the proceedings on the basis that the plaintiff ought not to be permitted to go to trial when at that stage, both parties (not to mention the Judge) had fully prepared themselves for a trial. By then, discovery had taken place, witness statements had been exchanged (including those of expert witnesses) and all other preparations on the assumption that a trial would take place, had been made. And yet, the judge was persuaded not only to deal with the strike out application but also to embark on the trial itself. In my view, the Judge ought to have refused to deal with the abuse arguments and simply have dealt with the substantive issues in the action only. It was at that stage far too late to mount a strike out application on the basis of the abuse alleged. …”

189.  Applying that approach in the present case, it seems to me clear that the plea of abuse, not having been pursued by Wing Ming prior to trial, should not be entertained at trial, when the court should focus on the real issues on the merits.  This defence is therefore rejected.

190.  Wing Ming also pleads that because it had done reinstatement works as a result of the outcome in the first action, it would be caused additional expense if ordered to carry out further reinstatement works, which ought to have been the subject of the first action.  In my view, this is a matter that relates to the question of relief but does not assist Wing Ming’s argument on abuse of process.

Limitation and laches

191.  Wing Ming has raised the defence of time bar and laches.  This defence needs to be separately discussed in relation to CPS 2, 5, 8 and 9 on the one hand and CPS 3 and 4 on the other.

CPS 2, 5, 8 and 9

192.  In the case of the void areas in front of CPS 2, 5, 8 and 9, the wrongful act complained of is the purported sale of the void areas.  The wrong was committed by Wing Ming once and for all when it purported to sell the areas.  Thereafter, any interference with those common areas was committed, if at all, by the respective owners of the car parking spaces.  This is not a case where Wing Ming leased or licensed the areas to third parties in return for a monthly rent or fee paid over a continuous period. 

193.  The cause of action pleaded is the breach of DMC and breach of the obligation incorporated into the DMC by s. 34I(1)(a).  As such, the claim is an action upon a specialty, the DMC being a document under seal, and therefore subject to a limitation period of 12 years: s. 4(3) of the Limitation Ordinance (Cap 347); Incorporated Owners of Million Fortune Industrial Centre v Jikan Development Ltd [2002] 4 HKC 33 (CA) at §28; Aiken v Stewart Wrightson Members Agency Ltd [1995] 1 WLR 1281, 1292-1293.

194.  Since the purported sales of the void areas in front of CPS 2, 5, 8 and 9 took place in 1991 and 1992, the IO’s claim against Wing Ming for monetary relief would seem to me to be barred by the Limitation Ordinance.

195.  Mr Cooney accepts that the IO’s claim for damages based on breach of the DMC is subject to a 12-year time bar.  (He submits that the claim can date back 12 years from 29 September 2006 being the date of the counterclaim.  It seems to me it should date back from 18 August 2006, being the date of Wing Ming’s writ, by virtue of s. 35(1)(b) of the Limitation Ordinance.)

196.  He submits, however, that arising from the conversion of the void areas, there is a “duty in equity to account” on the part of Wing Ming which “rests on trust” and which is not subject to any limitation period.  He relies on Jikan Development Ltd v Incorporated Owners of Million Fortune Industrial Centre (2003) 6 HKCFAR 446 for the proposition that the claim lies in trust and that the money belongs in equity to the IO. 

197.  In my opinion, Jikan Development Ltd is to be distinguished.  There, a provision (clause 8(b)) of the DMC provided a method of allocating the common parts for car parking purposes, and stipulated that the income should be paid into the management sink fund.  The 1^st defendant, who was the manager, allocated spaces for parking but acted in breach of its obligation under the DMC in paying the income over to the 1^st defendant. Clearly the 2^nd defendant was subject to fiduciary obligations in relation to the fees collected, which were destined for a specific account to be used for a particular purpose.  The 1^st defendant knowingly received money paid in breach of that obligation; hence Rogers VP’s observation in the Court of Appeal’s decision [2002] 4 HKC 33 at §15 that

“even if the first defendant had not been bound by the terms of the DMC, knowledge of those arrangements would have bound it as a recipient of the monies in breach of the second defendant’s obligations”

and at §18 that

“The monies which the Manager received as parking fees in respect of car and lorry parking in the Common Parts was money which was impressed with a trust. That money could only be used, as indicated above, for the purposes of the maintenance of the Building.”

198.  It is in this context that Litton NPJ said at §53 of his judgment in the Court of Final Appeal that the fees collected “belonged in equity to the owners as a body” and should have been paid by the 2^nd defendant into the management sink fund for the benefit of the owners, which “gave rise to a duty in equity to account”.  The claim in that case against the 2^nd defendant would not be subject to limitation because he was a trustee in possession of trust property within the meaning of s. 20(1)(b) of the Limitation Ordinance.

199.  In my respectful opinion, the Court of Final Appeal in Jikan did not decide, as a general proposition, that monies or occupation rent that one co-owner needs to account for or pay to the other co-owner arising from occupation of the co-owned property are trust monies belonging to the latter. 

200.  Nor do I think, as a matter of general principle, that a trust arises in these circumstances.  Co-owners are not trustees for one another, or fiduciaries with respect to any benefit they derive from the property.  A duty to account for rent received or to pay occupation rent may arise where there is ouster of one co-owner by another, or where there is an agreement making one the bailiff of the other: Chen Yu Tsui v Tong Kui Kwong [2006] 1 HKC 23 at §§87-105.  This does not impose an obligation binding on the conscience of a co-owner to hold or deal with any asset in any particular way, which is the essence of a trust.

201.  Indeed, the IO has neither pleaded any trust nor s. 20(1)(b) of the Limitation Ordinance.

202.  What the IO does rely on, however, is s. 4(7) of the Limitation Ordinance, which provides:

“This section shall not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief, except in so far as any provision thereof may be applied by the court by analogy in like manner as the corresponding enactment contained in the Limitation Act 1980 (1980 c. 58 U.K.) is applied in the English Courts.”

203.  The argument, as I understand it, is that because account is an equitable relief, the claim for it is not subject to any limitation period by virtue of s. 4(7).

204.  In my opinion, this contention should likewise be rejected.  As Millett LJ said in Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400, 415j: “A claim for an account in equity, absent any trust, has no equitable element; it is based on legal, not equitable rights”. The scope of s. 4(7) has been examined by Deputy Judge Lisa Wong SC in Lee Kwok Wing v Chung Chuen Hei [2012] 4 HKLRD 917 who stated at §57: “where a claim to an account is based upon the assertion of legal rights alone, or concurrent legal and equitable rights, the statutory limitation period would be applied”.  It has been held in Hong Kong that claims for account between co-owners are subject to limitation: see Lee Kei Kwan v Lee Kui Kwan (HCMP 1960/1995; 9 April 1997) (by concession); Ma Weineng v Ma Hook Kwan (HCA 2237/2011; 14 May 2013) (where the defendant did not appear).  In my judgment, the IO’s claim for an account against Wing Ming, based as it is on a breach of the DMC and s. 34I of the Ordinance, is in no different position.

205.  The IO has also referred to two Court of Appeal’s decisions, namely, The Incorporated Owners of Man Hong Apartments v Kwong Yuk Ching [2001] 3 HKC 116 and The Incorporated Owners of Mountain View Mansion v Heart Cuisine [2012] 4 HKLRD 628.  In my view, these decisions, which concern the question of adverse possession of the common parts of a building in multiple ownership and the enforcement of a DMC by injunction, are not relevant to the issue at hand.

206.  In conclusion, therefore, I hold that the IO’s claim for monetary relief in relation to the void areas in front of CPS 2, 5, 8 and 9 is time-barred.

CPS 3 and 4

207.  In contrast, arising from Wing Ming’s own use of the void areas in front of CPS 3 and 4, there was a continuing breach of covenant by Wing Ming up to 2011 when such use ceased.  Insofar as the counterclaim relates to the wrongful interference with those common areas after 18 August 1994, it is, in my view, not time-barred. 

208.  Nor do I think that the IO’s claim is barred by laches.  Until about 2006, no one seems to have focussed on the fact that the void areas were common areas and could not be made part of any car parking space.  I do not think that the circumstances were such that the IO should be regarded as having waived the owners’ rights in relation to those common areas or that it was inequitable for the IO to claim relief.

Relief

209.  Reyes J and the Court of Appeal have already held the void areas in front of CPS 2, 3 and 4 to be common areas.  The parties here have proceeded on the agreed premise that the void areas in front of CPS 5, 8 and 9 are also common areas.  The void areas in front of CPS 6 and 7 are, for some unexplained reasons, not covered by this action.  In these circumstances, quite apart from the time bar, I would decline to grant any declaration.

210.  As the car parking spaces have been re-delineated in 2011 following the conclusion of the first action and the void areas are no longer included as part of any car parking spaces, injunctive relief is in my view unnecessary.  In any event, Wing Ming had only itself occupied the void areas in front of CPS 3 and 4.  For CPS 2, 5, 8 and 9, it was the owners who had purchased the spaces in question, rather than Wing Ming, who had occupied the void areas.  An injunction against Wing Ming in relation to CPS 2, 5, 8 and 9 would have no basis in fact.  I decline to grant injunctive relief.

211.  This leaves the question of monetary relief in relation to the void areas in front of CPS 3 and 4.  The IO claims an order that Wing Ming pay for the wrongful occupation of the void areas.  What is the basis of such a claim?

212.  An action for trespass may in certain circumstances be brought against an owner of property by his co-owners.  The IO has not, however, pleaded trespass.  In any event, an owner cannot be sued by his co-owners in trespass unless he has ousted his co-owners: see Clerk & Lindsell on Torts (20^th ed), §19-25; Fu Wan Sang v Fu Man Kwong (HCA 16108/1999, 31 March 2003), at §81.  No ouster is pleaded in the IO’s counterclaim.  In the IO’s reply, what is pleaded is first that ouster is irrelevant, but that in any event the IO relies on (i) the sale of the car parking spaces including the void areas, and (ii) the construction of the wall behind the car parking spaces.  These acts, in my view, do not establish ouster in relation to the void areas in front of CPS 3 and 4 because (i) these two spaces have not been sold by Wing Ming at all, and (ii) the construction of the wall ousted co-owners from the areas behind the wall but not from the void areas which lie in front of the wall.

213.  In the absence of ouster, the liability of a co-owner to pay an occupation rent for his occupation of the land is less clear.  The basic rule is that one co-owner is not normally obliged to pay another co-owner rent by reason merely of the fact that the former has been in sole occupation of the property.  But it has been said that:

“a court of equity will order an inquiry and payment of occupation rent, not only in the case where the co-owner in occupation has ousted the other, but in any other case in which it is necessary in order to do equity between the parties that an occupation rent should be paid. The fact that there has not been an ouster or forceful exclusion therefore is far from conclusive”: In re Pavlou [1993] 1 WLR 1046, at 1050 per Millett J.

214.  The precise ambit of that principle is, however, unclear.  Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (4^th ed), §25-065, states that the decision in Re Pavlou, supra, should be placed in the category of an account as an incidental consequence in a suit for partition or proceedings analogous thereto.  See also Forgeard v Shanahan (1994) 35 NSWLR 206; Chen Yu Tsui v Tong Kui Kwong [2006] 1 HKC 23 at §§87-105.

215.  In my view, there is liability on the part of Wing Ming to pay occupation fees or equivalent sums in damages in respect of the void areas in front of CPS 3 and 4.  This is a case where there was a mutual covenant for the area in question to be kept for common use.  Wing Ming has, in breach of that covenant, marked that area out as being for its own enjoyment and has usurped that area for itself.  The general rule that one co-owner in sole occupation does not have to pay rent to the other co-owner assumes there is no contract: see Dennis v McDonald [1982] Fam 63, 69-70.  In contrast, there is a covenant in this case among the owners that no one should convert common areas to his own use or interfere with common areas. In my opinion, this is so analogous to the situation recognised in the old cases, where one owner became by agreement the bailiff for his co-owner and liable for an occupation rent (see M’Mahon v Burchell (1846) 2 Ph 127; Henderson v Eason (1851) 17 QB 701; 117 ER 1451, 1457), that equity will order an inquiry and payment of occupation rent.

216.  The same result can, in my view, be reached by requiring Wing Ming to pay damages to the IO for breach of covenant, such damages being assessed not on the ordinary compensatory basis but on a restitutionary basis in accordance with the principles laid down in such cases as Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 and Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2011] 1 WLR 2370.  In Pell Frischmann at §48, Lord Walker stated the following general principles derived from the cases:

“(1) Damages (often termed ‘user damage’) are readily awarded at common law for the invasion of rights to tangible moveable or immoveable property (by detinue, conversion or trespass): Stoke at pp1410-1412; Experience Hendrix at paras 18 and 26.

(2) Damages are also available on a similar basis for patent infringement and breaches of other intellectual property rights of a proprietary character: Stoke at p1412; General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd [1975] 1 WLR 819.

(3) Damages under Lord Cairns’s Act are intended to provide compensation for the court’s decision not to grant equitable relief in the form of an order for specific performance or an injunction in cases where the court has jurisdiction to entertain an application for such relief: Lord Nicholls in Blake at p281. Most of the recent cases are concerned with the invasion of property rights such as excessive user of a right of way (Bracewell v Appleby [1975] Ch 408, Jaggard). The breach of a restrictive covenant is also generally regarded as the invasion of a property right (Peter Gibson LJ in Experience Hendrix at para 56) since a restrictive covenant is akin to a negative easement. (It is therefore a little surprising that Lord Nicholls in Blake, at p283, referred to Wrotham Park as a ‘solitary beacon’ concerned with breach of contract; that case was concerned with the breach of a restrictive covenant to which neither the plaintiff nor the defendant was a party; but the decision of the House of Lords in Blake decisively covers what their Lordships have referred to as a non-proprietary breach of contract.)

(4) Damages under this head (termed ‘negotiating damages’ by Neuberger LJ in Lunn Poly at para 22) represent ‘such a sum of money as might reasonably have been demanded by [the claimant] from [the defendant] as a quid pro quo for [permitting the continuation of the breach of covenant or other invasion of right]’ (Lunn Poly at para 25).

(5)     Although damages under Lord Cairns’s Act are awarded in lieu of an injunction it is not necessary that an injunction should actually have been claimed in the proceedings, or that there should have been any prospect, on the facts, of it being granted: Millett LJ in Jaggard at p285 (but cf at p291); Lord Nicholls in Blake at p282; Chadwick LJ in World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2008] 1 WLR 445, para 54.  This point was not raised in argument in the appeal but is pertinent since there was such a long delay before PFE issued the order of justice commencing these proceedings.”

217.  Wing Ming’s breach constituted both a breach of a restrictive covenant relating to the use of property in common ownership and the use of such property without consent of the other owners.  In these circumstances it seems to me that damages may be awarded for breach of covenant to represent such sums of money as might reasonably have been demanded by the IO from Wing Ming as a quid pro quo for permitting the continuation of the breach of covenant (see Pell Frischmann at §48(4)).

218.  On this basis, the sums to be paid by Wing Ming should, in my judgment, be assessed by reference to the prevailing market rent of each private car parking space.  There is insufficient material for me to calculate the actual amounts applicable over the entirety of the relevant period.  The sums payable should be worked out by the parties in accordance with the following directions:

(1) There is agreement between the parties’ experts that the monthly rental of a legitimate car parking space on the G/F of the building would be $3,059 as at March 2011.  I adopt this figure as the starting point.

(2) This amount of $3,059 should be adjusted with reference to the proportion that the area of the void areas lying within each of CPS 3 and 4 as delineated during the relevant period bears to the total area of each of the then CPS 3 and 4.

(3) Wing Ming has to pay for its occupation of the void areas in front of CPS 3 and 4 back to 18 August 1994 (12 years prior to the writ of summons).  On the evidence, Wing Ming started using those void areas from 1994 to 2011.  The calculation has to be carried out for that period.

(4) No evidence of rental values as at any date other than March 2011 is available.  It would be a disproportionate response for the parties to be required now to obtain valuation evidence for each year back to 1994.  Instead, the amounts payable in other years should be based on $3,059 (as at March 2011) and adjusted upwards or downwards in accordance with the rental indices for private flatted factories published by the Rating and Valuation Department.

219.  For the reasons I have already given, there is no need to quantify any monetary relief in respect of CPS 2, 5, 8 and 9.  In any event, I have difficulty with the IO’s contention that Wing Ming should hand over the entire sale proceeds of those car parking spaces to the IO. First, the IO has not adopted the sale of the void areas.  Instead, the purported transfer of the relevant void areas had been reversed, with the car parking spaces being moved back to their proper location.  Secondly, Wing Ming has now given exclusive possession of the car parking spaces proper to the purchasers.  There is no suggestion that those spaces include any common areas.  Thirdly, so far as CPS 5, 8 and 9 are concerned, most of the area that Wing Ming purported to assign to the purchasers lay within the car parking spaces proper.  It is only the front portions that fell within the void areas.

Orders

220.  The IO’s counterclaim in relation to the void areas in front of CPS 2, 5, 8 and 9 is dismissed.

221.  On the IO’s counterclaim in relation to the void areas in front of CPS 3 and 4, I make the following orders:

(1) Wing Ming do pay the IO the sums calculated in accordance with paragraph 218 above. 

(2) There be general liberty to apply in relation to the quantification of the sums payable.

E. G/F – Part Loft above void areas in front of CPS 2, 3 and 4

222.  The IO complains that Wing Ming has since 1994 wrongfully occupied and converted to its own use the space above the void areas in front of CPS 2, 3 and 4. 

223.  There was a cockloft in the building as first constructed in accordance with the approved building plans of 1978.  In addition, DMC clause I.C.5 reserves to the owner of the Front Portion of the G/F (i.e. Wing Ming) a right to construct a loft over CPS 2, 3 and 4.  This right was subject to the Building Authority giving approval and to a head room of at least 7 feet 6 inches being left to CPS 2, 3 and 4.  Such a loft, if constructed, would amount to an extension of the cockloft in the original plans.

224.  There is no dispute that a loft was built on behalf of Wing Ming in 1994, as part of the 1994 alteration works, which extended the cockloft.  It was built with the Building Authority’s approval leaving a headroom of not less than 7 feet 6 inches.

225.  The loft was constructed, however, not only over the proper location of CPS 2, 3 and 4, but also over the void areas in front of them which were marked as car parking spaces during the period between about 1994 and 2011.  As I have said above, at the time in 1994, Wing Ming thought that the three car parking spaces included the void areas in front of them.

226.  That part of the loft, which is located directly over the void areas in front of CPS 2, 3 and 4, has been referred to in these proceedings as the “Part Loft”, which now forms part of the cockloft on the mezzanine floor.

227.  Wing Ming accepts now, as it has to, that CPS 2, 3 and 4 do not extend to the void areas in front of them, and that the void areas are common areas.  It follows that, in the absence of specific provision in the DMC, the entire air space there between the floor and ceiling of the G/F must also be common areas and space available to all the owners. 

228.  It follows that Wing Ming had no right under DMC clause I.C.5 or otherwise to build the Part Loft, which amounts to an ouster of other owners from that space.

229.  As in the claim relating to the void areas dealt with in section IV.D above, the IO says that Wing Ming has breached DMC clause IV.27 and s. 34I of the Ordinance.

230.  The IO claims (i) a declaration that the space in question forms part of the common areas; (ii) an injunction to restrain Wing Ming from continual conversion of the space for its own use and profit; (iii) a mandatory injunction to require Wing Ming to reinstate the original space, which is tantamount to an order to demolish the Part Loft; and (iv) an order for an account of all profit, income and occupation fees in respect of the space.

231.  Wing Ming contends that the IO’s claim fails because:

(1)   The claim lies within the exclusive jurisdiction of the Lands Tribunal.

(2)   The claim should have been but was not raised by the IO in the first action and is therefore barred by the wider principle of res judicata.

(3)   The claim is barred by the Limitation Ordinance or laches and acquiescence.

Exclusive jurisdiction of Lands Tribunal

232.  For the reasons set out in paragraphs 167-177 above, I reject Wing Ming’s argument that the IO’s claim falls outside the jurisdiction of the Court of First Instance.

Res judicata

233.  Wing Ming claims that its plea of abuse applies with greater force in relation to this counterclaim because (i) the Part Loft lies directly above the wall that the IO sought an order in the first action to demolish; (ii) instead of seeking an order to prevent Wing Ming from building the Part Loft in 1994, the IO sat by while Wing Ming built it and eventually even re-routed the pipe that went through that space. 

234.  However, Wing Ming’s plea of res judicata and abuse of process must also be seen in the context of the history of the relevant claim and defence in the present action relating to the Part Loft.

(1) The IO first sought to introduce a claim relating to the Part Loft in August 2007 when it sent a draft amended defence and counterclaim to Wing Ming seeking its consent for the amended pleading to be filed.

(2) Such consent not forthcoming, the IO took out a summons for leave to amend its defence and counterclaim in September 2007.

(3) Wing Ming opposed that application.  In particular, an affirmation made on behalf of Wing Ming in November 2007 stated that the amendment was opposed on the ground that the new claim had no prospect of success given that the void areas were clearly part of CPS 2, 3 and 4 and, secondly, that it would be an abuse of process because the issue was “almost the same” as the issue in the first action.

(4) Meanwhile, the trial of the first action took place before Reyes J in December 2007 without the IO seeking in any way to introduce the claim in that action.

(5) In the present action, on 2 January 2008, shortly prior to the hearing of the IO’s summons for leave to amend its defence and counterclaim, Wing Ming’s solicitors wrote to the IO’s solicitors stating that in view of Reyes J’s judgment, Wing Ming would not object to the application for leave to amend and would agree that the costs of and occasioned by the summons be to the IO in any event, subject to the usual provision that the costs of and occasioned by the amendments be to Wing Ming in any event.  A draft consent summons was attached.

(6) An order was made by consent on 10 January 2008 giving leave to the IO to amend.  The IO’s amended pleading was filed on 15 January 2008. 

(7) The above events are in my view highly significant.  If the new counterclaim was thought to be vexatious, it ought to have been resisted at that stage.  Yet Wing Ming simply dropped its opposition without even a reservation of the abuse argument (though I should make clear I am not suggesting that such a reservation would have been effective).

(8) Wing Ming did not amend its reply and defence to counterclaim in response until over three years later, on 22 February 2011.  In defence to the IO’s claim relating to the Part Loft, Wing Ming pleaded that the matter “could and therefore should have been raised” in the first action, that failure to do so “estops” the IO from raising the matter in the present action, and that raising the matter in this action amounts to an “abuse of process”, rendering the plea subject “to being struck out”.

235.  I have already dealt with the defence of res judicata or abuse of process in relation to CPS 2, 3, 4, 5, 8 and 9 in section IV.D above, to which I refer.  In light of the circumstances I have set out above, those reasons apply a fortiori here, since Wing Ming had an opportunity of opposing the addition of the claim by way of amendment on the ground relied on here now, and yet decided not to oppose it.  In my view, it is far too late for Wing Ming to try, in the trial of the action itself, to shut out the claim in relation to the Part Loft on the ground of abuse of process irrespective of the merits.  I find that this defence fails.

Limitation and laches

236.  The Court of Appeal has held in The Incorporated Owners of Man Hong Apartments v Kwong Yuk Ching [2001] 3 HKC 116 and The Incorporated Owners of Mountain View Mansion v Heart Cuisine [2012] 4 HKLRD 628 that a claim by the incorporated owners to enforce the DMC and s. 34I of the Ordinance by injunctive relief, so as to recover possession of common parts which have fallen into the exclusive possession of an individual owner, is not subject to limitation.  Although these two decisions have been examined and explained in the recent judgment of the Court of Appeal in Wong King Lim v The Incorporated Owners of Peony House [2013] 4 HKC 295, no argument has been advanced by Mr Pennicott to suggest that the two cases should not be followed.  These decisions are binding on me.  I conclude therefore that there is no question of limitation in relation to this counterclaim so far as injunctive relief is concerned.

237.  Wing Ming also pleads laches as a defence.  In Erlanger v New Sombrero Phosphate Co (1878) 3 App Cast 1218, 1279, Lord Blackburn said:

“In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, 239, it is said:

‘The doctrine of laches in courts of equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct done that which might fairly be regarded as equivalent to a waiver of it, or where, by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases lapse of time and delay are most material. … the validity of that defence must be tried upon principles substantially equitable. Two circumstances always important in such cases are the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.’

…, it must always be a question of more or less, depending on the degree of diligence which might reasonably be required, and the degree of change which has occurred, whether the balance of justice or injustice is in favour of granting the remedy or withholding it.  The determination of such a question must largely depend on the turn of mind of those who have to decide, and must therefore be subject to uncertainty; but that, I think, is inherent in the nature of the inquiry.”

238.  In Snell’s Equity (32^nd ed), the law is stated as follows:

“Laches essentially consists of a substantial lapse of time coupled with the existence of circumstances which make it inequitable to enforce the claim. Delay will accordingly be fatal to a claim for equitable relief if it is evidence of an agreement by the claimant to abandon or release his right, or if it has resulted in the destruction or loss of evidence by which the claim might have been refuted … But apart from such circumstances delay will be immaterial ….”

239.  In my view, while there is undoubtedly a long delay in the bringing of this counterclaim, the delay is not indicative of an intention to waive any right or to abandon any property. Rather, it appears to have been the result of a mistaken belief that the space in question was covered by Wing Ming’s right to build a loft when in fact it is not.  It is in my judgment not inequitable to allow the IO to enforce the DMC against Wing Ming now.

Relief

240.  Wing Ming argues that injunctive relief ought not to be granted because of the IO’s acquiescence and delay.  In particular, it relies on the fact that (i) instead of contending that Wing Ming’s right to build a loft did not extend over the void areas, the IO removed the pipe that ran through that space in 1995 (see paragraph 32 above) and allowed Wing Ming to construct and complete the Part Loft; and (ii) it made no claim about the Part Loft until 2006, over a decade after it was built.

241.  In my opinion, what the IO did and omitted to do should not be judged with hindsight, but has to be examined in light of the parties’ understanding at the time.  Both parties appear to have assumed until 2006 that the void areas (because they were coloured green on the DMC G/F plan) were not common areas under the DMC but were areas within Wing Ming’s exclusive possession.  The courts had likewise expressed preliminary views in interlocutory applications to that effect. Thus, for example, in the appeal from Wing Ming’s application in the first action for an interlocutory injunction to remove the pipe that passed through the space, Mortimer VP said:

“My preliminary view however is that there is no defence to a breach of the D.M.C. save perhaps that the defendants [i.e. the IO] may have an arguable immunity from the award of damages.”

Sears J said:

“I have great doubts as to whether the defendants [i.e. the IO] have any defence to the plaintiff’s [i.e. Wing Ming’s] claim for breach of the deed of mutual covenant. They erected the length of pipe over the plaintiff’s air space which the deed recognised may be built upon. Their decision to erect the pipe appears to have deliberately ignored the legal rights of the plaintiff.”

242.  Viewed against that background, it is not surprising that the IO had not sought an injunction earlier to prevent Wing Ming from constructing the Part Loft or to require its demolition.  That omission cannot be taken to be a waiver of the IO’s rights. Nor does it in my view make it inequitable for an injunction to be granted to require the Part Loft to be removed and the space returned to the possession of all the owners in common.  On the contrary, it would be unconscionable for Wing Ming to continue to oust all other owners by the walls enclosing that space which is admittedly a common area.

243.  In any event, justice can in my view be done by making allowance in favour of Wing Ming for the cost of constructing the Part Loft in 1994-5 and of dismantling it now in the assessment of the monetary relief which I deal with below.  This can be achieved because in the hypothetical negotiation between the IO and Wing Ming for permission to use the space (see paragraph 216 above), the parties, acting reasonably, would take into account the need for Wing Ming to incur expense to construct the Part Loft at the outset and to remove it at the end of the licence.  This assumes that the hypothetical negotiating parties enjoy not the benefit of hindsight (which is probably impermissible), but reasonable commercial foresight: c.f. Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd (2006) 25 EG 210, §§27-29; Pell Frischmann,at §53.  The amount that the IO might reasonably expect to receive in return would, in my view, be the prevailing open market rent less such expenses. 

244.  There will accordingly be a mandatory injunction to require Wing Ming to remove the Part Loft.  Once the Part Loft is demolished, there is no way for Wing Ming or its tenants to occupy that space exclusively or at all.  A permanent negative injunction thereafter is unnecessary and I decline to grant one.

245.  As regards monetary relief, for the reasons given in paragraphs 216-217 above, damages should also be assessed on the basis of the principles enunciated in Wrotham Park and Pell Frischmann.  The starting point would be the prevailing open market rent of the Part Loft.  Wing Ming contends that such rent would be nil because the space occupied by the Part Loft is inaccessible except via the cockloft owned by Wing Ming, so that no one would be willing to pay any rent for it.  I reject that argument.  The space is valuable to anyone who has the use of the cockloft because it expands the cockloft.  It was of value to Wing Ming.  The relevant inquiry is the amount that the IO might reasonably demand from Wing Ming for permission to use the space in question.  The market rent is simply an aid to the assessment of that amount.

246.  For the same reasons as set out in paragraph 218 above, the sums payable should be worked out by the parties in accordance with the following directions:

(1) The valuation experts are agreed that the open market monthly rent for the Part Loft was $4,674 as at June 2011. I adopt this agreed amount.

(2) Wing Ming had completed construction of the Part Loft by summer 1994.  The calculation should be carried out from 18 August 1994 (12 years before the writ of summons herein) to the present.

(3) The amounts payable in other years than 2011 should be based on $4,674 per month (as at June 2011) and adjusted upwards or downwards in accordance with the rental indices for private flatted factories published by the Rating and Valuation Department.

(4) For the reason stated in paragraph 243 above, the expense incurred by Wing Ming in constructing the Part Loft in 1994 and the expense to be incurred in dismantling it may be deducted from the aggregate sums.

Orders

247.  There will accordingly be:

(1) a declaration that the space below the ceiling and above the void areas in front of CPS 2, 3 and 4 on the G/F forms part of the common areas of the building;

(2) an injunction that Wing Ming do remove the Part Loft insofar as it extends into the space above the void areas in front of CPS 2, 3 and 4 and restore that space in accordance with the applicable building plans prior to the construction of the Part Loft;

(3) an order that Wing Ming pay the IO the amounts calculated in accordance with paragraph 246 above; and

(4) liberty to apply in relation to the terms of the orders.

F.  Roof Floor (11/F) storeroom

248.  The storeroom on the Roof Floor (11/F) is a rectangular room situated directly above the half landing in the staircase at the northwest corner of the building at the Roof Floor (11/F).  The floor of that storeroom is higher than the floor of the Roof Floor by about 1 metre.

249.  The IO complains that, in breach of DMC clause IV.27 and s. 34I of the Ordinance, Wing Ming has wrongfully occupied and converted that storeroom to its own use.  The IO contends that the storeroom was situated on an area called “Mechanical Area” in the DMC Roof Floor plan and Upper Roof plan, which is a common area. 

250.  The IO seeks (i) a declaration that the 11/F storeroom forms part of the common areas; (ii) an injunction to restrain Wing Ming from converting that storeroom to its own use; (iii) an order for account; and (iv) damages.

251.  Wing Ming contends that the 11/F storeroom should be regarded as an integral part of the Recreation Area on the 11/F and not a common area.

252.  In my view, Wing Ming’s contention should be accepted for the following reasons:

(1) The evidence shows that the storeroom has always been there.  It is not a subsequent addition constructed by Wing Ming as a co-owner.  Nor was it blocked off from common access by walls and doors installed by Wing Ming.

(2) The original approved drawing G6 for the 11/F shows the storeroom with access using a cat ladder via the “Recreation Area” on the 11/F.  This supports Wing Ming’s proposition that the storeroom was designed as an integral part of the Recreation Area on 11/F. The storeroom, located as it is, is likely to have been designed as a storage place to serve the Recreation Area.

(3) Neither the DMC 11/F plan nor the DMC Upper Roof plan shows the storeroom.  These plans are therefore of little value in showing whether the storeroom is part of the common areas.  If it were intended that the storeroom was part of the common areas, one would have expected some express indication on the plans.

(4) The storeroom does not fall within the definition of Common Areas or Common Facilities in the DMC.

(5) The store room is (and has always been) only accessible from the Recreation Area which is a part of the building within Wing Ming’s exclusive possession.  The absence of any stipulation for a right of way over the private areas on the 11/F for access to the storeroom suggests that it is not common area, but intended to be part and parcel of the 11/F Recreation Area.  This may be contrasted with the specific provision in the DMC for a right of way through the Basement to certain Common Facilities.

253.  Mr Cooney submits that if there is any ambiguity, the DMC should be construed against Wing Ming. However, Lord Hoffmann said in Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279 at 296C:

“I have some doubt about whether the principle for construing reservations applies to a DMC. The grant is the assignment of the undivided share. The DMC is, as its name says, mutual. The parties contract as covenantor and covenantee and do not reserve anything. But whether or not the principle applies, it is only a last resort to resolve an ambiguity.”

In any event, as I do not think there is any ambiguity, there is no scope for applying any kind of contra proferentem rule against Wing Ming here. 

254.  I find that the 11/F storeroom is not common area.  It is unnecessary to deal with Wing Ming’s contention that this counterclaim falls within the exclusive jurisdiction of Lands Tribunal and that it is liable to be struck out for abuse of process.  For the reasons set out in the earlier sections, I would in any event have rejected these defences. 

Orders

255.  This head of the IO’s counterclaim is dismissed.

G. G/F storeroom

256.  The G/F storeroom is situated in a small loft directly above CPS 1 and 11 on the G/F.  There is no dispute that pursuant to the DMC, one share is allocated to it (together with Room A on G/F) which is now held by Wing Ming, and that Wing Ming is entitled to the exclusive possession of the G/F storeroom.

257.  The IO alleges that Wing Ming carried out or permitted to be carried out unauthorised building works to the G/F storeroom, in breach of s. 14 of the Buildings Ordinance (Cap 123), regulation 41 of the Building (Planning) Regulations (Cap 123F) and DMC clauses IV.4, 12, 19 and 27. 

258.  The provisions relied upon in the DMC provide as follows:

Clause IV.4

“4. Subject to clauses 3, 4 and 5 of Sub-section C of Section 1 hereof, no Owner shall make any structural alterations or additions to any part of the Building owned by him which may damage or affect or interfere with the use and enjoyment of any other part or parts of the Building whether in separate or common occupation nor will any Owner use, cut, injure, damage, alter or interfere with any part or parts of the Common Areas or any of the Common Facilities or any equipment or apparatus on in or upon the Lands or the Building not being equipment or apparatus for the exclusive use and benefit of any one Owner.”

Clause IV.12

“No owner shall use or permit or suffer any part of the Building owned by him to be used except in accordance with the Conditions of the Grant and the law or regulations applicable to Building or other Regulations or any Government or other permit, consent or requirement from time to time applicable thereto and in particular no owner shall use or permit or suffer any part of the Building for any offensive noxious or unhealthy manufacturing purpose or heavy industry.”

DMC Clause IV.19 and 27 have been quoted in paragraphs 152 and 163 above respectively and will not be repeated here.

259.  The alleged unauthorised works are (i) opening up part of the structural wall between the storeroom and the adjoining common area (i.e. a landing in the staircase) as a door; (ii) opening up part of the external wall that separates the storeroom and the light well to create a window; (iii) building a toilet inside the storeroom; and (iv) installing additional drainage pipes inside the storeroom and connecting them to the drainage system of the building.

260.  The relief sought by the IO is a mandatory injunction to require Wing Ming (i) to reinstate the wall between the G/F storeroom and the adjoining staircase landing; (ii) to reinstate the wall between the G/F storeroom and the light well; (iii) to demolish the toilet inside the G/F storeroom; and (iv) to disconnect all additional drainage pipes inside the G/F storeroom from the drainage system of the building.

261.  The following features of the G/F storeroom are not in dispute:

(1) The storeroom is shown on the approved building plan with access only via a cat ladder from the car parking area below.

(2) A door opening had been created for the storeroom at the half landing of the staircase between the G/F and the 1/F, with a metal gate.  Inside the gate are four metal steps that lead up to a timber door that opens into the storeroom.

(3) The wall opening, metal gate, metal steps and timber door are not shown on the approved building plan.

(4) The metal gate is not fire resistant and there is no smoke lobby separating the storeroom from the half landing of the staircase that exits to the street.

(5) A toilet had been installed inside the room.

262.  The following issues arise:

(1) Does the IO have locus to seek relief in relation to the G/F storeroom?

(2) When were the works done?

(3) Who caused the works to be done?

(4) Were the works unauthorised building works?

I deal with these issues in turn below.

IO’s locus

263.  It is common ground that the share allocated (in part) to the G/F Storeroom belongs to Wing Ming and that the G/F Storeroom lies within its exclusive possession.  On that basis, Wing Ming contends that the IO has no locus to seek relief.  Instead, the IO should report the matter to the Buildings Department, who will decide for themselves if the works were unauthorised building works.

264.  As I understand the submission, there are two broad points taken by Wing Ming.  First, the IO, not being a party to the DMC, has no standing to enforce the DMC insofar as it does not involve common parts.  Secondly, the power of enforcement conferred by the terms of the DMC itself is conferred upon the Manager or the Management Committee, not on the IO.

265.  Sections 16 and 18 of the Ordinance have been raised in argument in this context.  S. 16 provides:

“When the owners of a building have been incorporated under section 8, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners, and accordingly-

(a) any notice, order or other document which relates to any of the common parts of the building may be served upon the corporation at its registered office; and

(b) any proceedings in the tribunal in respect of any of the common parts of the building may be brought and pursued by or against the corporation.”

266.  Mr Pennicott submits that the terms of s. 16 make it clear that it only applies “in relation to the common parts of the building”, and confers no standing upon the IO to bring this action in respect of any alleged breaches of the DMC unrelated to the common parts. 

267.  He relies on the Court of Appeal’s decision in One Beacon Hill (IO) v Match Power Investment Ltd [2012] 5 HKLRD 375.  That case concerns a development with 604 residential units.  Some units were sold to purchasers on the terms of Consent Scheme contracts, while other units were subsequently sold to other purchasers on different terms.  There was a dispute as to whether the developer had acted in breach of certain provisions, which were found only in the Consent Scheme contracts, regarding the construction of the common parts of the development.  Instead of the purchasers of the Consent Scheme contracts bringing an action, however, a claim was brought against the developer by the owners’ corporation of the entire development.  The Court of Appeal held that the statement of claim should be struck out on the ground that the owners’ corporation had no locus to bring that claim.

268.  The judgment of Cheung CJHC contains passages which illuminate the role and scope of powers of an owners’ corporation.  His Lordship explained that s. 16 of the Ordinance was enacted to facilitate the enforcement of rights and liabilities arising from the common enjoyment of the common parts by all the co-owners and the need for their upkeep and maintenance (see §§25-27).  He said at §25:

“… An IO is the ‘persistent persona of all the owners of the premises at any moment of time’ but only in relation to the common parts of the building: Grenville House Ltd v The Incorporated Owners of Grenville House [1978] HKLR 235, 241.”

269.  It can be seen that the facts of that case are rather different from the present case.  There, the claim was about common parts, but not all the owners had co-extensive rights in relation to the common parts.  Here, the relevant claim is not about common parts, but all the owners are subject to and have the benefit of the DMC which contain provisions applicable to all.

270.  S. 16 is not the only provision about the powers of an owners’ corporation.  S. 18 makes further provision about the duties and powers of an owners’ corporation:

“(1) The corporation shall-

(a) maintain the common parts and the property of the corporation in a state of good and serviceable repair and clean condition;

(b) carry out such work as may be ordered or required in respect of the common parts by any public officer or public body in exercise of the powers conferred by any Ordinance;

(c) do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building.”

“(2) A corporation may, in its discretion-

(a) engage and remunerate staff for any purpose relating to the powers or duties of the corporation under this Ordinance or the deed of mutual covenant (if any);

(aa) subject to such terms and conditions as to attendance at meetings of a management committee and its sub-committees as the management committee may determine, pay the chairman, vice-chairman (if any), secretary and treasurer of the management committee appointed under section 14(2) or paragraph 2(1), 5(2), 6 or 6A of Schedule 2 such allowances as may be approved by the corporation by resolution passed at a general meeting, in accordance with, but in aggregate not exceeding, the maximum allowances specified in Schedule 4;

(b) retain and remunerate accountants for the purposes of auditing the corporation's books of accounts and preparing the annual income and expenditure accounts and balance sheets;

(c) retain and remunerate a manager or other professional trade or business firm or person to carry out on behalf of the corporation any of the duties or powers of the corporation under this Ordinance or the deed of mutual covenant (if any);

…

(e) purchase, hire or otherwise acquire movable property for use by the owners in connection with their enjoyment of the common parts or to satisfy any requirement of a public officer or public body for the purpose of any Ordinance;

(f) establish and maintain lawns, gardens and playgrounds on the common parts;

(fa) carry out any renovation, improvement or decoration work, as the case may be, to the common parts;

(g) act on behalf of the owners in respect of any other matter in which the owners have a common interest.”

271.  Mr Cooney relies on s. 18(2)(g), which was held in some previous authorities as providing a source of standing for an owners’ corporation to bring proceedings to enforce the DMC in relation to parts of the building that are not common areas.  However, the previous authorities have to be approached cautiously because of the Court of Final Appeal’s decision in Jikan, supra.  There, the owners’ corporation sued for car parking fees in respect of common areas collected by the manager and paid to an owner from 1989 onwards.  The owners’ corporation was only formed in 1997.  The trial judge held that the owners’ corporation lacked power under s. 16 of the Ordinance to sue on the basis of rights that accrued to the owners before their incorporation, but that the corporation could sue on behalf of the owners under s. 18(2)(g) in respect of such rights which were a matter in which the owners had a common interest (see [2001] 1 HKLRD 463, 471–472).  In the Court of Final Appeal, Litton NPJ, with whom all the other members of the court agreed, said:

“62. The trial judge had plainly erred in this regard. Section 18(2) deals with management matters such as the employment and remuneration of staff, the insurance of the building, acquisition of property for use in connection with the common areas, etc. It does not confer power where none existed. If a right of action against an owner, in relation to the common parts, was in law exercisable by the corporation in terms of s.16, then s.18(2)(g) empowers the corporation to engage solicitors to institute proceedings. But it begs the very question.”

272.  Mr Cooney submits that the passage is obiter.  However, even if it was, it has since been authoritatively adopted by the Court of Appeal in One Beacon Hill (IO). There, Cheung CJHC, after quotating the above passage from Jikan, said:

“66. In other words, section 18(2)(g) does not by itself confer on the IO a right to sue. It is not, by and of itself, a source of locus. It is unhelpful to dwell on whether what was said in Jikan about section 18(2)(g) was obiter, and therefore not binding on the lower courts. Nor is it fruitful to even suggest (as counsel did) that what was said in the Court of Final Appeal was said in ignorance of Pearl Island and Mirador Mansion. Equally irrelevant is any discussion, in the context of the present case, on whether the two earlier Court of Appeal cases can survive Jikan on the (narrow) basis that Litton NPJ’s views were expressed in the context of a claim for an account of car parking fees arising out of the use of the common parts, whereas the two earlier Court of Appeal cases were concerned with premises other than the common parts of the building.

67. In the present case, we are indeed concerned with the common parts of the development.  Even assuming (for the sake of argument only) that what was said in Jikan about section 18(2)(g) was obiter, it was nonetheless of the highest persuasive authority.  For my part, I see no reason not to follow it.”

His Lordship concluded at §69:

“section 18(2)(g) does not confer any power to sue where none existed”.

273.  That decision is binding on me.  It is therefore necessary for the IO to rely on some other source of power than s. 18(2)(g). 

274.  In my view, s. 18(1)(c) provides the necessary basis for the IO’s standing to sue in relation to the kind of provisions in the DMC under discussion.

(1) S. 18(1)(c) requires the owners’ corporation to do all things reasonably necessary for the enforcement of the relevant obligations contained in the DMC.  This statutory duty necessarily confers the requisite powers to perform the duty.

(2) The enforcement of the obligations contained in the DMC is ultimately achieved by the institution of legal proceedings invoking the coercive power of the law and the courts.

(3) S. 18(1)(c) relates to obligations contained in the DMC for the control, management and administration of the building and is not confined to the common parts.  This is to be contrasted with s. 18(1)(a) and (b), both of which concern only the common parts.  This deliberate choice of words in s. 18(1)(c) suggests that the duty placed on an owners’ corporation extends to the enforcement of provisions in the DMC as regards the building generally and not just the common parts.

(4) This approach is supported by authority.  In Incorporated Owners of Mirador Mansion v Tecowin Development Ltd [1999] 4 HKC 113, the roof of the building was owned by the defendant, an individual owner in the building.  The defendant had enclosed substantial parts of the roof by parapet walls.  Those areas were used by guests staying at the defendant’s guesthouse, who caused nuisance or inconvenience to other residents.  Clause 11(c) of the DMC there provided:

“… each party hereto hereby covenants with the others as follows:

(c) not to use his part of the said building … or permit anything therein or thereon which may create unnecessary noise or may be or become a nuisance annoyance damage or inconvenience to the other occupiers of the said building”

The owners’ corporation of the building brought an action, inter alia, to enforce clause 11(c) of the DMC.  In his judgment, Mr Recorder Robert Tang SC (as he then was) referred to s. 18(2)(g) of the Ordinance in the context of the enforcement of a restrictive covenant contained in a 1962 assignment of the roof.  What his Lordship said there has to be read now in the light of the Court of Appeal’s decision in One Beacon Hill (IO).  However, Recorder Tang also dealt with clause 11(c) of the DMC, and said:

“That being the case, in my opinion, it is a breach of Clause 11(c) for the Defendant to permit anything on the Roof which may be or become ‘a nuisance damage or inconvenience’ to the other occupiers of the said building. In the context, I think damage must include danger or what is dangerous. Damage or inconvenience is wide enough to cover e.g. the Defendant deadbolting the entrances to the Roof from the staircase. I think they are also wide enough to cover the parapet walls and other obstructions on the Roof which have substantially reduced the area available for refuge in the event of fire.

         So far as the enforcement of Clause 11(c) is concerned, the Plaintiff plainly has standing. s.18(1)(c) BMO.”

275.  On this basis, while the IO could of course have reported the matter to the Building Authority, this is not the only thing it could do under s. 18(1)(c).  In my view, by virtue of this section, the IO has the necessary standing to bring a counterclaim for breach of a provision in the DMC that prohibits an owner from carrying out unauthorised building works in his own unit.

276.  It is unnecessary to consider the further submission of Wing Ming that the power of enforcement conferred by the terms of the DMC itself is conferred upon the Manager or the Management Committee, not upon the IO.

When were the works done?

277.  Since the IO’s case is that Wing Ming carried out or permitted to be carried out the unauthorised building works in breach of the DMC, it is incumbent upon the IO to prove that the works in question were done after the DMC came into existence (i.e. 2 March 1991).  Unauthorised building works constructed before the DMC was executed would, of course, remain unauthorised works infringing the Buildings Ordinance, but their construction as such would not have been in breach of the DMC.

278.  Mr Luk gave no positive evidence on the date of the works and accepted they could have been carried out before 1991.

279.  There is unchallenged evidence from Mr Yuen, which I accept, that the opening from the staircase to the G/F storeroom already existed well before 1991.

280.  There is nothing to show that the opening to the light well was created after the DMC was executed.  I find that it has not been proved that the works for that opening were carried out or permitted to be carried out by Wing Ming in breach of the DMC.

281.  As to the toilet and drainage works inside the storeroom, Yuen said that no water supply had been installed prior to the termination of Essman as Manager in 1994.  That would suggest the works were done after 1994.  This leads to the question: who carried out the works?

Who caused the works to be done?

282.  The room appears to have been occupied by one Mr Leung Cheuk Hung, a caretaker supervisor of the building from the early 1990s to about October 2004 when Guardian took over the management of the building. Leung was employed by Essman between 1991 and 1994 and directly by the IO between 1994 and 2004.

283.  I accept Mr Yuen’s evidence, which was unchallenged in this respect, that Wing Ming has not itself used the storeroom, did not install any facilities in the storeroom including electricity and water supply, and has not paid any relevant electricity and water charges.  More likely than not, they had been paid either by the caretaker himself or by the Manager at the time.  Neither the IO nor the Manager has ever sought to charge Wing Ming for the use of electricity and water in that storeroom.

284.  Mr Yuen denied responsibility for the works and there is no evidence that the works were carried out or instructed by Wing Ming.

285.  Although Mr Luk categorically stated in his statement that the IO had never permitted its employees to occupy or use that storeroom, it is in my view difficult to believe that the individuals sitting on the IO’s committee had no knowledge at all that the storeroom was used by the caretaker and that at some stage he began to live there.  Under cross-examination, Mr Luk said that the IO did not “clearly” know about it and that it was a “grey area”.  In respect of other issues, Mr Luk claimed that he had no knowledge as he was not the chairman of the IO at the time, so his evidence about what the IO knew or did not know ten years ago is of doubtful value.  I find Mr Luk’s evidence on this part of the case unreliable.

286.  I find that Wing Ming, as the owner, had allowed that room to be used by the caretaker of the building. However, there was no reason for Wing Ming to spend any money for that purpose.  There is no direct evidence to show that Wing Ming knew that toilet and drainage works were carried out inside the room, though on balance it seems likely that permission would have been obtained from Wing Ming.  The purpose of those works was to make the storeroom inhabitable for the caretaker. 

287.  The fact that no records exist of the IO paying for such works is inconclusive, for when Easyknit left, it took away many records.  The IO, on which the burden of proof lies, has failed to call any evidence from Easyknit or anyone involved at the time.

288.  On the evidence, the likelihood is that the toilet and drainage works were caused to be done by the caretaker himself or by the Manager or by the IO during the tenure of Easyknit as Manager between 1994 and 2004, with the permission of Wing Ming.

Were the works unauthorised building works

289.  Much time was spent on the question whether the works in question were unauthorised building works.  I am not sure that is the correct question to investigate.  The provisions of the DMC relied upon by the IO are clauses IV.4, 12, 19 and 27.  DMC clause IV.4 prohibits not unauthorised building works, but “structural alterations and additions … which may damage or affect or interfere with the use and enjoyment of any other part or parts of the Building”.  Clause IV.12 is directed at user, not alterations or building works. Neither clause IV.19 nor clause IV.27 concerns unauthorised building works.

290.  Be that as it may, I shall state my conclusions on this question as follows.

Opening to staircase

291.  It is common ground that no prior approval of the Building Authority had been obtained for the door opening at the half landing.

292.  Wing Ming’s expert, Mr Wu, opines that it is exempted works under s. 41(3) of the Buildings Ordinance, as they did not involve the structure of the building and did not contravene any regulations: see s. 41(3) and (3D).  He accepts, however, that the metal gate there has to be taken down as it swings into the staircase passageway.

293.  The IO contends that there was a breach of regulation 41(1) of the Building (Planning) Regulations in that making a door opening in the staircase is contrary to paragraph 12 of the Code of Practice for Provision of Means for Fire Escape, which provides:

“The enclosing walls of every staircase should be so continued at ground storey as to separate from the remainder of the building any passage or corridor leading from the staircase to any ground storey exit door to which the staircase gives access; provided that –

(a)     in the case of a building served by two or more staircases, a cloakroom, lavatory, water closet, caretaker’s office, fire control room or caretaker’s counter may open off such passage way; and …”

294.  Mr Wu, however, says that because the room was actually used as a caretaker’s office, it was exempt from the restriction in paragraph 12 of the Code of Practice. 

295.  In my view, while the exemption may be applicable during the early 1990s to 2004, it did not apply when the opening was first created, there being no suggestion that the room was used from the outset as a caretaker’s office.  Its use as indicated in the building plans was a store.

296.  Further, the opening at the half landing seems to me to involve structural alterations to a significant wall of the building which enclosed the staircase.

297.  I find that the opening to the staircase at the half landing was unauthorised building works.  As stated above, however, the works were done well before the DMC came into existence.

Opening to light well

298.  The evidence does not suggest that the creation of a window that opened to the yard involved any unauthorised building works. I find that the IO has not proved that this opening involved any unauthorised building works.

Toilets and drainage works

299.  Mr Wu has expressed the unchallenged opinion that the partition walls for the toilet inside the storeroom and the toilet drainage works are exempted building works under s. 41(3) and (3C) of the Buildings Ordinance.  On this basis I find that there were no unauthorised building works involved in this respect.

Relief

300.  There being no unauthorised building works, which form the basis of the IO’s case, in relation to the window that opens to the yard and the toilet drainage pipes inside the G/F storeroom, the IO’s claim for mandatory injunction relating to these features fails.

301.  In my opinion the IO’s claim for mandatory injunction relating to the opening into the staircase also fails because:

(1) The deviation from the building plans took place well before 1991 when the DMC was executed, possibly shortly after the building was completed.  There could be no breach of the DMC or destruction of common areas when the opening and door was created.  At that time, the whole building belonged to Wing Ming.

(2) The owners benefitted from there being a resident caretaker in the building, whom the IO employed, for over a decade up to 2004.  It appears from Mr Luk’s evidence that it was a “grey area” that they were content to accept until that caretaker retired and Guardian took over the management of the building.

302.  This conclusion does not, of course, affect the power of the Building Authority to enforce the Buildings Ordinance or the IO’s (or indeed any owner’s) ability to report any infringement of building laws and regulations to the Building Authority.

Orders

303.  For the above reasons, the IO’s counterclaim is dismissed.

H. G/F Extension wall behind CPS 5–10

304.  The Southern Half Portion on the G/F is separated from CPS 5–10 by a wall that runs parallel to the southern frontage of the building.  The IO complains that Wing Ming had wrongfully “moved” northwards (i.e. away from the external wall) the wall at the back of CPS 5–10, thereby expanding the area of the Southern Half Portion of the G/F by several feet and pro tanto reducing the size of CPS 5–10.

305.  The relevant facts are largely not in dispute.  On the original building plan approved in 1978, CPS 5–10 extended beyond the columns at the rear end of the parking spaces.  The wall at the back of the parking spaces was positioned a few feet to the south of those columns.  This was the actual configuration of the building as first constructed in 1978.

306.  It appears that as early as in 1991, Wing Ming intended to move that wall northwards for a few feet, to the edge of the columns, so that it would align with the adjacent wall at the back of CPS 2, 3 and 4. 

307.  That intention is evidenced by the way car parking spaces were drawn in the assignments, beginning with the first assignment to Super Kind in March 1991, which I shall describe further below.  Some alteration plans were also submitted to the Building Authority in around 1991.

308.  Mr Yuen testified that when Wing Ming began to sell CPS 5–10, Wing Ming caused to be installed kerbs at the rear end of the parking spaces, to make clear to the purchasers that the area behind the kerbs was not being sold to them as part of the parking spaces.  He said this was done because the intended alteration works could not be implemented in time, as the process for approval of building plans took time.  I accept that evidence, which is consistent with the way in which the car parking spaces were delineated in the relevant assignments. Furthermore, the extension was built after CPS 5–10 were sold.  The purchasers of those car parking spaces would surely have protested if they thought Wing Ming was encroaching on and enclosing part of their land.

309.  I shall call the area between the original wall and the wall as moved northwards “the narrow strip”.

310.  The DMC was entered into at the same time as the first assignment, on 2 March 1991.  The DMC G/F plan coloured the narrow strip “blue” or “indigo” (being the colour of the Front Portion), not “green” as for car park.

311.  DMC clause I.C.4(i) gave the owner of the Front Portion of the G/F (ie Wing Ming) the right to construct a loft over that part of the G/F identified as the “Southern Half Portion” in the G/F plan annexed to the DMC.  Such right was subject to approval by the Building Authority of any proposed loft.

312.  The first assignment of CPS 6 and 7 to Super Kind, the assignment of CPS 8 and 9 to Renley, and the assignment of CPS 5 to Conwan all contain plans on which the relevant parking spaces (marked with colour) stop at, and exclude, the narrow strip.

313.  In April 1994, building plans submitted on behalf of Wing Ming for the proposed 1994 alteration works were finally approved by the Building Authority.  The new approved building plan for the G/F shows that the wall at the back of CPS 5–10 was to be moved northwards to align with the wall at the back of CPS 2, 3 and 4.  The narrow strip would therefore enlarge the “Southern Half Portion”.

314.  Building works were carried out in accordance with the new approved plan so that, since around 1994, the wall has been re-positioned northwards and the narrow strip had been used together with the “Southern Half Portion”.

315.  The IO did not make any complaint about the extension wall until 2009, when it re-amended its defence and counterclaim.  However, what was then pleaded was that Wing Ming carried out unauthorised building works expanding the area of the Southern Half Portion.  That plea was doomed to fail since the works were specifically approved by the Building Authority.

316.  The counterclaim was re-re-amended in 2013.  The case based on unauthorised building works was dropped. As now pleaded, the complaint is that the re-positioning of the wall reduced the size of the parking spaces, resulting in the following breaches:

(1) breach of Special Conditions (9) and (10) of the Conditions of Sale; and

(2) breach of DMC clauses IV.4, 5, 9, 12, 15, 19, 22, 27 and 28.

317.  The IO seeks a mandatory injunction to require Wing Ming to demolish the existing extension wall and restore the original CPS 5–10 in accordance with the DMC, the Car Parking Layout Plan, the Building plans, the DMC G/F plan and Special Conditions (9) and (10) of the Conditions of Sale.

318.  In defence, Wing Ming contends:

(1) the claim should have been brought in the first action and is therefore an abuse of process;

(2) the IO has no locus to bring this claim as the narrow strip is not common area;

(3) as a matter of construction of the DMC, CPS 5–10 do not extend to any area beyond the extension wall; alternatively, the owners are estopped by convention from denying that the correct location of CPS 5–10 is as shown on the DMC G/F plan and the individual assignments;

(4) the IO’s claim is barred by laches.

IO’s locus and abuse of process

319.  The pleas of lack of locus and abuse of process can be quickly disposed of.  For the reasons already given in section IV.G above, I reject Wing Ming’s argument that the IO has no locus to bring the claim.  For the reasons given in section IV.D above, I reject Wing Ming’s attempt to strike out the IO’s claim as an abuse of process.

The breaches alleged

320.  While the IO has pleaded a large number of provisions of the DMC allegedly breached, they were narrowed down in closing submissions to clauses IV.5, 12 and 28.  The IO’s case seems to me to raise two main issues: first, what the true extent of CPS 5–10 is under the DMC; and, secondly, whether there is a breach of Special Conditions (9) and (10) of the Conditions of Sale.

Extent of CPS 5–10 under the DMC

321.  It seems to me quite clear that, as far as the DMC and the relevant assignments are concerned, CPS 5–10, as conveyed to the purchasers, do not include the narrow strip.  Instead, the narrow strip is incorporated into the Front Portion, exclusive possession of which lies with the owner for the time being of the 125 shares allocated to it.  The assignments define the property sold as the car parking spaces “shown and coloured green” on the plans annexed thereto.  The positions of the car parking spaces are marked and coloured clearly on the plans.  Their extent and position are clearly indicated by reference to the columns and the wall behind CPS 2, 3 and 4.  The DMC G/F plan is the same.  The background against which the DMC and assignments are to be construed includes the fact that kerbs were placed at the back of the car parking spaces to mark out the narrow strip (see paragraph 308 above).

322.  There is no suggestion that the assignment plans or DMC G/F plan should be rectified.  Nor have the purchasers taken any step to seek rectification.  Mr Cooney accepts that the narrow strip can be an area in the exclusive possession of Wing Ming.  Mr Luk Siu Kai also confirmed that the extension wall did not encroach upon any area assigned to Conwan.

323.  It follows that, as between Wing Ming and the other owners, Wing Ming is entitled to the exclusive possession, use and enjoyment of the narrow strip.

324.  All this is clear from the DMC and the assignments themselves.  It is in my view unnecessary to consider Wing Ming’s plea of estoppel by convention.

325.  Indeed, as I understand his submissions, what Mr Cooney argues is that the narrow strip must be used for car parking by virtue of Special Condition (9) of the Conditions of Sale. He does not contend that exclusive possession of the narrow strip is vested in and should be given to the owners of CPS 5–10 respectively.

326.  That being the case, there is in my view no breach of DMC clause IV.28 which provides:

“(a) The Owner shall use the Car Parking Spaces in the Building for the purpose of parking motor vehicles of the appropriate size only and shall not place or store goods or other things thereon …”,

because “Car Parking Spaces”, in the context of the DMC, do not include the narrow strip.

Special Condition (9)

327.  That is not the end of the matter, says the IO, because the DMC G/F plan is different from the car parking layout plan submitted to Director of Lands pursuant to the Conditions of Sale, which did not show any narrow strip at the rear end of CPS 5 to 10.

328.  Special Conditions (9) and (10) of the Conditions of Sale provide as follows:

“(9)(a) Space shall be provided within the lot to the satisfaction of the Director of Public Works for the parking, loading and unloading of vehicles (including containers on trailers with their prime movers) at the rate of not less than one vehicle for each 10,000 square feet or part thereof of gross floor area, excluding any floor area to be used for this purpose, of any building erected on the lot or at the rate of not less than one vehicle for each 5,000 square feet or part thereof of the site area, whichever rate provides the greater amount of such space.

(b) The space so provided shall not be used for any purpose other than for parking, loading and unloading of vehicles.

(c) The space provided for loading and unloading shall abut a goods handling platform or area which must be provided and so laid out that goods loaded/unloaded from/to such platform or area may be transported within the lot to all parts of the building both vertically and horizontally. The platform or area for goods handling must give access to the building in accordance with the Code of Practice on provision of means of escape in case of fire and allied requirements, laid down under the provisions of the Buildings Ordinance.

(d) Of the space provided for parking. loading and unloading, one half shall be used for the parking of private cars and light vans assuming each vehicle to have a turning circle of 24 feet outer radius and to occupy an area of 16 feet x 8 feet with a minimum headroom of 7 feet 6 inches and one half for the parking, loading and unloading of lorries assuming each lorry to have a turning circle of 30 feet outer radius and to occupy an area of 25 feet x 8 feet with a minimum headroom of 15 feet 6 inches (provided that the space stipulated herein for the parking, loading and unloading of lorries shall be designed so that a portion thereof will accommodate at least one container on a trailer with its prime mover).

…

(10)         A lay-out plan indicating the parking, loading and unloading spaces to be provided within the lot in accordance with Special Condition No. (9) and approved by the Building Authority, or a copy of such plan certified by an authorized architect, shall be registered by the purchaser by memorial in the Land Office.  No transaction affecting the lot or any part thereof or any building or part of any building erected or to be erected thereon shall be entered into prior to such registration. The parking, loading and unloading spaces indicated on the said approved plan shall not be used for any purpose other than the purposes set out in Special Condition No. (9).  The purchaser shall maintain the parking, loading and unloading spaces in accordance with the said approved plan and shall not alter the layout except with the prior written consent of the Director of Public Works.”

329.  The IO’s argument is that even though the narrow strip may be in Wing Ming’s exclusive possession pursuant to the DMC, it can only be used for car parking purposes according to these conditions.  Any other use would involve a breach of the Special Condition (9)(b).  That would, in turn, lead to a breach of DMC clauses IV.5 and 12, which provide:

“5. No Owner will permit or suffer to be done any act or thing in contravention of the covenants and conditions in the Grant …”

“12. No Owner shall use or permit or suffer any part of the Building owned by him to be used except in accordance with the Conditions of the Grant …”

330.  It is incumbent upon the IO to prove that the present configuration involves a breach of the Conditions of Sale.  The relevant documents show:

(1) Wing Ming submitted alteration plans involving the construction of the extension wall to the Building Authority for approval in 1991.

(2) The application involved alteration to the approved car parking layout plan referred to in Special Condition (10).  As a result of proposed building works, the narrow strip would clearly not be used for vehicle parking.

(3) The Buildings Ordinance Office circulated the plans to the District Lands Office / Kowloon West for comments from the point of view of the lease conditions.  The District Lands Office replied to the Buildings Ordinance Office on 5 November 1991 and 28 November 1991 that they had “no objection” to the building plans.  It can be inferred that the District Lands Office gave such reply in writing, though neither party has obtained and adduced the documents.

(4) By a letter dated 5 December 1991 to the authorised person engaged by Wing Ming, the Building Authority approved the alteration plans, indicating that comments from the District Lands Office / Kowloon West would be conveyed in due course.  No such comment however was subsequently sent.

331.  In these circumstances, and having regard to Special Condition (10), it seems to me that the District Lands Office / Kowloon West had arguably given approval for the change in layout.  On the altered layout, the narrow strip was no longer designated for vehicle parking.  It follows that the IO has not made out a breach of Special Condition (9)(b) by Wing Ming.

332.  I am conscious that the Court of Appeal in the appeal from Reyes J’s judgment in the first action (CACV 27/2008) had rejected Wing Ming’s argument that the Building Authority’s approval of the plans gave rise to a defence against an allegation of breach of Special Conditions (9) and (10).  However, the Court of Appeal expressly referred to the fact that there was no evidence before it of the District Lands Office’s position.  Here, as set out above, there is evidence that the plans were circulated to the District Lands Office for comments from the point of view of the lease conditions and the District Lands Office expressly stated it had no objection. 

333.  Further, in the first action Wing Ming argued that there was consent from the District Lands Office in order to justify its claim that the car parking spaces had been relocated and that the IO was guilty of trespass into Wing Ming’s property.  Here, the IO is counterclaiming against Wing Ming for breach of the DMC and the burden of proof lies squarely on the IO.

334.  In addition, the IO submits that Special Condition (9)(d) requires that each lorry parking space (i.e. CPS 5–10) should be 25 feet long.  However, the distance from the extension wall to the front boundary of each of CPS 5–10 is only 20 feet 5 inches.  (The distance from the extension wall to the entrance to the switch room next to CPS 10 is 22 feet.)  Mr Cooney submits there is therefore a breach of Special Condition (9)(d).

335.  But, as stated above, the narrow strip is within Wing Ming’s exclusive possession.  There is no suggestion that there is any obligation upon it to allow other owners to park their vehicles on its land.  As Mr Pennicott submits, CPS 5–10 as conveyed to the purchasers would not increase in size simply because the extension wall was removed.  It would, in any event, not be open to the IO, not being a party to the documents, to seek rectification of the DMC and the relevant assignments.  One is not concerned with common areas here at all.

336.  In the circumstances, it seems to me an artificial exercise to require the extension wall to be knocked down when there is nothing to show that the narrow strip would then form part of CPS 5–10 and be used accordingly. 

337.  The relief sought by the IO highlights this problem.  The IO seeks a mandatory injunction to “restore” the original CPS 5–10 in accordance with, inter alia, the DMC, the building plans, and the DMC G/F plan.  But as stated above, under the DMC and the DMC G/F plan, CPS 5–10 do not include the narrow strip.  As for building plans, the current approved building plans are the approved plans for the 1994 alteration works by which the Building Authority had, with the concurrence of the Lands Department, approved the construction of the extension wall.  Under those plans, CPS 5–10 likewise do not incorporate the narrow strip.  It is clear that the injunction sought cannot be granted.

338.  For these reasons I think the case for mandatory injunction has not been made out.

339.  I would observe, in addition, that the dimension in Special Condition (9)(d) is specified for lorries.  In practice, as Mr Yuen states in his evidence (which is unchallenged in this respect) and as Mr Luk admits, the owners of CPS 5–10 use the lorry spaces including the void areas in front to park two private cars.

Laches

340.  It is unnecessary to decide the defence of laches.  If it were material, I would not have found relief to be barred by laches.  It is true that there has been a very substantial delay from 1994 before the IO sought to make the present claim (and even more delay before it raised the question of breach of the Conditions of Sale and deviation from the car park layout plan).  There is, however, little that had happened during this period of delay which would, in my view, have made it inequitable to grant the relief sought, if such relief should otherwise have been granted.  Ex hypothesi, the breach is not one that the IO could consent to.

Orders

341.  For the above reasons the IO’s counterclaim is dismissed.

I.   Basement – excavated void

342.  By a claim introduced by amendment in June 2009, the IO complains that the works that created the excavated void in the Basement and the room the excavated void had become involved structural alteration and were unauthorised building works, not being exempted building works and not having been approved by the Building Authority.  The IO pleads that they contravened the Buildings Ordinance and its subsidiary legislation, and also constituted a breach of DMC clauses I.C.6(ii) and IV.4, 9, 15 and 27.

343.  The IO claims a mandatory injunction requiring Wing Ming to rectify the unauthorised excavation works and reinstate the excavated void and make good the retaining walls and waterproof membrane in the Basement.

344.  Wing Ming disputes the IO’s locus to sue, denies that the excavated void is an unauthorised building work, and asserts that the IO’s claim is barred by the 12-year limitation period.

The IO’s locus

345.  I reject the locus point for the reasons set out in section IV.G above.

Alleged breach of DMC

346.  Much time has been spent on whether the excavated void involves unauthorised building works, but as in section IV.G above, it does not seem to me to be the real issue here. Contravention of the Buildings Ordinance or its subsidiary legislation does not provide a cause of action for the IO; only a breach of the DMC does. 

347.  The IO relies on DMC clauses I.C.6(ii) and IV.4, 9, 15 and 27.  These provisions do not turn upon whether any alteration is unauthorised building works in the context of the Buildings Ordinance.

(1) Clause I.C.6(ii) concerns a right of way to the pump house in the Basement.  There is no complaint relating to the right of way.  I fail to see how this clause is relevant.

(2) Clause IV.4 has been set out in paragraph 258 above.  As stated there, it concerns not unauthorised building works but “structural alterations and additions … which may damage or affect or interfere with the use and enjoyment of any other part or parts of the Building”.

(3) Clause IV.9 provides:

“No Owner shall do or permit or suffer to be done and each Owner will take all possible steps to prevent his tenants, occupiers or licensees from doing any act, deed, matter or thing which in any way interferes with or affects or which is likely to interfere with or affect the maintenance of the Building or the proper use and enjoyment of the Building or any part or parts thereof by other owners or occupiers of the Building.”

(4) Clause IV.15 provides:

“No Owner shall have the right to enter into, alter, repair, connect to or in any other way interfere with or affect the working of the Common Facilities without the previous written consent of the Manager.”

(5) Clause IV.27 has been quoted in paragraph 163 above and concerns interference with common areas.

348.  As I understand the IO’s case, the principal contentions are two-fold: first, that Wing Ming has wrongfully dismantled a brick wall that separates the Basement from the excavated void; and, secondly, that Wing Ming has wrongfully turned the excavated void into a room which had contributed to the leakage problem in the Basement.

349.  Originally there was an allegation that Wing Ming had unlawfully excavated land to form the excavated void itself.  The IO’s expert Mr Howes has however subsequently accepted that the void was formed at the time of construction of the building by the structural elements of the building, including retaining walls and pile caps.

350.  It follows that there was no unauthorised excavation as such carried out by Wing Ming.  The claim for a mandatory injunction to rectify the unauthorised excavation works therefore fails.

351.  However, Wing Ming’s expert accepts that the opening up of the brick wall to give access to the excavated void was an unauthorised building work.  More importantly, the brick wall seems to me to be a common part of the building, because the excavated void was not intended to be a usable part of the building.  The brick wall which separates the Basement from the excavated void may therefore fairly be regarded as an external wall and, as such, a common area within the meaning of the DMC and a common part within the meaning of Schedule 1 to the Ordinance.

352.  Although on its pleading Wing Ming contends that the excavated void is within its exclusive possession, there is no access to it, and no opening in the brick wall, as shown in the DMC Basement plan.  It is not seriously in dispute that Wing Ming did remove part of the brick wall at some stage to form an entrance into the excavated void. From the DMC Basement plan, it can be inferred that this took place after the DMC was executed.  It can further be inferred that the opening was made before May 1994, when the excavated void was included in the property that Wing Ming intended to sell via an estate agent.

353.  It follows that Wing Ming breached DMC clause IV.27 at some time between March 1991 and May 1994 by damaging a common part of the building, i.e. opening up the brick wall to form an entrance to the excavated void.

354.  Yuen denied ever using the void area or ever wanting to use that area.  I do not accept that evidence as the excavated void was tiled on the walls and floor and equipped with electrical fittings and a sump pit.  Further, it is clear from documents that Wing Ming tried to sell the Basement including the excavated void together with the G/F and Mezzanine floor in 1994.

355.  On this basis, it is incumbent upon Wing Ming to reinstate the brick wall.  Wing Ming does not seem to dispute this.  Mr Pennicott submits that Wing Ming has in fact sealed up the opening in 2008, which was opened up with the IO’s consent to facilitate the experts’ investigation and rectification works.

356.  The remaining dispute is this.  Mr Cooney submits that, as the brick wall was regarded as an external wall, it should have been fitted with waterproofing facility, which would have been compromised when the brick wall was opened up.

357.  In my view, while the brick wall might properly be regarded as an external wall because it excludes an area not taken into account as usable floor area of the building, it is not actually the outermost wall that protects the building from the elements.  The outer walls are the retaining walls.  It is in my view improbable that the brick wall was meant to be the wall protecting the Basement from water.  It was a part brickwork and part blockwork wall.  It could not have been intended that water could accumulate and well up in the excavated void, which was not backfilled, to be kept out of the Basement only by the brick wall.

358.  There should therefore simply be an injunction to require Wing Ming to reinstate the brick wall.

Limitation of action

359.  As explained in paragraph 236 above, according to The Incorporated Owners of Man Hong Apartments v Kwong Yuk Ching [2001] 3 HKC 116, the present claim for an injunction to reinstate a common part which has been removed by Wing Ming is not barred under the Limitation Ordinance.

Orders

360.  There will therefore be an injunction to require Wing Ming to reinstate the brick wall in front of the excavated void in accordance with the approved building plans.

J.  G/F – Room A

361.  By a late amendment in June 2013, the IO added a counterclaim relating to “Room A” on the G/F of the building.  “Room A” is a room located between the lifts and the toilet areas on the G/F.  The IO’s case is principally that Wing Ming wrongfully converted part of the common areas into Room A for its own use, but it appears also to allege that the works creating Room A were unauthorised building works.  The IO seeks (i) a declaration that Room A forms part of the common areas; (ii) a mandatory injunction requiring Wing Ming to remove Room A and reinstate the area; and (iii) an injunction to restrain Wing Ming from using Room A for its own private purposes.

362.  Wing Ming contends that Room A is not common area but is designated for its exclusive possession under the DMC.  It also contends that the IO’s claim falls within the exclusive jurisdiction of Lands Tribunal, and that the IO has no locus to pursue any claim for rectification of the DMC.

363.  The following issues arise on this counterclaim:

(1) Is the IO’s counterclaim within the exclusive jurisdiction of Lands Tribunal?

(2) Does the IO have locus to pursue this counterclaim?

(3) Is Room A part of the common areas?

(4) Whether there is any breach of the DMC?

Exclusive jurisdiction and the IO’s locus

364.  For the reasons set out in sections IV.D and IV.G above, I reject Wing Ming’s arguments on exclusive jurisdiction and lack of locus.

Whether Room A forms part of common areas

365.  The principal issue raised by the IO’s claim is whether Room A forms part of the common areas of the building. 

366.  Room A does not appear in the original approved building plans, on which the area occupied by Room A and the present G/F toilets forms a larger toilet area.  There have clearly been alterations to that area, as a result of which Room A was created.

367.  Room A is, however, shown in the DMC G/F plan, which shows the present actual configuration of the relevant area.  Room A is coloured blue hatched black on that plan, unlike the toilets and other surrounding common areas, which are coloured pink.  Room A is also expressly referred to in Preamble (3) of the DMC, which states that one undivided share is allocated to Room A together with the G/F storeroom.  There is no dispute that this one share has always been vested in Wing Ming.  The DMC gives the right of exclusive possession over Room A to Wing Ming.  As far as I can see, Room A is also shown in each of the assignment plans in the assignments of units from the first sale to Super Kind in 1991 onwards.  It is, in my view, clear that Room A does not form part of the common areas of the building.

Whether there is a breach of DMC

368.  Mr Cooney relies on DMC clauses IV.5 and IV.12 and argues that they require compliance with the Conditions of Sale. Special Conditions (9) and (10) are pleaded (which are quoted in paragraph 328 above) but, as I read them, they concern the use of areas designated for parking and loading and have nothing to do with the toilets. Mr Cooney also refers me to Special Condition (21), which is not pleaded, but that provision relates to pollution, which has nothing to do with Room A.  Nor does it seem to me that DMC clauses IV.30 is breached, since there is no suggestion that Room A is used otherwise than for industrial or godown purposes.

369.  Mr Cooney further says Room A and the attendant change in the configuration of the toilets are unauthorised building works done in contravention of the Buildings Ordinance.  It is clear that Room A did not appear in the 1978 approved building plans and the 1994 approved alteration plans, though it appears in the 2010 approved alteration plans.

370.  However, it can be seen that configuration of the toilets as shown in the DMC G/F plan, so far as the number and position water closet fitments are concerned, conforms with the approved building plans (Plans G1 and G2) in 1978, as referred to in paragraph 7 of the amended statement of claim.  According to those plans, the female toilets have only 2 water closet fitments, not 3 as shown in the 1994 approved alteration plans.  The main difference between the 1978 approved building plans and the DMC G/F plan seems to be that Room A has been carved out.  The IO has adduced no expert evidence that the creation of Room A required approval or that Room A is a structure created in contravention of the Buildings Ordinance.  This cannot in my view be assumed.

371.  It follows that the IO’s claim for declaration and for an injunction preventing private use of the area by Wing Ming fails.  For these reasons I find that the IO has not made out a case on this counterclaim.

Orders

372.  This counterclaim is accordingly dismissed.

V.  CONCLUSIONS AND ORDERS

373.  In summary, on Wing Ming’s action:

(1) In respect of Wing Ming’s complaints concerning the Basement, there will be orders as specified in paragraphs 49, 58, 61, 67, 72 and 83 above.

(2) In respect of Wing Ming’s complaints concerning the Upper Roof, there will be orders as specified in paragraphs 108 and 109 above.

(3) On Wing Ming’s other claims, there will be orders as specified in paragraphs 112 and 114 above.

374.  In relation to the IO’s counterclaim:

(1) No order is required on the claim for blocking access in the Basement.

(2) On the claim arising from the alterations to the external wall on the G/F, there will be orders as set out in paragraph 150 above.

(3) The claim relating to display of advertisements on the G/F is dismissed.

(4) On the claim in respect of the void areas in front of CPS 2, 3, 4, 5, 8 and 9, there will be orders as set out in paragraphs 220 and 221 above.

(5) On the claim relating to the Part loft over the void areas in front of CPS 2, 3 and 4, there will be orders as set out in paragraph 247 above.

(6) The claim regarding the 11/F storeroom is dismissed.

(7) The claim regarding the G/F storeroom is dismissed.

(8) The claim regarding the extension wall behind CPS 5-10 on the G/F is dismissed.

(9) On the claim relating to the staircase void in the Basement, there will be an order as set out in paragraph 360 above.

(10) The claim in respect of Room A on the G/F is dismissed.

375.  I give the parties liberty to apply in relation to the terms of the injunctive relief granted and their implementation.

376.  There will be general liberty to apply in relation to the question of interest on the sums ordered to be paid.

377.  In light of the potential arguments, I shall deal with costs after hearing the parties.  The hearing will be fixed in consultation with one counsel’s diary on each side.  Wing Ming shall lodge with the court its skeleton argument on the costs of the action and the IO its skeleton argument on the costs of the counterclaim 8 working days before the hearing.  Wing Ming shall lodge its responsive skeleton argument on the costs of the counterclaim and the IO its responsive skeleton argument on the costs of the action 5 working days before the hearing.

378.  I thank counsel for their assistance.