XCHRX COLLIERS JARDINE MANAGEMENT LTD. v. CHOW YUK LAN

HCA16082/98

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H E A D N O T E

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Jurisdiction - Lands Tribunal - Building Management - Deed of Mutual Covenant - Building Management Ordinance - Abuse of Process - Inherent Jurisdiction - Costs - Stay of Proceeding

The Plaintiff alleged breach by the Defendant of deed of mutual covenant and prayed for injunctions. The Defendant filed and served a home - made defence raising triable issues. The Plaintiff then applied for Order 14 summary judgment. The Defendant did not attend to contest the Order 14 summons.

Held : (1) the preponderance of the authorities is in favour of exclusive jurisdiction to the Lands Tribunal over disputes falling within Schedule 10 of the Building Management Ordinance, Cap. 344. (2) Even if the Court of First Instance and the Lands Tribunal have concurrent jurisdiction, cases should be commenced in the Lands Tribunal which may on its own initiative or on the application of a party transfer a case to the Court of First Instance. (3) Where a case falling within Schedule 10 of the Building Management Ordinance, Cap. 344 is unjustifiably commenced at the Court of First Instance, the Court may invoke its inherent jurisdiction and stay the proceeding or order that costs recoverable be taxed according to District Court scale. (4) In the present case, since the defence has raised triable issue, summary judgment refused with no order as to costs. (5) The present case should be dealt with by the Lands Tribunal, stay of proceeding in the Court of First Instance until further order with liberty to the Plaintiff to apply to withdraw or discontinue the action.

HCA16082/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 16082 OF 1998

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REASONS FOR JUDGMENT

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The Plaintiff is the management company of Greenwood Terrace in Shatin where the Defendant's flat is situated. It is not disputed that the Defendant made certain alterations to the bedroom windows of her flat in a block ("the building") of Greenwood Terrace. It is alleged by the Plaintiff that,inter alia, the alterations affected the external appearance of the building and thus in breach of the applicable deed of mutual covenant ("the DMC").

2. The Plaintiff applied for summary judgment under Order 14 r.1 of the Rules of High court. Specifically, the Plaintiff sought (1) a mandatory injunction requiring the Defendant to purge the alteration made to the bedroom windows of her flat and re-instate them to their original conditions; (2) a permanent injunction against the Defendant not to breach the DMC and (3) costs on solicitor and client basis. The application was refused and I ordered that further proceedings in this action be stayed until further order. Here are the reasons for my decision.

Summary Judgment

3. The principle applicable to Order 14 applications is well settled: where there is trial issue, summary judgment may not be granted. The Defendant has filed and served the acknowledgement of service and some sort of home-made defence. The crucial part of the defence is, I quote:-

"To my knowledge, the movement of the windows does not alter the external appearance, does not cause any structural damages, also does not occupying any common areas."

4. Of course, the defence is not in the best legalese but it is not difficult to understand. The Defendant challenges every conceivable objection to the alteration to the windows. It is quite obvious that whether the movement (relocation?) of the windows would alter the external appearance of the building is a matter of fact for trial, whatever conclusion the trial court may come to is of course none of my concern at this stage. So right at the start of the hearing I asked Mr. Yeung for the Plaintiff why summary judgment should be granted. Mr. Yeung, quite fairly, informed the court that the Defendant had re-instated the windows. In the light of the court's query, Mr. Yeung would abandon the substantive reliefs but would seek costs against the Defendant.

Costs

5. Since the claim against the Defendant is based on breach of a deed of mutual covenant, it is a matter that could have been brought before the Lands Tribunal. There is nothing unusual or complicated in the claim. In fact it is one of the sort of mundane cases that the Lands Tribunal deals with on a daily basis. For such cases, the proper scale of costs would be the District Court scale as the Lands Tribunal routinely orders. Hence, I made it plain to Mr. Yeung that in any event I would not be prepared to allow costs above the District Court scale even though this claim is before the High Court.

6. More importantly, although the Defendant did not attend the hearing to contest the Order 14 summons, since the Plaintiff was not entitled to summary judgment, there was no reason to award costs to the Plaintiff. That would offend the principle of costs to follow the event.

7. Accordingly, I made no order as to costs on the summons.

Jurisdiction

8. As I have mentioned, this case could have been brought before the Lands Tribunal. Mr. Yeung said that he was aware of authorities to the effect that the Lands Tribunal has exclusive jurisdiction over cases of this kind but he thought that arguably the High Court still has jurisdiction. I asked why then, given the choice, this case is not brought before the Lands Tribunal. After some hesitation, Mr. Yeung indicated that the case is brought before the High Court for its formal procedure and for consideration of costs.

9. Now, I know of three judgments of the High Court on the question of jurisdiction over this sort of cases. They are in chronological order: Winbase Industrial Ltd et al v. Mightyton Property Management Ltd and another HCA 10232 of 1994, NGAN Chor Ying Ann and another v. Year Trend Development Ltd HCA 10337 of 1994 and Mass Transit Railway Corporation v. LAM Kai Fai and others HCA 1796 of 1994. For some reason, none of these decisions has been reported even though they touch on a point of jurisdiction or practice and procedure that affects a significant number of cases.

10. The Winbase case concerned allegations of irregular management against the owners committee of an estate appointed under a deed of management and deeds of mutual covenant. Mayo J. (as he then was) held,

" It would appear to be common ground that the present litigation does indeed come within the proceedings specified in the 10th Schedule. [of the Building Management Ordinance, Cap. 344]

Mr Chan however argued that the range of proceedings referred to in the 10th Schedule was so wide that it must be the case that the jurisdiction of the Lands Tribunal would be a concurrent jurisdiction together with the jurisdiction of the High Court. I do not think that this is right. I agree with Mr Tang that if the 10th Schedule is considered in the context of Part VIII generally it is quite clear that proceedings referred to in the 10th Schedule are limited to matters coming within the ambit of the Building Management Ordinance Cap. 344. This is the only sensible way of interpreting the legislation.

The fact that the Ordinance, unlike the Labour Tribunal Ordinance Cap. 25, does not contain an expresses exclusive jurisdiction provision is not significant. In this connection I would adopt the reasoning of Trainor J. in Kong Hoa (Hong Kong) Ltd. v. Lau Hung Kwan [1976] HKLR 62. I have no doubt that it was the intention of the legislature to vest in the Lands Tribunal an exclusive jurisdiction to hear the cases specified in the 10th Schedule. This being the case the High Court does not have jurisdiction to hear the action which has been commenced by the Plaintiffs."

11. Since the reasoning adopted by Mayo J is embedded in the judgment of Trainor J, one should go back to Kong Hoa (Hong Kong) Ltd v. Lau Hung Kwan. The reasoning appears to be this:-

" On the case coming on for hearing before me a preliminary point was taken by Mr. Woo, counsel for the defendants: that the Court had no jurisdiction to hear the matter as exclusive jurisdiction is vested in the District Court by Part II of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7).

It was common case that the premises in question are domestic premises within the meaning of part II of the Ordinance.

Mr. Woo in his argument pointed out that the word "court" in Part II of the Ordinance means District Court, vide Section 49. He referred to s. 68(6) which reads:-

"The court shall have the jurisdiction conferred on it by this Part notwithstanding anything in the District Court Ordinance";

and s. 68(7) which states: -

"Any determination or order of the Court under this Part shall be final and no appeal shall lie therefrom.".

It was the contention of Mr. Li who appeared for the plaintiff that the jurisdiction of the District Court under Part II of the Ordinance is not exclusive; that despite the wording of that Part the Supreme Court has concurrent jurisdiction .....

In my opinion the intention of the legislature that the District Court should have exclusive jurisdiction is made manifestly clear by subsections (6) and (7) of section 68. I say this because the ordinary jurisdiction of the District Court to hear and determine any action for the recovery of land is limited by the District Court Ordinance; and where the property involved in a dispute exceeds that jurisdiction the jurisdiction lies in the Supreme Court. By subsection (6) the limitation imposed by the District Court Ordinance is removed and the District Court is given the unlimited jurisdiction normally vested in the Supreme Court. To put it as its lowest, that must indicate that the legislature intended something more than merely to give jurisdiction to a second tribunal. But when one discovers that the legislature has declared in subsection (7) that a decision of the District Court shall be final, that no appeal lies from it, then the intention of the legislature becomes clear: that there be a court of first and final jurisdiction. If the Supreme Court had jurisdiction to hear cases to which Part II of the Ordinance applied then, in the ordinary way, a right of appeal to the Full Court and the Privy Council must lie. This would result in the existence of one court with first and final jurisdiction in those cases, and another with a right to appeal up to the Privy Council.

It was argued that the Supreme Court has a concurrent jurisdiction in these cases and when it exercises it it is to be implied that it stands in the same position as the District Court, i.e., its decision is final. To accept that argument would mean that the right of appeal from a decision of the Supreme Court to the Full Court and the Privy Council is abrogated by implication. While such might be possible I would expect in the circumstances something much more positive and clearly expressed to force such an implication before concluding that the existing right of appeal from the Supreme Court had been abrogated.

In my opinion it was the clear intention of the legislature exclusively to vest in the District Court the right to adjudicate on disputes between landlords and tenants as to the tenure and rent of premises to which Part II of the Landlord and Tenant (Consolidation) Ordinance applies. A dispute exists in the instant case as to the tenure between the plaintiff and the defendants and the District Court is the only Court that can resolve it; this Court has no jurisdiction.

The next question that arises is what order may I make. May I order the case to be transferred to the District Court? S. 40 of the District Court Ordinance is as follows: -

"40. Where an action or matter commenced in the Supreme Court is within the jurisdiction of the Court or has been brought within such jurisdiction by payment, admitted set-off or otherwise, the Supreme Court or a judge thereof may, if it or he thinks fit, order the transfer of such action or matter to the Court and thereupon the Court shall have jurisdiction and authority to proceed therein.".

That section implies that both Courts have jurisdiction; in which event the Supreme Court may hear the case or remit it to the Court below. But in the instant case as I have no jurisdiction to try the issue may I exercise some jurisdiction and order the case to be transferred to the District Court?

Supposing I were to order the case to be transferred and later the plaintiff did not wish to proceed the defendant would be entitled to apply to have the case dismissed with costs. Thus my order would impose on the plaintiff costs of proceedings which he might otherwise avoid. On the other hand the defendants might decide to give up possession of the premises without more ado yet there would be proceedings existing in respect of which an order for costs might be made.

I mention those examples merely to illustrate unfortunate possibilities were I to order a transfer. In fact, I am of the opinion that once I hold I have no jurisdiction in the case I cannot make any other order in it; not even an order for transfer.

Costs however are a different matter. I have jurisdiction to decide the issue whether or not these proceedings could be brought in the Supreme Court. An unconditional entry of appearance by the defendants does not waive that lack of jurisdiction in the Court." [1976] HKLR 62 at 63 and 65-67.

12. In a nutshell, the decision of Trainor J turned on the true interpretation of section 68 (6) and (7) of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7. However, Section 68(7) has no parallel in the Building Management Ordinance, Cap. 344. There is provision in the Lands Tribunal Ordinance, Cap. 17 to the effect that certain decisions or determinations of the Tribunal are final but that provision does not apply to building management cases. In the premises, although the decision of Trainor J is instructive on the question of the powers of the High Court in cases over which the High Court has no jurisdiction, I hesitate to apply it to building management cases.

13. The NGAN Chor Ying case concerned use of shop premises in breach of a deed of mutual covenant. The plaintiffs sought Order 14 judgment. In the judgment of Finlay J:-

" Section 45(1) of the Building Management Ordinance (Cap. 344) says -

The tribunal [the Lands Tribunal] shall have jurisdiction to hear and determine any proceedings specified in the Tenth Schedule.

The Tenth Schedule is very comprehensive and certainly covers the proceedings before me. So, the Lands Tribunal has jurisdiction to hear and determine these proceedings. But does it have exclusive jurisdiction?

Mayo J. seems to recognise that what he considers to be within the exclusive jurisdiction of the Lands Tribunal is limited; he says it is limited to "matters coming within the ambit of the Building Management Ordinance Cap. 344." If, by this, Mayo J. is saying that the exclusive jurisdiction of the Lands Tribunal is limited to those rights and remedies that are created by that Ordinance, I have little difficulty with that conclusion. If, however, the decision is to be taken to say that the exclusive jurisdiction covers all those matters mentioned in the Tenth Schedule, without limitation, I must respectfully disagree.

Where a dispute concerns the interpretation and enforcement of a deed of mutual covenant, a matter in respect of which the High Court has a natural jurisdiction, my view is that the court should not lightly find that this jurisdiction has been ousted. If the legislature had intended this, I would expect to find its intention is express words or necessary implication.

Section 5 of the Small Claims Tribunal Ordinance (Cap 338) recites -

5 (1) The tribunal shall have jurisdiction to hear and determine the claims specified in the Schedule.

(2) Save as provided in this Ordinance, no claim within the jurisdiction of the tribunal shall be actionable in any other court in Hong Kong.

Section 7 of the Labour Tribunal Ordinance (Cap. 25) says -

7 (1) The Tribunal shall have jurisdiction to inquire into, hear and determine the claims specified in the Schedule.

(2) Save as provided in this Ordinance, no claim within the jurisdiction of the tribunal shall be actionable in any court in Hong Kong.

This is the language the legislature uses when it wishes to give exclusive jurisdiction to a particular tribunal. It has not spoken thus in this Ordinance. It has not given exclusive jurisdiction to the Lands Tribunal by express words. Has it done so by necessary implication?

I can find nothing in the Ordinance that leads me to the conclusion that the legislature must have intended that the Lands Tribunal should have exclusive jurisdiction over all matters mentioned in the Tenth Schedule. Indeed, there are, in my view, strong indications to the contrary."

14. Last but not the least, in the Mass Transit Railway Corporation case, again one for Order 14 judgment against use of commercial premises as a fast food shop in breach of a deed of mutual covenant, Yam J apparently adopted the approach taken by Mayo J as already noted and went on to say:-

" Section 11(2) of the Lands Tribunal Ordinance provided that subject to the provisions of any ordinance relating to appeals from the Tribunal, any party to proceedings before the Tribunal may appeal to the Court of Appeal against the determination or order of the Tribunal on the ground that such determination or order is erroneous in point of law. Section 14 of the Supreme Court Ordinance provided that subject to sub-section (3), an appeal shall lie as of right to the Court of Appeal from every judgment or order of the High Court in any civil cause or matter. If the High Court has jurisdiction to hear and determinate the proceedings specified in the 10th Schedule in the ordinary way, the right of appeal to the Court of Appeal must lie not limited to erroneous point of law only. This will result in the existence of one court with right of appeal restricted to erroneous point of law and another with a general right of appeal. This is the reasoning of both Trainor, J. and Mayo, J. in the aforesaid cases cited.

Section 45(3) of the BMO divests the Lands Tribunal of jurisdiction to make any order to vary or avoid any contractual or proprietary rights enjoyed by any owner or occupier referred to in a registered instrument including a deed of mutual covenant. This section is nothing more than making it clear that the 10th Schedule is only concerned with the interpretation and enforcement of a registered instrument. It has nothing to do with the issue of variation (proceedings for rectification of a registered instrument) and validity of a registered instrument which remained within the jurisdiction of the High Court. Accordingly s. 45 and the 10th Schedule vest exclusive jurisdiction in the Lands Tribunal in respect of, inter alia, the interpretation and enforcement of a registered instrument and exclusive jurisdiction in the High Court in respect of rectification and validity of a registered instrument. Consequently, it leaves the issues of interpretation and enforcement of a registered instrument to the Lands Tribunal which is less expensive and formal and to which the general public has more ready access."

15. Now, it is far from it for me to say which of the three illustrious judges are correct. However, one may notionally regard the trio as comprising the Court of Appeal coming down to a majority of 2 to 1 decision in favour of exclusive jurisdiction for the Lands Tribunal. I am also inclined towards the majority but I think there is also an alternative approach.

The Proper Forum

16. Assuming for argument's sake that both the Court of First Instance and the Lands Tribunal have concurrent jurisdiction over matters falling within Schedule 10 of the Building Management Ordinance, Cap. 344, one still has to give effect to the intention of the legislature. Before the Lands Tribunal was granted jurisdiction, the High Court (now the Court of First Instance) had sole jurisdiction. So, clearly, our legislature saw the need to divert cases to a specialized tribunal deemed to have expertise and able to deal with them in a more economical and efficient way. One can easily see that it is cheaper for the parties in terms of costs to litigate on the usual District Court scale costs ordered by the Lands Tribunal. There is also economy for the public purse too because judges of the Court of First Instance can be freed to deal with cases which cannot be tried in any other forum. Efficiency is another factor. In the present case, the writ was issued on 21st September 1998, the Order 14 summons was taken out on 22nd March 1999 and the summons heard on 13th April 1999. Since the Defendant has raised triable issues, the case should in the normal course of events go on to the running list and it may take months for it to come on trial. The time-table for the Lands Tribunal, according to official statistics for March 1999, is that a building management dispute would come on trial within 36 days after setting down. My experience, having sat in the Lands Tribunal, is that the waiting time varies from 30 days to 60 days. Put simply, it makes much more sense for administration of justice to have cases under consideration dealt with by the Lands Tribunal.

17. Of course I do not suggest for a moment that the Court of First Instance has no role to play in appropriate cases. If a case having started in the Lands Tribunal should be tried in the Court of First Instance, the Lands Tribunal on its own initiative or on the application of any party to it may transfer it up. It goes without saying that unjustified refusal by the Lands Tribunal to transfer to the Court of First Instance is appealable to the Court of Appeal. So there is mechanism for ensuring that cases beyond the competence of presiding officers at the Land Tribunal would be handled by judges of higher calibre.

18. I would therefore hold that cases under consideration should be commenced at the Lands Tribunal in any event. A party who chooses to start such a case in the Court of First Instance does so at its own peril. It may be that the complexity or other circumstances of the case justify doing so. It may be that after issue of writ the other party readily surrenders to summary judgment and it would be pointless to deflect the case back to the Tribunal. But, for the usual cases, the court has inherent jurisdiction to stay proceedings which are an abuse of its process such as frivolous, vexatious or harassing proceedings: see White Book 1999 Volume 2 20A-334. In my view, taking a case to the Court of First Instance when it should be dealt with by the Lands Tribunal is harassment in that either the Defendant may be inflicted with unjustifiably higher costs or, in cases where the Defendant is a corporation, the Defendant is put into unnecessary expense of having to engage professional legal representation. Furthermore, the types of abuse of process are not exhaustive. Using the process of the High Court for the majority of the disputes falling within Schedule 10 of the Building Management Ordinance, Cap. 344 is like cracking nuts with a sledgehammer. That is an abuse of judicial resources. For these unjustified cases, the Court of First Instance may well invoke its inherent jurisdiction (exercisable by judges and masters) to stay the proceeding, and the sooner the stay the better.

Conclusion

19. In conclusion, I think the preponderance of authorities is in favour of exclusive jurisdiction to the Lands Tribunal. If I am wrong on this point, and the Court of First Instance and the Land Tribunal have concurrent jurisdiction, I hold that, exceptional cases notwithstanding, disputes falling within Schedule 10 of the Building Management Ordinance, Cap. 344 must be commenced at the Lands Tribunal otherwise the Court of First Instance may order

(1) stay of proceeding in the Court of First Instance and/or

(2) costs recoverable in proceeding in the Court of First Instance be taxed on the District Court scale.

20. Taking all factors and circumstances into consideration the present case is exactly one that should be dealt with by the Lands Tribunal. Hence, in exercise of the Court's inherent jurisdiction, I ordered that proceedings be stayed until further order except that the Plaintiff may apply to withdraw or discontinue.