YAN YAN MOTORS LTD v. THE INCORPORATED OWNERS OF WALTON ESTATE

LDBM 167/2018

[2018] HKLdT 69

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 167 OF 2018

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R E A S O N S   F O R   D E C I S I O N

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1.  This is the urgent application by the applicant for an interlocutory injunction against the respondent (“the IO”) restraining the IO from discontinuing/disconnecting the electricity supply to the cargo lift and the escalators (collectively referred to as the “Facility”) serving the Commercial Development, ie the Ground Floor (“G/F”) and the 1^st Floor (“1/F”) of Block B of Walton Estate (‘the Estate”) pending the hearing and determination of the issues raised in the Notice of Application filed on 9 August 2018 (“NOA”).

Background

2.  The applicant is the owner of Shop no. 90 on the G/F and 1/F of Block B of the Estate which is part of the Commercial Development of the Estate.  

3.  There is a cargo lift serving the Commercial Development and escalators connecting the G/F and 1/F.  The shops on 1/F include Parkn Shop and JHC, all relied on the cargo lift to transport goods to their shops and the escalators as access to their shops.  The charges for the electricity supply to the Facility are borne by the IO all along.

4.  By a letter dated 2 November 2017 (“2/11/2017 Letter”), the applicant acknowledged that it will take over the Facility from the IO and be responsible for the electricity charges for the same with effect from 1 October 2017.  And it is also stated in the letter that the applicant would arrange for separate electricity meter to be installed for the electricity supply to the Facility.  On 6 November 2017, the Facility was formally handed over to the applicant by the IO and there was a written document to acknowledge the same and signed by both parties.  Apart from paying the IO $5,700 being maintenance expenses for the Facility, the applicant had done nothing to honour the promise stated in the 2/11/2017 Letter.

5.  By letters from the management company of the Estate to the applicant dated 2 November 2017, 8 December 2017, 19 December 2017 and 26 January 2018 and by a letter from the solicitors of the IO dated 17 March 2018, the IO, time and again, urged the applicant to install its own electricity meter for the supply of electricity to the Facility and also requested the applicant to reimburse the IO the electricity charges incurred for the same. 

6.  Since no action had been taken by the applicant as requested, the management company had sent a letter dated 22 June 2018 (“22/6/2018 Letter”) to the applicant setting a deadline of 14 days for the applicant to install its own electricity meter and pay for the electricity bill, failing which the IO will disconnect the electricity supply to the Facility.

7.  By an undated letter before 31 July 2018 to the applicant, the IO had indicated its intention to disconnect the electricity supply to the Facility from 3pm on 1 August 2018.  By a reply letter dated 31 July 2018, the applicant contended that the Facility are common facilities and not for the personal use of the applicant, hence the duty to maintain the same falls upon the IO.  There are further exchanges of correspondence between solicitors and the IO had indicated in the correspondence, time and again, that the electricity supply for the Facility will be disconnected on 10 August 2018.

8.  On 9 August 2018, the NOA was filed together with the interlocutory application for an interlocutory injunction.  It is directed that the interlocutory application is to be heard on 10 August 2018 (“the Hearing”) with notice to the IO.

9.  At the Hearing, this Tribunal was being told that the IO had in fact disconnected the electricity supply to the Facility by cutting the cable to the meter in the midnight of 10 August.  Yet, the applicant still asked for the prohibitory injunction sought as well as a mandatory injunction to re-connect the cable to the electricity meter for the Facility.  The IO indicated that since it required a resolution from the management committee to authorise the engagement of contractor, it will take time to arrange for the cable to be re-connected but the IO had no objection to allow the contractor engaged by the applicant to carry out the work instead.

10.  Having heard from both parties at the Hearing, the following orders, inter alia, are made:

a.   A mandatory injunction against the IO to allow the contractor arranged by the applicant to re-connect the cable to the meter for the supply of electricity to the Facility; and

b.   An interlocutory injunction restraining the IO from disconnecting/discontinuing the electricity supply to the Facility.

11.  I have indicated at the Hearing that detailed reasons for the decision will be handed down in due course.  This I now do.

Legal Principles

12.  The principles for interim relief are well-settled and governed by the American Cyanamid principles ([1975] AC 396).  The applicant needs to show:

(i)   a serious question to be tried;

(ii)   damages are not an adequate remedy; and

(iii)   if there is doubt as to the adequacy of damages, that the balance of convenience lies in favour of granting the injunction.

13.  On the test to be applied when considering whether a serious issue to be tried has been shown, I refer to the principles summarized at paragraph 29/1/10 of the Hong Kong Civil Procedure 2018, that:

“…The prospects of the plaintiff’s success are to be investigated to a limited extent. All that has to be seen is whether he has prospects of success which, in substance and reality, exist. Odds against success do not defeat him, unless that are so long that the plaintiff can have no expectation of success, but only a hope. If his prospects are so small that they lack substance and reality, then he fails; for he can point to no question to be tried which can be called “serious”, and no prospects of such success which can be called “real”.

Discussion

14.  The gist of the argument raised in the NOA is whether the Facility are common facilities of the Estate and the IO had the duty to maintain as contended by the applicant or the Facility is in the exclusive possession and occupation of the applicant as contended by the IO.

15.  The applicant relied on the following provisions in the Deed of Mutual Covenant (“DMC”) in support of its contention:

Part I – Definitions

“Commercial	shall mean the Air-Conditioning Plant Room…
Common Areas”	the Cargo Lifts and their lobbies (if any)…and any other parts of the Commercial Development for the use and benefit of the Commercial Development exclusively. (at page 6-7)

Part VI (D) – Management And Other Expenses

…

3. The budget shall be an estimate by the Manager of the sum which will be necessary to meet all the costs of managing and maintaining…include the following costs, charges and items :-

…

(g) all utility charges except where the same are separately metered to individual Residential or Commercial Units.” (at page 51)

16.  It is the contention of the applicant that since the cargo lift falls within the definition of “Commercial Common Areas” and the electricity charges of the Facility have no separate meter charged to individual Commercial Unit, the Facility should be common facilities of the Estate and the liability for electricity charges should be borne by the IO.

17.  The IO relied on the description of the property assigned to the applicant in the Assignment (“Assignment”) in support which reads:

“1. THE PROPERTY

(a) Description, address, lot number, sections, undivided shares etc:-

ALL THOSE 585 equal undivided…shares… TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy (i) ALL THAT SHOP NO.90 on the GROUND FLOOR of BLOCK “B”… (ii) ALL THAT the FIRST FLOOR of BLOCK “B” … AND (iii) ALL THOSE PORTIONS on the GROUND FLOOR and the FIRST FLOOR of BLOCK “B” (which said portions are shown and coloured Green on the said Ground Floor Plan and the First Floor Plan annexed to the Assignment) of the Building…” (at page 3).

18.  The IO contended that since the Facility is located within the Green part on the Assignment Plans, they should have been assigned to the applicant and according to section 2 of the Building Management Ordinance (“BMO”), the Facility should be within the exclusive possession and occupation of the applicant and not common facilities and this had in fact been acknowledged by the applicant when it agreed and did take over the Facility from the IO.

19.  I agree with Mr Lam for the applicant that on the face of the provisions of the DMC and the Assignment of the property, there appeared to be a conflict between the 2 documents as to whether the Facility are common facilities and who should be responsible for the electricity charges for the Facility.  Both the DMC and the Assignment are documents registered in the Land Registry as stipulated in s. 2 of the BMO.  The conflict between these 2 documents and whether any of the document has an overriding effect against the other is a serious issue that has to be resolved at trial.  The fact that the applicant had once taken over the Facility cannot be construed as decisive in the determination as to which document is to be adopted.  The inconsistencies between the 2 documents is a serious question to be tried which has a real prospect of success.  I am satisfied that the applicant had overcome the first hurdle in this interlocutory application.

20.  The applicant contended that without the Facility in service, the business of the applicant and its tenants will be seriously affected.  Goods cannot be unloaded to the shop premises on the 1/F and inconvenience will be caused to customers visiting the Commercial Development at Block B and the residents living nearby.  Since it will take the applicant at least 2 weeks to apply for separate electricity supply, the loss will be huge since the tenants can sue the applicant for breach of the tenancy agreement for their loss and this will damage the applicant’s reputation as a landlord to many properties in Hong Kong.  On the other hand, there will not be any serious prejudice caused to the IO who can recover the overpaid electricity charges from the applicant if they succeeded at the end of the day.  Therefore, the balance of convenience is clearly in favour of the applicant.

21.  The IO contended that there were occasions that the Facility was out of order and the delivery of goods to the 1/F was done by walking up the escalators and so were the customers.  So even if there is no electricity supply to the Facility, no inconvenience/damage is likely to be caused to the shops on 1/F.

22.  I agree with the applicant that damages will not be sufficient remedy for the applicant.  Without electricity supply, the Facility will not be able to provide their usual service and such failure is not for days but likely to be for weeks.  Even though the customers and the delivery workers can make use of the escalators as staircase, the inconvenience caused is apparent and inevitable given the nature of the business of Parkn Shop and JHC which required goods to be delivered on daily basis and the large flow of customers everyday.  The applicant, being the landlord of the shops on 1/F, is likely to face a claim by these tenants for breach of contract and quantum is difficult to assess and damages is not an adequate remedy.  On the contrary, the only damages suffered by the IO is the electricity charges to be incurred for the Facility and the balance of convenience tilts towards the granting of the interlocutory injunction.

Conclusion

23.  Based on the findings above, I have come to the view that the balance of convenience and/or the course which appears to carry the lower risk of injustice if it should turn out to be wrong, would be to grant the interim relief sought by applicant and I made the order at §10 above.