THE INCORPORATED OWNERS OF HAIPHONG MANSION v. JAMES S. LEE & COMPANY (KOWLOON) LTD AND ANOTHER

LDBM 138/2021

[2025] HKLdT 54

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 138 OF 2021

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BETWEEN

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D E C I S I O N

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1.  By summons dated 6 May 2025 (“Summons”), the Applicant (“IO”) seeks leave to appeal against my judgment dated 8 April 2025 (“Judgment”) dismissing the IO’s claim.

2.  I determined that it was appropriate to deal with the application for leave to appeal on paper and gave directions to that end. The IO lodged and served Submissions For the Applicant/ Appellant dated 26 May 20205 (“IO’s Subs”) and Reply Submission For the Applicant/IO dated 23 June 2025 (“IO’s Reply”) of trial counsel Mr Lewis Law and Mr Steve Cheung. The Respondents lodged and served Submissions For The Respondents dated 9 June 2025 (“Respondents’ Subs”) of trial counsel Mr Bernard Man SC and Mr Harrison Miao.

3.  The facts are set out in the Judgment. I shall not repeat them here. I adopt the abbreviations used in the Judgment unless otherwise stated. The case concerns a large advertising sign that has been displayed on the 1/F external walls of the Building since the 1950s.

4.  Significant for the purposes of the draft Grounds of Appeal is that:

(1) The IO’s claim was for, inter alia, injunctions to compel the Respondents to reinstate the walls and restrain them from erecting further signage without authorisation, declarations and mesne profits for unauthorised use of the external walls of the Building for the A Sign from 12 December 2018. The Notice of Application (“NOA”) prayer is set out at the Judgment §51.

(2) The pleaded defences were acquiescence, laches, proprietary estoppel and lost modern grant. The Respondents did not make any counterclaim or seek any declarations.

(3) There were signs at different positions on the external walls of the Building. The signage was identified by a letter, “A” to “C” according to the position of a sign on the walls and a number: Judgment §15. The actual sign at a given position changed or was replaced from time to time over the years but the letter designation remains the same. The sign in issue is an A Sign on 1/F level of the external walls. All signs in that position throughout the years are referred to as the A Signs. The C Signs included the Longines C4 Sign, which was at a different position on the walls to that of the A Signs.

(4) Attached to the Judgment is a photograph of the Sign, identified as A-16, which was taken in or about August 2021 (“the A Sign”). The photograph also shows a much smaller sign, C-5 Sign which succeeded the Longines C-4 Sign: Judgment §272.

(5) The parties reached common ground that (1) the pre-2018 A Signs were illegal for the purposes of the Buildings Ordinance, Cap.123 (“BO”), and (2) the post-2018 A Signs were legal: Judgment §37, Issue 2.

5.  I found that the equitable defences of acquiescence, laches and also proprietary estoppel were proved and dismissed the claim. Costs were to be paid by the IO to the Respondents: Judgment §281.

The draft Notice of Appeal

6.  The IO advances 6 grounds of appeal. They are broadly:

(1) Error of law in finding that the IO could have acquiesced in the A Signs which were illegal structures.

(2) Error of law in finding passive encouragement.

(3) Irrationality and/or failure to consider relevant factors in the Respondents’ mistaken belief.

(4) Error of law and failure to consider relevant factors in detrimental reliance.

(5) Failure to independently determine the issues.

(6) It is in the interests of justice for the appellate court to consider the illegality doctrine especially in relation to proprietary estoppel.

THE LAW

Appeal from the Lands Tribunal

7.  The applicable provisions are sections 11 and 11AA of the Lands Tribunal Ordinance, Cap. 17 (“the LTO”). Section 11(2) of the LTO provides:

“(2) Subject to section 11AA and 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 a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law.”

8.  Section 11AA(6) of the LTO provides:

“(6) Leave to appeal shall not be granted unless the Tribunal, the Court of Appeal or the registrar hearing the application for leave is satisfied that—

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

9.  The IO refers to the legal principles for granting leave to appeal stated in South Crown Development Limited v Chung Ki To (As Administrator of The Estate of Chung Koon Kow, Deceased) & Others [2020] HKCA 188 at §§5-6 per Kwan VP:

(1) Pursuant to section 11(2) of the LTO subject to the requirement for leave, any party may appeal to the Court of Appeal against a judgment order or decision of the tribunal on the ground that it is erroneous in point of law.

(2) Under section 11AA(6) of the LTO, leave to appeal may be granted where the tribunal is satisfied that:

(a) The appeal has a reasonable prospect of success; or

(b) There is some other reason in the interests of justice why the appeal should be heard.

(3) “A reasonable prospect of success”, for the purpose of granting leave to appeal, means an appeal with prospects that are more than “fanciful” but which do not need to be shown to be “probable”.

(4) Under the 2^nd limb “some other reason in the interests of justice that the appeal should be heard”, leave may be granted if a question is one of general principle, decided for the first time, or a question of importance upon which further argument and a decision of the Court of Appeal would be to the public advantage: Hong Kong Civil Procedure 2025, Vol.1 at §59/2A/4, p.1262.

10.  The legal principles for identifying errors of law are not in dispute. The IO refers to Kwong Mile Services Limited v Commissioner of Inland Revenue (2004) 7 HKCFAR 275 at §§31-37 which held a decision may be quashed if it is:

(1) Based on findings of fact or inferences which are perverse or irrational;

(2) Unsupported by evidence;

(3) Made by reference to irrelevant factors (IO’s Subs §4.3); or

(4) Made without regard to relevant factors to the extent that the true and only reasonable conclusion is not the one adopted by the fact-finding tribunal.

11.  The IO reminds the tribunal that the appellate court is not bound to defer to the fact-finding tribunal’s conclusion where such a conclusion is not reasonably open on the evidence. In such a case, the appellate court is duty bound to intervene even on an appeal confined to points of law: Kwong Mile Services Limited at §37.

12.  The Respondents highlight the following:

(1) An appeal only lies against the tribunal’s decision on the grounds of an error in a point of law: section 11(2) of the LTO, which may include errors buried under factual findings as explained in Kwong Mile Services Limited §§31-32.

(2) A reasonable prospect of success means an appeal with prospects which are more than fanciful but which need not be probable. An appellant has to show more than an arguable case to demonstrate a reasonable prospect of success: The Incorporated Owners of Grenville House v Keen Joy Enterprises Limited [2024] HKLdT 57 §9, DDJ SH Lee (as he then was).

(3) The appellate court may not intervene if the fact-finding tribunal’s conclusion is reasonable, even if it prefers a contrary conclusion; the appellate court may only substitute a factual finding if it regards the contrary conclusion as the true and sole reasonable conclusion: Kwong Mile Services Limited. The Respondents invite the tribunal to adopt this, rather than that set out in the IO’s Subs §4, as the test for whether an appellate court would interfere with a finding of fact on the basis that is an error of law. IO’s Subs §4.3 suggesting that the taking into account of irrelevant factors would, without more require the appellate court to intervene is wrong.

(4) The tribunal is entitled to set out the main thrust of its decision rather than to discuss each and every contention raised. Unless there are plainly obvious errors in respect of a material factor which the tribunal has failed to take into account, the appellant cannot ask the appellate court to rehear the arguments by dressing up the tribunal’s omission to address an argument as an error of law: Oriental Moon Limited v Golden Sino Link Limited & Others [2023] HKCA 608 §§27-29.

PRELIMINARY POINTS

13.  The IO’s draft Grounds of Appeal 1 to 5 are based on errors of law, as detailed below. While Ground 6 is that in any event it is in the interests of justice that the appeal be heard.

14.  The Respondents submit that Grounds 1 to 5 have no prospect of success and make the following preliminary points:

(1) The tribunal found the IO to be barred from claiming against the now legal A Sign. It also followed the long line of authorities most recently affirmed in Centre Chase Investment Ltd v International Industrial Building (Castle Peak Road) (IO) (No. 3) [2025] 1 HKLRD 532 §§ 44-46 (Cheung JA) in its findings.

(2) Grounds 2 to 4 relate to proprietary estoppel only. This means that even success on them would not change the result of the case, because the Respondents have succeeded on other defences as well. For that reason, unless leave should be given for Grounds 1, 5 or 6, leave for these grounds should be refused on the ground that it would be academic. In any case, the tribunal was clearly entitled to conclude from the evidence that (i) the IO had passively encouraged the Respondents’ belief through its long inaction, (ii) the Respondents had harboured under the mistaken belief over their entitlement to erect and maintain signage at the 1/F external walls, and that (iii) the Respondents had suffered detriment in relying on the IO’s encouragement.

(3) The Presiding Officer has clearly applied her independent judicial mind in reaching her decision. The argument should not have been advanced. The mere fact that she agrees with a large part of Respondents’ submissions does not show that she abdicated her judicial duties.

15.  As to Ground 6, interests of justice, the issue of whether the IO would be debarred from claiming against unauthorised building works (“UBWs”) is not engaged as the A Sign is now legal. In any event, the Court of Appeal has recognised that the position is now well-established and nothing can be gainsaid: Centre Chase Investment Ltd (No. 3) §46. I do not consider this authority can be disregarded as suggested by the IO.

GROUND 1: ILLEGALITTY AND ACQUIESCENCE

IO’s case

16.  The IO submits that the finding that the IO had power to approve conversion of common parts and could acquiesce or assent, to the erection of the A Signs was central to upholding the Respondents equitable defences: Judgment §224. The IO’s case is that the tribunal erred in law in holding that the IO could have acquiesced in breaches involving or by way of erection and continued presence of the A Signs which were UBWs prior to their regularisation in 2018. The IO has statutory obligations under sections 18 and 34I of the Building Management Ordinance, Cap. 344 (“BMO”) to manage and maintain common parts and to enforce compliance with the DMC and relevant building laws. These statutory functions cannot be waived or diluted by implication, nor can they be retrospectively overridden by inaction or silence. Thus the IO did not and could not lawfully acquiesce in the maintenance or use of the UBWs erected when such UBWs were in breach of the BO.

17.  Further, any delay in enforcement prior to 2018 was not an implicit endorsement or approval of illegality. To the extent that the tribunal accepted that passive inaction by the IO prior to 2018 could amount to equitable acquiescence or support proprietary estoppel, such finding is inconsistent with the regulatory purpose of the BO, which is directed at the safety and lawful use of buildings.

18.  The IO says that the Presiding Officer’s reasoning that historic illegality of the signage structures was simply part of the “factual background”, and it does not disqualify the operation of equitable defences misapplies the law: Judgment §229(6)(ii). That paragraph is part of my application of the Petal test and is taken out of context if it is suggested that I reverted to the pre-Patel test. The IO continues that decisions such as Yick Fung Holdings Ltd v Sandwood Ltd [2009] 2 HKLRD 573 and Freder Centre (IO) v Gringo Ltd & Another [2016] 2 HKLRD 190 did not concern an IO discharging statutory obligations under the BMO in the context of unauthorised structures; nor address how equity, especially estoppel, interacts with persistent breaches of the BMO. Moreover, both decisions preceded the landmark Supreme Court decision Patel v Mirza [2017] AC 467, which has been followed in the Hong Kong Court of Appeal in Monat Investment Ltd v All Persons in Occupation [2023] HKCA 479.

19.  Under the Patel test, the courts must consider whether granting relief (or recognising a defence) would undermine the purpose of the legal prohibition in question, and must assess the proportionality of denying relief in light of the connection between the illegality and the conduct relied upon. In my analysis application of the Patel test was the most important and pivotal point in the case. The IO submits that to allow a party to benefit from an equitable defence rooted in illegal conduct, namely the prolonged use of the UBWs signage erected without approval, would frustrate the legislative framework of the BO and erode the IO’s capacity to fulfil its statutory role. I disagreed. My application of the Patel test resulted in the finding that allowing the defence would not frustrate legislative framework of the BO: Judgment §229. An IO is able to fulfil its role and to enforce. However, if it fails to do so for a prolonged period, the equitable defences may be available.

20.  The IO submits that, the finding that the IO acquiesced in or approved the illegal structure was an error of law. The tribunal’s subsequent application of the equitable doctrines was tainted by this misapprehension. In my view the IO has mischaracterised the finding such that Ground 1 proceeds on a false premise. The IO has not identified an actual misapprehension. The IO contends that in any event the findings involve a question of great general public importance to the management of common parts of buildings. Even if no such error of law, the question warrants leave to appeal under section 11AA(6)(b) of the LTO.

Respondents’ response

21.  The Respondents reply to the contention that, given the IO’s statutory obligations under sections 18 and 34I of the BMO it could not acquiesce in, or be debarred from enforcing against, illegal structures as follows.

22.  First, the argument is not engaged in this case. The IO was not found to have acquiesced in, or to be debarred from enforcing against UBWs:

(1) The IO’s claim is not based on any covenant to comply with the BO: Judgment §222.

(2) There is no dispute that the A Sign is now legal under the BO: Judgment §223(1). The IO is not enforcing against, and the Respondents are not setting up defences over, UBWs.

(3) Thus, the Respondents case is not that the IO has acquiesced in or approved UBWs, but only that by reason of the IO’s conduct, it has acquiesced in and is otherwise barred from enforcing against a legal sign: Judgment §§223(2)-(4).

23.  First, in my view the Respondents have correctly identified the findings in the Judgment and reasons why the IO’s UBWs argument is not actually engaged.

24.  Second, the Respondents submit that the IO’s reliance on its statutory duties under the BMO sections 18 and 34I is of no moment:

(1) It is now well-established that the IO has the power to permit an owner to convert a common part to his own use. It thus has the power to waive and acquiesce in the same: Yick Fung Holdings Ltd §§23-24 (Le Pichon JA); Hollywood Shopping Centre Owners Committee Ltd v Wing Wah Building Mongkok Kowloon (IO) [2011] 4 HKLRD 623 §§21, 67-69 (Kwan JA, as she then was); Freder Centre (IO) §24 (Chu JA, as she then was); Sun Hing Building (IO) v Joint Profit (Hong Kong) Limited & Another [2024] HKCA 589 §53 (G Lam JA); Centre Chase Investment Ltd (No.3) §§44-46 (Cheung JA).

(2) The IO has power to waive or acquiesce in conversion of the common parts despite its duties under sections 18 and 34I of the BMO: Freder Centre (IO); Sun Hing Building (IO); Centre Chase Investment Ltd (No. 3).

25.  The law is clear. An IO does have power to permit conversion of common parts. I agree with the Respondents’ submission. It is too well settled to question: Centre Chase Investment Ltd (No. 3) per Cheung JA at §§44-46.

26.  Third, the Respondents submit that the argument that authorities such as Yick Fung Holdings Ltd and Freder Centre (IO) have been overtaken by Patel and Monat must be rejected:

(1) Mr Man SC maintains, as he has throughout, that Patel did not represent “year zero” such that in all future cases it is only Patel that is to be considered and applied. The court should not disregard the value of precedent built up in various areas of the law to address particular factual situations giving rise to the illegality defence. Those decisions remain of precedential value unless it can be shown that they are not compatible with the Patel approach: Henderson v Dorset Healthcare University NHS [2021] AC 563 §77 (Lord Hamblen); Judgment §198.

(2) This is especially given that a body of authoritative, respectable and valuable local jurisprudence has been built up by various levels of courts in Hong Kong since 1979 on the issue. The underlying rationale should not be disregarded overnight simply because a new test is propounded under Patel: Judgment §§227(3)-(4).

(3) In particular, the test in the pre-existing case law, namely whether the illegality only immerged as part of the background rather than as a constituent element to the claim or defence, bears on the centrality of the illegality to the claim or defence. Centrality remains a factor of particular importance even under the Patel test. The lack of a close causal link between the illegality and the defence would tend to show that it is disproportionate to disapply the defence: Henderson §124.

(4) Thus, as the tribunal held (following highly authoritative case law) and recognised, the underlying rationale of the cases preceding Patel remains relevant: Judgment §227.

(5) In any event, the tribunal did not simply proceed on the basis that the past illegality was only part of the factual background. The tribunal applied the Patel test to the facts, and held that the past illegality would not defeat the equitable defences: Judgment §§229-230.

(6) The IO only argues that allowing a party to benefit from an equitable defence rooted in the prolonged use of building works erected without approval would defeat the BO legislative framework and erode the IO’s capacity to fulfil its statutory role.

(7) This has been answered in the Judgment, after reciting and applying principles authoritatively established. As the tribunal noted at Judgment §229:

(i) The purpose of the BO is given effect by allowing the Building Authority to enforce against UBWs and by imposing sanctions for non-compliance with the Building Authority’s order.

(ii) The purpose of the BO does not demand a now legal sign to be taken down.

(iii) Whereas, the denial of the defences would unsettle the rights between the parties and frustrate the legal policy that long-established state of affairs should not be disturbed if it would be inequitable to do so.

(iv) It is disproportionate to disapply the defences based on past illegality, especially given that (i) the past illegality has been rectified, (ii) the illegality has no substantial connection to the defence, (iii) the IO’s course of conduct shows that it was completely disinterested in enforcing against UBWs at the Building.

27.  Contrary to the IO’s argument, applying Patel I found that the BO legislative framework would not be defeated and IOs capacity to fulfil its statutory role would not be eroded.

28.  Contrary to IO’s Subs §8, I did not hold that the IO acquiesced in erection and continued presence of UBWs. I wholly agree that the IO has the duties under sections 18 and 34I of the BMO and to enforce compliance with the DMC. The IO may have mischaracterised the findings, to suggest that I found that the statutory functions can be retrospectively overridden by inaction or silence, in order to submit that it follows the IO could not lawfully acquiesce in maintence or use of UBWs erected in breach of the BO. The treatment of illegality is determined by application of the Patel test as applied in Monat.

29.  I considered the regulatory purpose of the BO, including safety and lawful use of buildings. That is the first crucial step in the Patel test. The possibility of error in determining the purpose of the BO was alleviated by Monat, that identified the purpose of the BO and which I was able to adopt in applying the Patel test here: Judgment §§229(1)-(3). Both the IO and the Respondents applied the first step in the same manner: Judgment §§206, 209. This should be uncontroversial.

30.  The second step required consideration of the policy underlying the defences and whether denial of the acquiescence defence would frustrate the legal policy that a long established state of affairs should not be disturbed if it would be inequitable to do so. I considered there were similar underlying policy concerns in respect of acquiescence and adverse possession, and determined that it would be inequitable to deny the acquiescence defence: Judgment §§229(4)-(5). The IO had allowed display of the A Signs for such a prolonged period I cannot see that I erred at step two. Nor at step three: Judgment §229(6). The facts relied upon that show it was disproportionate to disapply the defence of acquiescence based on past illegality are not actually disputable. First, the case proceeded on the basis of the parties’ consensus, so to be treated as an agreed fact, that the past illegality had been rectified. Secondly, there was no substantial connection between the illegality and the defence. Thirdly, it was undisputed that the IO did not demanded a fee for the A Signs until after the A Sign was legal. It did not take action against the A Signs on the basis they were UBWs. I had independently addressed and answered the facts and matters argued by the IO. For example at Judgment §§210(2)-(3), (7), 211-214. I cannot see any error in applying the third step. I did not revert to the Tinsley v Milligan [1994] 1 AC 340 test or misapply the law at the Judgment §229(6)(ii).

31.  Further, obviously I was fully aware that Yick Fung Holdings Ltd and The Incorporated Owners of Freder Centre (IO) predated Patel and Monat. The treatment of Hong Kong cases on illegality and the value of those cases post-Patel was a core issue. The answer is provided by Henderson. What the IO’s point comes down to is that I should have come to a different conclusion at step two, and apparently three, of the Patel test. If that may be so, Ground 1 would have a reasonable prospect of success. However, given I followed the invaluable guidance on application of the Patel test provided by Monat, where the illegality was also breach of the BO, and the undisputed or indisputable facts in this case, I am not satisfied that the result could have been different.

32.  The IO would prefer a different result on the Patel test. In my view there was no error of law in application of the Patel test, treatment of illegality and finding that the IO had acquiesced. I am not satisfied that Ground 1 has a reasonable prospect of success on appeal.

GROUND 2: PROMISSORY ESTOPPEL PASSIVE ENCOURAGEMENT

33.  Ground 2 is that I erred in holding that the IO had, by its silence and the visibility of the A Sign, “passively encouraged” the Respondents to install and retain the A Signs, thereby constituting a representation for the purposes of proprietary estoppel: Judgment §185.

34.  The Respondents emphasise that Ground 2 turns on the finding of passive encouragement which relates to the representation elements in proprietary estoppel only. It does not affect the Respondents’ other defences such as acquiescence and laches, or the tribunal’s conclusion that the IO’s claim is debarred: Judgment §§183, 191, 265. The ground is thus academic to the outcome of the appeal and is not a proper question of law: Wise Pearl Limited v The Commissioner of Inland Revenue [2024] HKCFI 439 (Cheng J). The Respondents reply in any case, this ground enjoys no reasonable prospect of success, for the reasons below.

35.  The IO says that I relied heavily on Summit Court (IO) v Full Surplus Investment Ltd (No.2) [2005] 1 HKC 662 which held that a party’s passive acquiescence, combined with other conduct could amount to a representation. The passive encouragement finding was premised on the IO’s silence and visibility of the A Signs. However, the tribunal erred in law in applying the Summit Court (IO) reasoning in concluding the IO’s silence constituted a representation. In Summit Court (IO) the representor was an architect who had construction knowledge which, combined with affirmative conduct, and failure to object to extensive works, amounted to passive encouragement by conduct: Summit Court (IO) §88. Whereas here the IO is a statutory body and had asserted its rights over the wall. There is no evidence that the IO had actual knowledge of the exact nature or installation process of the A Signs prior to their erection. The IO has duties under the BMO and DMC, and cannot be equated with a private individual or corporate body capable of waiving property rights or making discretionary concessions contrary to statutory obligations. I cannot agree that I relied heavily on Summit Court (IO), and erred in applying the reasoning. I relied on Summit Court (IO) for a legal proposition. I was well aware of the distinguishing facts: Judgment §110.

36.  The Respondents reply first, that there is no merit in the IO’s argument that I wrongly relied on Summit Court (IO):

(1) The tribunal only referred to Summit Court (IO) for the uncontroversial proposition that silence or acquiescence could amount to passive encouragement, and to illustrate that such encouragement might be found where the representor had stood by silently while the representee carried on building works known to the representor: Judgment §§72, 75, 184(3).

(2) This proposition applies to an IO equally. The IO has the same power to acquiesce in the conversion of the common part, as a private owner does with his own unit. The silence of either could constitute passive encouragement.

(3) The IO also suggests that there is no evidence to show that it had (i) specific knowledge about the issues surrounding the A Signs before 2012, or (ii) actual knowledge of the exact nature or installation process of the A Signs prior to their erection.

(i) The tribunal did not apply the facts of Summit Court (IO) by analogy. The tribunal also noted the IO’s submission that “there is nothing in this case to the kind of ‘passive encouragement’ in that case [i.e. Summit Court (IO)]”: Judgment §110. The tribunal did not find passive encouragement from the IO or other owners’ silence “at the time of construction”.

(ii) It cannot be argued that passive encouragement may only be found where the representor has stood by silently at the time of construction, but not when the infringement continued to be in place. The representor only has to be aware of facts or matters to raise a doubt in its mind as to whether an infringement has taken place. It does not have to fully understand, as a question of law, the rights that it possessed: Yick Fung Holdings Ltd §28 (Le Pichon JA).

(iii) Thus, the relevant question is whether the IO was aware of sufficient facts to raise a doubt as to whether the A Signs amounted to an infringement and remained silent.

(iv) The circumstances clearly show that the IO had the requisite knowledge. Significantly, the A Signs were highly visible and were present for the entire working life of the Building. The IO must also have known about the facts giving rise to its rights under the DMC and the BMO: Judgment §§179-180.

(v) Nonetheless, neither the IO nor any owner had opposed the installation of the signage for over 50 years.

37.  The above sets out my use of Summit Court (IO) and findings accurately, which I fail to see was erroneous. The evidence of knowledge of the A Signs was overwhelming. Mr Law referred to the A Signs as “huge” and “giant”: Judgment §§162, 275. The point of the A Signs was to attract attention to the advertisements thereon. The Owners or IO only need to look up any time they entered the Building: Judgment §212. The IO now makes much of knowledge at time of construction. That is not necessary, but the IO was undoubtedly aware and stood by as the A Signs changed and new A Signs were installed from time to time over the years. Plainly the IO was aware of sufficient facts to raise a doubt as to whether the A Signs amounted to an infringement and remained silent. Coupled with the fact that they have knowledge of the terms of the DMC, it is fanciful to suggest they were not aware of matters to raise a doubt as to an infringement.

38.  The IO points out that it had demanded license fees for the C Signs since 2012 and communicated with R1 and R2 on enforcement rights, which acts are inconsistent with passive encouragement. They demonstrated the IO’s active assertion of its property rights over the 1/F external walls. The IO continues:

(1) Mr Darwin Cheung of R2 admitted upon receiving the license fee request, he began to doubt R1’s entitlement to treat the 1/F external walls as its own. The IO followed up with IPIL, R1’s agent in writing including by solicitors Messrs SH Chan & Co letter on behalf of the IO explicitly asserting ownership of the 1/F wall, Mr Wan of R1 confirmed these letters were received by R1 at the time.

(2) R2 became aware of the dispute over ownership and enforcement rights and its shop staff began paying licence fees to the IO for signage C in the same area, from 2013 onwards. This conduct is inconsistent with any reliance on a belief that the IO had relinquished enforcement rights. It undermines any claim of “encouragement” or assurance through silence.

39.  The Respondents reply, that the IO’s demand for licence fees for the C Signs and its communications with the Respondents since 2012 cannot negate its passive encouragement.

(1) The IO (as well as other owners) had not acted for 50 years before making any demands over any signage installed by the Respondents until 2012: Judgment §179(5). This long silence must on any view have amounted to an assurance that the IO would not object to the erection of signage.

(2) Even by 2012, the IO only made demands over the LONGINES Sign (a C Sign) but not the A Signs: Judgment §179(7)(iv). These demands therefore fortified the position that the IO would not object to the A Signs.

(3) R2’s reaction after receiving the IO’s demand for licence fees in 2012 is immaterial:

(i) The tribunal expressly referred to Mr Darwin Cheung’s evidence in this respect: Judgment §111. He began to have doubts about R1’s ownership of the 1/F external walls after the IO’s demand in 2012. This illustrates precisely that the IO’s silence before 2012 had led on the Respondents’ mistaken belief.

(ii) The tribunal found that R2 paid the modest licence fee for the LONGINES Sign to avoid unnecessary disputes with the IO, and that R1 had not been aware of the payment: Judgment §171(4). The payment did not show that the IO’s inaction did not operate as a passive encouragement on R2, still less R1.

(iii) In any event, R2 only became a tenant in 2010. R2’s belief would not stop the IO’s long silence in the previous 50 years from operating on R1 and its predecessors.

40.  I maintain my view set out in the Judgment and by the Respondents above. The IO’s demand for fees from R2 for C Signs cannot assist the IO, and really is grasping at straws, after decades of failure to make any demand and allowing R1 to display the A Signs. The correspondence only latterly raised 1/F wall rights and could not change its previous stance in respect of the A Signs. It was far too late to somehow retrospectively undo the passive encouragement given for decades.

41.  The IO also submits that the tribunal failed to distinguish properly between the principles governing estoppel and mere inaction. There was no conduct by the IO that could be reasonably understood as an assurance and the inaction of the IO could not amount to assurance/ promise given the demands for licence fee in 2012 (for a C Sign). Even if there had been some initial ambiguity it was dispelled long before 2018. I cannot accept I failed to distinguish such principles. The principles governing estoppel were set out. The IO’s argument that its inaction did not satisfy the material element of estoppel was rejected. I do not accept there was simply some “initial ambiguity”. The IO did nothing for decades, failing to take any material action at all, while carrying out its role and when it finally did take issue with signage and demand a fee, it was only in respect of the C Sign, thereby not only perpetuating its stance on the A Signs, but reinforcing its position that it had no objection to the A Signs. I also rejected the IO’s mistake and confusion excuses: Judgment §179(7)(iv).

42.  The IO submits that the tribunals’ finding of passive encouragement should be reconsidered, being a misapprehension of the IO’s statutory position and disregarded critical evidence demonstrating the IO’s assertion of its rights. I did not disregard the evidence of the IO asserting its rights. In my view what the IO finally did was too little too late to counter or even undermine the consequences that flow from the preceding decades of failure to take action.

43.  The IO asserts that the Respondents’ proprietary estoppel defence fails at the first limb. While the Respondents submit it is plainly open to the Presiding Officer to conclude from the evidence that the IO’s long inaction, despite its clear knowledge of the A Signs, had amounted to passive encouragement. I am not persuaded that my conclusion on the evidence may be wrong. Indeed, it is hard to see how it could possibly be otherwise.

44.  I took all of the evidence and arguments into account, including those now relied upon under Ground 2, and found that the more than 50 years of silence here constituted passive encouragement. In my view this finding of fact is evidence based and could properly be made, so not an error of law. Therefore, I hold that there is no reasonable prospect of success in respect of Ground 2.

GROUND 3: PROPRIETARY ESTOPPEL MISTAKEN BELIEF

45.  Ground 3 is that the tribunal erred in law in finding that the Respondents held a mistaken belief that R1 had ownership or the right to control the use of the 1/F external walls prior to 2018. The finding which underpinned the tribunal’s conclusion on proprietary estoppel, was irrational and/or unsupported by the evidence. Alternatively, the tribunal failed to properly consider key factual material.

46.  The Respondents repeat that, similar to Ground 2, Ground 3 only relates to proprietary estoppel and would not alter the conclusion that the IO’s claims are barred by acquiescence or laches.

47.  The IO submits that the Respondents relied heavily on Mr Robert Kiang of R1 to support the long-term belief in R1’s rights over the 1/F external walls. Yet Mr Kiang had resided mostly overseas since the 1960’s and had no role in the day to day management of R1. The IO asserted that Mr Kiang would not know if there were complaints earlier, but I had to point out that not even the IO had alleged or adduced evidence of any complaint prior to the 2010s: Judgment §114. His sporadic visits and limited involvement was said to render his evidence inadequate to establish R1’s institutional belief. The visits were not sporadic, He would even stay in an apartment in Nathan Road and walk across the road to the Premises to conduct Mr Lee’s business. Mr Kiang had first-hand knowledge of the history and could give evidence spanning decades. He had since 1955 worked for and was involved with the late Mr Lee and his business, up to date, first as an employee and now as a director. My independent findings are at Judgment §§92-93.

48.  Yet the IO contends that there is more reliable evidence undermining any belief in R1’s ownership, but this from witnesses who only have any personal knowledge since the 2010s. Further, the IO’s witness Mr Hamilton Lo explained he had to replace the intended witness Mr Chan, who resigned after filing a witness statement, but before trial: Judgment §§17, 179(3). The documents relied upon include the lease between R1 and R2 dated 19 March 2010 renewed in 2015, with clause 2(ee), which obligated R2 to remove signage upon the IO or Manager’s request. The IO says this was a lawyer approved clause specifically addressing signage on the external walls that shows a clear acknowledgement of the IO’s authority over the 1/F external walls.

49.  Similarly Mr Darwin Cheung of R2 admitted he knew in 2015 that the IO might ask for the signage removal due to UBWs but he did not query as to why this could occur if R1 was the owner, further undermining any consistent belief in R1’s ownership. In my view clearly this could occur because the IO and Manager have duties under the DMC and BMO and are responsible for, inter alia, management and protecting the owners, who are tenants-in-common of the land and building, against enforcement action of any sort. Of particular concern must always be Building Authority orders registered against the property and to ensure that the Government lease is not at risk. The IO is entitled to ask any owner to remove UBWs, whether the owner had exclusive use or possession of an external wall area or it was common parts. It was reasonable for Mr Darwin Cheung to act as he did and it does not call his credibility or his and the Respondents’ beliefs and case into question.

50.  In 2012, the IO demanded licence fees for Sign C4. Mr Wan confirmed receipt. R1 raised no objection nor reiterated prior claims of ownership. That silence is said to be inconsistent with a genuine belief in ownership. On the other hand, R2 began paying licence fees for the C Sign from 2013, and the IO issued receipts. The IO submitted that these payments by R2 and known to Mr Cheung of R2, signify acceptance of the IO’s rights over the 1/F external walls. I cannot agree. The licence fee only related to the small C Sign. At the same time the more prominent A Signs were displayed over a much larger area, but the IO made no demand for a licence fee for the A Signs. The fact the IO made no demand in respect of the A Signs must reinforce the belief that the Respondents were entitled to leave the A Signs in place without payment of any fee, that the IO had no issue with the A Signs at all: Judgment §§168(1)-(2).

51.  It was not until later, in particular 2019-2020, Mr Cheung of R2 consulted R1 on who has title of the 1/F external walls. The IO also relies on a message dated 23 October 2019 from Mr Darwin Cheung telling Mr Chan of the IO that he was studying who has title: Judgment §127. He then informed the IO that R1 did not own the signage area and R2 was willing to rent it. A draft licence agreement followed. R1 never objected nor asserted any rights during those negotiations.

52.  According to the IO Mr Alex Tse of R1 gave contradictory and evasive evidence. He first denied knowledge of the IO’s position until trial, then conceded awareness in 2019 when shown contemporaneous emails. The IO says that he could not justify R1’s inaction or explain why R1 did not dispute R2’s decision to rent space directly from the IO.

53.  I fully considered each of the matters that the IO argues the tribunal failed to give due regard to.

54.  The Respondents reply that I considered the above factors and reached a reasoned and rational finding that I was plainly entitled to reach:

(1) The Presiding Officer dealt with each of these factors in the Judgment: §§114-137, 170-172. This by itself shows that she did not fail to consider the above factors.

(2) The IO made no attempt to explain why the findings on these factors are irrational, and resorted to rehash its arguments on the inferences to be drawn from these factors.

55.  The Respondents submit that my findings are well-justified for the following reasons:

(1) First, it was explicitly recognised that Mr Kiang was not in Hong Kong constantly between 1961 and 1984. Nonetheless it was found that his evidence was not limited for this reason, as he had been working for or been involved with the late Mr Lee and his businesses since 1955: Judgment §93.

(2) R1’s belief as to its right over the external walls was a matter which spanned over decades. Mr Kiang was involved in the businesses since the 1950s. The mere fact that he was based elsewhere between 1960s and 1980s would not significantly undermine his knowledge of R1’s belief, especially when he still stayed in Hong Kong for at least one to two months every year.

(3) Second, the Presiding Officer considered the effect of clause 2(ee) at length at Judgment §170. The inclusion of the clause into the lease agreements were agreements between R1 and R2 providing for contractual allocation of risk inter se. The IO was not a contracting party. The inclusion of the clause could not be taken as R1’s recognition that the IO was entitled to enforce against the signage: Judgment §170(2).

(4) Third, Mr Darwin Cheung’s admission that he knew that the IO might ask for signage removal in 2015 (when the lease was renewed) did not undermine R2’s belief in R1’s ownership or authority to install signage at the 1/F external walls. The IO neglected to deal with the fact that Mr Darwin Cheung also explained that he had understood that the IO might require the removal if, for example, the signage were unauthorised building structure: Judgment §170(2)(ii). This explanation was entirely credible, and showed that even if Mr Darwin Cheung considered the IO might request removal of the signage, it did not mean that he believed that R1 was not entitled to install signage at the 1/F external wall.

(5) Fourth, the Respondents reaction to the IO’s demand for license fees for the LONGINES sign (namely, C4 Sign) was unremarkable. The demand did not relate to the A Signs: Judgment §171. In particular, the Presiding Officer noted that R1 did not know that R2 in fact paid for the license fees until recently: Judgment §171(4). The fact that R1 did not object to the IO’s demand in 2012 could not reflect on its belief over entitlement to install the signage at the 1/F external walls, especially the A Signs.

(6) Fifth, the Presiding Officer also found that R2’s attempt to negotiate with the IO between 2019 and 2020 did not mean that it was conceding that the IO was right to demand removal of the A Sign, but only that it had made a commercial decision to seek to resolve the issue by paying a modest sum to the IO. The finding was clearly supported by Mr Darwin Cheung’s evidence: Judgment §172. In any event, R2’s stance could not affect R1’s belief: Judgment §172(3).

(7) Sixth, in relation to Mr Alex Tse’s credibility, the Presiding Officer has already explained that she accepted Mr Tse’s evidence, and did not find him to be an evasive witness: Judgment §94. The tribunal is clearly in the best position to assess a witness’s credibility, and the IO has not pointed to any factor which shows that the tribunal’s assessment is a plainly obvious error: cf Oriental Moon Limited §29.

56.  Mr Law submits that taking all the above together, it is more probable than not that the Respondents did not genuinely or reasonably believe R1 owned the 1/F external walls. The tribunal’s finding to the contrary is said to be unsupported and irrational by not meaningfully engaging with the above evidence with analysis (see §170 Judgment reproducing R’s written Closing Submissions as part of the tribunal’s reasoning), thereby committing an error warranting appellate correction.

57.  The irrationality alleged is that I accepted the Respondents’ submissions without separate analysis. I had in fact considered all of the evidence, including that relied upon by the IO, and having reviewed my note of the evidence I was satisfied that any evidence I relied upon stated in submissions was accurately identified. Where my note differed from the IO or Respondents’ version I used my note. For example in respect of Mr Kiang’s evidence. It must not be overlooked that R2 was a tenant. R2’s concern was to be able to advertise on the walls. Ultimately, what mattered to R2 was that no one prevented it advertising its business, rather than who had legal ownership of the walls. It made its own commercial decisions in its own best interest. R2 was entirely independent of R1: Judgment §96. R2 only started to study who had title in October 2019: Judgment §127. Material independent findings include on Mr Kiang and R2 making a commercial decision to pay a modest sum: Judgment §§92-93, 172.

58.  The facts and matters at Judgment §170 are all supported by the evidence and proper findings. I was persuaded that they supported and logically led to my findings. Cumulatively they were entirely persuasive.

59.  After considering all submissions of both the IO and the Respondents, I found the Respondents’ explanation of the evidence compelling, and certainly more persuasive than that of the IO. In my view the Respondents’ analysis was the proper one. I was persuaded that the Respondents undoubtedly reasonably believed R1 had ownership or the right to use the walls for the A Signs. Beyond consideration of the evidence and the submission there was no further analysis required.

60.  In so far as the IO’s appeal point is that I did not give “due regard” to those matters, the IO is taking issue with the weight I attached, which the IO considers to be insufficient.

61.  The Respondents submit that even taking the IO’s case at the highest, it only means that the Presiding Officer should have ascribed different weight to particular pieces of evidence. In the absence of palpable errors, the appellate court would not interfere with the trial judge’s assessment of the evidence or the weight attached to a particular piece of evidence: China Gold Finance Ltd v CIL Holdings Ltd & Others CACV 11/2015, 27.11.2015 §16. I agree that the IO has failed to demonstrate any such error, still less to show that its reading of the evidence is the “true and only reasonable conclusion”: cf Kwong Mile Services Limited §32.

62.  My findings were supported by evidence. I had regard to relevant factors and independently assessed the evidence. Standing back, my view remains that an entirely reasonable conclusion on the evidence is that R1 held such a mistaken belief for decades. In so far as irrationality is said to arise from my accepting the reasoning and position of the Respondents, I was satisfied that the evidence supported the points, which were well made, articulated with precision and persuasive. I maintain my assessment of the evidence and weight to be attached. Therefore, I find that Ground 3 has no reasonable prospect of success.

GROUND 4: PROPRIETARY ESTOPPEL DETRIMENTAL RELIANCE

63.  The IO argues that even if there had been a mistaken belief of the Respondents, the tribunal erred in finding that such mistaken belief held by the Respondents regarding ownership of the 1/F walls or their right to erect signage thereon, was induced by the IO’s conduct, and hence caused detriment to the Respondents. On the contrary, the belief and detriment stemmed entirely from the Respondents own failure to verify R1’s legal position, without any representation or acquiescence by the IO. I disagreed. Given that R1 was not trying to sell (and is not making a counterclaim), it is clear that legal ownership was not of primary importance. The real issue was the uninterrupted right to display the A Signs. That did not depend on documents of title but the stance and action of the IO and other owners. There was no reason for R1 to verify the legal position according to conveyancing documents when the IO was allowing the display of the A Signs.

64.  Mr Kiang testified that the late Mr James S Lee had always believed himself or his company to be the owner of the 1/F and the G/F premises and their external walls. The belief may have been formed on an incorrect assumption that the rights attaching to the 1/F external walls mirrored those over the G/F, as the DMC expressly granted signage rights on the G/F external wall to the G/F owner. The IO submits that there is no evidence that the IO ever encouraged or induced this assumption.

65.  Mr Wan confirmed that R1’s understanding of ownership did not depend on the IO’s stance. He agreed that R1’s right to put up signage was not based on the IO’s consent or inaction.

66.  The Judgment §173(3) findings that R1 would have sold the Premises had it known about the IO’s enforcement rights also lacks evidential foundation. Mr Law submits that Mr Kiang admitted that this was merely speculative or an after-thought, instead of actual missed opportunity to sell the premises. He had no role in such decision and his evidence on this was unchallenged. Further, there was no evidence that the late Mr Lee ever considered selling the Premises due to the IO’s position. After Mr Lee’s death in 2009, Mr Kiang said he was not responsible for sales decisions and could not attribute any non-sale to the IO conduct.

67.  In any event, no concrete evidence of detriment was presented. At most the Respondents raised speculative assertions of forgone investment opportunities, but at the same time the tribunal did not actually regard the long term profit that R1 had received by renting out the premises including its tenants who gained benefit from unauthorised signage and hence added value to R1’s rental yield. I disagreed: Judgment §§173(2)-(5), 180(4) and 185(4)-(5).

68.  As such the tribunal erred in law in concluding that the elements of proprietary estoppel, especially reliance and detriment, had been met on the basis of the non-existent or speculative detriment. The absence of causative link between the IO’s conduct and any detriment negates the limb of estoppel. The belief was self-generated, not induced. I cannot accept that the belief was self-generated. I repeat, the Respondents did not rely on construction of the title documents. R2 first looked into the title in 2019: Judgment §127. R1 relied upon the IO and other owners effective consent. The IO concludes that there was no actionable reliance on the IO, nor any resulting prejudice that would render it unjust for the IO to enforce its rights.

69.  The Respondents reply is in three parts, as follows. First, the Respondents remind the tribunal that Ground 4 again only relates to the element of detrimental reliance in proprietary estoppel. It does not affect the other defences.

70.  Second, the Respondents submit that the IO’s argument that there is no evidence that it had ever encouraged or induced R1’s assumption that it had the right attaching to the 1/F external walls is plainly erroneous:

(1) The IO’s argument ignores the tribunal’s finding that the IO’s prolonged failure to raise objections had amounted to representative or passive encouragement of the Respondents’ belief.

(2) Once the IO’s arguments on Grounds 2 and 3 above are rejected, it must follow that there was evidential basis for the finding that the IO had encouraged or induced R1’s mistaken assumption.

(3) The IO next refers to Mr Wan’s evidence that R1’s understanding of ownership did not depend on the IO’s stance to argue that there was no reliance or causative link between the IO’s assurance and R1’s mistaken belief.

(4) This is yet another attempt by the IO to rerun its argument before the tribunal. The Presiding Officer has already considered this submission: Judgment §§145, 185.

(5) Mr Wan’s evidence should also be considered against the following matters:

(i) The IO’s assurance did not have to operate as the single or primary motivating factor behind the Respondents’ actions; it would suffice if the assurance induced or influenced the Respondents actions: Wilken & Ghaly, The Law of Waiver, Variation and Estoppel (3^rd edn.) §11.54: Judgment §185(1).

(ii) Mr Wan was only confirming that he had all along understood that the late Mr Lee or his company to be the owner of the 1/F external walls, and that the right of the company to put up the signage did not depend on the IO’s attitude. Mr Wan was thus explaining his personal understanding only, and not whether R1 had formed its mistaken belief in reliance on the IO’s passive encouragement.

(iii) Even if Mr Wan was speaking to R1’s belief, he was only saying that R1’s right would not have depended on the IO’s attitude (as it was the belief that R1 had such right as owner of the 1/F external walls). This did not mean that R1’s mistaken belief was not encouraged or induced by the persistent lack of objections from the IO or other owners in the first place. For example, one’s belief that something is so, could logically be contributed to by the fact that lots of other people believe it to be so, even though logically whether it is so does not depend on whether other people believe it. Other people’s belief very often affect one’s own belief.

(iv) Further, Mr Kiang explained in his witness statement that R1 had long understood that it would be allowed to erect the signage at the external walls given the lack of objections of the IO and other owners throughout the years: Kiang §13 [A/9/131]. He also explained during cross-examination that the late Mr Lee would probably have decided to sell the Premises if the IO had intervened earlier: Judgment §§169(2)-(3), 173(2).

(v) Thus, in the totality of the evidence presented, the conclusion that R1 had relied on the IO’s encouragement or inducement over the years must at least be reasonable and beyond appeal.

71.  The IO’s argument has not changed my view regarding inducement and reliance set out in the Judgment and by the Respondents above.

72.  Third, the Respondents submit that it must be open for me to accept the evidence on detriment:

(1) R1 was found to have suffered detriment by passing up opportunities to sell the Premises to unlock its funds for other uses or investments: Judgment, §§180(4), 185(5), and R2 by expending costs in installing the signage over the years: Judgment §173(5).

(2) Detriment is not a narrow or technical concept confined to expenditure of money or other quantifiable financial detriment: Cheung Lai Mui v Cheung Wai Shing (2021) 24 HKCFAR 116 §24. The Respondents’ detriment is capable of supporting a proprietary estoppel.

(3) The IO now argues that Mr Kiang’s evidence on passing up investment opportunities was merely speculative and an afterthought, and that there was no evidence that the late Mr Lee ever considered selling the Premises due to the IO’s position. Mr Man SC submits that this is a typically hopeless challenge against a finding of fact by the tribunal:

(i) Mr Kiang never accepted that his evidence was speculative or an afterthought.

(ii) Mr Kiang’s evidence that R1 would probably have sold the Premises had the IO intervened earlier is credible. He clearly explained that the late Mr Lee saw the premises as an important investment property. It also made plain sense that the Premises could have been realised for capital which could have been used otherwise.

(iii) The evidence is perfectly capable of being accepted without requiring Mr Kiang to enumerate the opportunities passed over. There was no challenge of this evidence in cross-examination. He was not tested in cross-examination by being asked to give particulars of opportunities.

(iv) One could easily understand why such questions were not asked: the actual reality was that the IO’s position led R1 to believe that it did not have to sell the Premises. Hence R1 obviously did not actively seek to do so in the actual reality.

(v) The gist of Mr Kiang’s evidence is therefore that the late Mr Lee saw the Premises as an investment (which is factual and which is clearly capable of being accepted); and that an investment property could clearly have been sold in Hong Kong (which is a proposition again clearly capable of being accepted).

(vi) There is also no merit in the IO’s suggestions that the Presiding Officer did not have regard to the long-term profit that R1 had received by renting out the premises together with the signage. While countervailing benefits are relevant, there is no requirement that the detriment must be proportional to the countervailing benefits. The tribunal would also not embark upon a quantified comparison between the detriment and the countervailing benefits: Cheung Lai Mui §24 [R315]; Mak Ho Fung v Mak Kai & Others, CACV 246/2011, 5.12.13 §37 (Cheung JA). The Presiding Officer referred to these principles, and concluded that the Respondents’ had suffered detriment in their reliance on the IO to resile from its assurance.

73.  I agree with the Respondents that the IO has not shown a failure to consider relevant factors in finding detrimental reliance and/or an error of law. All points now raised were considered. While the treatment of past illegality was the most significant issue in the case, under the estoppel defence the element of detrimental reliance required closest scrutiny and was cause for pause. Reliance was clearly proved. Detriment was the real issue. Subject to the following, I agree with the points made by the Respondents, which accord with my findings and the Judgment. Contrary to the Respondents’ position, my note of the evidence showed some inconsistencies between Mr Kiang’s witness statement and oral evidence cross-examination by Mr Law: Judgment §93. However, after review of all the evidence I decided that this was not fatal to the Respondents’ case: Judgment §§173(2)-(3). His views were based on decades of knowledge, including of the A Signs, which were maintained and interest in the Premises due to the new MTR immediately outside. The applicable tests as set out by the parties and each element of estoppel listed by the Respondents were correctly stated according to the authorities, including for detrimental reliance. In determining detriment I was not to embark upon a quantified comparison between the detriment and the countervailing benefits. I did consider countervailing benefits. For example, the benefit of the A Sign against maintaining them and the difficulties that R2 was suffering during challenging times for retail, while still being liable under the lease, in addition to the sums expended by R2: Judgment §§173(3)-(5), 180, 185(5). On my analysis, accepting the principles stated in submissions and applying those tests strictly I found they were satisfied on the evidence, so found that detriment was proved.

74.  There can be no doubt but that the IO has changed its stance. The Respondents cannot turn back the clock. The detriment is irreversible: Judgment §180(4). The element of detriment must be judged at the moment when the person who has given the assurance seeks to go back on it. The tribunal has to look at the matter in the round and undertake a broad inquiry as to whether repudiation of an assurance is unconscionable in all the circumstances: Judgment §76. If the Respondents had known the IO’s new stance earlier they could have ordered their affairs accordingly. For example, if because of a change of stance by the IO R1 has to enter the market now, or at a time when it is down, it can have cause to complain that had it known earlier it could have sold at a better time or changed its business model. There were times when there was particular interest in the Premises, such as when the new MTR was opening adjacent to the Premises. Markets go up and down but the injustice stems from the IO’s change of stance, which has impacted adversely on the Respondents’ position. The IO has caused Respondents to suffer detriment such that it would be unjust to allow the IO to go back on its position and the repudiation of the assurance is unconscionable.

75.  Therefore, in my view Ground 4 has no reasonable prospect of success.

GROUND 5: FAILURE TO INDEPENDENTLY DETERMINE ISSUES

76.  The IO accepts that I made independent findings in respect of some issues, but submits that reproduction of the Respondents’ written submissions in the Judgment gives rise to legitimate concern that the tribunal has not engaged in a sufficiently robust independent analysis of the issues before it. However, the treatment of the IO’s submissions was the same as that of the Respondents’. I had set out submissions from both sides. Revisiting the Judgment, it is too long, but that is the product of considering every point of both sides, not a failure to do so.

77.  I wholly appreciate that this is a serious matter. I fully engaged and conducted my own independent analysis on every issue. I also appreciate that that must be seen to be so objectively. There was no failure to independently analyse, reason or determine each issue, as shown below.

78.  The IO accepts that I made independent findings in respect of issues, such as the construction of clause 8 of the DMC, mesne profits and certain aspects of relief, but claims these findings do not go to the heart of the substantive dispute. The IO alleges they were peripheral findings and even though they have been independently reasoned, cannot offset the overall impact the use of Respondents’ submissions in respect of the central questions in dispute. Further, the IO submits that the doctrine of lost modern grant was a key issue but that I expressly refrained from reaching a definitive conclusion: Judgment §§262-263. The appearance of judicial neutrality is undermined when significant tracts of reasoning essentially mirror one parties’ submissions particularly where those issues involve both legal and factual controversies. The failure constitutes procedural unfairness and further vitiates the Judgment. If not remedied by a retrial, the Court of Appeal should review the case de novo: Kwan Kwai Lin & Another v Yeung On Ki [2025] 2 HKLRD 170.

79.  The Respondents submit that this ground plainly has no merit. This argument should not have been run.

80.  The principles are well established:

(1) The fundamental question is whether the Judge has applied an independent mind to his judicial function and is seen to do so.

(2) In ascertaining whether there is judicial copying, the court looks at the importance and quality of the Presiding Officer’s own reasoning instead of the percentage of copying.

(3) An order for re-trial should be a remedy of last resort.

81.  The Respondents submit that there is no merit in the IO’s arguments and that I clearly applied an independent judicial mind in reaching the decision:

(1) A large part of the alleged reproductions are references to the issues at trial, the relevant legal principles, and the parties’ submissions. These matters are not controversial and any reproduction carried little significance: Kwan Kwai Lin §29.

(2) The Presiding Officer also set out her own survey of the case law, including on key issues such as illegality: Judgment §§192-202.

(3) The Presiding Officer also added her own analysis on the evidence: e.g. Judgment §173(2).

(4) Even where the Presiding Officer adopted the Respondents’ analysis, she nonetheless:

(i) Added her own observations on the evidence: eg., §173(2);

(ii) Prefaced the analysis with phrases such as “I find that” or “I am satisfied that”: e.g., §§179-180, 184-185, 191; and

(iii) Came to her own conclusions: e.g. Judgment §§187, 230.

(5) In fact, even the IO accepts that the Presiding Officer has made independent findings on a number of issues. That itself should dispose of any suggestion that the Presiding Officer has abdicated her judicial function or may be perceived to have done so.

(6) The IO’s argument then seeking to dismiss these as “peripheral issues” has no merit:

(i) Illegality is on any view one of the central disputes between the parties. In fact, the analysis herein shows that without Ground 1 (concerning illegality), Grounds 2 to 4 of the proposed appeal are academic. The Presiding Officer carried out detailed analysis on the case law.

(ii) Lost modern grant is one of R1’s defences. The Presiding Officer’s refusal to reach a definitive conclusion on the issue: Judgment §§262-263 amply shows that she did not adopt the Respondents’ case in full, but was careful in assessing the issues material to her determination.

(iii) Relief is the ultimate question to be determined. The Presiding Officer’s findings on relief clearly show that she had applied independent judgment to the case.

82.  Further, the Respondents considered that I took a keen interest in the submission in the course of the trial:

(1) For example, the Presiding Officer actively engaged with counsel on pertinent matters during closing submission, including whether the DMC made provisions for breach of the BO, whether the incorporation of the IO would make any difference if the owners had already acquiesced to the signage before then, whether she was entitled to take into account loss of opportunity on R1’s part and the precise scope of relief for which Respondents were contending.

(2) The Presiding Offer’s engagement during the trial further shows that she has been exercising an independent judicial mind throughout the proceedings.

83.  I note that the IO has listed paragraphs of the Judgment that were agreed or undisputable in the draft Notice of Appeal to support this ground of appeal. I fail to see how it can be objectionable to set out agreed facts and statements of issues as set out in parties submissions in a judgment. Further, where I have repeated the same principles of law or facts, the IO lists that as additional ground to complain, even when it is agreed or indisputable facts such, as iterations of the lengthy period that the A Signs were displayed and that the IO did not take issue with any signage until 2012, and the A Sign until 2018-2019. Further, where I set out or rely on legal principles, for example from Monat, the IO treats those as being taken from the Respondents’ Submissions, rather than from Monat, notwithstanding that I independently addressed them.

84.  In respect of the law, I read the authorities, checking that the principles as set out in the submissions were accurately stated. I independently determined which passages in which cases were material to my analysis and warranted quoting in the Judgment. The Respondents Opening Submission and Closing Submission did not quote paragraphs from authorities, save two paragraphs in their Closing Submission, being at §34.4(ii) Sarat Chunder Dey v Gopal Chuder Laha (1892) LR 19 IA 203 (PC) per Lord Shand and, at §54.5(ii), Ryder Industries Ltd v Chan Sui Woo (2015) 18 HKCFAR 544, §1 per Ma CJ and a paragraph on expert evidence, that I did not cite. Whereas, in the Judgment I quote extensively from the authorities that I considered important to my analysis, reasoning and decision. This included authorities cited and quoted by the IO. I was conscious that my citations were lengthy, particularly in respect of Monat and Henderson. So I omitted some paragraphs or parts, as shown by “…”. I would not have been able to do that had I not conducted my own independent analysis and made my own determinations on what was relevant to my reasoning.

85.  In respect of the evidence, I reviewed my note to check that evidence that the IO and the Respondents referred to and that I was relying on, was accurately recited. I relied on the evidence according to my note. I was applying my mind to the detail of the evidence and what was actually said, to determine whether it was credible, my findings of fact and the consequences, whether the IO’s case was made out and whether the Respondents had adduced evidence to satisfy the elements of the defences relied upon. Particularly the evidence of Mr Kiang and Mr Tse, because of inconsistencies and that their evidence was contentious. I expressed my independent views and findings on the evidence at different parts of the Judgment, not necessarily repeated under each issue. For example, under illegality I made it clear that I did not think much of the IO’s explanation of the delay in acting and excuses about confusion and misunderstanding, relying on the Convey contract. I found that if the IO was unsure as to what the Convey contract covered, but looking at the documents was too taxing for the IO, they could simply have asked Convey: Judgment §§138-142, 179(7)(iv). All my independent assessments and views of evidence applied under each defence and throughout, even if they were not repeated under illegality, acquiescence and proprietary estoppel separately.

86.  I do not agree that the matters the IO accepts I properly determined independently were peripheral. And I reject the submission that there was any issue which I failed to independently analyse and determine. I shall address the Issues in turn: List of Issues at Judgment §45.

87.  Issue (1) and Issue (2) were resolved shortly but stated on the basis of my own understanding: Judgment §§35-38.

88.  Issue 3 was in respect of clause 8 of the DMC. It was not peripheral. It was a substantive issue, independently analysed and determined in the IO’s favour: Judgment §§39-47. The IO accepts my determination was independent.

89.  Issue 4, whether the IO could legally assent, lay by or acquiesce in the construction, erection or retention of the Unauthorised Structure (A Signs). I considered this the most important issue in the case. The most significant legal issue in the case was the treatment of past illegality. I did not simply apply the Tinsley test or disregard the illegality as part of the “factual back ground”. The Respondents case was first and foremost that Patel did not represent year zero so, in effect, the tribunal could rely on past decisions in this area. After reading the authorities and considering the submissions of both sides, I actually accepted the IO’s approach that the applicable test was the Patel test and that the proper approach, was first to apply the Patel test and Monat. I did not simply follow the Respondents’ approach that Petal did not represent year zero, so I was able to go to the preceding authorities, which the Respondents went to and addressed first. The Respondents also explained the place of previous decisions under the Patel test by virtue of Henderson.

90.  Having determined that the Patel test had to be applied, I set out the steps to be taken from Monat: Judgment §229. I recited paragraphs of Monat extensively to ensure that the test was faithfully applied. None were recited in the Respondents’ Submissions. I tried to reduce the extent as seen by “…”: Judgment §§193-197. To my mind the most crucial step, and upon which it was possible that the case would turn, was the second step. I analysed the underlying policy both here, in respect of acquiescence and in Monat, in respect of adverse possession and the finding in Monat in respect of the policy: Judgment §195, in particular Monat at §36.4(b). I came to the view that there were some similar underlying policy concerns relevant in both adverse possession and acquiescence, namely the significance of delay or a long established state of affairs. The longer the delay or more “stale” the claim, the more inequitable it would be to allow a stale claim to be prosecuted and granted. I found that “Analogous to adverse possession, some similar policy concerns arise, denial would be to encourage stale claims.”: Judgment §229(5). The determination of the similarity was the culmination of my own analysis. Had I not conducted my own analysis for application of the Patel test I would not have been able to come to that conclusion. This is not peripheral. This second step in the Patel test was the point upon which the entire case could turn, in my view. If the Respondents did not pass the second step, the defence of acquiescence would fail. In so far as this Ground looks to the importance and quality of my own reasoning, I considered that this was the most important issue in the case. I do not believe the quality of my own reasoning can be faulted: Kwan Kwai Lin. I came to the conclusion that the policy did not require the defence to fail.

91.  The IO applied the range of factors test, and at the first step referred to the same policy considerations under the BO and to UBWs, just as I did. However, under the second step Mr Law submitted that there were no counter policy considerations and that the second step was not engaged: Judgment §209. I disagreed.

92.  Under the third step proportionality, the IO submitted it was not overkill to “revert control” to the IO: Judgment §210. I found that the reality was that the IO had never had control of the A Sign wall area. The A Signs had been in existence for the entire working life of the building: Judgment §214. This was again independent analysis and determination objectively shown.

93.  Application of the Patel test steps was not peripheral. Indeed, Mr Law’s position at trial was that the crucial dispute was the law in respect of the defences. He considered that the most important determinations were whether the IO could have legally assented, lain by or acquiesced in their construction and erection before 2018 and or their retention after 2018 and that it was not within the IO’s power to acquiesce in their retention: Judgment §§53-55.

94.  Mr Law’s submissions on the A Signs, proportionality and step three included that there was “lesser” illegality in respect of past A Signs design. I was not prepared to make findings on the degrees of illegality, in circumstances where even the experts could not tell details from the photographs. I was throughout dealing independently with the evidence and arguments of the IO, as well as those of the Respondents: Judgment §§210(7), 211. I made clear my independent views on the IO’s submissions throughout. For example, I found the submission that the larger size of A Signs would have led to greater concern if the attention of the IO had been drawn to it at the time somewhat hollow, where the IO also submits that the A Signs were “huge”. The IO members or co-owners simply need to look up any time they approached the Building and they would see the A Signs: Judgment §212. My own assessment.

95.  Henderson was the answer, or way through, according to the Respondents. It provided the answer to the question of how the court was to deal with existing case law in light of the new Patel test for illegality. I read and independently considered the whether and how it should be applied in Hong Kong and, in particular the proper treatment of Lands Tribunal jurisprudence post-Patel. I considered the decision important to my analysis so quoted material passages from Lord Hamblen JSC’s decision in the Judgment: Judgment §§198-200. I did not revert to the Tinsley test. The IO refers to my reference to illegality being part of the “background” erroneously. I considered that fact in applying third step of the Patel test as to centrality: Judgment §229(6)(ii). I merely accepted that it was still necessary to look at the pleadings to know the case of each party, but that was not to revert to a pre-Patel test: Judgment §200.

96.  Whereas, the Respondents had first gone through all the cases, acknowledging that they were pre-Patel, but submitted that they remained good law and that Patel did not represent a clean slate, before also then going to the Patel test to show their place under the third step. The Respondents made extensive submissions on the effect of illegality being part of the “back ground” and went through what was and was not pleaded in the NOA and the defences in the NOO: Judgment §§218, 221-224. They submitted that the focus of the inquiry is the subject matter of the IO’s acquiescence or assent: Judgment §224(6).

97.  The crucial determination on this point was treatment of existing jurisprudence. After my analysis of all authorities, and considering the submissions, I set out my own independent decision, in particular in respect of Lands Tribunal jurisprudence, at Judgment §200. I do not believe the quality of my reasoning on this is questionable. Again, I reject the suggestion that my independently analysed determinations were peripheral.

98.  In sum, I followed the IO’s approach. However, the IO disagrees with the result of the Patel test second, and apparently the third, step. I maintain my findings, particularly because the possibility that I erred is alleviated by following the reasoning of Monat as to the BO policy. I do not believe that the quality of my reasoning at the second step can be impugned. While the facts that support the third step were undisputed or indisputable and independently considered and addressed.

99.  I still consider the illegality issue the most important and pivotal in the case. It was independently analysed and determined and objectively that can be seen to be so.

100.  Issue 5 was proprietary estoppel. If the defence of acquesence is upheld and draft Ground of Appeal 1 were dismissed, then the additional proprietary estoppel defence is academic. Grounds 2 to 4 would not assist the IO unless this Ground 5 and Ground 6 succeed. In addressing Grounds 2-4 above I have referred to my analysis, which includes matters that objectively show my independent analysis and determinations, which should also be considered under this Ground 5. I shall not repeat the same here.

101.  Issue 6 was framed “Whether the 1^st respondent has obtained a legal or quasi-easement to put up signs and displays at the relevant part of the external walls by the doctrine of lost modern grant”. Issue 6 was framed to require a determination of whether the 1^st Respondent had obtained a property right, namely a quasi-easement: Judgment §§213 - 263.

102.  I declined to determine the issue in circumstances where there was no counterclaim by R1 for such property right, or otherwise. I considered that the issues of law in the lost modern grant defence would be better determined in a case where there was an actual claim or counterclaim or relief sought. There may be factors that should, but would not, be taken into account where the issue is only raised as a defence, resulting in an unsatisfactory precedent, whilst it would make no difference to the outcome. Concerns as to what would follow here and of issue estoppel caused me to take the more cautious course: Judgment §263. I did considered whether there may be a similar problem with a finding of proprietary estoppel. I had questioned counsel on relief. If I were to accept the proprietary estoppel defence and dismiss the claim what of the future? The proprietary estoppel determination turned on fact, rather than law, and defensive rather cause of action estoppel was in issue, so I proceeded to make my findings. Having just gone through the arguments, principles and the Guest remedy of giving effect to the equity, I made clear here that meant refusing the claim, the effect would be to maintain the status quo: Judgment §§186-187. I was independently analysing the issues and how they interacted with each other.

103.  The IO fails to appreciate that it is to the IO’s advantage that I did not make a definitive finding on that defence. There should be no question as to my neutrality. If I had found that the defence was made out, it would be one more defence that the IO would have to overturn on appeal. Whereas, a finding that it failed makes no difference to the IO, because the effect is that R1 does not have lost modern grant as a defence. Given my decision on other defences a determination on lost modern grant would at best be academic.

104.  So there is no basis for the IO to complain that the doctrine of lost modern grant was a key issue but I refrained from reaching a definitive conclusion. The IO was not disadvantaged by this.

105.  Issue 7, the determination was necessarily short, but entirely the result of my own analysis: Judgment §§264-265.

106.  Issue 8, whether the IO should be entitled to mesne profits or damages arising from the Respondents’ breach of the DMC and or the BMO. I considered the submissions of both sides, the evidence and law, setting out my analysis and reasoning: Judgment §§273-280. In respect of quantum the IO was relying on an offer and the facts that I had already considered on other issues. The Respondents’ position included that there was “no evidence” of quantum or to prove the reasonable price payable for use of the 1/F external wall for advertisement: Judgment §§61, 279. I did not agree with the Respondents, that there was no evidence. I noted that an offer may, in certain circumstances be some evidence of market value at the time of offer: Judgment §280. The IO accepts that I did conduct my own analysis on Issue 8. I could not have done so if I was not on top of the evidence, conducting my own analysis and making my own findings on other issues.

107.  The IO raised an additional issue, being the IO’s alternative case. If the tribunal found there had been acquiescence, but not estoppel and lost modern grant were not made out, then relief similar to Hollywood Shopping Centre should be granted. The IO also warned against an apparent finding of adverse possession. I do not believe the IO takes issue with how I dealt with this part of the IO’s case. If the IO accepts that my analysis and reasoning on this was independent, it would know that, necessarily, I must have independently considered and analysed the authorities when determining the acquiescence and proprietary estoppel defences, to appreciate and address the alternative case and adverse possession argument. I did not simply state in the Judgment that the alternative does not arise.

108.  It seems that where I have found in the IO’s favour it accepts my analysis was independent, but not on some of my findings in the Respondents’ favour. In any event, in my view the IO takes a superficial approach. The most important issues and findings were in respect of illegality and whether that precluded the defence of acquiescence. Obviously I applied an independent mind to the analysis and determination of those issues. If Issue 5, proprietary estoppel is where use of parties submissions is objectionable, or the treatment of any element of that defence is in question, it would make no difference to the outcome and may be considered academic. It is regrettable that my effort to be comprehensive and ensure no failure to take any matters into account has opened the door to this ground of challenge. Particularly, when there was so clearly acquiescence and the Patel test shows the defence should not be defeated, therefore the result should not be disputable. In fact all issues were analysed, reasoned and determined independently. In my view this can also be seen to be so, objectively, on a fair reading of the Judgment. Therefore, I am not satisfied that an appeal on Ground 5 has a reasonable prospect of success.

109.  Despite my view that Ground 5 is not reasonably arguable and does not enjoy a reasonable prospect of success, I have considered whether leave should be granted under section 11AA(6)(b) of the LTO so that there can be no question of my objectivity, or any lack thereof. However, whilst the tribunal has jurisdiction to grant leave to appeal in the interests of justice, it should not be “overly generous; otherwise unmeritorious challenges would add to the costs to be incurred by the opposing parties and would waste court resources”: Dr Yeung Sau Shing Albert v Google Inc (No.2) [2015] 1 HKLRD 26 §33 (DHCJ Marlene Ng as she then was). I am of the view that the interests of justice do not require an appeal be heard on this ground.

GROUND 6: INTERESTS OF JUSTICE

110.  The IO also seeks leave to appeal under section 11AA(6)(b) of the LTO, that there exists some other reason in the interests of justice why the appeal should be heard. The Judgment is said to raise an issue of considerable public importance, namely the proper treatment of the equitable defences of acquiescence and proprietary estoppel in the context of UBWs. Particularly in relation to proprietary estoppel, where the “passive encouragement” (as the representation/assurance) and “mistaken belief” are solely based on the inaction of the IO. While the Court of Appeal in Yick Fung Holdings Ltd, in a costs decision addressed acquiescence simpliciter in a UBW situation, it did not address proprietary estoppel, which in terms of granting/ refusal of relief, are not the same. Otherwise there would not be two doctrines. The Respondents could just plead acquiescence simpliciter in their NOO, which has a lower threshold.

111.  The tribunal’s reliance on passive acquiescence in the face of apparent illegality is said to have created uncertainty as to the proper scope of equitable relief in UBW scenarios. The IO repeats it’s position is very different from a private party, in view of its statutory duties, as recognised by the Court of Appeal in Yick Fung Holdings Ltd, and the fact that its management committee members do not have direct financial/ proprietary interest in the matter. If the tribunal’s approach stands unchallenged, it may encourage unauthorised use of common parts based on mere inaction. That is a non sequitur. A party does know in advance of making unauthorised use that the IO will fail to take action. To the contrary, the availability acquiescence and estoppel may encourage IOs to perform their duties under the DMC and the BMO.

112.  The IO continues that the proper balance between the equitable doctrines and the statutory obligations in building management is a concern. The Judgment will prompt questions as to when past silence or past inaction by an IO would estop it from invoking DMC rights or performing its BMO statutory duties, even when the structure in question has been unauthorised. In my view existing authorities answer the said questions.

113.  The IO raises The Incorporated Owners of Hoi Luen Industrial Centre and Another v Ohashi Chemical Industries (Hong Kong) Limited [1995] 2 HKC 11 asking whether in a DMC without any covenant against illegal structure, is the proposition in Ohashi in fact incorrect or overly general because, on the Respondents’ line of thinking, when the breach of DMC complained of is not illegal structure, an IO is actually legally competent to authorise the existence of UBWs in common part? But assuming Ohashi was generally correct, does the Judgment mean the IO cannot enforce the DMC/BMO to regain control of a common part occupied by a co-owner by way of UBWs even though its inaction in previous years could not in law amount to acquiescence? Is the IO handicapped because the co-owner swiftly makes use of the minor works scheme to regularise it?

114.  The IO says that the Respondents’ emphasised that the crux of whether illegality would defeat the defence in this case is whether the right the IO tries to enforce (the covenant said to be breached) is a prohibition of illegal structure or merely a right to reserve common parts for common use. I do not think that correctly states the Respondents’ position. They made the point that there was no such prohibition in the DMC, so were able to distinguish that situation from the present, but it was not the crux of the matter. The IO’s Closing Submissions Annex 1, was a table considering cases involving breaches of DMC, whether the BMO/BO was involved and outcomes, said to show that the distinction may not be the governing principle in previous cases, or if such principle existed before Monat, has not been sufficiently analysed in those authorities. The IO is putting up strawmen. Any such principle is not in issue. The alleged doubt is said to be an important question of law, especially in view of the change from Tinsley to Patel, warrants more proper guidance from the Court of Appeal and would have a wide-ranging effect on building management in Hong Kong. I not do consider any further guidance on the impact of such a prohibition is required, but were guidance required it would be better provided in a case where there is such a prohibition in the DMC and turn on the wording of the particular prohibition and DMC. There is no such prohibition here, so Ohashi may be distinguished. The present case does not call for Ohashi to be reconsidered.

115.  The IO says authoritative appellate guidance and a definitive decision of the Court of Appeal on the interaction between proprietary estoppel, acquiescence and UBWs would be to the public advantage, when disputes over signage, UBWs and common part rights are frequent. Accordingly leave to appeal should be granted in the interests of justice.

116.  The Respondents reply that none of the legal doctrines or principles are decided for the first time in the present case, and or a question of importance upon which further argument would be to the public advantage.

117.  I agree with the Respondents for the reasons above, and in the Judgment, that first, on a true analysis, the present case does not turn on whether the IO would be barred from enforcing against UBWs.

118.  Second, the respondents submit, correctly, in my view, that the Court of Appeal decision in Yick Fung Holdings Ltd provides a complete answer to the issue whether illegality bars acquiescence over UBWs. As noted in the Judgment, there is nothing to show that Yick Fung Holdings Ltd is incompatible with Patel or Monat.

119.  The IO suggests that parties would benefit from appellate court guidance on whether illegality bars the separate defence of proprietary estoppel. However, the Respondents submit:

(1) The IO has not identified any reason why illegality should operate differently for proprietary estoppel as opposed to acquiescence or waiver.

(2) To this end, the Court of First Instance also found in Li lap Wai v Lee Tin Choi [2021] HKCFI 3923 that illegality would not bar proprietary estoppel. Similar to Yick Fung Holdings Ltd, there is nothing to show that the ruling is incompatible with Patel or Monat.

120.  The Respondents consider the “interests of justice” contended by the IO is highly similar to the grounds for leave to appeal to the Court of Final Appeal in Centre Chase Investment Ltd (No. 3). The Court of Appeal already dismissed the leave to appeal application in [2025] HKCA 505 per Cheung JA at §§4-5. I am bound to agree.

121.  The IO identifies the issue of public importance as the proper treatment of the equitable defences of acquiescence and proprietary estoppel in the context of UBWs. In my view the Court of Appeal has provided ample guidance. Monat provides the necessary guidance on the treatment of illegality. Monat has determined that the Patel test is to apply in Hong Kong. Monat shows how that test is to be applied: the facts concerned adverse possession and breach of the BO. The Patel test provides for different factual situations and policy concerns that may arise in other cases. Beyond that, the application of the Patel test to a given set of facts is not a matter that warrants leave on the alternative basis.

122.  The Patel test is applicable generally. The IO has not explained why proprietary estoppel should be singled out for separate treatment or require different guidance. The IO emphasises passive encouragement or mistaken belief, but there is abundant authority on the elements of proprietary estoppel. These matters then turn on the facts. Referring to the acquiescence defence here as “passive” acquiescence does not add to the point. I am not satisfied that there is some other reason in the interests of justice why the appeal should be heard.

DETERMINATION

123.  For the above reasons I am not satisfied that any of the draft Grounds of Appeal have a reasonable prospect of success or that there is some other reason in the interests of justice why the appeal should be heard. If I be wrong, and there were reasonable prospects of success, but only on Ground 2 , 3 or 4 or a combination thereof, it would not alter the outcome, so may be considered academic and leave to appeal may be refused. Therefore, leave to appeal is refused and the IO’s Summons is dismissed.

COSTS

124.  The parties agree that costs should follow the event. I see no reason to depart from that starting point. I order that the IO shall pay the Respondents’ costs on the District Court scale, with certificate for counsel, to be summarily assessed. The Respondents shall file and serve their Statement of Costs within 14 days hereof. The IO shall file and serve its List of Objections within 14 days thereafter.

ORDER

125.  I make the following order:

(1) The Applicant’s application for leave to appeal by summons dated 9 May 2025 is dismissed.

(2) The costs of the application be paid by the Applicant to the Respondents on the District Court scale with certificate for counsel to be summarily assessed.

(3) The Respondents do file and serve their Statement of Costs within 14 days hereof.

(4) The Applicant do file and serve its List of Objections within 14 days thereafter.