XCHRX THE INCORPORATED OWNERS OF HAIPHONG MANSION v. CONVEY ADVERTISING CO. LTD.

HCA 9773/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9773 OF 2000

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D E C I S I O N

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1. This is an application for summary judgment under Order 14.

2. In these proceedings the plaintiff seeks an order requiring the defendant to remove structures in the nature of illuminated advertising signs on the outside walls of the building of which the former are the incorporated owners, and the latter the tenant of units on the second and third floors. It is not conceded by Mr Yeung, on behalf of the plaintiff, that the defendant is the tenant at present, as the last leases of which they are aware expired by effluxion of time in November last year, and they have no knowledge of any renewal. I am a little surprised by this, as the evidence before me suggests that the chairman of the plaintiff is the owner of at least one of the units. However, for the purpose of this application I will assume that valid tenancies still exist. If it is found that they do not, then other appropriate steps can, if necessary, be taken by the plaintiff.

3. The building is on the junction of Nathan Road, Haiphong Road and Lock Road in Tsimshatsui, and it will be readily apparent that it is a prime site for large advertisements, which, indeed, those the subject of this action are, being five in number and being up to 10 metres long and 6 metres wide, some projecting out from the wall at right angles over the road from the second and third floors, and others affixed along the wall. There is also another complained of in the corridor outside the entrance to the defendant's premises.

4. The plaintiff relies on clause 8 of the deed of mutual covenant (DMC), the relevant part of which reads:

"None of the parties hereto shall...... and not to display or cause or permit or suffer to be displayed any notices signs or any other things in the corridors staircases and landings or any part of the said Building used in common by the parties hereto."

5. The plaintiff also claims that the defendant is in breach of clause 10 of the DMC in that the signs are a "nuisance, annoyance or inconvenience to the other occupiers of the said Building or of premises in the neighbourhood." While it is obvious that such signs are capable of being such a nuisance, whether they are or not must be a question to be determined on evidence at trial, and I will not concern myself with it for the purpose of this application and will look only at the first of the plaintiff's contentions under clause 8 of the DMC.

6. The defendant's version of events, by an affidavit of their Mr Mak Siu Tong, a director, is that at least one sign was first erected outside the premises on the second floor in 1990 after negotiation with the owner, Mr Cheng Chun Wing, and extra rent paid to him for the privilege, which they have continued to do to this day. In 1993 there were some reservations expressed about the maintenance and safety of, either that, or another sign and in November 1994 an agreement was reached between the plaintiff and the defendant that the latter would pay a deposit to the plaintiff of $30,000.00 which they could use to pay the costs of removal and restoration should the defendant leave without removing the sign, and which would be returned without interest in the event of the defendant removing it and making good the wall. This agreement is not in dispute, and an acknowledgement and receipt was signed by Mr Chan Chuen Fung, the vice-chairman of the plaintiff. The defendant maintains that there was also another sign of theirs at the time, and they offered a further $15,000.00 deposit in respect of that, but were told it was not necessary. This is disputed by the plaintiff.

7. No complaint about the existence of the sign, or signs, was made by the plaintiff, nor about two further signs erected either that year or some time thereafter. Matters only came to a head in April 2000, when the defendant wrote to the plaintiff to notify them of their intention to erect two more large advertising signs. This time the plaintiff objected, and, when the defendant nevertheless went ahead with the signs, commenced these proceedings not only in respect of the new signs, but of the earlier ones as well.

8. Mr Wong, on behalf of the defendant, concedes that he can put forward no case in respect of these later signs, and that in the corridor, but contends that the defendant has an arguable defence in respect of the others.

9. In the defence, two principal defences are pleaded: the first is that in the first assignment of the unit in December 1960, the developer, Kiu Fung Investment Co. Ltd, assigned also to the then purchaser the right to erect a neon light sign board outside the balustrade, and the defendant is entitled to the benefit of this assignment; the second is that by the agreement of 1994 the plaintiff agreed not to raise any objection to the intended signboard referred to in it.

10. The first defence can be dealt with fairly shortly, and, indeed, Mr Wong did not pursue it with any vigour. The assignment of the right to place a sign was to that purchaser, one Chan Chai Chuen, and was personal to him. The unit was further assigned, in 1965 to Cheong Ping, in 1972 to Soo Hou Wing, and in 1975 to the present owners Cheng Chun Wing and Lee Fong Fong. The right relating to the sign, being personal to Chan Chai Chuen, was not capable of being assigned further by him, and, indeed, did not appear in any of the later assignments. Further, in 1961, after the first assignment, but before the later assignments, the DMC was entered into, and in clause 17 of that document, the developer reserved all rights regarding advertising on the outer walls to themselves. The developer, Kiu Fung, was wound up in 1978 and any rights they had prior to that, as incident to their interest in the property, fell away and reverted to common ownership, under the control of the plaintiff, and governed by the provisions of the DMC. This accordingly affords no defence to the defendant.

11. The second part of the defence has been expanded, and improved on, by Mr Wong, to the extent that the issues he now says raise an arguable defence are not pleaded in the defence filed but are issues he says which arise from the facts revealed in the affidavits filed, and the defence can be amended to include them. What Mr Wong now says is this: by the agreement of 1994, and their failure to take any action to object to the advertising signs before now, the plaintiff has not only acquiesced in what the defendant has done, but had given permission for at least one sign, and is now estopped from complaining about them. To some extent I have sympathy with this argument. In 1994 it is clear that there was already one sign, and probably two, and that, not only did the plaintiff not object, but received a deposit to ensure that, when it eventually came to be removed, they would not be put to any expense. The evidence is that both the chairman and vice-chairman of the plaintiff were aware of this, the chairman being the defendant's landlord, and the vice-chairman signing the acknowledgement, in addition to Mr Wu Lin Yun, the plaintiff's building supervisor, who, the defendant says, by agreement, received from the defendant written notice of all construction and maintenance works done to the signage. Regrettably none of those notices were disclosed in evidence, although there is reference to two letters in 2000 clearly relating to the new signs which gave rise to this dispute. There is therefore clear evidence of acquiescence at least from 1994 to last year, and the defendant being led to believe that the plaintiff would not rely on its strict legal rights under the DMC. What then is the effect of that?

12. Where in such a situation a party acts to its detriment, equity will normally step in to prevent the other from insisting on its strict legal rights. Mr Yeung says that this it does not assist the defendant here and it cannot rely on such apparent estoppel. In support of this he points to the decision of the English Court of Appeal in Western Fish Products Ltd v Penwith District Council [1981] 2 All ER 204, where it was held that a party cannot be estopped from performing its statutory duties. The plaintiff's duties here arise by way of the Building Management Ordinance Cap 344, where, under section 18, it states:

(1) The corporation shall -

.........

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

13. This section, he contends, combined with clause 8 of the DMC, makes it not possible for the plaintiff to consent to the erection of signs or other use of the common areas in contravention of the DMC, and places them under a duty to ensure that such is not done by others. For the same reasons Godfrey JA came to a similar decision in The Incorporated Owners of Hoi Luen Industrial Centre & Anor v Ohashi Chemical Industries (Hong Kong) Ltd [1995] 2 HKC 11 where he said, at p. 13:

"What cannot be done expressly cannot be done impliedly. Although equity will sometimes restrain a plaintiff in the exercise of his legal rights because it would be inequitable and unjust in all the circumstances to allow him so to exercise those legal rights, equity will not hold him bound by acquiescence to allow something which he could not have allowed by express grant. (For these propositions, reference may usefully be made to The Incorporated Owners of Chungking Mansions v. Shamdasani, Civil App. 199 of 1991, unreported.)"

14. Mr Wong submits that there are two exceptions to the general rule expressed in Western Fish Products, namely where an authority delegates powers to its officers to determine specific questions, and where an authority waives a procedural requirement, and says that the second of these at least is relevant. He refers me to section 34I of the Building Management Ordinance, which reads:

(2) No person may -

(a) convert any part of the common parts of a building to his own use unless such conversion is approved by a resolution of the owner's committee (if any);

15. He says that by dispensing with the resolution of the owner's committee those members of the plaintiff were merely waiving a procedural requirement. However, the Western Fish Products case only provides that this would estop a party from relying on the lack of formality, not from relying on something that they would otherwise not be permitted to do expressly by statute.

16. However, both parties' arguments overlook the fact that the plaintiff is not precluded totally by the DMC, and consequently by statute, from exercising a right to display advertisements on the exterior walls of the building, nor of granting that right to others. As I have observed above, the developer having reserved such rights to itself by clause 17 of the DMC, those rights reverted to common ownership, under the control of the plaintiff, upon the liquidation of the developer (see The Incorporated Owners of Cheong Wang and Cheong Wai Mansion v The Government of the Hong Kong Special Administrative Region HCMP 3230 of 2000). It must therefore at least be arguable that the plaintiff had the power to assign or grant those rights to others, and further arguable that, by the clear acquiescence referred to above, that they had impliedly done so in respect of the 1994 signs. Whether they had the consent by resolution of a majority of the owners under the provisions of the DMC is not a concern of the defendant, who is entitled to accept the implied permission of the representatives of the owners without enquiring further as to whether the strict procedure for obtaining that consent had been complied with.

17. The defendant was led to believe by their landlord that they could erect signs, and paid extra rent for the privilege. They were led to believe by members of the plaintiff that no action would be taken in respect of the signs there in 1994, which were openly tolerated until 2000. In other circumstances such action, or lack of it, on the part of such people, on the strength of which they acted, no doubt incurring expense, although no doubt also receiving income from their clients, would give rise to plea of estoppel.

18. In those circumstances I accept that estoppel could arise, although it must be obvious that any implied permission could not permit the defendant to display signs indefinitely, and it may be that the letter to the defendant from the plaintiff's solicitors dated 27 June 2000 was sufficient to terminate that permission. But this must depend on the facts and is a matter for trial.

19. I accordingly give judgment for the plaintiff in terms of the prayer of the statement of claim in respect removal of the structures referred to in paragraphs 8 and 9 only with unconditional leave to the defendant to defend as to the rest of the claim. As to the claim for damages, I assume that this relates to the allegations of nuisance and annoyance, although no specific claim for damages is pleaded under either head of claim. As I have said above, this is a matter for trial if the plaintiff wishes to pursue it, although I have seen no evidence of complaints of nuisance and have been asked to assume that such signs have caused it. In the context of a commercial building in the middle of Tsimshatsui I am not prepared to do this, and if the plaintiff wishes to continue with that part of their claim then the defendant must also have leave to defend it.

20. As has been mentioned above, matters now put forward by the defendant were not all specifically pleaded in the defence. I do not consider that this prevents the defendant from raising them now, although I have taken that into account in the question of costs. It will be necessary for the defendant to amend the defence extensively, and I give leave to do so within 21 days, with leave to the plaintiff to file and serve an amended reply within 14 days thereafter, with liberty to apply.

21. There will also be an order nisi that the defendant pay the costs of this application to be taxed and paid forthwith.