The Incorporated Owners of Hipway Towers v. Wong Chi Kit

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM 164 of 2000

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J U D G M E N T

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I. Background

1. The Applicant was the Incorporated Owners of Hipway Towers (hereinafter called the Building) and the Respondent was the owner of 3 car parking spaces numbered U60, U61 and U62 located on the upper carport level of Hipway Towers. By way of the present application, the Applicant was seeking an order of the Tribunal for the removal of the structure built on and around the 3 car parking paces and for the reinstatement of the said car parking spaces to their original states.

2. There was no dispute between the parties that the structures erected on the car parking spaces were illegal structures against the relevant conditions of sale and against the Deed of Mutual Covenants (hereinafter called the DMC) of the Building. Likewise, there was also no dispute that he Applicant itself had committed various breaches of the DMC by erecting illegal structures on common parts of the Building for the use of the watchmen and caretaker hired by the Applicant and/or for the use of the Applicant's purpose of holding meetings. There was uncontested evidence in court to the effect that some of the top floor owners including the chairman of the Applicant had illegal structures on their self-owned roof-tops. The Respondent thus alleged that the Applicant should not be granted equitable relief in the form of mandatory injunction for the Applicant itself did not come to the Tribunal with clean hands. The Respondent initially relied on acquiescence/laches and consent. However, at his final submission, Mr. Wong for the Respondent expressly abandoned these grounds and said that he would rely on the clean hand rules governing the granting of equitable relief alone. More specifically, Mr. Wong said that the inequitable conducts of the Applicant included the following things:

(i) The Applicant had ceased to pursue the matter in 1981 but only revived its action against the Respondent in 1999;

(ii) That the Applicant did not take any action against other owners who had illegal structures on their premises in breach of the DMC and

(iii) That the Applicant itself was in breach of the DMC by erecting illegal structures on common parts of the development.

II. The Applicant's Case

3. The only witness testifying in the Applicant's case was Mr. LEUNG Sik-pui. He was the chairman of the 22nd term management committee of the Applicant. He became an owner of the Building in July, 1997 and took up his present position in July 1999. From reading the documentary records and from other owners in the Building, he learned of the problem relating to the 3 car parking spaces now belonging to the Respondent. The witness related that as early as 1977, the Applicant had tried to take action against the Respondent but the Respondent later sold the car parking spaces together with the illegal structure thereon to a 3rd party Mdm. WONG Bik-har. Legal action was taken against Mdm. WONG in respect of the illegal structure in the High Court in 1998 but for reason unknown, the action led to no result at all. Those car parking spaces were later sold to one CHAN Shuet-chu and eventually, the Respondent had got them back by way of an assignment in 1988 from Mdm. CHAN. According to the Mr. LEUNG, the Applicant had been making follow-up with the Respondent on the illegal structure and he referred to various letters, minutes of meetings and notices of the Applicant to show that the Applicant had never given up in pursuing the matter with the Respondent. In 1995, one new problem emerged for it was found that part of the main gas pipe of a block of the building was within the enclosed area of the illegal structure in question. The Hong Kong and China Gas Limited (Town Gas) had written to the Applicant and warned that this might cause a problem on the safety feature of the pipe if ventilation in the enclosed structure became inadequate (see page 266 and 267 of the "Agreed Bundle"). Possibility of rerouting the pipe was explored but the Respondent eventually did not to carry out such work. Finally, in a management committee's meeting held on 19th November, 1999, the committee resolved to take legal action against the Respondent after the Respondent had refused the committee's request of surrendering the common parts of the Building being enclosed by illegal structure. From a sketch layout plan (see page 84 of the "Agreed Bundle") enclosed in the expert report prepared by the Applicant's surveyor, the Respondent's illegal structure had encircled some area originally forming the common parts of the Building. There were no disputes between the parties on the accuracy of and descriptions on this page of the surveyor's report.

4. Under cross-examination, Mr. LEUNG admitted that he as well as other roof-top owners had illegal structures built on their roof-tops. Mr. LEUNG said no action had been taken by the Applicant in respect of those roof-top illegal structures because these structures were all built on private land and involved no common parts of the Building. Furthermore, legal advice had been sought. The advice was because the Applicant had charged owners of roof top illegal structures with management fee for those illegal structures, the possibility for the Applicant in maintaining legal action against those owners successfully would be slim. Mr. LEUNG also admitted that in the common areas within the compound of the Building, there were also 3 other illegal structures built. The first one was a conference room (see photograph 2 of page 333 of the "Agreed Bundle") for the use of the Applicant in holding management committee's meetings and owner's meeting. The second one was a security guard duty room (see the 2 photographs in page 334 of the "Agreed Bundle") for the use of the watchmen or caretakers of the Building. The third illegal structure was some telecommunication devices owned by Smartone Mobile Phone Limited. The device occupied an area of 5 feet x 30 inches and Smartone paid a monthly licence fee of $11,000. The amount was credited into the Applicant's account and formed part of the income of the Applicant. Mr. LEUNG explained that the Applicant took no action against these 3 illegal structures for all 3 such structures existed for the benefit of all the owners in the Building either functionally (as in the case of the conference room and the security guard's duty room) or financially (as in the case of the telecommunication devices).

III. The Respondent's Case

5. Only the Respondent himself gave evidence in the trial. His evidence was that he had bought the 3 car parking spaces in question in 1977 from one TONG Cheung the previous owner. Respondent said at that time, the illegal structure as shown in the photographs and the sketch plans were already there. Although he was hesitated on the legality of the structure, he agreed to buy it in the end after TONG had produced to him various documents assuring him that there should be no problem with the structure. However, by the end of 1977, the Applicant had complained of the illegal structure. To avoid trouble, the Respondent sold those car parking spaces to one Mdm. WONG Bik-har . Mdm. WONG sold the same to Mdm. CHAN Shuet-chu in September, 1979. Then, Mdm. CHAN had the same sold back to the Respondent in March, 1988. In that same year, the Respondent himself had emigrated to Australia. After two more years, he began to pay frequent visits to Hong Kong ranging from 2 to 3 times a year with each time staying as long as 3 to 4 months. When Mdm WONG was the owner of the car parking spaces, she agreed to surrender two keys for the access leading to a corridor at the back of the illegal structure where the water meters for the various households were installed. In this way, meter readers of the Water Work Department could read the meters without having to ask the structure owner for access. In 1993, the Applicant had successfully applied for a water meter to be installed for the structure on the strength of a "no objection" letter apparently issued by one KU Yui-kin a head-caretaker of the then Applicant. Mr. KU also told the Respondent that the then chairman of the Applicant had approved this. As for the gas pipe problems mentioned in the Applicant's case, the Respondent said that he had caused windows to be installed in the illegal structure to facilitate ventilation. After the windows were installed (see photograph 6 on page 82 of the "Agreed Bundle") and after he told the town gas staff that there was a large gap at top of the roller shutter, the town gas staff became satisfied with condition of the gas pipe and took no action on him thereafter. Under cross-examination, the Respondent said that the windows of the illegal structure would remained opened but for rainy days. The Respondent said that he or in his absence, his family members would be responsible for shutting or opening those windows at the right time.

IV. The Applicant could not have consented or acquiesced a breach of the Deed of Mutual Covenants

6. Although not forming part of the ratio of that judgment, Godfrey JA's view expressed in Incorporated Owners of Hoi Luen Industrial Centre & Anor v Ohashi Chemical Industries (Hong Kong)Ltd [1995] 2 HKC 11 in that an incorporated owners could not have expressly granted the right to any owner nor could it acquiesce such owner to act in contravention of the deed of mutual covenants had been consistently followed by the Lands Tribunal. (see Taikoo Shing (Management) Ltd v Trillon (HK) Ltd (BM 35/95) and Incorporated Owners of Hamilton Mansion v Yu Kiem Chiu & ors. [1998] 1 HKC 112. Hence, if Mr. WONG for the Respondent had continued to rely on these points at the end of the trial, these grounds would have failed. For this reason, Mr. WONG had fairly and properly abandoned these grounds in making his final submission. Mr. WONG's remaining argument was simple and straight forward. He contented that because:

(1) the Applicant had been delaying its action against the Respondent,

(2) the Applicant was unfair in not taking action against other roof-top illegal structure owners but just against him and

(3) the Applicant committed breaches over the DMC by erecting or permitting the erection of illegal structures in the form of a conference room, a security guards' duty room and some communication devices owned by the Smartone Mobile Phone Ltd

the Applicant should not be granted equitable remedy in the form of mandatory injunction requiring the Respondent alone to remove his illegal structure on the car parking spaces.

V. How Equity Could Intervene:

7. Mr. WONG placed heavy reliance on the case of Guardian Property Management Ltd & anor v LUI Man Ho [1998] 2 HKC 244. In that Lands Tribunal case, Deputy Judge YUNG as he then was refused to grant the application made by the manager of an estate to order the removal of an iron gate installed on a car park in contravention of the provisions of the relevant DMC some 11 years before the application. After weighting the Respondent's position against that of the Applicant, Deputy Judge YUNG held that given the delay and the change of circumstances during the interim period, it was inequitable to grant the mandatory injunction. Instead, a declaration to the effect that the iron gate was erected in breach of the relevant Deed of Mutual Covenants was granted instead.

VI. My Analysis:

8. In order to decide whether the Applicant should be denied of its equitable remedy, I should look into the inequitable conduct of the Applicant as alleged by the Respondent.

9. Firstly, on the delay point, I am inclined to say on the evidence before me, in particular those written records of the Applicant in the form of minutes of meeting, notices and letters, I am prepared to find that the Applicant had never given up the option of taking legal action against Respondent on the illegal structure built on the car parking spaces. Assuming I am not counting the legal action in 1978 which did not lead to any result for unknown reason, there was obviously a delay of at least 22 years before the Applicant made the present application. However, one should not overlook on how Deputy Judge YUNG had dealt with the point of "lache" raised before him. He said at page 247 of the judgment:

"An owner's incorporation can only be as efficient as those who are in the management committee. Their members are running the management of the building out of good will and are hardly paid anything for their effort. Lache alone in this particular case would not be sufficient to establish a case of waiver or estoppel."

10. Then, at the end of that page and the beginning of the next, Deputy Judge YUNG referred to a passage in Spry's Principles of Equitable Remedies and came to the conclusion that lache would only be relevant when the word was referring to "the position caused by the delay, and especially its effect on the defendant himself, rather than the delay itself, which causes the court to deny relief." The learned Deputy Judge then went on to hold that the respondent in that case was a racing car driver by career and had to secure his not readily insurable racing car by the illegal iron gate of his car park. Furthermore, the delay by the Applicant in that case had rendered the respondent's inability to buy an alternative storage place for his car because there had be a rising property market in the last 11 years. The learned Deputy Judge on these reasons refused to grant the injunction sought in that case.

11. In the instant case, the Respondent was a retired person. His evidence was that the illegal structure was used by him and his wife as a store room but there was no evidence on how important this store room was for him. Apart from obtaining electricity and water supplies and had a window fixed, he did not carry out any substantial work after he had bought the property. In the circumstances, I found no evidence to suggest that his position was affected by the delay of the Applicant. His case, for this reason, was clearly distinguishable from that of the respondent in the LUI Man Ho's case.

12. I now turn to the second and third inequitable conduct of the Applicant relied upon by the Respondent. As for the illegal structures on the roof top, it was not in dispute that they were all built on the private land of the roof top owners. This was again clearly distinguishable from the case of the Respondent's illegal structure which infringed upon common area. Furthermore, those owners of roof top structures had also been paying management fee to the Applicant for those structures and this might affect the possibility of success for the Applicant in bringing an action against those owners. The Respondent on the other hand, did not pay any management fee for his illegal structure. In the circumstances, I am not convinced that the Applicant has acted inequitably by bringing the present application against the Respondent and not the other roof top illegal structures owners.

13. As for the Applicant's inaction on the 3 illegal structures on the common areas of the building; namely, the conference room, the security guards' duty room and the telecommunication devices of Smartone, the Applicant said they were all there for the benefit of the all the owners. The Respondent could not challenge the validity of this assertion. Hence, I also find that these three illegal structures are distinguishable from the Respondent's illegal structure as well. I am again not convinced that the Applicant has acted inequitably by bringing the present application but did nothing on the 3 illegal structures occupying the common areas of the building.

14. Last but not the least, when considering all the circumstances, I should not underestimate the potential danger created by the fact that the Respondent's illegal structure had enclosed within itself a gas pipe for the building. It does not require an expert to tell how dangerous it would be if gas leakage took place inside the enclosed structure resulting in the accumulation of a large volume of flammable gas. The Respondent's evidence was that there were two openings which helped to alleviate the risk and they were the window and the gap on the top of the roller shutter. I am doubtful of the effect on ventilation brought about by the roller shutter gap for if gas could only escape from the illegal structure when it reached the top of the roller shutter, the volume of leaking gas so accumulated would already be sufficient to cause a catastrophe. The other channel for ventilation were the windows installed by the Respondent. The Applicant's case was that the windows were kept close most of the time while the Respondent said that they would be opened except for rainy days. I doubt very much that this was the practice for I could see two air conditioners being installed on the cockloft of the illegal structures. If the windows were meant to be open all the time, there should not be air conditioners. Even accepting the Respondent's version, the ventilation provided by windows would only be as efficient as the Respondent or his family members who were tasked to open or shut them up. Such arrangement was far from satisfactory for the risk would still be too high for all the occupiers of the building.

15. Having considered all the circumstances and weighting the Applicant's position against that of the Respondent, I am not convinced that the conduct of the Applicant was such that it should be denied of the remedies it is now seeking in its application. For the reasons above, I give judgment to the Applicant

VII. The Order

(i) The Respondent is hereby ordered to demolish and remove so much of the illegal building works and the unauthorized structure erected on car parking spaces number U60, U61 and U62 and the adjacent common area in the Building and to reinstate the said car parking spaces to their original states in accordance with the approved layout plan at his own expenses.

(ii) Cost of this application be to the Applicant with certificate for counsel.