中紀投資有限公司 v. 青山道國際工業大廈業主立案法團 AND ANOTHER

CACV 96/2021

[2023] HKCA 93

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 96 OF 2021

(ON APPEAL FROM LDBM NO 118 OF 2017)

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J U D G M E N T

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Hon Yuen JA (giving the Judgment of the Court):

Procedural history

1.  The procedural history of LDBM 118/2017 in the Lands Tribunal (“the LT case”)  has been set out in the Reasons for Judgment of this court in Centre Chase Investment Ltd v International Industrial Building, Castle Peak Road (IO)¹.

Background facts 

2.1.  Briefly, STL Co Ltd (“the 9A owner”), the owner of Unit 9A of International Industrial Building (“the building”), had installed some window frames on the external wall of the building which was a common part.

2.2.  In 2015, the Building Authority issued notices to the Incorporated Owners of the building (“the IO”)  requiring it to carry out an inspection of the common parts, and complete any necessary repairs.

2.3.  In 2016, the inspector appointed by the IO reported that the window frames installed by the 9A owner were unauthorized building works.

2.4.  Centre Chase Investment Ltd (“the 2A owner”), the owner of Unit 2A, requested the IO to take action against the 9A owner to remove the window frames.  When the IO did not do so, the 2A owner commenced the LT case against the IO in June 2017.

2.5.  The following month, July 2017, the Management Committee (“the MC”)  of the IO passed a resolution (the original Chinese resolution is set out in §12 of the LT Judgment defined in §4 below).  The MC resolved to approve the current non-structural installations, including the 9A decorative window frames, until the repair of the external walls in the future, when the IO will again resolve upon the appearance of the external walls and the installations and decorations affecting such appearance.

2.6.  In March 2018, the 9A owner removed the original set of window frames (“Pre-Window Frames”), and replaced it by another set (“Post-Window Frames”).

Proceedings in the Lands Tribunal

3.1.  Prior to the hearing of the LT case, the Presiding Officer HH Judge S Lo (“PO”)  ordered the 2A owner (but not the IO)  to make written submissions on whether the 9A owner should be joined in the LT case.  The then counsel for the 2A owner submitted that: (1)  the 2A owner had no right to sue the 9A owner, (2)  the 2A owner had the right to sue the IO to compel it to take action against the 9A owner, and (3)  when the 2A owner sued the IO, it was not necessary for the 2A owner to join the 9A owner as respondent.  The PO did not respond to these submissions and presumably accepted them.

3.2.  However, despite the possible effect of the LT case on the 9A owner, the PO did not pose the question to the IO whether it should join the 9A owner as third party.

3.3.  Consequently, the LT case proceeded to trial with only the 2A owner and the IO as parties.

4.  The PO dismissed the 2A owner’s claim on 24 January 2020 (“the LT Judgment”)².  The 2A owner’s application for review was dismissed for reasons set out in a decision of 9 July 2020 (“the Review Decision”)³.

Leave to appeal

5.1.  The 2A owner’s application for leave to appeal the Review Decision was refused by the PO, for reasons given in a decision given on 11 January 2021 (“the Leave to Appeal Decision”)⁴.

5.2.  On 5 March 2021, the Court of Appeal⁵ gave leave to appeal after a renewed application.

Joinder

6.1.  When giving leave, the court ordered a directions hearing on the issue whether the 9A owner should be joined as a party to the appeal.

6.2.  The joinder hearing was held on 12 November 2021, with the 2A owner supporting the joinder, and the IO opposing it.

6.3.  For reasons given in the Reasons for Judgment dated 18 November 2021 referred to in §1 above, this court decided that the 9A owner should be joined as the 2^nd respondent in the appeal.

6.4.  The 9A owner has since filed a respondent’s notice in the appeal.

Summonses before the court

7.1.  There are 2 summonses before the court for leave to adduce new evidence for the appeal:

(1)   the IO’s summons (filed on 12 October 2021)  for leave to adduce an affidavit of Yuen Man Chung, a member of the MC (“Yuen I”);

(2)   the 9A owner’s summons (filed on 31 January 2022)  for leave to adduce:

(a)   an extract from the Building Department’s website pertaining to “Minor Works Procedures”;

(b)   a photograph taken on 30 November 2021 by the building’s management company captioned “over-sized air-conditioning equipment on external wall inside 2A’s Light Well” (“the Photograph”);

(c)   the 3^rd affirmation of its director Mao Yau Fong Henry (“Mao III”).

7.2.  Both summonses are opposed by the 2A owner.

Legal Principles

8.1.  In considering whether to give leave to adduce new evidence on appeal, the principles set out in Ladd v Marshall⁶ apply, i.e. (1)  the evidence could not have been obtained with reasonable diligence for use at the hearing below; (2)  the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and (3)  the evidence must be such as is presumably to be believed, or it must be apparently credible, though it need not be incontrovertible.

8.2.  In considering whether to allow a new point to be taken on appeal, the principles in Flywin Co Ltd v Strong & Associates⁷ apply, i.e. where a party does not take a point at trial and then seeks to raise it on appeal, it will be barred from doing so unless there was no reasonable possibility that the state of the evidence relevant to the point would have been materially more favorable to the other side if the point had been taken at trial, the foundational imperative of this “state of the evidence bar” being fairness.

Discussion

The IO’s summons

9.  Dealing first with the IO’s summons, the new evidence in Yuen I relates to other proceedings taken out by the 2A owner’s controller Ng Hin Chung against the IO or persons connected with the building, updating the proceedings previously referred to in a witness statement filed by the IO before the Lands Tribunal, and adding new proceedings.

10.1.  In the IO’s Composite Skeleton Submissions, it says it intends to serve a supplementary respondent’s notice to add the following ground (“the Additional Ground”)⁸:

“The learned Presiding Officer should have held that the Tribunal should not exercise its discretion to [compel the IO to take action against the 9A owner] after taking into account the exceptional circumstances taking place between the [2A owner], the [IO] and other co-owners of the Building (including but not limited to the undue hardship that would be caused to the [IO]). In the circumstances of the present case, the Tribunal should hold that it is unjust and inequitable to make a mandatory order against the [IO]”.

10.2.   The IO submits⁹ that the new evidence is relevant to the exercise of the court’s discretion whether to grant a mandatory injunction¹⁰; is relevant to the issue whether “in light of what had happened in the building, whether it was reasonably necessary for the IO to take actions against the 9A owner”¹¹; shows Mr Ng’s litigious nature¹²; and shows the IO’s need to consider how to deploy resources in view of expenditure on costs¹³. It submits that the new evidence “has an important influence on the result of the appeal in light of the Additional Ground”.

11.  The 2A owner’s objections to the new evidence are based on the Flywin principles as well as the Ladd v Marshall principles. 

12.1.   In our view, the new evidence does not pass the Flywin hurdle.  Although some of the proceedings had been mentioned in the IO’s Notice of Opposition (§4A), it was in the context of the 2A owner or its controller Mr Ng being hostile to the MC, or putting pressure on it.  The IO did not plead that by reason of the “exceptional circumstances”, hardship would be caused to it, or it would be unjust or inequitable if the court ordered it to take action against the 9A owner. 

12.2.   As such a case was not pleaded, it was not in the 4 issues for the Tribunal’s determination (LT Judgment §26)  and was not a ground of review (Review Decision, §12).

12.3.   In fact, even though the review process had been invoked by the 2A owner, the IO did not take that opportunity to put forward the case it is now seeking to advance of “exceptional circumstances causing hardship or injustice or inequity”.

12.4.   Given the nature of the Additional Ground, it clearly cannot be said that there was no reasonable possibility that the state of the evidence relevant to the point would have been materially more favorable to the other side if the point had been taken at trial.  The IO’s application therefore falls at the Flywin hurdle.

13.  It is not necessary for us to consider whether the Ladd v Marshall hurdle can also be passed.

14.  Accordingly, we would dismiss the IO’s summons with an order nisi that the IO pay the 2A owner’s costs to be taxed if not agreed.  We do not consider it appropriate to attempt a summary assessment of costs.  

The 9A owner’s summons

15.1.  Before dealing with the 9A owner’s summons, it is noted that as it has not filed any pleadings, its case is set out in its Respondent’s Notice filed on 8 December 2021, ie :

(1)   both the Pre-Window Frames and Post-Window Frames are “signboards” under s.2(1)  of the Buildings Ordinance, and hence the minor works regime applies;

(2)   (a)   the IO had approved the affixation of both sets of Window Frames and is barred from complaining about them by reason of waiver, acquiescence and/or estoppel;

(b)   “by extension”, the 2A owner is also barred from complaining about the Window Frames;

(c)   the affixation was not “totally precluded by the DMC”.

15.2.   Further, the 9A owner has indicated that it intends to file a supplemental respondent’s notice that because the 2A owner itself has also installed some equipment on the external wall of the building (as shown in the Photograph), it has not complied with the “clean hands principle” and should thus be precluded from claiming relief.

16.  The 2A owner submits that the 9A owner was made aware of the LT case before it was heard and could have applied then to join as a party.  In our view, although the 9A owner could have done so, it had no obligation in law to do so, and in any event that is not an answer to its right to produce evidence now that it is a party.  The fact that the 9A owner sent a letter to the LT in May 2018 setting out its position is neither here nor there.  The evidence adduced by a party is different in nature and effect from a letter sent to the court by a stranger to the litigation.

17.1.  The next question is whether Ladd v Marshall and Flywin are general principles such as to preclude the 9A owner’s production of evidence even though it was not a party at the trial (as the 2A owner submits).

17.2.   In our view, the 9A owner cannot be precluded from adducing evidence now when it had not been made a party at the trial, and thus could not be said to have “omitted” to produce the evidence then.  None of the cases cited by the 2A owner provides support for its submission.  Richly Bright International Ltd v De Monsa Investments Ltd¹⁴ appears to be the only case where evidence was sought to be adduced on appeal by an additional party, but as rightly acknowledged by counsel for the 2A owner in its Composite Submissions in Opposition (§42), in that case, the additional party had already been joined at trial as an interested party.

17.3.   For the same reason, it cannot be fair to preclude the 9A owner from taking the points of “clean hands” and “estoppel, waiver and/or acquiescence” on the ground that it was not canvassed at trial, when it was not a party to the case then.  As stated in Flywin, the “foundational imperative” is fairness.  This court appreciates that these points are fact-sensitive, and it may well be that relevant directions may have to be made at some stage to deal with this complication.  However, if the evidence on these points are precluded now, that would in effect deny a party the opportunity to advance its case.

18.  For these reasons, we would make an order in terms of §(1)  of the 9A owner’s summons and an order nisi that the 2A owner pay the 9A owner’s costs to be taxed if not agreed.  As with the IO’s summons, we do not consider it appropriate to attempt a summary assessment of costs.