XCHRX THE INCORPORATED OWNERS OF POKFULAM GARDENS AND ANOTHER v. METROGAIN DEVELOPMENT LTD.

HCA4075/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4075 OF 1998

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J U D G M E N T

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This case concerns two domestic split air-conditioning units. The plaintiffs contend that their installation was in breach of the Deed of Mutual Covenant ("DMC") with which all the occupants of Pokfulam Garends were required to comply. The defendant was the owner of a flat on the 6th floor.

BACKGROUND

At a meeting of the plaintiffs in April 1995, it was resolved that no further air-conditioners would be permitted until further notice and notices to this effect were put up. In 1996, the offending air-conditioners were taken down as part of redecoration works. In May 1997, the residents were informed by letter that, in accordance with the DMC all split air-conditioners should not be installed on the external walls or placed inside the flower beds. In August 1997, the defendant re-installed the offending air-conditioners. In 1998, without admitting liability they dismantled them. In 1999, they sold the flat.

Now, in March 2000, because of a failure by the parties to agree a costs order, the matter comes before the High Court by way of Order 14 and Order 14A proceedings. The parties remain unable to agree costs and so the only way to resolve it is for the court to hear all the arguments and make a ruling on a number of matters of law relating to a dispute over two air-conditioners on the 6th floor of a block of flats in Pokfulam which were removed in 1998. In October 1998, the plaintiffs' solicitors wrote an open letter proposing a compromise on costs which was not accepted.

THE ISSUES

1. Jurisdiction

The defendant's first argument is that the High Court has no jurisdiction to hear the case. If correct, the plaintiffs would lose and the matter would be brought to a close. The point on jurisdiction was not pleaded. The point was taken for the first time by Mr Henry Lo in his written skeleton for the purpose of these proceedings. Mr Lee, for the plaintiffs, met the point by oral submissions.

Mr Lo submits that these proceedings could only have been commenced in the Lands Tribunal. A total of seven apparently conflicting authorities were cited, none of which bind this court. In the recent past different views on the matter have been formed in different courts.

I have come to the conclusion that a straightforward reading of the words of the legislation must result in a ruling that the High Court and the Lands Tribunal have concurrent jurisdiction. The relevant section is section 45 of Cap.344, the Building Management Ordinance :-

" (1) The (Lands) Tribunal shall have jurisdiction to hear and determine any proceedings specified in the Tenth Schedule.

(2) No person other than a person to whom this section applies shall be competent to commence any proceedings referred to in subsection (1) ...."

This plainly confers on the Lands Tribunal a jurisdiction which the High Court already has. It does not say "exclusive" jurisdiction and it does not abrogate the High Court's jurisdiction. There are examples of other Tribunals, such as the Obscene Articles Tribunal, being given "exclusive" jurisdiction. However, the Lands Tribunal is not.

Mr Lo argues that because the Lands Tribunal by virtue of section 8A of Cap.17, the Lands Tribunal Ordinance, has the power in certain circumstances to transfer cases to the High Court, it implies that actions such as this can only be started there. I do not agree. Section 8A confers the right of transfer in cases which have in fact been commenced in the Lands Tribunal.

Mr Lo also relies on section 45(4) of Cap.344 :-

"(4) This section applies to the following persons, namely-

(a) an owner;

(b) a person referred to in section 3(1)(a) or (b);

(c) a management committee;

(d) a corporation;

(e) a manager within the meaning of Part VIA;

(f) an owners' committee within the meaning of that Part;

(g) a registered mortgagee;

(h) an administrator;

(i) with leave of the tribunal, the tenants' representative; or

(j) with leave of the tribunal, any other person specified in an instrument which is registered in the Land Registry including a deed of mutual covenant (if any),"

He submits that because leave is required from the Lands Tribunal under sections (i) and (j), it follows that the proceedings must have been started there. Again, I disagree. Sections (a) to (h) are those with an automatic right; (i) and (j) are those who may commence proceedings in the Lands Tribunal with leave. This is not a relevant consideration in deciding if this or any other section takes away the High Court's jurisdiction.

Mr Lo's final point on jurisdiction concerns the 10th Schedule of Cap.344. The 10th Schedule clearly includes this action. Mr Lo seeks to read into the heading to the 10th Schedule an exclusive jurisdiction in the Lands Tribunal. It says :-

" TENTH SCHEDULE

[ss.42 & 45]

HEARING AND DETERMINATION OF SPECIFIED

PROCEEDINGS BY TRIBUNAL"

The point is the same. This is a list of those matters which the Lands Tribunal can hear. It is the Schedule to which section 45 relates. It defines the Lands Tribunal's jurisdiction, not the High Court's lack of jurisdiction.

For the sake of completeness, the same approach must apply to section 45(2) (supra). Those words simply limit the number of people who can take advantage of the jurisdiction conferred on the Lands Tribunal. It is not a list of people who are not competent to commence proceedings in the High Court.

2. The merits

Mr Lee submits there are no issues of fact suitable for determination at trial. All issues, he submits, relate to the interpretation of the DMC and are eminently suitable for rulings under Order 14A.

Mr Lo submits that the pre-requisite conditions under Order 14A, rule 1(1)(a) and/or (b) have not been made out. Alternatively, that on the merits, there are issues to be tried. If either argument is correct, the inevitable consequence will be that the plaintiffs' summons will be dismissed and the matter set down for trial. It is part of Mr Lo's submission that a final determination may require the court making site visits to Pokfulam Gardens and, prior to trial, giving directions for leave to file experts reports and if necessary, hearing expert evidence at trial.

Order 14A, rule 1(1) provides as follows :-

(1) The Court may upon the application of a party or of its own motion determine any question of law or construction of any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that -

(a) such question is suitable for determination without a full trial of the action; and

(b) such determination will finally determine (subject only to any possible appeal) the entire cause or matter or any claim or issue therein."

Mr Lo's submits that (a) the above pre-requisite conditions have not been made or alternatively (b) a determination on the merits under Order 14A should be in the defendant's favour. His arguments under each heading are the same. I will therefore deal with the two submissions together under each of the three alleged breaches of the DMC by the defendant. Mr Lee, on the other hand, submits quite simply that the plaintiffs' case falls fairly and squarely within both (a) and (b) of rule 1(1).

The material parts of the DMC are as follows :-

(a) Section IV(A) Clause 17 :

"Except as herein mentioned no external signs, signboards, notices, advertisements, flags, banners, poles, cages or other projections or structures whatsoever extending outside the exterior of any Building shall be erected, installed or otherwise affixed or projected from any Building or any part thereof."

Photographs of the building show many many air-conditioner units on view. All the units, except the offending units, are installed (in compliance with the DMC) either inside a window recess or underneath a projecting concrete ledge. The offending "split" units were placed on top of the ledge. The existence and position of the offending units are not in dispute. The material facts are merely where they were and what they were. There is thus no challenge to the material facts. No site visits or experts reports would be required. There can be no sensible argument that the units are not projections extending outside the exterior of the Building. It was additionally contended, without merit, that the concrete ledges did not form part of the exterior wall of the building.

Mr Lo further seeks to rely on the ejusdem generis rule. He submits that the purpose of clause 17 is to restrict advertising and therefore air-conditioner units do not fall within this clause. To succeed he would have to persuade the court that "poles" and "cages" were part of a genus of advertising devices. He did not persuade the court.

(b) Section IV(A) Clause 18 :

"No owner shall do or permit to be done any act or thing which may or will alter the external appearance of any Building without the prior consent in writing of the Manager."

That the units "alter the external appearance" is obvious and unarguable. It is self evident. I was referred to authority on the point. It was not necessary to do so. The issue of whether there was prior consent in writing, I deal with below under the heading of "waiver and acquiescence".

(c) Section IV sub-section B, Clause 6 :

"No part of the Block's Common Areas shall be obstructed or incumbered nor shall any refuse, matter or other thing be placed thereon nor shall any part of such Common Areas be used for any business or private purpose and no owner shall do or permit or suffer to do anything in such Common Areas as may be or become a nuisance or cause annoyance to any other Owners or occupiers of the Residential Block of which the Residential unit owned by him forms a part."

By definition in the DMC the common area includes the external wall which includes the concrete ledges (or "window heads" as they are described in the pleadings). Given the unchallenged evidence as to the positioning of the units, there can be no serious challenge to the complaint that the defendant converted part of the common area to its own use. To submit, again, that the issue requires site visits and experts reports to resolve is, to say the least, unattractive.

WAIVER AND/OR ACQUIESCENCE

Mr Lo points to a resolution passed and minuted at a meeting of the Incorporated Owners in April 1995. The resolution stated an agreement to "suspend all legal demand to dismantle unauthorized split air-conditioners at Pokfulam Gardens for the time being until a resolution is reached". He submits that as a resolution was not reached, it was not open to the plaintiff to "suddenly" issue Order 14 proceedings in December 1999 when the case had been "dormant" since October 1998. It is not right to say the case had been dormant or that the issue of the summons was sudden. In fact, no settlement was reached and the plaintiffs resorted to litigation. In any event the defendant's argument fails both in law and on the facts. As a matter of law, if there has been a breach of the DMC, the plaintiffs are not only entitled to enforce the covenant, they are bound to. It is not therefore open to them to waive or acquiesce to a breach.

On the facts there was no waiver or acquiescence. The background to the case, outlined at the beginning of this judgment makes that clear. In addition, there was never any uncertainty about the plaintiffs' position concerning these particular units. The units were re-installed in August 1997 contrary to notices and resolutions which expressly did not permit the installation.

In conclusion, by these proceedings the plaintiffs no longer seek an injunction, nor do they seek damages. The need for either have long since gone. They seek their costs. They may have them. The sole order I make is that the costs of the action, including the costs of and arising from this summons be the plaintiffs on the District Court scale, to be taxed if not agreed.