WHOLE GRAND LTD v. THE INCORPORATED OWNERS OF BO FUNG BUILDING

CACV 77/2023, [2024] HKCA 626

On Appeal From [2021] HKLdT 50

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 77 OF 2023

(ON APPEAL FROM LDBM NO 57 OF 2019)

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J U D G M E N T

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Hon Kwan VP:

1.  I agree with the judgment of G Lam JA.

Hon G Lam JA:

2.  The appellant (“Whole Grand”) is the owner of, inter alia, Shops 4 and 5 on the G/F, the Cockloft, and the whole of the 1/F of Bo Fung Building (“Building”) situated at 5 Horse Shoe Lane, Kwun Tong, Kowloon.  The respondent is the Incorporated Owners (“IO”) of the Building.  This appeal which is brought against a judgment of the Lands Tribunal concerns the right of Whole Grand to use a lift at the 1/F.

Background

3.  The Building, erected in 1992, is a commercial-cum-residential building.  The occupation permit, issued on 26 June 1992, specified the following uses for the different levels of the Building:

Ground Floor:	shops (non-domestic use)
Cockloft:	storage (non-domestic use)
1st Floor:	shop (non-domestic use)
2nd Floor:	day nursery & transformer room (non-domestic use)
Podium:	roof garden, generator room and service rooms (non-domestic use)
3rd  to 25th  Floors:	4 flats per floor for domestic use (there are no 4th, 14th and 24th Floors)

4.  On 21 July 1992, a deed of mutual covenant (“DMC”) was entered into between (1) the first owners, (2) Cherub Ltd as the “Manager”, and (3) The Financial Secretary Incorporated as the assignee of the day nursery on the 2/F.  The Building is divided into three portions under the DMC, called “Residential Development”, “Commercial Development”, and “Day Nursery”. 

5.  There are three lifts in the Building.  The one in issue in these proceedings is labelled “Lift A” in the building plans and referred to as such below.  For convenience I shall refer to the other two lifts as “Lift B” and “Lift C” respectively.  To gain access to the three lifts, one has to key in a passcode at the entrance of the Building, open the gate and then go through a corridor in order to reach the lift lobby.

6.  From the outset the three lifts had served different floors as follows:

-  Lift A served G/F, 1/F, 3/F, 7/F, 9/F, 11/F, 13/F, 16/F, 18/F, 20/F, 21/F and 25/F

-  Lift B served G/F, 3/F, 5/F, 8/F, 10/F, 12/F, 15/F, 17/F, 19/F, 21/F and 23/F

-  Lift C served G/F and the Day Nursery on 2/F

7.  In the original configuration of the Building, in order to go to the 1/F, one could either (1) go through the main entrance of the Building at the G/F and take Lift A or walk up the common staircase behind the lift shafts; or (2) walk up the steps inside Shop 1 (on the G/F) which lead to the Cockloft and then the 1/F.

8.  Shortly after the Building was completed, certain alteration plans affecting Shops 4 and 5, the Cockloft and the 1/F were approved by the Building Authority on 15 December 1992.  The alterations (“Alterations”), which were carried out presumably not long after the plans were approved, involved converting part of Shops 4 and 5 into an entrance lobby on the G/F that opened to Horse Shoe Lane (“Entrance Lobby”).  An internal one-way escalator (“Escalator”) together with a stairway in parallel (“Stairway”) were installed to connect the Entrance Lobby and the Cockloft.  The Entrance Lobby, the Cockloft and the 1/F, all of which fall within the Commercial Development of the Building, will be referred to as the “Property”.

9.  After the Alterations, one can make use of the Escalator-Stairway to access the Cockloft from the Entrance Lobby.  From the Cockloft, one can use the pre-existing staircase (located above Shop 1) to access the 1/F. 

10.  By an assignment dated 1 February 2010, Whole Grand acquired, inter alia, the Property,[1] which was at the time let to a tenant who operated a restaurant there called “Fu Lin Wah Seafood Restaurant” (“Fu Lin Wah”).

11.  In late 2009, the Escalator broke down and could not be immediately repaired due to the lack of suitable parts that needed to be imported.  Fu Lin Wah’s staff disclosed the passcode of the Building’s main entrance to their customers so that they could take Lift A to access Fu Lin Wah on the 1/F.  The frequent use of Lift A by Fu Lin Wah’s customers resulted in complaints from the residents of the Building.

12.  At a meeting on 16 July 2010, the Owners’ Committee of the Building (there being no incorporated owners then) passed a resolution (“Resolution”) that the customers of Fu Lin Wah shall not be allowed to use the lifts of the Building and that lawyers would be instructed to implement the arrangement in accordance with the provisions of the DMC.  Whole Grand’s representative attended the meeting but did not raise any objection.  Accordingly, in around October 2010, Lift A was adjusted so that it would no longer stop at the 1/F.  A notice published by the Manager on 19 October 2010 stated that if access to Lift A at the 1/F was needed in an emergency, the management staff could be approached for that purpose.

13.  Fu Lin Wah did not make any complaint to Whole Grand about the closure of Lift A on the 1/F, and vacated the Property after its tenancy expired on 30 November 2011.

14.  From 10 December 2011 to 9 December 2017, the Property was let by Whole Grand to another tenant, Jointed-Heart Ltd (“Jointed-Heart”), who operated a rice noodle restaurant there.  It is not clear exactly when the Escalator was eventually repaired, but the evidence, which was apparently uncontroversial, was that by the time Jointed-Heart took possession of the Property, the Escalator was operating normally and had never since broken down due to disrepair.  Jointed-Heart did not make any request for Lift A to resume serving the 1/F, and Whole Grand therefore likewise did not take any action about the cessation of service of Lift A for the 1/F.

15.  After Jointed-Heart vacated the Property in December 2017, Whole Grand began looking for suitable tenants and in the course of doing so, received offers from prospective tenants who required lift service between the G/F and the 1/F as a condition for taking up a tenancy of the Property.  Whole Grand therefore requested the Manager to reactivate the service of Lift A for the 1/F.  The response to these requests was apparently delayed because an owners’ corporation for the Building was being set up at the time.  The IO was eventually incorporated on 22 August 2018.  Whole Grand thereafter requested the IO for Lift A to resume serving the 1/F.  The IO responded by asking Whole Grand to obtain formal legal advice to show that it had the right to use the Lift A.

16.  On 4 January 2019, Howell & Co, solicitors instructed by Whole Grand, wrote to the IO stating that Whole Grand was entitled under the DMC to use Lift A for the proper enjoyment of the Property and that the IO had failed to discharge its duties under the DMC and the Building Management Ordinance (Cap 344) (“BMO”), deprived persons with disability of the use of a lift contrary to section 72 of the Building (Planning) Regulations (Cap 123F) (“BPR”) and section 28(2) of the Disability Discrimination Ordinance (Cap 487) (“DDO”), and created a fire hazard by depriving the Property of the use of a firemen’s lift.  The solicitors demanded that the IO forthwith allow access by Whole Grand, its tenants, servants, agents and licensees to Lift A and admit liability for breaches of duties and agree to compensate Whole Grand for its losses.

17.  The IO at a meeting on 17 January 2019 resolved to seek free legal advice from the Home Affairs Department and other sources before coming to a decision.

18.  On 15 March 2019, Whole Grand instituted proceedings against the IO in the Lands Tribunal (“Tribunal”).

19.  Since 2 July 2019, the Property had been leased to a new tenant on a 4-year lease for another restaurant business, called “窩心八鮮蒸鍋”.  On 28 September 2019, there was an incident at the restaurant.  A disabled customer in a wheelchair was carried by others to the restaurant on the 1/F but, when he left, for safety reasons he could not be similarly carried down to the G/F and had to take the lift instead.  The person-in-charge at the restaurant made a request to the Manager who initially refused the request on the ground that the IO had decided not to allow the Lift A to serve the 1/F.  The request was eventually acceded to after a more senior person in the Manager intervened.

20.  On 18 October 2019, the Manager issued a notice stating that the IO had since the incident of 28 September 2019 instructed that if there is a fire or injury or if there is a need from disabled and wheelchair-bound persons, it will be treated as an emergency and the caretaker will make Lift A accessible to the 1/F for use by the relevant persons.

The parties’ cases

21.  Whole Grand’s case in the Tribunal as set out in its Amended Notice of Application was as follows.

(1)  Lift A is within the definition of “Common Areas” of the Building in the DMC and within the definition of “common parts” in the BMO.  It forms part of the Commercial Development and also part of the Residential Development in the Building.  Under the DMC, the owners for the time being of any Commercial Units, their tenants, servants, agents, lawful occupants and licensees have the right to use and enjoy the lift service provided by Lift A for going between the 1/F and the G/F.

(2)  The rights and authorities of the Manager are subject to the provisions of the DMC including its duty to prevent obstruction of the Common Areas.

(3)  The closure of Lift A is wrongful and contrary to the provisions of the DMC.  By closing Lift A to the 1/F in August 2010, the Owners’ Committee and the Manager acted in breach of:

(a)  various provisions of the DMC;

(b)  section 2 of the BMO, in that Lift A is within the “common parts” of the Building;

(c)  section 72 of the BPR and section 78 of the 3^rd Schedule to the BPR, in denying access to a lift for the disabled;

(d)  section 28(2) of the DDO, in discriminating against persons with a disability;

(4)  The liabilities arising from the closure of Lift A were transferred to and to be borne by the IO upon its incorporation.

(5)  The IO breached its duties under section 18 of the BMO by adopting the closure of Lift A.

(6)  Whole Grand had received offers from prospective tenants to rent the Property at a monthly rent of $255,000 or $250,000 subject to the availability of access to Lift A.  As a result of the IO’s breaches, Whole Grand lost those prospective tenancies.  It claims damages for lost rental income between April and August 2018 in the sum of $1.04 million and also for reduced rental income over the term of the current tenancy in the sum of approximately $1.03 million.

22.  By way of relief, Whole Grand claimed:

(1)  a declaration that Whole Grand as owner of the Property, its tenants, servants, agents, lawful occupants and licensees shall have the right to use and enjoy Lift A as part of the Common Areas under the DMC and/or as a common part under the BMO;

(2)  a declaration that the IO has no power under the DMC or otherwise to deny Whole Grand, its tenants, servants, agents, lawful occupants and licensees the access to and use and enjoyment of Lift A as part of the Common Areas and/or common parts;

(3)  a declaration that the IO has no power under the DMC or otherwise to close access on the 1/F to Lift A as a lift for the disabled and a firemen’s lift;

(4)  an order that the IO do forthwith reinstate the lift service between the G/F and the 1/F by re-opening access to Lift A on the 1/F for the use and enjoyment of Whole Grand as owner of the Property, its tenants, servants, agents, licensees and lawful occupants of the Property; and

(5)  damages, including loss of rental income.

23.  The IO’s case in the Tribunal as set out in its Re-Amended Notice of Opposition was as follows:

(1)  It is admitted that Lift A is part of the “Common Areas” of the Building under the DMC.  But by virtue of clause 3.2.1 of the DMC, an owner of a Commercial Unit is not entitled to use Lift A because it forms part of the Residential Development.

(2)  Since late 2009, the then owner or tenant of the Property had failed to maintain the Escalator, causing many of its customers to take Lift A for access between the G/F and the restaurant.  As a result, nuisance, annoyance and/or disturbance was caused to the owners and residents of the Building.

(3)  Pursuant to the powers under the DMC, the Owners’ Committee made the House Rules or passed the Resolution that the owners of the Commercial Development shall not enter the Building except the Commercial Development and Lift A shall not stop at the 1/F except in emergency.  In so doing, the Owners’ Committee set aside, allocated and/or assigned Lift A for the exclusive use of the G/F, Podium, 5/F, 7/F, 9/F, 11/F, 13/F, 16/F, 18/F, 20/F, 22/F and 25/F.

(4)  Alternatively, the Manager has power under the DMC to set aside, allocate and/or assign Lift A to those floors.

(5)  The House Rules or Resolution were made taking into account a number of matters including security concerns.  They were reasonable and proper measures made by the Owners Committee and implemented by the Manager and binding on all the owners of the Building.

(6)  After its incorporation, the IO adopted, confirmed and/or continued to implement the House Rules or Resolution.

The Tribunal’s judgment

24.  The case was tried before Deputy District Judge Michelle Soong sitting as the Presiding Officer of the Tribunal (“judge”). On 30 July 2021, the Tribunal issued its judgment (“Judgment”).[2]

25.  The judge dealt first with the IO’s contention that Whole Grand, as the owner of a Commercial Unit, was excluded from Lift A being part of the Residential Development.  The IO’s argument was based on section 3 of the DMC.  Clause 3.2 provides as follows:

“ 3.2 Commercial Units

3.2.1 The Owner of a Commercial Unit shall have the benefit of the following easements, rights and privileges subject to the provisions and restrictions contained in this Deed, the House Rules and subject to the rights of the Manager as hereinafter provided and to the payment by the Owner of his due proportion of the Manager’s Remuneration and management expenditure:-

(a) Full right and liberty (but subject always to the right of the Manager and the Assignor hereunder) for the Owner for the time being, his tenants, servants, agents, lawful occupants and Licensees (in common with all persons having the like right) to go pass or repass, over and along and to use such of the Common Areas forming part of the Commercial Development and not those forming part of the Residential Development for all purposes connected with the proper use and enjoyment of such Commercial Unit.

…

3.2.2 The Owners of the Commercial Units shall have no right to enter upon any part of the Land and the Building save as expressly herein provided, …” (underlining added)

26.  “Residential Development” is defined in clause 1.1 of the DMC to mean “the Units on the Floors above the Second Floor Level of the Building and/or any other parts of the Land and the Building intended for residential use.”

27.  The IO submitted that Lift A was intended for residential use and because it formed part of the Residential Development, Whole Grand as the owner of a Commercial Unit was excluded from it by virtue of clause 3.2.1.  The judge rejected this argument and held that Lift A (including the lift lobby) was intended for common use by the residential and commercial units including the 1/F.[3]

28.  The judge went on to note that the Alterations had taken place which had obviously enhanced the conspicuousness and accessibility of the 1/F, but that there was no information on whether they were done with the consent of the Manager and the other owners of the Building and, if so, on what basis consent was given.[4] At §59, the judge stated:

“ In my view, even if the DMC originally intended, upon its drafting and execution, that Lift A should serve 1/F, that intention was obviously based on the original design of the Building with a correspondingly smaller number of visitors to 1/F which could be reasonably absorbed by the capacity of the lift lobby and the lift without causing much problems to the residential owners. But since the Alterations have virtually changed what I would describe metaphorically as ‘the ecology’ of the Building by substantially increasing the conspicuousness and accessibility to 1/F and the potential number of visitors thereto, in my view it is no longer meaningful for the parties to place their entire focus on whether the applicant’s use of the lift was permitted or not permitted under the DMC.”

29.  The judge also noted that after the Alterations, outsiders including customers could easily gain access to the 1/F through the Entrance Lobby and then to Lift A or the common staircase and in turn to any floor of the Residential Development.  The Alterations had opened up a major loophole in the security system of the Building, with or without lift service to the 1/F.  With the availability of a lift, the difference is just a matter of degree.[5]

30.  The judge went on to observe that there might have been a breach of clause 5.1.4 of the DMC which prohibited structural alterations that interfered with or affected the rights of other owners, since the Alterations compromised the security system and overloaded the capacity of Lift A and the lift lobby.[6]

31.  Further, the judge noted that the Escalator fell into disrepair in late 2009 and the 1/F restaurant then gave the passcode for the main entrance of the Building to the customers, resulting in overcrowding of the lift lobby, competition and conflicts from the use of Lift A as well as security concerns, and arguably a breach of clause 5.1.9 of the DMC, which provides:

“ No Owner shall do or permit or suffer to be done and each Owner shall take all possible steps to prevent his tenants occupiers or licensees from doing any act deed matter or thing which in any way interferes with or affects or which is likely to interfere with or affect the proper management and maintenance of the Building.”[7]

32.  The judge noted that under the express terms of clause 3.2.1 of the DMC, the right of the owner of a Commercial Unit to use the Common Areas is “subject to the provisions and restrictions contained in this Deed, the House Rules and subject to the rights of the Manager as hereinafter provided.”  Clause 6.2.1 confers a wide power on the Manager to manage the Building, as follows:

“ The Manager will manage the Land and the Building in a proper manner and in accordance with this Deed and except as otherwise herein expressly provided the Manager shall be responsible for and shall have full and unrestricted authority to do all such acts and things as may in its opinion be necessary or requisite for the proper management of the Land and the Building. Without in any way limiting the generality of the foregoing the Manager shall have the following duties and powers namely:-

…

(i) To prevent the obstruction of all the Common Areas and to remove any article or thing causing obstruction …

(o) To do all things which the Manager shall in his absolute discretion deem necessary or desirable for the purposes of maintaining renewing and improving all facilities and services in or on the Building for the better enjoyment or use of the Building by its Owner occupiers and their licensees.

…

(ai)    To allocate and/or assign any lift for the exclusive use of particular floors and/or Units where the circumstances so warrant.”

33.  The judge stated that even if Whole Grand’s right to use Lift A is wholly unaffected by the Alterations, its right is not an absolute and unqualified one.  It cannot assert an absolute right to use Lift A without regard to the potential breach of the DMC (i.e. clauses 5.1.4 and 5.1.9) on its part, the inconvenience and interference caused to other owners, and the Manager’s obligation and power to manage to Building properly and protect the interests of other owners.[8]

34.  The judge noted that the exercise of rights in the multi-unit building context must be subject to an element of reasonableness, and that it appeared that Whole Grand was not challenging the reasonableness of the closure of Lift A as a measure to tackle the security and overcrowding concerns.  Assuming such reasonableness was in issue, the judge said she did not think the measure taken was unreasonable.  She found the IO’s security and nuisance concerns to be real and valid.  It was incumbent on Whole Grand to take a more proactive approach to deal with the problems caused by the Alterations, instead of treating compliance with the DMC as merely the tenant’s own responsibility.  Whole Grand had simply asserted a full and unrestricted right to use Lift A, without showing any willingness to accommodate any reasonable measures proposed by the IO.  In conclusion the judge did not consider it unreasonable for the Manager and the IO not to provide lift service to 1/F in light of all the circumstances.[9]

35.  In the end, although the judge agreed with Whole Grand on the construction of clause 3.2.1 of the DMC, she declined to make any declaration since Whole Grand was asserting an absolute and unrestricted right.  She stated that should Whole Grand wish to have the lift service reinstated, they should interact with the IO reasonably with a view to addressing the valid concerns of other owners before prematurely seeking redress from the court.  As the judge did not find any breach of the DMC by the IO, no damages were awarded.  Accordingly, the judge dismissed Whole Grand’s application with costs.[10]

Whole Grand’s appeal

36.  Under sections 11(2) and 11AA of the Lands Tribunal Ordinance (Cap 17), an appeal lies from a judgment of the Tribunal to the Court of Appeal on an error in point of law, with leave of the Tribunal or the Court of Appeal.  In a decision dated 6 January 2023, the judge refused to grant Whole Grand leave to appeal.[11] On 3 March 2023, Chow JA grant leave to appeal.

37.  The grounds advanced by Whole Grand for the appeal may be stated broadly as follows:

(1)  The Tribunal traversed beyond the pleadings and went into the unpleaded Alterations in reaching its decision.

(2)  The true issue was the binary question of whether or not Whole Grand as an owner of Commercial Units has the right to use Lift A.  If Lift A is a common area or common part, Whole Grand has a right to use it and the IO has no power to remove that right.  This question is to be determined as at the execution of the DMC.  Post-agreement conduct and statements are irrelevant.  Once the Tribunal concluded that when the DMC was executed on 21 July 1992 it was intended that Lift A should serve 1/F, that should have been the end of the analysis and should have resulted in the determination of dispute in Whole Grand’s favour.

(3)  The Tribunal erred in holding that the analysis does not end with the construction of the DMC, and in holding that the “ecology” of the Building was changed by the Alterations.  Whole Grand has the right to remove the Alterations at any time.  The Alterations could not result in a different interpretation being given to the right of Whole Grand to use Lift A under the DMC.

(4)  The Tribunal was wrong to consider the Alterations an adverse factor against Whole Grand.  The Alterations were at most a neutral factor because, among other things, the 1/F had always been intended to be for commercial use; the Alterations were lawfully carried out pursuant to approved Alterations and Additions Building Plans; the way the 1/F was used as a restaurant did not involve any breach of the DMC; and the Alterations provided an alternative entrance to the 1/F, helping to reduce reliance on the common parts of the Building, and did not amount to an abandonment by the Property’s owner of its right to use Lift A.

(5)  The IO did not counterclaim for any breach of the DMC by Whole Grand.  The Tribunal was not asked to adjudicate and did not make any finding on any breach of the DMC by Whole Grand.  In any event, Whole Grand’s right to use Lift A was not dependent on the absence of breach of the DMC.

(6)  The Tribunal erroneously shifted the burden to Whole Grand in saying that it was incumbent on it to deal proactively with the problems caused by the Alterations.  It was for the IO to justify its conduct in depriving Whole Grand of the right to use Lift A.

(7)  The Tribunal was wrong to find that the measure taken by the IO was reasonable.  The IO did not merely impose restrictions, but deprived Whole Grand of the right to use lift service completely.

(8)  The Tribunal failed to examine the overall impact of the measure imposed and determine whether a fair balance have been struck between the collective interest and the individual rights encroached upon.

(9)  The Tribunal erred in failing to take account of the impact of the BPR and DDO.

(10)  The Tribunal’s refusal to grant declaratory relief was plainly wrong.  There existed a real issue between the parties, and Whole Grand had and still has a genuine interest in obtaining a declaration against the IO.

38.  The IO has filed a respondent’s notice contending that the three declarations sought by Whole Grand (see §22(1)-(3) above) were correctly refused because there was no total denial of Whole Grand’s right to use Lift A and the chairman of the IO had stated in his witness statement that Lift A could be used for the 1/F: (1) in case of fire or personal injury; (2) by wheelchair-bound disabled persons; (3) by those with mobility problems; and (4) in any situation where ordinary people would consider it necessary.

39.  I shall deal in turn below with the contentions advanced.

Ground 1 – the pleading objection

40.  Counsel for Whole Grand submit that the judge was wrong to traverse into the Alterations which were wholly unpleaded, even though there may have been evidence on the subject.  It is the pleadings that define the issues for determination by the Tribunal and not the other way round.

41.  I do not accept this argument.  While the IO’s Notice of Opposition did not refer to the Alterations as such, it referred to the Escalator and the Stairway extensively which were created by the Alterations – see §§9(a), (f)(i), (ii) and (vi).  It was stated that as a result of the failure to maintain the Escalator, large numbers of the customers of the restaurant used Lift A for access, causing security and overcrowding concerns for the residents of the Building.  For its part, Whole Grand responded to those matters in its Reply.

42.  The notices of application and opposition are not pleadings as such.  Section 10(5)(a) of the Lands Tribunal Ordinance provides that “the proceedings of the Tribunal shall be conducted with as much informality as is consistent with attaining justice”.  Direction No 4 given by the President of the Lands Tribunal on 1 July 1986 states that presiding officers should not regard Notices as in the nature of pleadings by which parties are bound, but as an indication of the issues which are likely to be raised.  Nevertheless, basic fairness requires that there should be advance notice of the points taken and issues raised and that no party should be prejudiced by being taken by surprise and having to deal with issues raised without a proper opportunity of preparing for them: see Grand Power v Chan Sing Hoi [2020] 2 HKLRD 142, §§27-42; Great Source Enterprise Ltd v Sino Estates Management Ltd (CACV 253/2003, 7 May 2004), §§14-17.  The application of this principle – and the rigour with which ordinary rules of pleading may be applied by analogy – will of course depend on the facts and the procedures adopted in the particular case.

43.  In the present case, what the judge did was to take account of the state of the Property and the Building as they existed at the time of the litigation (i.e. after the Alterations) – which she described as the “ecology” of the Building – in considering how the rights of Whole Grand and the other owners are to be balanced and what powers of management the Manager and the IO have and how they are to be exercised.  In so doing she did not in my view traverse into unpleaded matters.

44.  It was revealed in the course of trial, in particular during the cross-examination of the IO’s witness, that the existing configuration of the Property was not the original design of the Building but the result of substantial alterations done subsequent to its completion.  In so far as the judge raised the unpleaded question whether consent for the Alterations was given by the Manager and/or the other owners on the understanding that henceforth the occupants and visitors of the Property should use the Escalator and the Stairway as their primary means of access,[12] she noted that there was no evidence at all in that regard, and did not pursue this further in her reasoning.

Grounds 2 and 3

45.  Counsel for Whole Grand submit that the judge was wrong in holding that the Alterations changed the “ecology” of the Building and that it was “no longer meaningful” for the parties to focus on whether the use of Lift A was or was not permitted under the DMC.  Instead, counsel submit, the issue is a binary question of the construction of the DMC and BMO as to whether or not Lift A is a common area and common part.  Post-agreement conduct is irrelevant to the construction of the DMC.  Shops 4 and 5 can be sold separately from the rest of the Property and the Alterations reversed, as Whole Grand wishes.  The judge’s analysis would suggest that the right of the Property’s owner to use Lift A was lost upon carrying out the Alterations in 1992.  This cannot be right.

46.  I do not agree that the finding that Lift A is a common area or common part is the end of the analysis as Whole Grand contends. It is true that the IO had taken the position that Lift A was part of the Residential Development and, as such, categorically excluded by virtue of clauses 3.2.1(a) and 3.2.2 of the DMC from the common areas to which a commercial unit owner had any right of access.  That interpretation is wrong, as the judge held.  A declaration to that effect might have been made if that was what Whole Grand had claimed.

47.  But that was not what Whole Grand claimed.  The orders it sought (see §22 above) assert a categorical and absolute right to the use of Lift A.  Its case run before the Tribunal was squarely based on such absolute right: see §§79, 89 and 104 of the Judgment; see also §13, 14, 15 and 17 of the judge’s decision refusing leave to appeal.  At §14 of the latter, the judge recorded:

“ … at trial I specifically asked the applicant’s Counsel to confirm whether the applicant was still seeking an absolute and unrestricted right to use the lift by that time. Mr Ho answered in the affirmative during his closing submissions. …”

48.  The judge did not accept that Whole Grand had any such absolute right free from any power of restriction.  DMCs are subscribed to by owners in multi-unit buildings for the purposes of “regulating by contract their rights inter se regarding the exclusive use and occupation of the units allotted to their respective parcels of undivided shares, their use of the common parts of the building, as well as their mutual obligations on such matters as management charges”: Kung Ming Tak Tong Co Ltd v Park Solid Enterprises Ltd (2008) 11 HKCFAR 403, §19.  As a matter of general principle, the rights to the use and enjoyment of common areas and facilities “are not absolute and must as a matter of construction be subject to an element of reasonableness and also must coexist with other provisions in the DMC unless specifically excluded”: Music Advance Ltd v Incorporated Owners of Argyle Centre Phase I [2010] 2 HKLRD 1041, §14; approved by this court in Silver Triumph Ltd v Guardian Ltd (HCMP 566/2012, 18 May 2012), §17.

49.  Further, the DMC in respect of the Building contains express words in clause 3.2.1 making the right of a commercial unit’s owner to use the Common Areas subject to the provisions and restrictions contained in the DMC, the House Rules, and the rights of the Manager provided in the DMC.  Clause 4.4.1 confers on the Manager “full right and authority to control and manage the Common Areas and Common Facilities”.  Clause 6.2.1 gives the Manager “full and unrestricted authority to do all such acts and things as may in its opinion be necessary or requisite for the proper management of the Land and the Building.”  Such power must of course be exercised in good faith, reasonably, and not for improper purposes.

50.  From the outset, therefore, Whole Grand’s predecessor-in-title did not have an absolute and unqualified right to use the common areas by itself, its tenant or its licensees in whatever way they thought fit and without regard to the effect on the other owners.  There is no question of it having “lost” such right through carrying out the Alterations.  Nor did the Tribunal rely on the Alterations, which was admittedly something that occurred after the DMC, for the purpose of construing it.

51.  It is plain that the reasonableness of the restrictions imposed has to be judged with reference to the prevailing circumstances.  There is in my view nothing erroneous for the Tribunal to have regard to the Alterations and other subsequent events in assessing what courses of action were properly open to the Manager and the IO under the DMC in terms of restriction on access to Lift A at the 1/F.  Should Whole Grand sell Shops 4 and 5 separately with the result that the Escalator and Stairway are removed, no doubt that would be a material circumstance for the Manager and the IO to take into account in the exercise of their powers, and for the Tribunal to consider if there is a dispute.

Ground 4

52.  Counsel for Whole Grand submit that the Alterations are at most a neutral factor.  They are internal to the Property and do not disturb the common parts.  They have been in place since 1992, 18 years before Lift A was closed to the 1/F.  If anything, they provide an alternative and additional access route to the 1/F through the Entrance Lobby, and reduce the need for occupants and visitors to rely on the common parts for access to the 1/F.  The Alterations fall far short of any clear and unequivocal abandonment of the right to use Lift A.

53.  I do not see that any error of law in the Judgment has been shown in connection with this ground.  No one has suggested that the Alterations gave rise to an abandonment of right on the part of Whole Grand or its predecessor-in-title.  The fact that the Alterations were internal to the Property and done in accordance with approved building plans and the fact that the 1/F has from the beginning been intended for non-domestic use do not mean that there cannot be nuisance or security concerns caused to other owners.  It is speculative to suggest that the Alterations have reduced the number of visitors using the common parts, since, without the Alterations, there might have been far fewer visitors to the 1/F in the first place.  The fact based on unchallenged evidence is that the Escalator broke down for a substantial period of time between 2009 and 2010 and Fu Lin Wah’s staff gave the passcode of the main gate of the Building to its customers, leading to overcrowding and security concerns, which the Tribunal found to be “real and valid”.[13]  There is no appeal from this finding.

54.  It is true that Lift A did serve the 1/F for many years before 2009.  This suggests that even with a restaurant operating at the 1/F, there may be scope for relaxing the restriction if a reasonable and acceptable solution can be found.  This is why the judge was singularly unimpressed by the extreme but misconceived stance of Whole Grand that it has an absolute right incapable of being restricted and also by the “none of my business” attitude of Whole Grand’s representative towards its tenant’s compliance with the DMC.[14]

55.  I do not see any error of law in the Tribunal taking into account the Alterations and what had happened as shown in the evidence.

Ground 5

56.  This ground criticises §75 of the Judgment where the judge stated: “The applicant could not assert the use of lift as an absolute right without any regard [to] the potential breach of the DMC provisions [i.e. clauses 5.1.4 and 5.1.9] on their part  …”  Counsel for Whole Grand submit that there was no counterclaim by the IO or finding by the Tribunal that Whole Grand had breached the DMC.  Even if there was a breach, the DMC does not provide as a condition precedent that Whole Grand must first comply with its duties in order to be entitled to use Lift A.

57.  In my view the criticism is misplaced.  The judge was careful not actually to find any breach of clauses 5.1.4 and 5.1.9 of the DMC by Whole Grand, there being no counterclaim or allegation by the IO to that effect.  It is correct that there is no provision in the DMC that compliance by an owner with his obligations is a condition precedent to the enjoyment of his rights thereunder.  But with respect the argument misses the point, which is that, as explained above, the right in question is not absolute but subject to an element of reasonableness, to the other provisions of the DMC, and to the powers of managements conferred on the Manager and the IO.  The fact that Whole Grand or its tenant has engaged in conduct that may interfere with the enjoyment by the other owners of their rights is plainly a matter that the judge was entitled to take into account.

Ground 6

58.  By Ground 6 it is contended that the judge wrongly shifted the burden by holding (in §85 of the Judgment) that it was incumbent on Whole Grand to take a more proactive approach to deal with the problems caused by the Alterations.

59.  I do not think any error of law is made out. First, reading the sentence attacked in the context of §§84-86 of the Judgment, it is clear that what the judge found unsatisfactory is that Whole Grand was simply interested in letting out its Property and paid no regard whatsoever to the use of the common parts of the Building by the tenant and its visitors. What the judge meant was that compliance with the DMC, such as in terms of not causing nuisance to the other owners, is a matter for Whole Grand as the owner, who cannot absolve itself simply by leaving everything to the tenant.  This observation cannot be faulted.  Plainly an owner is responsible under the DMC if his tenant interferes with the enjoyment by the other owners of their property.  For example, clause 5.1.9 provides that “each Owner shall take all possible steps to prevent his tenants occupiers or licensees from doing any act deed matter or thing which in any way interferes with or affects or which is likely to interfere with or affect the proper management and maintenance of the Building.”

60.  Secondly, the relevant sentence in the Judgment does not concern the burden of proof in the litigation.  What the judge criticised and rejected in the wider context of §§84-90 is Whole Grand’s uncompromising position that it had an absolute and untrammelled right.  This is relevant to the judge’s overall consideration of the reasonableness of the restriction imposed.

61.  Thirdly, in any event, even on the question of burden of proof itself, I do not think it entirely accurate for counsel to submit that the burden lies on the IO to justify its conduct.  Whole Grand brought the proceedings for declarations and an injunction, claiming an absolute right.  In response, the IO took the position that Whole Grand had no right at all to use Lift A but that in any event the right, if any, was subject to the powers of the Manager or the Owners Committee or the IO under the DMC. It was averred that the Resolution in 2010 was made pursuant to those powers. In reply, Whole Grand averred that the Resolution was “unreasonable, wrongful, unlawful and in breach of the DMC”.[15] The general principle of law is that he who asserts must prove: see e.g. Wong Hon Sun v HKSAR (2009) 12 HKCFAR 877, §23.

Grounds 7 and 8

62.  Whole Grand contends that the judge erred in holding that the measure adopted by the IO was not unreasonable because the IO did not merely impose restrictions, but deprived Whole Grand of the right to use lift service completely.  It is submitted that there is no power under the DMC for the IO or the Manager to deprive Whole Grand of the right to use Lift A.  It is further submitted that the judge failed to examine the overall impact of the measure imposed and to decide whether a fair balance has been struck between the general interest and the individual rights in question.

63.  As mentioned above, clause 4.4.1 of the DMC gives the Manager “full right and authority to control and manage the Common Areas and Common Facilities”, and clause 6.2.1 gives it “full and unrestricted authority to do all such acts and things as may in its opinion be necessary or requisite for the proper management of the Land and the Building”.  Clause 6.2.1 goes on to provide:

“ Without in any way limiting the generality of the foregoing the Manager shall have the following duties and powers namely: –

…

(ai) To allocate and/or assign any lift for the exclusive use of particular floors and/or Units where the circumstances so warrant.

   …”

64.  Counsel for Whole Grand submit that the power under clause 6.2.1(ai) does not encompass the power to prohibit an owner from using a lift altogether.  It is said that this sub-clause merely confers power on the Manager to designate how the three lifts in the Building are to be shared among the various units and floors, on the assumed basis that each floor would be served by at least one lift.  It does not empower the Manager to deprive the owners of a particular floor of the use of any lift. 

65.  In response, counsel on behalf of the IO submit that the power to allocate and assign lifts for the use of particular floors includes the power to allocate the lifts to floors other than a particular floor.  Further, they submit that the Manager does not in fact prohibit absolutely all use of Lift A at the 1/F, but allows its use: (1) in case of fire or personal injury; (2) by wheelchair-bound disabled persons; (3) by those with mobility problems; and (4) in any situation where ordinary people would consider it necessary.

66.  The wording of the DMC is wide and expressed in general terms.  It seems to me as a matter of construction that the power to allocate and assign lifts under sub-clause (ai) includes the power to allocate and assign them in such a way that no lift stops at the 1/F.  There is in addition the general power in clauses 4.4.1 and 6.2.1 even if sub-clause (ai) does not apply.  Removing lift service for a particular floor altogether is a drastic measure, but I am satisfied that there is power to do so under the DMC, though no doubt it should only be exercised in exceptional circumstances.  Those wielding management power must only do so with caution and even-handedly, making sure that it is fair to the owners of that floor, even if the owners of the other floors welcome it.  There is however no question of the measure imposed in this case being ultra vires. 

67.  It is further to be noted that what the IO or the Manager has imposed, as clarified in the evidence, is not a complete prohibition but subject to the four exceptions mentioned above.  But even with those exceptions, I would accept that the measure is a substantial restriction on an owner’s right to use a lift in a building.  It is more serious than, for example, the measure in Music Advance, supra, where the passenger lifts were closed only for 8 hours a day and the floors affected remained served by a cargo lift throughout.

68.  As to the question of reasonableness, it has to be borne in mind that, first, building management is a matter primarily for the manager and the owners corporation of a building.  On many issues there will be a range of reasonable options open to the management.  Within that range it is not for the Tribunal itself to manage the building and substitute its own decisions on what are reasonable management measures: see Steak Expert Holdings Ltd v Incorporated Owners of Jade Plaza (Tsuen Wan) (HCMP 3233/2015, 21 January 2016), §8. 

69.  Secondly, it needs to be recalled that an appeal lies from the Tribunal only in point of law.  The Tribunal’s assessment of reasonableness in this regard, in so far as it lies within the range of tenable opinion, will not generally raise any issue of law susceptible to appeal.

70.  Thirdly, the view reached by the Tribunal in the present case has to be seen in the context.  In particular:

(1)  There were real and valid security and nuisance concerns during 2009 and 2010 before the measure was imposed in response.  (Indeed, at the hearing Mr Chan SC clarified that it is not his argument that the Resolution in 2010 was unreasonable.)

(2)  There was no request by Whole Grand to the Owners Committee or the Manager to re-open Lift A at the 1/F for some 8 years until 2018.

(3)  In the litigation and indeed in the pre-action solicitors’ letter, Whole Grand asserted an absolute right to the use of Lift A.  The reliefs it claimed were tied to that assertion.  It was not made clear to the Tribunal that the reasonableness of the measure imposed was an issue that the Tribunal needed to determine in connection with the reliefs claimed: see Judgment, §§79-80.

(4)  Because Whole Grand considered it had an absolute right, it did not engage with the IO at all with a view to addressing the concerns of the other owners but took a “wholly uncompromising and uncaring attitude”.[16] It may be that with the Escalator having been repaired and kept in good working condition, and if Whole Grand and its tenant refrain from giving the main entrance passcode to visitors, the problem would not be as serious as before, though this was not how the case was put below or in the notice of appeal.  And it may be that with sensible communications in good faith, it can be shown that the nuisance and security concerns are unlikely to arise or can be addressed by less drastic measure than making Lift A skip the 1/F at all times save when the exceptions apply.  The judge did envisage that attempts could be made to address the residents’ concerns, through ways of controlling the volume of visitors and preventing them from entering the residential areas via the 1/F.[17]  Counsel for Whole Grand has also raised before us the suggestion of a lift access control system, though it is misconceived for them to criticise the judge for omitting to consider this as an “obvious solution to the security concern” when their client had adopted a wholly unneighbourly approach. 

71.  The judge’s opinion on reasonableness was arrived at in the particular circumstances presented to the Tribunal.  As she stated at §90 of the Judgment:

“ To sum up on the question of the reasonableness of the measure taken (assuming it is in issue), I do not consider it unreasonable for the manager and the respondent not to provide lift service to 1/F in light of the circumstances of the present case. The circumstances include, inter alia, their valid concerns over security and nuisance, the features in the physical layout of the Building, the applicant’s attitude and behavior as well as the lack of means of access for the residential owners to commute between the ground floor and their units as compared to the better accessibility of 1/F (which justified the giving of priority to the residential owners over 1/F visitors on the use of lifts).”

72.  In my judgment this is an opinion the Tribunal was entitled to come to on the facts of this case.  I do not think that Whole Grand has demonstrated that there is any error of law in that conclusion.

73.  As to the allegation that the judge failed to examine whether a fair balance has been struck, counsel for Whole Grand refer to the fourth stage of the proportionality test as set out in Hysan Development Co Ltd v Town Planning Board (2016) 19 HKCFAR 372.  I do not see how this concept applicable in relation to fundamental rights in public law cases has any application in the present case: see Lee Yin Hong v Serenade Cove [2011] 5 HKLRD 660, §11.  In any event, the whole thrust of the section of the Judgment on reasonableness is to set out the judge’s views on balancing Whole Grand’s right with the Manager’s powers and the other owners’ rights.

Ground 9

74.  Under Ground 9 it is said that the Tribunal erred in failing to take account of the impact of the BPR and DDO.  The Tribunal may be correct in saying that it has no jurisdiction to try claims for relief concerning disability discrimination or breaches of fire regulations, but in my view this does not mean that it cannot deal with or take account of allegations that the closure of a lift is contrary to the BPR and DDO in determining the true legal position as between an owner and the building Management in relation to the use of a lift.

75.  However, the IO has clarified that the restriction imposed does not apply to persons with mobility problems or in case of fire.  Counsel for Whole Grand submit that this clarification was only given after the incident on 28 September 2019 (see §19 above).  But even in that unfortunate incident, the disabled person was eventually given access to Lift A.  I do not think that there is any material legal error in the Tribunal’s approach that should impugn its overall conclusion.

Ground 10

76.  Finally, counsel submit that the Tribunal’s refusal to grant declaratory relief in favour of Whole Grand was plainly wrong. Referring to Convoy Global Holdings Ltd v Kwok Hiu Kwan [2021] HKCA 1594 at §29 (which in turn refers to the three requirements set out by DHCJ To in Koo Ming Kown v Rev Mr Mok Kong Ting (HCA 2337/2016, 4 May 2018) at §20), they submit that (1) there was a real issue between the parties; (2) Whole Grand had and still has a genuine interest in obtaining the declarations; and (3) the IO was a proper contradictor.

77.  I do not understand the IO or the Tribunal to have disputed these three elements in the present case.  The difficulty for Whole Grand was that it asserted an absolute and unrestricted right to use Lift A and that this assertion underpinned the declarations it sought.[18]  As the judge did not accept there was any such absolute right, naturally she refused to make the declarations.  There is nothing raised in the notice of appeal to fault this reasoning.  There was no narrower declaration (such as one limited to rejecting the IO’s construction of clause 3.2.1 of the DMC) proposed to the Tribunal. Even in the notice of appeal the reliefs claimed are the same wide declarations. During his oral submissions in this court, Mr Chan SC suggested adding the words “subject to proper exercise of the right of management under the DMC” to the declarations and injunction sought as referred to in §22(1), (2) and (4) above.  But I would decline to disturb the order below, in the absence of any legal error demonstrated.  In any event, as Mr Ho SC pointed out on behalf of the IO, it would be pointless to make declarations that amount in substance to no more than paraphrasing the provisions of the DMC.

78.  There is no error of law made out under this Ground.

Conclusion

79.  For the above reasons, I would hold that none of the grounds of appeal has been made out.  It follows that the appeal must in my view be dismissed.  I would make an order nisi that Whole Grand do pay the IO the costs of the appeal.

Hon Chow JA:

80.  I agree with the judgment of G Lam JA.

[1]   The assignment covered Shops 1, 2, 3, 4, 5, 6 and 7, the Cockcroft, the whole of the 1/F, and Flat A on the 3/F.

[2]   [2021] HKLdT 50.

[3]   Judgment, §§49-52.

[4]   Judgment, §§54-58.

[5]   Judgment, §§60-62.

[6]   Judgment, §§63-65.

[7]   Judgment, §§66-69.

[8]   Judgment, §§70-75.

[9]   Judgment's, §§76-90.

[10]   Judgment, §§102-105.

[11]   [2023] HKLdT 2.

[12]   See Judgment, §58.

[13]   Judgment, §81.

[14]   See Judgment, §§85-90.

[15]   Amended Reply, §§8 & 9.

[16]   Judgment, §103.

[17]   Judgment, §85.

[18]   See Judgment, §104.