THE INCORPORATED OWNERS OF WAH FAI COURT v. LEE MAN HO JOSEPH

LDBM 60 of 2010

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION

NO. 60 OF 2010

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J U D G M E N T

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Background

1.  The applicant is the Incorporated Owners (“IO”) of Wah Fai Court (“the Building”) situated at 1-6, Ying Wa Terrace, Hong Kong.  The respondent is the registered owner of Flat B on 1^st Floor and Portion B of the Flat Roof of the Building  (“the Property”).

2.  The applicant lodged the Notice of Application in this case on 10 March 2010 with the re-amended version filed on 29^th March 2012.  It is alleged in the Re-amended Notice of Application (“Form 29”) that the respondent had breached the Deed of Mutual Covenant (“DMC”) and Section 34I of the Building Management Ordinance (“BMO”) in that he had made structural alterations to the common parts of the Building. 

3.  The relevant terms of the DMC and BMO reads as follows:

4.  Clause 10(a) DMC

“Not to make any structural alterations in his part of the said building which may damage the other parts thereof … and not to cut or injure the cement concrete flooring columns beams or girders of the said building or do anything whereby the structural strength thereof may be affected.”

5.  Clause 10(d) DMC

“Save as hereinafter provided not to erect or cause to be erected so as to extend outside any of the exterior walls of the said building any awnings sunshades cages signboards structures aerials racks for flower pots for drying clothes or otherwise or to enclose or alter wholly, or in part any balcony in the said building.”

6.  Clause 12 Third Schedule DMC

“No Owner shall make any structural alterations additions to the said building or to the exterior of his unit … except with the written consent of the Agent …”

7.  Clause 13 Third Schedule DMC

“No Owner shall place any furniture object chattel article or thing in or occupy any part of the said building not included in his Unit and the Owner shall only use the parts of the said building intended for common use for the purpose of access to and from his Unit and not otherwise.”

8.  Clause 18 Third Schedule DMC

“No Owner shall erect any canopy cage or structure on or above any Common Areas.”

9.  Section 34I(1)(a) BMO

“(1) No person may :-

(a)  convert any part of the common parts of a building to his own use unless such conversion is approved by a resolution of the owners’ committee (if any).”

10.  Paragraph 9 of the Re-amended Notice of Application reads as follows :-

“On an unknown date, the respondent started some works on Portion B of the Flat Roof of the property. It was noticed that:

(a) The external/boundary walls of the flat roof, namely the common parts of the said Building, were altered and thinned while the flat roof was enlarged.

(b) Two water towers were constructed on the flat roof and parts of them were located at the original place of the said external/boundary walls.

(c) A canopy was constructed on the said external/boundary walls.

(d)An iron ladder was also constructed on the said external/boundary walls and/or along a common pipe of the said Building.

(e)  An additional door was also installed on the said external/boundary walls/fences possibly causing structural alterations.”

The Evidence

11.  The factual evidence adduced by both parties are by and large not in dispute.

12.  Mr. Lee, Manager of the Building testified that:

(a)   The boundary wall of the Property has been altered and the original L-shaped exterior wall of the Property now becomes a straight angle (photo at page 81 of Bundle) and the area of the flat roof becomes enlarged as a result (“the L-shape wall”);

(b)   Two water towers are placed within the enlarged area beyond the original L-shaped space (photo at page 81 of Bundle) (“the Water Towers”);

(c)   A gate has been built on the masonry wall with a 3-step metal staircase erected for access into the Property and a canopy erected on the top of the gate (photo at page 79 and 119 of Bundle) (the “UBW”);

(d)   The IO cannot tell when these alterations had been in existence and had never consented to their construction/alteration.  But the alterations must be there before the respondent became the owner of the Property, yet the IO only discovered the alterations after the respondent became the owner;

(e)   Upon discovery, the IO had issued warning letters to the respondent on 6 November 2009 and 4 December 2009 requesting for the L-shaped Wall, the Water Towers as well as the UBW to be demolished and to reinstate the flat roof to its original design.

13.  The respondent testified that :

(a)  The L-shaped wall had not been altered;

(b)  The Water Towers were being installed outside his Property and had nothing to do with the Property.  He had no knowledge as to who installed the same but found them already there upon purchase of the Property;

(c)  The UBW was not erected by the respondent and he had no idea who did it.  The door open up to the Property but he had never use it as an access, nor had he noticed the presence of the UBW on purchase of the Property. 

14.  From the joint expert report filed on 10 January 2013, Mr. Yeung the expert found that :

(a)  Within the lot boundary line, there are three components, namely an existing masonry wall (“Masonry Wall”) for the public staircase, a 400mm gap for solider piles, and a reinforced concrete railing (“RCC Railing”) on screen wall which forms a safety barrier for the first floor flat roof (at page 8); 

(b)  The outer edge of the Masonry Wall aligns with the building lot boundary, whereas the outer edge of the RCC Railing aligns with the boundary of the Property (at page 8);

(c)  There are screen walls franking the south western corner of the Building and the screen walls at the south western corner continue at first floor level and become a stepped construction (“Stepped Construction”).  The RCC Railing next to the Stepped Construction is a non-structural railing that sits on the screen wall from ground floor (at page 9);

(d)  The L-shaped Wall of the external/boundary wall at the south-western end of the flat roof matches with that shown in the First Floor Plan of the Approved Plan and it had not been altered, thinned or made straight ( at page 14 with photo at page 12);

(e)  The Water Towers were mounted on the outer face of the external wall and outside the boundary of the Property as per the Assignment Plan (at page 14-15 with photo at page 12);

(f)  It is discovered that the RCC Railing which is within the Property boundary next to the Stepped Construction was removed. In lieu, there was an opening with a metal handrail.  There was a metal ladder affixed onto the Stepped Construction.  A timber door, a canopy and a metal gate (i.e. the UBW) were constructed to fill up an opening on the Masonry Wall (at page 13 and 15 with photo at page 10-11 and 13).

The Issue

15.  At the adjourned trial, after hearing evidence from Mr. Yeung, Ms. Lee for the IO confirmed that the allegation about the L-shaped Wall is not to be pursued. So, what remains to be determined is the liability of the respondent for the erection of the Water Towers and the UBW.

16.  It is common ground that the L-shaped Wall, the boundary wall of the Property as well as the Masonry Wall are common parts of the Building.  And there is also no dispute as to the fact that the erection of the UBW and the Water Towers are in breach of the DMC and/or BMO. 

17.  The defence raised by the respondent is 3-fold and they are:

(a)  The allegation about the RCC railing had not been pleaded in the Form 29 and should not be an issue to be determined by this court;

(b)  The IO failed to prove that all the alleged structural alterations are made by the respondent, as alleged in paragraph 9 of the Form 29;

(c)  Since the breach is not a continuous breach, the respondent should not be liable as a current owner and the IO should sue the previous owner of the Property instead.

Allegation about the RCC railing not in pleadings

18.  Mr. Chan for the respondent cited Soar v National Coal Board [1965] 1 WLR 886 and submitted that the allegation about the removal of the RCC railing has never been pleaded in the Form 29, it is not right to allow such new allegation to be raised at trial.  So this issue should not be a matter to be considered or determined by the court.

19.  Ms. Lee argued that Paragraph 9(a) of the Form 29 alleged an alteration of the boundary walls of the Property and this should cover the RCC railing.  And allegation at Paragraph 9(e) may also involve an alteration of the structure which should include the RCC railing as well.

20.  I think Paragraph 9(a) of the Form 29 refers to the L-shaped Wall only and is never minded to point to the RCC Railing.  But I agree with Ms. Lee that Paragraph 9(e) of the Form 29 can arguably be taken to refer to the RCC railing which, according to the expert evidence, is in fact the boundary wall of the Property. 

21.  And even if Paragraph 9 of the Form 29 did not cover the RCC Railing, I do not agree with Mr. Chan that just because of the fact that the RCC Railing was not pleaded, this court should not deal with it when there is clear evidence to show that it was an unauthorised alteration.

22.  Section 10(5)(a) of the Lands Tribunal Ordinance (“the LTO”) empowered the President of the Lands Tribunal to give Directions as to the manner and form in which proceedings shall be conducted.  Direction No. 4 issued on 1 July 1986 stipulated 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. The remedy, if the documents filed by the party are so incomplete or misleading as to prejudice the other party, is to adjourn, not to dismiss the claim”.

The effect of this Direction is that for proceedings at the Lands Tribunal, parties are not bound by their pleadings.

23.  Section 10(5) of the LTO also required the Tribunal to conduct the proceedings with “as much informality as is consistent with attaining justice”.  I found justice required me to consider the allegation about the removal of the RCC railing even though this had not been mentioned in the Form 29.  It is apparent from evidence that neither party was aware of the fact that the RCC railing had been demolished before the expert report is available.  This is not a case that the IO is trying to conceal such fact from the Form 29.  The IO had difficulties in discovering the same since the location where the RCC railing is situated are covered by canvas as appeared from the photographs taken by the IO (at page 75-81 of Bundle).   

24.  In any event, the respondent should have raised this issue as early as possible so that the court can grant him an adjournment to deal with this new allegation as stipulated in Direction No. 4.  Yet, such argument is only raised at final submission.  But since the respondent is not challenging the finding of the expert about the RCC railing, I cannot see how an adjournment can serve any purpose.  I found no injustice had been caused to the respondent if such allegation is to be dealt with at this trial. 

25.  Furthermore, by way of procedure, even if I declined to deal with the RCC railing at this trial due to this technical challenge, the IO is still entitled to take out another application concerning the RCC railing.  This is a waste of costs and effort and not in line with Section 10(5) of the LTO. 

No evidence to show the respondent made the alterations

26.  Mr. Chan submitted that Paragraph 9 of the Form 29 alleged that it was the respondent who did the alteration work but this is not supported by evidence.  Hence, the application against the respondent should be dismissed.

27.  Ms. Lee submitted in reply that the wordings of Paragraph 9 of the Form 29 did not suggest that the respondent was the one who made the alterations but instead the IO discovered the UBW and the alterations when there were works ongoing at the Property.

28.  From the wordings of Paragraph 9 of the Form 29, it cannot be taken to mean that the respondent is alleged to be the one who did the alteration works.  I accept the submission by Ms. Lee that Paragraph 9 only stated the circumstances when the IO discovered the alterations.  The evidence of the Manager clearly showed that the IO is not alleging that the respondent is the one who made the alterations.  I found the respondent’s contention that the IO alleged the respondent was the one who did the alteration is misconceived.

Continuous Breach

29.  Mr. Chan for the respondent cited Powell v Hemsley [1909] 2 Ch. 252 to support the contention that there was no continuing breach and the covenant having been broken once for all when the unauthorised work was erected, the breach was not committed by the respondent but by his predecessor and the respondent had not by his conduct rendered himself liable for the breach.  And relying on Section 41(8) of the Conveyancing and Property Ordinance (“CPO”), Mr. Chan submitted that the IO should go after the previous owner of the Property.

30.  Ms. Lee, in reply, submitted that the case of Powell concerned a covenant between a vendor and a purchaser so is not applicable to this case.  Ms. Lee cited Section 41(3) of the CPO, Sun Wai Chun v Fairview Park Property Management Limited FAMV1/2000 and The Incorporated Owners of Fortune Mansion, Tsuen Wan v Chiu Ng Ling LDBM 97/2009 to support the contention that the benefit and burden of the DMC run with the land and shall be enforceable against successors in title and person deriving title.

31.  I think the judgment of The Incorporated Owners of Marina Cove v Chu Kam Tai and another HCMP2141/2011, which I had drawn to the parties’ attention at trial, is directly on the point.  The IO in that case alleged that the respondents, who are the owners of a house in Marina Cove had constructed an iron gate and a low wall with iron fence behind their house at the common part of Marina Cove.  The respondents contended that they did not construct the structures and evidence showed that the structures only appeared after the respondents became the owners of their house.  The respondents also relied on Discovery Bay Services Management Ltd v Buxhaum [1995] HKDCLR 7 to argue that they could not be liable for breach of covenant that had occurred before they became owners.  The Hon Cheung JA found that:

“the Buxhaum case was concerned with the enforcement of a positive covenant. The position here is the enforcement of a negative covenant which runs with the land. It clearly binds the respondents who are the current owners even if they did not build the structures themselves” (at paragraph 8).

It is clear from the ruling in Chu Kam Tai that for a breach of a negative covenant, the successor-in-title will be liable even if the breach was committed by his/her predecessor.

32.  A positive covenant, as defined under Section 41(6) of CPO, is “a covenant to expend money, do something or which is otherwise positive in nature”.  The terms of the DMC in this case is to restrict the respondent from making any structural alteration and this is clearly a negative covenant.  A positive covenant was breached when the act covenanted is not done so there is no question of a continuing breach.  A negative covenant is different in the sense that the owner is prohibited from doing something and as long as that something had been done and still in existence, it must be a continuous breach.  I found the existence of the UBW and the Water Towers in this case must be a continuing breach of a negative covenant which runs with the land.

33.  I agree with Ms. Lee that Powell is not applicable and can be distinguished.  Powell involved a covenant “to erect no other than private residences and to submit plans for approval before commencing to build”.  As found by Cozens-Hardy M.R. in the judgment, “the covenant is a covenant by the defendant that he or his assigns will erect” (my emphasis).  And when being asked to construe that “this is not a case where the breach was a single breach complete before the assignment, but that it is a continuing breach”, Cozens-Hardy M.R. found that if so:

“we are being asked to construe a covenant which is affirmative in form as implying and involving a negative covenant for the purpose of invoking the jurisdiction of this court which is limited to the case in which a defendant has expressly and clearly covenanted that a certain thing shall not be done”.

So the nature of the covenant in Powell is a positive one which is different from a negative covenant.

34.  And I also agree with the findings in Sun Wai Chun and Chiu Ng Ling that Section 41(3) of the CPO which states that :

“… a covenant shall run with the land and, in addition to being enforceable between the parties, shall be enforceable against the occupiers of the land and the covenantor and his successors in title and persons deriving title under or through him or them by the covenantee and his successors in title and persons deriving title under or through him or them”

is no doubt applicable for the enforcement of the DMC.  From the wordings of Section 41(3), the respondent being the successor in title of the Property, will also be bound by the DMC and the liability of the covenant shall run with the land. 

35.  There is no evidence to show that there is a parallel provision like Section 41(3) in England.  Since Section 41(3) had not been considered in Powell, I cannot see how Mr. Chan can rely upon that case to support his argument.  And Section 41(8) relied upon by Mr. Chan only governed the liability of an owner who ceased to have any interest in the land and not for liability of a successor in title, like the respondent, which is governed by Section 41(3) instead.  Section 41(8) allowed the IO to go after the previous owner but not necessarily mean that the IO could only sue the previous owner.

36.  Having said so, I think a distinction need to be made between the UBW and the Water Towers.  The existence of the UBW opens up an access route from the Property to the staircase outside the Masonry Wall.  Inference can be drawn that the UBW must be constructed by the owner of the Property since it only served him/her and no one else and is for the sole benefit of the owner of the Property.  It is more likely than not that this is constructed by the previous owner of the Property.  As a successor-in-title, the respondent cannot deny liability as far as the UBW is concerned.

37.  But the Water Towers tells another story.  It is not in dispute that the Water Towers are not erected within the boundary of the Property and there is no evidence to show that the Water Towers served the Property or in any way related to the Property.  Without evidence to show the use of the Water Towers, one cannot rule out the possibility that someone installed the Water Towers for their use given the fact that the Water Towers are located at a common area.  I found there is no evidence to show that the Water Towers are erected by the predecessor of the respondent, hence no liability can be invested on the respondent.

38.  I found the IO is entitled to enforce the DMC against the respondent for the UBW in this case as a successor-in-title and the UBW is in breach of the DMC as well as the BMO.

The Order

39.  It is ordered that :-

(a)  The respondent do remove and demolish the handrail, the metal ladder, the canopy, the timber door, the metal gate and the metal steps and to reinstate the RCC railing and the Masonry Wall to its original state according to the building plan and to provide the IO with a certificate issued by an authorised person certifying the same on or before 1 June 2013;

(b)  An injunction to restrain the respondent, whether by himself, his servants, agents, tenants and licencees from making any structural alteration to any common parts of the Building; 

(c)  Cost order nisi that the respondent do pay the applicant costs of the claim to be taxed if not agreed at District Court scale;

(d)  Unless any of the parties applies by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.